Judge gives York County $81 million stake in Tepper company’s bankruptcy case. An SC win?
In what appears to be a win for South Carolina taxpayers, a federal judge ruled Monday that York County will have an $81 million stake in an upcoming bankruptcy fight with a company owned by Carolina Panthers owner David Tepper.
The fight is over who will be paid after the failed Rock Hill headquarters project.
U.S. Bankruptcy Court Judge Karen Owens said in a five-minute teleconference hearing from Delaware that she is giving York County a temporary voting stake of $81 million because the county, and city of Rock Hill, are in danger of being left without a voice in the bankruptcy case of GT Real Estate.
“I am concerned with the danger of disenfranchisement of the county and the city,” Owens said. “It is appropriate for them to have voice.”
The city of Rock Hill has a $20 million voting stake.
Why having a stake is important
Creditors -- businesses who say they are owed money from the failed project -- will vote later this year on a bankruptcy proposal from GT Real Estate.
Voting stakes in bankruptcy are proportionally measured based on claims of what allegedly is owed. Without a vote, York County and Rock Hill would have faced the possibility of never recouping any money, pending the outcomes of other lawsuits.
Other contractors, together owed at least $60 million, have generally agreed to a GT Real Estate proposal, which would pay the contractors much of what they claim. That proposal guarantees nothing to York County and Rock Hill.
A dispute over what’s owed
GT Real Estate says it had no strings attached to using city and county money and doesn’t have to pay it back.
York County’s lawyers say the county is owed $81 million in lost tax money that GT Real Estate should have used on road improvements. The county also says it’s owed future tax revenue from the failed project.
The city of Rock Hill claims it gave Tepper companies $20 million for the project.
York County and Rock Hill have sued GT Real Estate and other Tepper companies, alleging the misuse of taxpayer money.
Tepper company lawyers have stated GT Real Estate did not misuse any money.
After Rock Hill and York County sued the Tepper companies, GT Real Estate withdrew its initial bankruptcy settlement proposal that would have given $21 million to York County and as much as $20 million to Rock Hill. Possible money for Rock Hill would have come after the property is sold.
Friction between the city and county
York County, in a lawsuit, has blamed Rock Hill for breach of contract.
York County alleges that the city of Rock Hill failed to issue at least $135 million in bonds for the Panthers project. Rock Hill officials have said they were not obligated to issue the bonds.
Now the county and city are fighting to get back money.
Statements from lawyers and the judge at Friday’s hearing indicated that the combined votes of York County and Rock Hill could possibly halt confirmation of the proposal.
What happens now?
- Lawyers for York County, Rock Hill, and Tepper’s companies were on the Monday teleconference hearing but made no statements. On Friday, the lawyers had a contentious, hours-long dispute over the bankruptcy.
- The lawsuits filed by York County and Rock Hill against the Tepper companies remain pending regardless of the outcome of the bankruptcy confirmation later this year.
Owens said GT Real Estate has acknowledged that the lawsuits will be dealt with later this year after the bankruptcy confirmation.
This story was originally published October 31, 2022 at 4:34 PM with the headline "Judge gives York County $81 million stake in Tepper company’s bankruptcy case. An SC win?."
