Tuesday, September 10, 2019

Builder throws another wrench into financial reorganization plans for Oshkosh arena

The Menominee Nation Arena is best known as the home of the Wisconsin Herd.
By Miles Maguire
The company that built the Menominee Nation Arena is arguing that it is the rightful owner of promised public subsidy payments, throwing another wrench into the financial reorganization plans of the facility’s owner.

In a Sept. 6 bankruptcy court filing, Bayland Buildings Inc. says that arena developer Fox Valley Pro Basketball Inc. signed over its interest in the city’s tax increment financing (TIF) payments. The money was promised as partial collateral for the $13 million mortgage loan that Bayland extended when Fox Valley was unable to pay its construction bill in 2018.

Bayland helped to push the arena developer into bankruptcy court last month by asking that a receiver be appointed to run the facility, best known as the home of the Wisconsin Herd minor league basketball team.

Fox Valley has asked for court permission to work out its debts, saying that it would use the city’s TIF payment and other revenues to pay operating costs in the meantime.

Last week the city filed a motion to hang on to the first $430,000 TIF payment, which is due Nov. 1. According to City Manager Mark Rohloff the money should go to whatever entity ends up running the arena, not necessarily the current owner.

If Oshkosh is told to make the payment so that the arena can continue operating, the city wants Fox Valley to put up a bond to cover the amount so that the money will be used to keep the facility running on a permanent basis and not just to satisfy overdue bills.

Rohloff did not seem too concerned about Bayland asserting its claim over the TIF money. “It demonstrates the need for the court to act on our motion,” he said.

Bayland’s filing extends beyond the TIF money to other contracts that Fox Valley entered into before it petitioned for Chapter 11 bankruptcy protection. Chapter 11 is a legal process that is intended to give a company breathing room with creditors while it works out a way to pay off its debts.

The building contractor says that money the arena earns from new deals should belong to the arena. But Bayland says it has the right to money that comes in under contracts that were signed before the bankruptcy filing, which could include rental income and advertising sponsorships as well as the TIF.

“Bayland does not consent to the debtor’s continued use of the proceeds of the prepetition contracts, which constitute Bayland’s cash collateral, absent assurance of adequate protection,” the company said in a legal filing. “Debtor’s use of the proceeds of the prepetition contracts will immediately and irreparably harm Bayland’s interest in its collateral.”

In other legal action, Greg Pierce, the owner of Fox Valley, has denied claims made by Bayland about his financial stewardship of the arena. He also called for Bayland’s foreclosure suit to be dismissed.

Similarly Pierce has filed a response to a lawsuit from his former attorney over nonpayment of bills asking that it be dismissed. He said he and his former lawyer modified their legal services agreement “such that plaintiff’s claim for payment is barred in whole or part.”

Efforts to obtain comment from Bayland and from Fox Valley’s current and former lawyers were not immediately successful.

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