Thursday, March 26, 2020
Bayland calls Oshkosh arena a 'sinking ship,' lists problems it sees with reorganization plan
Two hearings next month will determine the future of the Menominee Nation Arena's finances.
By Miles Maguire
The contractor that built the Menominee Nation Arena has called the project a “sinking ship” in a move that threatens to derail the efforts of the facility's owner to maintain control.
In legal papers Bayland Buildings Inc. says that it is not satisfied with the plan of reorganization filed by Fox Valley Pro Basketball Inc., the project developer and current owner of the arena. Bayland also says that it does not want Fox Valley to maintain the exclusive right to determine how its finances can be fixed.
Bayland is by far the largest creditor of the arena, with an outstanding claim of $13 million.
In its court filing, Bayland says it is ready to pull the plug on the efforts to keep the arena afloat. The company is no longer willing to allow the arena operator to make minimal payments “so that debtor can use what little cash it has to keep its sinking ship afloat.”
On March 4 Fox Valley asked the court for an extension of time, until June 29, to allow it to maintain its exclusive right to win acceptance of its reorganization plan. But Bayland is objecting to this extension, and a hearing is scheduled for April 8.
Evan Schmit, an attorney for Fox Valley, said the developer is prepared to fight back. Bayland’s “objection does not address the relevant considerations for the extension,” Schmit said.
“Bayland is unhappy with the proposed treatment and attempting to gain leverage through the objection for more favorable terms at the expense of the unsecured creditors,” he said. “We will address the specifics in a formal reply filed with the court.”
Bayland says that it has only received $76,121.20 since Fox Valley went into bankruptcy last year.
“This equates to an average monthly interest payment of about $12,686.86 per month--an interest rate of just over 1%,” Bayland said.
Fox Valley, owned primarily by local financial adviser Greg Pierce, filed its plan of reorganization Feb. 28. The developer’s proposal turns on its ability to get a cash infusion by selling off its rights to a future stream of tax incentives from the city.
But it was unable to find a long-term lender to take over the mortgage on the property from Bayland.
Bayland said it found at least half a dozen things wrong with the proposed reorganization plan, including the 30 years it would take for the arena to settle its debts.
The contractor also challenged the claim that operations at the arena have moved into the black. Bayland said financial disclosures show the facility has had a negative cash flow, a decline in cash balances and a growing list of bills that have not been paid on a timely basis.
Then came the coronavirus.
“Given Gov. Evers’ March 17, 2020, order regarding mass gathering restrictions, it is likely that debtor will not be able to make any adequate protection payments in the coming months,” Bayland said. “Adequate protection payments” are sums paid to creditors to shield their collateral from a loss of value during the bankruptcy process.
Bayland also cast doubt on the idea that more time would allow Fox Valley to negotiate a better deal. “Debtor has had ample opportunity to negotiate with Bayland, and has made little progress in doing so,” the builder said.