Another creditor questions Magna's bankruptcy sale

March 31, 2009|By Bloomberg News

Creditors of Magna Entertainment Corp. asked a judge Monday to order an investigation into why the owner of the Pimlico and Laurel horse tracks filed for bankruptcy protection and whether a proposed sale involving the company's chief executive is appropriate.

Greenlight Capital Offshore Partners asked U.S. Bankruptcy Judge Mary Walrath to approve an examiner to investigate "whether there has been any mismanagement by the controlling shareholder and management."

Magna's chief financial officer, Blake Tohana, did not immediately return a telephone call for comment Monday.

Canadian-based Magna is controlled by Chief Executive Officer Frank Stronach, who is also chairman of auto-parts supplier Magna International Inc.

Magna Entertainment has asked the court to authorize an auction of its main assets, with an affiliate controlled by Stronach as the lead bidder.

Greenlight and PNC Bank NA also filed objections to the proposed auction of Baltimore's Pimlico Race Course, Laurel Park and Magna's other major race courses, including Santa Anita Park in California.

Pimlico is host to the Preakness Stakes, one of three races that make up horse racing's Triple Crown and a highly profitable event for Maryland.

Attorneys for Maryland asked the judge last week to affirm the state's claim to the Preakness Stakes as Annapolis lawmakers fear the bankruptcy proceedings could invalidate a law designed to keep the historic horse race in Baltimore.

Magna filed for bankruptcy March 5 in Wilmington, Del., listing assets of more than $1 billion and debt of $958.6 million as of Dec. 31.

Greenlight said in its objection that there isn't enough information about Stronach's role in the proposed auction, while PNC said in its March 26 objection that Magna hasn't provided enough details about what is being sold.

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