Contractor fights what it calls ‘insider transactions’ in Panthers’ Rock Hill deal

Jeff Siner/jsiner@charlotteobserver.com
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Lawyers for the general contractor hired to build the failed Carolina Panthers headquarters in Rock Hill, S.C., say the company owned by team owner David Tepper wants to use inside sources to finance bankruptcy, court testimony showed Wednesday.

GT Real Estate Holdings is the company Tepper created to be the owner and developer of the York County site that now sits idle. The project was hailed to include mixed-use retail and offices and was purported to be a boon for South Carolina and the region.

GT Real Estate declared bankruptcy June 1 and the project was officially stopped after construction was halted in March in a dispute between GT and the city of Rock Hill over financing.

GT Real Estate now wants to use its parent company, DT Sports Holdings Inc. LLC, to get millions of dollars in loans for the bankruptcy, court records and testimony show.

Lawyers for the general contractor, city of Rock Hill and York County object, say in court testimony and in documents that GT wants what they describe as an “insider” package without marketing the financing to independent third-parties.

In a federal bankruptcy court hearing Wednesday by Zoom from Delaware, Michael Roeschenthaler, the lead lawyer for general contractor Mascaro/Barton Malow (MBM), repeatedly called the attempt “insider” actions.

The proposal has been objected to by MBM, York County, and the city of Rock Hill.

Documents in the case show MBM is a potential creditor seeking at least $26 million. York County claims it is owed $21 million, and the city of Rock Hill claims it is owed $20 million.

In the court Wednesday, Roeschenthaler grilled GT Real Estate chief restructuring officer Jonathan Hickman for hours about Tepper companies being involved in the work stoppage, bankruptcy, and financing plan.

Roeschenthaler claimed GT didn’t properly market the financing to outside parties such as international banks and other lending institutions.

“There is a significant amount of insider transactions concerning this debt,” Roeschenthaler said.

A GT Real Estate LLC North Carolina Secretary of State document introduced as evidence Wednesday by MBM’s lawyers showed Tepper, a billionaire, as the only member of GT Real Estate.

Rock Hill, York County also object

Lawyers for Rock Hill and York County who also were in the hearing said they objected to GT Real Estate using so-called insider financing, testimony Wednesday showed.

One of GT Real Estate’s lawyers, Chris Shore, said in the court that it is clear MBM, York County and the city of Rock Hill would rather see GT liquidate the assets from the failed project rather than re-organize under bankruptcy.

The project already spent $282 million, according to testimony from Hickman. That amount includes $163 million from the Carolina Panthers in loans, plus, $21 million from York County, $20 million from the city of Rock Hill, $15 million from a parking lot sale next to the stadium in downtown Charlotte that was bought and sold by Tepper companies, and $60 million from DT Sports Holdings, Hickman testified under cross examination from Roeschenthaler .

Site still being considered for other uses

Testimony from Hickman Wednesday, and documents in the case reviewed by The Herald and Charlotte Observer show GT Real Estate is considering alternatives that include a possible redevelopment of the site by a third-party, selling the company’s assets, or liquidating the assets.

Hickman said in testimony Wednesday that the bankruptcy, “doesn’t mean other uses aren’t being considered for the site.”

“All options are on the table,” Hickman testified Wednesday.

The real estate company created by Tepper is reaching out to experts about the property’s value, and looking at alternatives for its use, even as the real estate company goes through bankruptcy, court documents show.

At least two real estate companies have sought information about the site, court documents show.

The 240-acre project along Mount Gallant Road adjacent to Interstate 77 was supposed to include mixed-use retail, offices and several other land uses. A new interchange is being built on I-77 near the site.

What happens now?

There were at times as many as 20 lawyers from different companies and governments involved in the case on Wednesdays Zoom hearing in front of U.S. Bankruptcy Court Judge Karen Owes of Delaware.

The hearing Wednesday that continued into the late afternoon and may continue into Thursday is just the most recent court action in a flurry of court motions and hearings in the case. Owens still must approve a final agreement about the property and debts, bankruptcy court documents show. It remains unclear when that ruling will happen.

It also remains unclear if Owens will keep the case.

Creditors want case moved to South Carolina

MBM, York County, Rock Hill and other creditors want the case moved to federal bankruptcy court in South Carolina because the taxpayers and residents of the city, county and South Carolina are the most affected.

A date for a hearing on changing the venue for the bankruptcy remains pending.

In a separate civil lawsuit in South Carolina filed earlier this month, York County has sued Tepper Sports Holding and the city of Rock Hill in an attempt to recoup the $21 million. That lawsuit, in which York County called the site the Panthers “failed vanity project,” also remains pending.

Charlotte Observer reporter Gordon Rago contributed to this report. This is a developing story, check back for updates.