Legacy Cares committee moves to convert bankruptcy case to Chapter 7

By Sarah Lizee

Olympia, Wash., Sept. 27 – Legacy Cares, Inc.’s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the District of Arizona to convert the company’s Chapter 11 bankruptcy case to Chapter 7, according to a motion filed Tuesday.

The committee said that it has supported the debtor in accomplishing the goal the company set for itself at the case’s outset, which was a going-concern sale of Legacy Park, a 320-acre sports and entertainment complex in Mesa, Ariz.

The group said despite the best efforts of the debtor and its professionals, the sale process appears to be failing.

No stalking horse bidder emerged by the Sept. 11 deadline provided by the bid procedures and the committee said it is unaware of anything resembling a promising development in more than two weeks since.

“With only days before a scheduled auction, hope that a viable third-party purchaser will present itself by the scheduled auction seem increasingly unrealistic,” the committee said in the motion.

In addition, the company’s bondholders have no plans to increase the funding under the debtor-in-possession loan, the committee said.

“The bondholders’ response to all this at the Sept. 26 hearing was as clear as it was troubling,” the committee said.

“Bondholder counsel bemoaned how increasing DIP financing would be a ‘tough pill to swallow,’ when the entire point of the financing would be to pay estate professionals, as though it were estate professionals’ obligation to the bondholders to work for free.”

The committee claims the Chapter 11 case is the “method the bondholders chose” to sell their collateral, and that it is the bondholders who must be expected to pay the freight for that process, “even when that freight exceeds their prepetition expectations.”

“With the likelihood of a successful sale and confirmable plan in serious doubt, the certainty of the estate’s administrative insolvency, and without any commitment by the bondholders to increase its funding limits under the DIP loan – or even consider it – the committee regrettably concludes that this court is left with no alternative but to convert this case to Chapter 7,” the committee said.

Legacy Cares is a non-profit corporation that owns Legacy Park, formerly known as Bell Bank Park, a 320-acre sports and entertainment complex in Mesa, Ariz. The company filed bankruptcy on May 1 under Chapter 11 case number 23-02832.

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