The demise of Hard Rock Theme Park in Myrtle Beach, S.C. was a stunning disappointment. After two years of construction and a lavish opening in June, 2008, the $400 million entertainment complex – boasting the ability to entertain 30,000 visitors a day — closed its doors and opted for bankruptcy court less than four months later. In re HRP Myrtle Beach Holdings, LLC, Administratively Consolidated in Case No. 08-12193 in the United States Bankruptcy Court for the District of Delaware.
Paltry Recovery from Sale of Assets
Suppliers and vendors were in for more bad news. In the spring of 2009, a court-ordered sale of all the theme park’s assets raised less than $25 million – a sum that was entirely consumed by the costs of the sale itself and claims of secured creditors. Even worse, some of the theme park’s inventory was branded and subject to exclusive licensing agreements. The branded inventory could not be sold to the highest bidder to satisfy creditors’ claims… it could not be sold at all!
Now Bankruptcy Preference Claims Imminent
Now, nearly two years after the Rock ‘n Roll Theme Park entered bankruptcy proceedings, creditors have cause to worry anew. The ninety-day period starting in late June, 2008 and ending when the bankruptcy case was filed September 24, 2008, which is virtually the entire time the Hard Rock Park was open, is the “preference period” for HRP creditors. Many vendors and suppliers — who felt lucky to be paid while the park was still open — are now the subject of demand letters from HRP’s bankruptcy trustee, claiming a right to avoid and recover payments received during the preference period.
Creditors in the zone of liability are arrayed from general contractors who were paid millions to entertainers whose receipts are barely over the minimum amount below which the trustee may not bring a lawsuit. Although the HRP cases have been moribund for months, it appears on the face of things that the trustee is about to start the final chapter of the Hard Rock Park saga when by filing adversary proceedings to collect preference claims against creditors who were paid when the park was open.