November 13, 2009

Greg Cross quoted in Baltimore Sun story on sale of Pimlico and Laurel Park

2 min

Venable partner Greg Cross was quoted in a November 14 Baltimore Sun story about Magna Entertainment Corp.'s failure to secure a “stalking horse” bidder for Maryland’s Pimlico and Laurel Park horse racing tracks.

Magna, the bankrupt operator of the tracks, will proceed to the second round of bidding after it could not agree on terms with an unidentified lead bidder for the tracks.

A stalking horse bid allows a bankrupt company to avoid low bids on assets because it sets the benchmark for the sale. Bankruptcy experts say debtors such as Magna ideally prefer a stalking horse bid, unless the terms are not favorable to them.

Unlike the auctions for Magna's other tracks across the nation, the sale process for Pimlico and Laurel Park involves a unique variable: Any party submitting a bid must agree not to move the Preakness outside Maryland.

The state also can assert its "right of first refusal" for the Preakness, which gives it 60 days to review a deal and the right to match any bid.

A bankruptcy attorney quoted in the story said the state's right of first refusal might deter bidders who fear being trumped by the government.

Cross, who is representing the State of Maryland in the Magna bankruptcy, disagrees. "If you want to keep the Preakness in the state of Maryland, it should not be a deterrent," he said.