Report: Hawthorne files for Chapter 11 bankruptcy protection

Hawthorne Race Course and its related company filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Chicago on Friday.

According to a news release cited by Paulick Report, the reorganization plan will prioritize paying accrued purses to Illinois Horsemen and payroll for track employees while restructuring debt. The filing is a bid to save horse racing in Illinois and preserve 250 jobs and the homes of hundreds of backside workers and their families.

The goal of the reorganization is to attract a buyer or investor willing to recapitalize Hawthorne and restart operations of the racecourse while maximizing recovery to the company’s creditors. Hawthorne will be working with financial advisor Getzler Henrich & Associates and asked the court to approve debtor-in-possession financing to assist with the restructuring process. 

“This is a difficult day for Hawthorne and for my family, which has owned Hawthorne for four generations over 117 years,” Tim Carey, president and CEO of Hawthorne, said in the release. “But filing for reorganization is the right thing to do for the Illinois horsemen and for our employees and their families."

Carey said Hawthorne faced challenges and headwinds while attempting to continue its struggling operation and to launch a racino at the track.

After the casino-expansion law passed the Illinois General Assembly and was signed into law by Gov. J.B. Pritzker in 2019, Hawthorne received a preliminary finding of suitability from the Illinois Gaming Board to build and operate a racino with casino-style gambling machines and table games at the racecourse. The IGB also issued Hawthorne a master sports-wagering license, which permitted Hawthorne to offer retail and online sports betting. In 2024, the IGB approved continued licensing suitability for Hawthorne and renewed its sports wagering license. 

But in the meantime, the horse-racing industry continued to face stiff headwinds.

“The debtors have faced substantial financial hardship in recent years,” Carey said in court documents, “driven by challenges affecting the horse-racing industry in Illinois, initially due to the expansion of casino gaming and later compounded by an increasingly competitive sports betting market, as well as other industry-wide issues, including rising costs and increased regulatory fees related to simultaneously running a troubled business and building a new business.”

The filing details that a bankruptcy filing became a required step when Hawthorne’s relationship with its lender and other creditors materially eroded. This led to a rapid succession of setbacks, according to the news release, foremost of which was the inability to continue the harness racing season, in addition to the termination of internet and mobile sports wagering by Hawthorne's sports-wagering partner, and the discontinuation of certain simulcast-wagering arrangements by other horse racing tracks throughout the U.S., resulting in litigation and monetary judgments against the debtors.

The declaration notes there is substantial interest from potential buyers and recapitalization partners, especially because of the opportunity to maximize Hawthorne’s enterprise value building and opening of a racino. The debtor-in-possession financing also could help pay to reactivate simulcast signals for offtrack betting and online wagering, which generates $4 million of revenue monthly. 

Hawthorne said it hopes to appear in federal Bankruptcy Court in Chicago next week to secure approval for its new financing.