The city of Springfield and Missouri State University also objected to the bankruptcy settlement between the John Q. Hammons estate and JD Holdings LLC, according to filings with the U.S. Bankruptcy Court in Kansas City, Kansas.
In a three-page filing reviewed by Springfield Business Journal, the city’s objection asserts its ownership of Hammons Field, noting the late hotelier’s trust only leases the facility, thereby nullifying any potential purchase by JD Holdings.
City Finance Director David Holtmann said the city-created nonprofit Springfield Center City Development Corp. in 2002 issued about $6.1 million in bonds, from which the proceeds were used to purchase and prepare the land where Hammons Field was built.
Hammons’ trust essentially reimburses the city for about $550,000 in annual principal and interest payments the city makes to cover the bonds. He said the payments are set to last through June 1, 2028, and the city has so far paid about $4 million, with an outstanding principal and interest payments totaling about $4.85 million.
Filed Feb. 26, JD Holdings’ response contends that Springfield’s objection is premature.
“The lease for Hammons Field can be assumed and assigned as part of the (settlement),” the response reads, adding "the purported lease may be nothing more than a disguised seller-financing transaction.”
A lengthier objection lodged by MSU draws issue with Hammons’ co-trustees Jacquie Dowdy and Greggory Groves signing off on the settlement without first reviewing the asset purchase agreement, the “centerpiece” of the plan.
MSU is listed in the filings as a creditor. The Hammons name is on several campus properties, including the Juanita K. Hammons Hall for the Performing Arts and Hammons Student Center. A more recent development was Hammons’ commitment of a $30 million donation toward development of the $67 million JQH Arena. Under terms of the agreement struck over a decade ago, Hammons was scheduled to pay MSU $1.9 million each year toward its $4 million annual debt service on the arena, according to SBJ reporting at the time.
MSU’s objection indicates the agreement lacks defined terms for a new charitable trust, for which JD Holdings would establish and pledge at least $20 million worth of cash and lien-free assets.
“First, the plan compels broad releases from the creditor universe in favor of JD Holdings and an unknown number of parties related to JD Holdings,” the filing notes.
MSU officials declined an interview request but provided an emailed statement.
“At this point, there are too many unknowns about the proposed plan,” wrote Suzanne Shaw, the school’s vice president of marketing and communications. “We are objecting to the proposed settlement right now until we reach a point where additional information is provided.”
Despite the proposed full payoff of creditors, according to the filing, “the strategically crafted claim-objection procedures result in impairment of, and discrimination against, creditors whose claims JD Holdings, in its absolute discretion, chooses to contest.”
Among other issues, the university argues that the plan is “unconfirmable as a matter of law” and supersedes creditor protections under bankruptcy code, namely third-party releases to JD Holdings and other “offensively broad and vague” parties.
JD Holdings calls MSU’s claims “premature and incorrect,” in the Feb. 26 response.
“MSU is wrong on all counts,” the response reads, noting the company has been in contact with the university on the allowance of its claims.
“JD Holdings is, in fact, highly motivated to review and pay all allowed claims in a short time period, as memorialized under the settlement, and as evidenced by all of its prior conduct to date,” the document states.
The response also notes the requested asset purchase agreement will be made available no later than 10 days before a yet-to-be determined confirmation hearing on the settlement.
The terms of the new charitable trust are contingent on debtors’ compliance with the purchase plan, according to the response.
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