In a move that could establish a minimum price for another entity to bid on keeping racing alive at the financially troubled Hawthorne Race Course, the track's owner, Carey Family Properties, LLC, has secured what is known as a “stalking horse” bid of $90 million to potentially sell the 108-acre property to a relatively anonymous and obscure Delaware limited liability company that was just created June 22.Hawthorne Race Course, Inc., controlled by the Carey family, has been seeking federal Chapter 11 bankruptcy protection since Feb. 27 in an attempt to restructure between $100 and $500 million in debt.Although the continuation of the sport at the 135-year-old Hawthorne-the last remaining Thoroughbred venue on a once-vibrant Chicago circuit-was not specifically addressed in the documentation made public via court filings, it doesn't mean that a sale couldn't still go through to another entity that wants to conduct racing and build a racino there.Stalking horse bids are common in bankruptcy sales. The term refers to a first buyer to make a formal, binding offer to purchase the assets of a distressed company.This initial bid establishes a minimum “floor” that other bidders must beat, and a bankruptcy judge must approve those sale terms for use as the starting point in any court-supervised auction that might follow.Other interested buyers can then submit higher bids. If no one offers more, the stalking horse bidder buys the assets. If another entity outbids them, the stalking horse bidder receives certain payments that cover the time and money that they put into conducting due diligence and negotiating the initial deal.There are numerous stalking horse companies nationwide that exist just to go after the assets of distressed companies, figuring they will make money either from the fees they reap after getting outbid at a subsequent auction or from acquiring property at a price and terms they have set.Having a stalking-horse bid made public is also useful to a seller going through bankruptcy proceedings, because it allows them to maximize the value of the property by showing that another interested party has already done significant work to come up with a price point that, theoretically at least, establishes fair market value.The proposed purchase-and-sale agreement submitted June 25 by Hawthorne to United States Bankruptcy Court, Northern District of Illinois (Eastern Division), lists the potential buyer as Allimac 2023, LLC.Little is known about Allimac 2023 because the entity didn't exist five days ago.Delaware is considered a corporate haven for entities that want to remain under the radar, in part because the state's division of corporations doesn't require member names on public documents.The proposed sale agreement submitted to the court by Hawthorne appears to have been signed by a director who created what is known as a “special purpose vehicle,” or SPV.An SPV adds yet another layer of corporate opacity because it can isolate a standalone transaction from a buyer's main business.Hawthorne's request to the court, which asked for a June 29 hearing to approve the stalking horse bidder, did, however, state that Allimac 2023 “is not an insider of the Debtors.”Hawthorne's legal filing further told the court that, “the Stalking Horse Agreement will enable the Debtors to achieve the highest and best value for the Real Estate Assets, or even all the Assets in the event that a qualified going-concern purchaser overbids the Stalking Horse Purchaser at auction.”The documentation filed with the court specifically lists what Hawthorne will pay to Allimac 2023 if the stalking horse bid gets trumped by another buyer.If another entity closes on the sale, Allimac 2023 will be entitled to “a Break-Up Fee equal to 2% of the Purchase Price ($1,800,000)…an Expense Reimbursement for actual, reasonable and documented out-of-pocket costs and expenses…up to $250,000 incurred by the Stalking Horse Purchaser in connection with the negotiation, documentation and implementation of the Stalking Horse Agreement…and a requirement that any higher and better bid at auction must exceed the Stalking Horse Purchaser's bid by an Overbid Minimum of at least $500,000.”The due date for bids was June 26.Ten days ago, on June 16, Hawthorne had asked the court for an extension of time to July 29.But on June 19, Hawthorne withdrew that request, presumably because it was nearing an agreement with Allimac 2023 to serve as the stalking horse bidder.Back on June 17, both Tim Carey, the president of the family-owned Hawthorne, and his bankruptcy attorney, Barry Chatz, underscored during an update to the Illinois Racing Board (IRB) that the first preference was to sell the track to a buyer whose priority would be to keep racing going and to follow through on building a racino within the historic track's gutted grandstand, a project that the Carey family started six years ago but never had the finances to complete.“We have multiple, ongoing, business-concern parties who are very interested in the racino opportunity as well as continuing racing,” Chatz said at last week's IRB meeting.Chatz, also during that June 17 meeting, had estimated the Hawthorne deal could end up being “potentially [an] over-$100 million sale of an opportunity to build a casino.”The post ‘Stalking Horse’ Bid Of $90M Sets Potential Minimum Price For Hawthorne Auction appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.