Hawthorne Race Course filed for Chapter 11 bankruptcy Feb. 27 in federal bankruptcy court in Chicago, seeking a reorganization it hopes will "save horse racing in Illinois and preserve 250 jobs and the homes of hundreds of backside workers and their families," the track said in a press release.
According to the release, the reorganization plan will prioritize paying accrued purses to the Illinois horsemen as well as payroll for the track employees while restructuring the company's debt. The goal of the reorganization is to attract a buyer or investor willing to recapitalize Hawthorne and restart the racecourse's operations while maximizing recovery for the company's creditors. Hawthorne will be working with financial adviser Getzler Henrich & Associates and has requested that the federal court 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, but filing for reorganization is the right thing to do for the Illinois horsemen and for our employees and their families," said Tim Carey, president and CEO of Hawthorne.
The filing for bankruptcy protection follows a dire Jan. 28 Illinois Racing Board meeting, during which John Walsh, assistant general manager of Hawthorne, acknowledged the track is unable to pay its bills or honor checks returned unpaid to horsemen.
Hawthorne's fiscal woes have snowballed since 2019, when the track won state approval to build a casino at the suburban Chicago location. After demolishing much of its grandstand in preparation for construction, financing fell through, and despite annual promises by Carey that a deal was nearly done, nothing has happened.
The situation reached a crisis at the start of the year when the IRB, citing Hawthorne's failure to meet financial requirements, canceled the track's harness racing. The IRB followed that Jan. 25 by suspending the license of Suburban Downs, which operates the Standardbred meeting.
READ: Hawthorne Financial Woes Imperil Chicago-Area Racing
In the bankruptcy filing, Carey described the challenges and headwinds Hawthorne faced while attempting to continue its struggling operation, while also supporting the entire horse racing industry in Northern Illinois and attempting to launch a casino at the racetrack.
"In 2016 with the closing of the Balmoral and Maywood harness facilities, Hawthorne reaffirmed its commitment to horse racing and saved hundreds of harness horsemen businesses and thousands of harness horsemen jobs thus becoming the country's only dual-breed racetrack, running both Thoroughbred and harness racing on the same track by converting the surface of the track prior to the commencement of a respective race meeting," reads Carey's declaration in the bankruptcy filing.
"Since 2022 and the closing of Arlington Racecourse, we undertook the sole responsibility of underwriting the Illinois horse racing industry in Northern Illinois and are the last racetrack operating in Northern Illinois bearing the increased burden of greater purses and regulatory expenses," he continued.
Additionally, Carey detailed the human element of saving Hawthorne: "The racetrack employs over 250 people with its longest tenured employee spending 52 years at the track. Backside residence on the racetrack property consisting of licensed horsemen and their families varies depending on any racing season but will vary from a low of approximately 290 up to 500 or more. There have been years when over 900 people lived on the backside. The families live rent-free and receive medical and dental care funded almost entirely by Hawthorne. These families are part of the community, supporting local businesses, attending church, and sending their kids to local schools. Currently there are approximately 100 children, age 18 or under, living on the premises. There is a gentleman who is 84 years old and has been working at the racetrack and living on the backside for 72 years, arriving when he was 12 years old."
In addition to approving a racino in 2019, the Illinois Gaming Board also issued Hawthorne a Master Sports Wagering License that permitted the racetrack to offer retail and online sports betting. In 2024, the IGB approved Hawthorne's continued licensing suitability and renewed its sports wagering license.
Despite winning approval for the racino, Carey wrote in the bankruptcy filing that the horse racing industry continues to face stiff headwinds.
"The Debtors have faced substantial financial hardship in recent years, 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," Carey submitted in the filing.
The bankruptcy filing became a required step, according to Hawthorne, when its relationship with its lender and other creditors materially eroded. This led to a rapid succession of setbacks, foremost of which was the inability to continue the harness racing season, in addition to: "... the termination of internet and mobile sports wagering by HRC's sports wagering partner; and the discontinuation of certain simulcast wagering arrangements by other horse racing tracks throughout the United States, resulting in litigation and monetary judgments against the Debtors."
The bankruptcy declaration notes substantial interest from potential "buyers and recapitalization partners," especially because the opportunity to maximize Hawthorne's "enterprise value" by completing the building and opening the racetrack racino. The debtor-in-possession financing can also help pay to reactivate simulcast signals for off-track betting and online wagering, which generate $4 million in monthly revenue.
Hawthorne executives said they hope to appear in federal bankruptcy court in Chicago next week to secure approval for its new financing.
Previous reporting by correspondent Bob Kieckhefer contributed to this story.
