Magna Entertainment files reorganization plan based on creditors dropping lawsuit

Magna Entertainment files reorganization plan

DOVER, Del. — Horse-track owner Magna Entertainment Corp. has filed a reorganization plan in Delaware bankruptcy court after reaching a settlement with unsecured creditors.

According to Thursday’s filing, the unsecured creditors will drop a lawsuit claiming that MEC’s parent company, Ontario-based MI Developments, and its chairman, Frank Stronach, propped up Magna with equity infusions disguised as secured loans to ensure that Stronach retained control of MEC assets.

In exchange, MID will pay $75 million to holders of unsecured claims not related to the Maryland Jockey Club. Any distributions to creditors of the MJC would come from the sale of jockey club assets, which include Laurel Park and Pimlico race tracks.

A hearing on the plan is scheduled for March 23.