Connect with us

New Development in Riverhounds' Bankruptcy Saga

image

The Riverhounds’ financial restructuring was approved in late 2014, but there are still some unresolved issues that stemmed from their bankruptcy filing that same year.  (photo courtesy Pittsburgh Riverhounds)  


It appears that we haven’t heard the last of the Riverhounds bankruptcy saga.
Riverhounds trustees are seeking funds that the team’s former managing partner David Wilke, and his accounting firm, Wilke & Associates LLP, apparently transferred prior to the organization filing a petition for Chapter 11 Bankruptcy in March 2014.
On Friday, according to the website Law360, a trustee for the Riverhounds filed a motion in Federal Bankruptcy Court, alleging that the organization’s former accounting firm and others fraudulently transferred nearly $4 million to them before filing for Chapter 11.
The details of Friday’s court filing are outlined in Law360 Article: Riverhounds Center Trustee Tracks $4M In ‘Fraud’ Transfers.
This looks like the Riverhounds trustees are going after Wilke, developer Craig Cozza and others with complaints in a bid to recover the transfers.

According to the complaints, Riverhounds Event Center transferred more than $2.1 million to Wilke himself, more than $867,000 to his firm and $775,000 to Cozza.

The center also made smaller transfers to other entities before filing a Chapter 11 relief petition in March 2014, despite knowing the company was insolvent, acting with “intent to hinder, delay or defraud one or more of REC’s creditors,” the complaints said.

The new complaints seek recovery of the transferred funds.
The complaint against Wilke alleges he breached his fiduciary duties to Riverhounds Event Center Management (REC) LLC, in which he held a majority interest, contending he led the company to begin construction of the stadium without first securing the necessary funds and financial commitments and that he also switched to more expensive union-worker construction.
Robert O. Lampl, an attorney for Wilke and Wilke & Associates, told Law360 that he had provided information to the trustee’s attorney showing that no fraudulent transfers were made.

Team officials didn’t have any comments regarding Friday’s developments.

The Riverhounds are preparing for their fourth season in its home at Highmark Stadium.

The organization filed for Chapter 11 Bankruptcy in March 2014, only one year after opening a soccer-only facility that cost nearly $10 million to complete and included many cost overruns.

By November 2014, however, Riverhounds trustees’ restructuring plans were approved by a federal judge  — and the organization and its entity, Highmark Stadium were out of bankruptcy at the end of 2014.

At the time, Tuffy Shallenberger, who took majority ownership of the team, expressed his thoughts and having to take action in filing for bankruptcy.

“It’s probably one of the most difficult things I’ve had to do in my business career,” said Shallenberger..
“If we’d not made that decision the future of pro soccer in Pittsburgh was very bleak,” he said.

The team has not released its financials following the 2015 season, which appeared to reveal a turnaround on the field with a new coaching staff — and after a slow start in the early in the season — maintained same attendance numbers to 2014.

According to Pittsburgh Tribune-Review articleJudge Approves Riverhounds Restructuring Plan in November 2014, a feasibility study released after the team’s restructuring was approved, predicted that the team would lose $750,000 in 2015 and $284,000 in 2016 but make a profit of $130,000 in 2017.  The study cited the Riverhounds’ development academy and its summer academy camps as driving force behind most of these anticipated revenues.

According to USL reports, the Riverhounds drew a total of 36,817 fans in 14 league home dates, with an average 2,630 per game.   The Hounds averaged a strikingly identical 2,686 fans in 2014 and 3,273 fans in Highmark Stadium’s inaugural season in 2013.  Early season games  in 2015 were most notably marred with lots of empty seats, but things picked up for the Hounds in the summer months.

The pro team qualified for the USL playoffs, losing in the first round to NY Red Bulls II — and had three additional home dates hosting U.S. Open Cup games in addition to their league schedule.  The last U.S. Open Cup game against Major League Soccer’s DC United in June attracted an overflow crowd of more than 3,900.

With a number of new players signed to the roster and a newly formed affiliation agreement with Major League Soccer’s Columbus Crew, the Riverhounds 2016 season is set to open on April 2 at Highmark Stadium, as they will take on the defending USL Champions, Rochester Rhinos.

John Krysinsky has covered soccer and other sports for many years for various publications and media outlets including Pittsburgh Tribune-Review, DK Pittsburgh Sports, Pittsburgh Sports Report, and more. Krysinsky also served as the Head Men’s Soccer Coach at his alma mater, Point Park University, where he led the Pioneers to the first-ever winning seasons and playoff berths (1996-98); head coach of North Catholic boys (2007-08), associate head coach of Shady Side Academy boys (2009-2014).

Click to comment

Leave a Reply

avatar
  Subscribe  
Notify of

Sponsored by:

Piper's Pub

adidas affiliate program partner

Subscribe to PGH Soccer Now

Enter your email address to subscribe to PGH Soccer Now and receive notifications of new posts by email.

Join 2,245 other subscribers

Like us on Facebook

Follow us on Twitter

More in Uncategorized