America’s Cup Debt Payment Plan Offered : Regatta: Proposal is designed to keep cash-strapped organizing committee from being forced into bankruptcy.
Anxious to keep from falling into involuntary bankruptcy, the America’s Cup Organizing Committee presented creditors with its plan Monday for satisfying $3.3 million in debt from this year’s races.
In a closed-door meeting, organizers and representatives of the San Diego Wholesale Credit Assn. distributed the repayment plan on behalf of the committee as well as its marketing arm, America’s Cup Services, and its predecessor, Sail America Foundation for International Understanding.
Under the financial reorganization, tax obligations and secured creditors will be paid first, and “it is anticipated” in full, according to the written synopsis given vendors.
About 117 unsecured creditors, all of whom have claims of $1,000 or less, will be paid 75% of their total. The creditors are owed a total $32,000 but will be paid $24,000, according to the plan.
Twenty other creditors, with claims of $1,000 to $2,500, will be paid half what they are owed, or about $17,000. The remaining unsecured creditors will received “a proportionate share of the remaining assets,” the statement says.
Some creditors will be paid by the San Diego Unified Port District, which gave the ACOC about $8 million to run the regatta. Race organizers had asked for $20 million.
A summary statement of the organization’s assets and liabilities shows that the ACOC has yet to pay off a $2-million loan from First National Bank. That loan is of special interest to creditors because ACOC President Malin Burnham is also chairman of the bank. If the loan is secured, vendors fear it will take precedence over their demands.
Monday’s financial presentation was a means of escaping court-imposed bankruptcy proceedings, which could be initiated by any creditor owed money. Should that happen, a court could wrest control of the ACOC from its management team. Cash-strapped firms often try to settle disagreements out of court speedily, to cut legal costs.
The disclosure of the $3.3-million debt is the latest in a long series of embarrassments for the ACOC. Since 1988, ACOC has consistently overestimated revenues and underestimated expenses.
In addition, the ACOC was mired from the beginning in a legal battle with Australian Michael Fay over when and where the race would be staged. The lawsuit was eventually settled, but resulted in a race mismatch between Fay’s so-called “The Big Boat” and Dennis Conner’s swift catamaran, which easily defeated Fay.
The yacht races themselves were criticized for being too far removed from the general public, fueling the perception that the sport is elitist. Ironically, this year’s races--in which the America 3 syndicate defended the Cup by defeating Il Moro di Venezia of Italy--were a huge success in other parts of the world while of little interest to most San Diegans.
The idea that money would pour into the city from the race this year failed to materialize when just eight syndicates took part in the regatta rather than the 12 or 13 expected. The world recession made it difficult for international travelers to visit San Diego, and hindered ACOC’s ability to wring cash from corporate sponsors.
