Bondurant Racing School Must Get New Investors, Buyer in 8 Days or It Could Close
One of the oldest racing schools in America could be done for good if it doesn’t meet a court-mandated deadline to pay four months of rent.
Are you in the market for a high-performance driving school with over fifty years of history, a long list of famous clientele, and a nearly ninety-acre purpose-built training facility? Now might just be your chance. The Bob Bondurant School of High Performance Driving is now seeking investors or buyers, per The ClassicCars.com Journal. Interested parties are asked to respond by Feb. 28.
Bondurant Chief Restructuring Officer Tim Shaffer said in Monday's news release, as quoted by The ClassicCars.com Journal:
This is an incredible opportunity and the chance to be a part of the future of one of the most respected brands in the industry.
Bob Bondurant enjoyed an incredibly successful racing career, which he parlayed into one of the world’s premier driver-trainer schools. We look forward to talking with potential investors and purchasers who can take the school to the next level.
However, Shaffer's statement glosses over the urgency of that Feb. 28 deadline, as the school could close if it doesn't meet a March 1 deadline given by the courts.
Bondurant filed for Chapter 11 bankruptcy relief in October, and allegations of mismanagement and a hostile work environment prompted a staff walkout that temporarily closed the school the following month. It has since reopened and is honoring its obligations as the official racing school provider for high-performance Dodge and Fiat vehicles, but the school is currently in dire need of some kind of financing as soon as possible.
Earlier this month, the school asked the courts to approve an additional $675,000 loan from Arlington Street Investments to cover rent, other lease payments, and operational costs. This sparked objections from Bondurant's landlord, who argued that the loan wasn't enough to cover all of their past due rent, as well as existing creditor Chase Bank, who argued that their share of the collateral could be diminished by yet another loan borrowing against Bondurant's assets and who also cast doubts on the school's ability to repay them.
That financing offer has since been withdrawn, although Bondurant's attorney testified that she was certain a new financing arrangement could be made by the end of the month.
The school was behind on its $61,228.18 per month rent to the Sun Marina Valley Development Corporation, which owns the race track where the school operates, per court documents filed in February:
Sun Valley has not been paid for November, December, January, or February rent. The total amount owing is $245,402.56 (or $33,402.56 more than the current Financing Motion provides).
Additionally, this rent is set to increase to $61,350.64 starting on March 1 per the terms of their lease. If the back rent for November through February isn't paid by then, Bondurant will be forced to vacate the premises, per court order:
That Debtor shall pay that rent no later than March 1, 2019. In the event that the Debtor fails to pay the rent on or before this date, Sun Valley shall notify the Court that the rent has not been paid. At that point, the Lease shall be deemed rejected, and the Debtor shall surrender the premises (the “Lease Rejection”). Further, the automatic stay shall be lifted to allow Sun Valley to secure the premises in accordance with Gila River Community law.
If they don't pay their back rent by March 1, the stay allowing them to keep using Fiat Chrysler Automobiles' vehicles as part of the school's activities would be withdrawn, and FCA will be allowed to "take immediate possession" of their cars from the school, per the same court order. Bondurant must file either a financing motion or a motion to arrange to sell "substantially all its assets" by March 1 for the court to consider an extension to that deadline.
The school already had to finance the amount they needed for the insurance that's required to cover their assets and day-to-day operations at the school. Bondurant Chief Restructuring Officer Timothy Shaffer explained in court documents:
The collective total of the annual premiums for the insurance policies is $264,635.84, a sum that the Debtor cannot pay in one lump sum at this time. The Debtor cannot renew and/or obtain the insurance policies unless the premiums are financed.
The Agreement requires the Debtor to make a 35% down payment in the amount of $96,122,54 and to make 7 monthly payments, each in the amount of $25,928.70. The annual percentage rate is 5.0 percent. Under the Agreement, the total amount financed is $178,513.30, and the total payment amount is $181,500.90. The Debtor has sufficient funds to pay the required down payment.
Insurance was already a sticking point in this case, as FCA alleged during the bankruptcy proceedings that Bondurant hadn't obtained the proper insurance to cover the vehicles the company provided for the school to use. (Shaffer vehemently denied this allegation at the time, saying that the school's insurance met the terms of FCA's agreement.)
If the facility goes up for sale, court documents show that Bondurant plans to sell the school using a stalking horse bidder, wherein a high bid is solicited from interested parties, which then becomes the first bid and starting price for a bankruptcy auction. (If this sounds familiar, this was the same process used when Jalopnik and the other Gawker Media properties were sold in 2016.)
"The Debtor believes a sale of its operations will provide a greater return to creditors than they would receive in a Chapter 7 [bankruptcy], and there is no better alternative under the current circumstances," lawyers for Bondurant explained in court documents.
Currently, 51 percent of the driving school is currently owned by CEO Pat Bondurant, the wife of racing driver and school founder Bob Bondurant who several ex-employees singled out as being financially irresponsible and hostile towards women and minorities. Pat remains the highest-paid person on Bondurant's payroll during its Chapter 11 reorganization, according to financial documents submitted to the court in January.
Shaffer told The ClassicCars.com Journal in December that he had a "high level of interest from people wanting to get involved with the future of the school." There's only eight days left to see who's really interested.