Freestyle Music Park missed its deadline Thursday to pay off a $570,000 debt, according to a park attorney, bringing creditors one step closer to possibly foreclosing on the park.
"Currently, the park has no ability to make the payment," said David Slough, a lawyer with Nexsen Pruet who represents the park. "They're working on this like they're working on all their payment obligation."
Freestyle inherited the debt when it bought Hard Rock Park out of bankruptcy last year. Fred Giuliano, the trustee appointed by a Delaware bankruptcy court to oversee Hard Rock's case, confirmed that he had not received the payment.
A bankruptcy court judge previously ruled that Freestyle had until Thursday to pay the debt, the second extension. Giuliano said the Hard Rock parties will receive a judgment in their favor, but he would consult with his attorney before deciding what further action to take.
The park doesn't plan to open for the 2010 season, unless a deal with new investors can be finalized, Slough said earlier this week.
Steve Baker, president of FPI MB Entertainment, the owner of the park, declined to comment , citing a non-disclosure statement.
Park owners have been courting investors since September, when the park closed for the off-season after a disappointing debut summer. The park also owes money to many of the companies that provided services for the park.
Freestyle could react to a judgment in several ways, said Allen Jeffcoat, a Myrtle Beach attorney who specializes in bankruptcy and foreclosure.
If the park does nothing, creditors will eventually foreclose and repossess the property, said Jeffcoat, who is not affiliated with the case.
"Even if Freestyle just rolls over and plays dead, which they're not likely to do, but even if they did that, the creditor is going to have to take additional steps," he said.
To stave off creditors, the park could choose to file Chapter 11 bankruptcy protection as it continues to look for investors or look for someone to buy the park, Jeffcoat said. Chapter 7 bankruptcy would also allow them to sell the park, he said.
Should Freestyle obtain investors and operate a profitable season, it's possible the park could begin to pay creditors and retain ownership of the park, he said.
The odds of the park reopening and paying off creditors are low, said Mark Neill, an attorney for one of the companies Freestyle owes money to, Quantum Communications Corp. of Myrtle Beach and Florence. The company filed suit in October to recover about $27,000 in unpaid debts from Freestyle and is awaiting a judgment in Horry County Circuit Court. After receiving a judgment, Quantum plans to put a lien on the park, which will increase the chance of the company being paid, Neill said, although other creditors may have higher priority.
Jimmy Feuger, general manager at Quantum of Myrtle Beach, said he does not think he will see the money again.
"If they declare bankruptcy then we get in line behind all the creditors and we're probably not going to get anything," he said. "I've kind of written off the money."
Freestyle had placed ads on several of Quantum's radio stations, but after 90 days had failed to pay, Feuger said. The money doesn't represent much of his business, but it is the largest sum he's been owed, he said.
Matt Doda, a member of alternative rock cover bank Willhite, is still owed $9,300 for performing at the park last year and doesn't think he'll ever be paid, he said
"We're in our early-mid-20s; that chunk of change is huge," he said. "We've been playing catch-up the last six to eight months."
Willhite has not filed a suit against Freestyle, he said.
"The way we're thinking about it, if they do file bankruptcy we'd be wasting our money filing a lawsuit," Doda said. "We're the smallest company out of all of the companies owed money."
Contact JAKE SPRING at 626-0310.