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A Delaware bankruptcy judge this morning granted Hard Rock Park's request to convert its bankruptcy to a Chapter 7, meaning the park has to turn over all its assets and records to a trustee for liquidation.
The judge ordered the park, with 55 acres of rides on 140 acres of land, to give a trustee all of the estate's records and property, and submit a list of unpaid debts that they accumulated after filing for bankruptcy within 15 days.
The park, which said it was worth $400 million when it opened in April, was unable to attract any bidders willing to pay at least $35 million for the park at a Dec. 15 auction, according to court documents. So the park says its is forced to liquidate.
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"Because the bid and sale process has been unsuccessful thus far, there exists no reasonable prospect of success in the immediate future," the Chapter 7 filing stated. "Regrettably, conversion of [the park's] Chapter 11 bankruptcy cases to cases under Chapter 7 of the bankruptcy code thus appears to be the only remaining means of allowing the debtors' assets to be liquidated and potential causes of action to be pursued and monetized for the benefit of creditors."
Within 30 days, the park is required to submit a final report and account to the U.S. Trustee's office.
The court also appointed Fred Giuliano, a Chapter 7 Bankruptcy Panel Trustee for Delaware, as the trustee in the case. The trustee’s role is to sell the assets and pay creditors.
Though he had only had a short time with the park’s information, Giuliano said most of the assets seemed to have liens on them, meaning there would likely be very little left, if anything, for the average person or business owed money.
"It doesn’t look like there’s a lot available there to pay the unsecured creditors," he said.
The park closed and filed for bankruptcy protection in September. It is still unclear whether the park will be sold in whole to one company - which may or may not run it as a theme park - or will be sold off piece by piece.
A spokeswoman for the park's attorneys said they had no comment.
The park opened April 15, hoping that buzz about the world's first rock 'n' roll theme park would generate enough publicity to bring visitors through its gates.
Local tourism officials and national theme park experts have criticized the park for not advertising enough before its opening. Theme park experts have also said the park's initial $50 ticket price - not including $10 for parking - scared off potential visitors.
In its initial bankruptcy filing, the park blamed a slow tourism year and high gas prices for its woes.
Throughout the summer, the park tried various discounting programs, including special prices for people in the Carolinas and in the hospitality industry.
Financial documents filed in court show the park made $21.5 million from April 15 through September, and it owes nearly $300 million. It had hoped to bring up to 30,000 people a day during the summer and 3 million people a year through its gates.
The average person or company owed money by the park has close to zero chance of getting it back, experts said.
"In most of these cases, the unsecured creditors get nothing," said Leon Bayer, a bankruptcy specialist with the California firm Bayer, Wishman and Leotta.
Hard Rock International, the cafe and casino company, had licensed its brand name to the park for at least $2.5 million annually, in addition to a $1.5 million fee off the bat. But it is now asking a judge to allow the park to turn over various memorabilia and release them from the license agreement.
In a recent filing, Hard Rock International said the theme park had damaged its reputation and did not live up to its agreement to thoroughly advertise and market the product.
"The park is not known as a destination of choice in Myrtle Beach, but is widely associated, as reported in the state and local news, with financial problems that have negatively impacted operations," the company said in the documents dated Dec. 23. "Hard Rock [trademarks] have been, and continue to be, harmed by the [park's] conduct."
One company, PARC Management based in Orlando, Fla., has said it is interested in running the park with a financial partner but would not put up the $35 million minimum bid.
PARC, which manages amusement and theme parks across the country, entered the Myrtle Beach market earlier this year when it bought the NASCAR SpeedParks and Myrtle Waves water park from Burroughs & Chapin Co. Inc.
C + P Eighty-Six Ltd., which licensed the Led Zeppelin brand to the park, said in a court filing the company worried about a new owner. In the filing, the attorney said there were no qualifying bids for the auction received before the deadline.
"C + P has grave concerns about the ability of any potential purchaser to maintain the high quality associated with the [Led Zeppelin] license," the document states.