Indianapolis Downs seeks approval of settlement with Cordish Cos.

By Jim Witters

Wilmington, Del., July 3 - Indianapolis Downs, LLC has reached a settlement with Power Plant Entertainment Casino Resorts Indiana, LLC and Live! Holdings, LLC in a dispute over management and trademark agreements, according to documents filed July 3 with the U.S. Bankruptcy Court for the District of Delaware.

Indianapolis Downs believes the settlement "provides a fair and reasonable compromise" and will "avoid protracted and expensive litigation," the court filing states.

Power Plant and Live! Holdings are affiliates of Cordish Cos.

Nature of the dispute

Indianapolis Downs and the Cordish entities are parties to a 2008 trademark license agreement and a 2007 development, financing and management agreement. Cordish stopped managing the gaming facility in July 2010.

Cordish demanded arbitration of disputes that arose under the management agreement.

Cordish sought a determination that the agreement had not been terminated, a determination that Indianapolis Downs breached the agreement and $10 million in damages.

Cordish also asserted a general unsecured claim of more than $17 million in the bankruptcy case and filed a motion to allow payment of administrative expenses of $33 million.

Proposed settlement

Under the terms of the settlement:

• The Cordish proof of claim is deemed allowed in the amount of $12 million;

• Indianapolis Downs will pay $2.5 million to Cordish within 10 days of court approval of the agreement and an additional $1 million in installments of $250,000 a week. After Aug. 27, interest will be 10%;

• Cordish will withdraw its administrative claims;

• The management agreement will be deemed rejected as of the effective date of any Chapter 11 plan;

• The trademark agreement will be deemed rejected upon approval of the agreement;

• The arbitration case will be dismissed; and

• The parties will exchange releases.

A hearing on the proposed settlement agreement is scheduled for 10:30 a.m. ET on July 17.

Indianapolis Downs, a Shelbyville, Ind., racetrack, off-track betting and gaming company, filed for bankruptcy on April 7, 2011. Its Chapter 11 case number is 11-11046.

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