Recently, the Chapter 7 Trustee (the “Trustee”) in the HRP Myrtle Beach Holdings bankruptcy, filed several avoidance actions pursuant to sections 547, 548, and 549 of the Bankruptcy Code. The avoidance actions, filed in the United States Bankruptcy Court for the District of Delaware, are before the Honorable Kevin J. Carey, Chief Judge of the Delaware Bankruptcy Court. For those not familiar with the HRP bankruptcy proceeding, this post will look briefly at the nature of HRP’s business and why the case ultimately converted to a chapter 7 liquidation.
HRP Myrtle Beach Holdings, LLC (“HRP”) is the parent company of various subsidiaries and affiliates that owned and operated the Hard Rock Park theme park, located in Myrtle Beach, South Carolina. HRP marketed the theme park as the world’s first rock n’ roll theme park that highlighted the “culture, lifestyle and legends of rock music entertainment.” See HRP’s Declaration in Support of First-Day Pleadings (the “Declaration”) at *3. Situated on 140 acres, HRP considered the $400 million property the largest investment to date in South Carolina tourism. Id. at *4.
Despite its size and unique theme, HRP’s theme park suffered from low attendance following its opening in April 2008. According to the Declaration, HRP blames poor attendance at its park on high energy and food costs, which in turn reduced overall consumer spending. Declaration at *8. In response to slumping sales, HRP filed for bankruptcy in September of 2008 hoping to restructure its debt and better develop its marketing and operations. While in bankruptcy, HRP tried unsuccessfully to complete a sale of all of its assets under section 363 of the Bankruptcy Code. Following the unsuccessful sale attempts, on January 2, 2009 HRP sought permission from the Bankruptcy Court to convert to a chapter 7 liquidation. The Court approved the conversion to chapter 7 on January 6, 2009 and the Trustee was appointed soon after.