SpeedVegas will be operating its business as it has in the past, except it will be doing so while under Chapter 11 bankruptcy protection.
The filing for Chapter 11 will give SpeedVegas the ability to negotiate its financing in order to become a stronger company, financially.
This decision was not made in-house. Rather, lenders to SpeedVegas came forward and filed an involuntary petition for bankruptcy. This was done through the court system, which took place in August of this year.
The main reason why the company decided to take this route of bankruptcy is that it would prevent utility services from being changed or cut outright. This part isn’t a surprise because, since the company has opened its doors for business, it has been struggling with paying its rent and utility bills on time.
What Other Financial Issues Are Impacting the Business?
Earlier this year, there was an accident involving a “Lamborghini Aventador” that resulted in the driver and the passenger, who was an instructor, both dying. The driver was a tourist from outside the United States, who lost control of the car and hit a barrier. This then resulted in the car catching fire.
The accident that caused the deaths resulted in the Nevada Office of Safety and Health looking into the matter. They found that there were seven violations in the incident and charged a fine of $12,000. Also, employees were not trained correctly when related to fire scenarios.
A few months after the accident, the estate of Gil Ben-Kely (the passenger instructor who died) filed a lawsuit against the company, designer of the track, car manufacturer, and owner of the race track. This then worsens the financial position of the company because there may be even more money leaving the business in the near future.
Future of the Speedway
The race track in Vegas seems perfect because it is known as a tourist city. The one issue when looking at the non-financials is that the track is off the Las Vegas Strip and not very convenient to visit. This results in individuals not going out of their way to drive fast in a luxury car. Also, the overhang of the accident and safety reports are something to consider seriously by potential drivers.
Now, financially, there are numerous loans that are outstanding, including the previous owner of the Lamborghini Aventador (the one used in the accident), the real estate company that owns the land, and the company that made the track what it is today. It seems that the senior managers of the company are being controlled by the debt holders, which is never a good thing. This could force future business decisions to be made by the debt holders rather than the senior managers of the company.
Also, there will still be a loan outstanding on the Lamborghini Aventador that will no longer be used by the company. This means that without even opening the doors of the business, there will be money flowing from the business without any return being accounted for.
Unless there are dramatic changes in the financial side of the business, the company may always be rolling the dice on its doors remaining open.
“SpeedVegas driving attraction files for Chapter 11 bankruptcy,” Las Vegas Review-Journal, December 15, 2017.
“2 die in fiery crash at SpeedVegas racetrack,” Las Vegas Review-Journal, February 13, 2017.