Bankruptcy judge seeks to clarify Future Legends ownership, loan

WINDSOR — All those with questions on the Future Legends Sports Complex may get some answers in a month.

That’s the time frame a Nevada bankruptcy judge laid out Tuesday to bring all parties back in front of her personally in Reno, Nevada, in the bankruptcy case of one of seven entities that own different portions of the 118-acre sports and entertainment complex. The complex was supposed to bring 1 million visitors a year to Windsor for sports tournaments. The complex has been incomplete, with various parts in differing stages of construction, except for a 5-acre parcel that holds the dome, an indoor soccer, basketball and volleyball court area. The dome is the only money-making portion of the complex now, but it is at the center of a bankruptcy case after lender U.S. Eagle Federal Credit Union sued for more than $45 million in unpaid loans.

A Weld District Court Judge placed the dome, and the unfinished sports arena and the dormitories under receivership in September. Future Legends 5 LLC filed for Chapter 11 bankruptcy protection to stop the receiver’s actions, in which he was charged by the court to take over management and income of the dome.

In a hearing Tuesday, attorneys alleged that Future Legends owner Jeff Katofsky was misleading the court by claiming that the dome was under the ownership of one of the seven limited liability companies, when evidence pointed to different ownership. Attorneys also questioned Katofsky’s claims that he has secured $300 million in two loans to pay off his debts and restart construction, as he didn’t file any actual loan documents in his court pleadings.

“It seems as if there’s a lot of hopes and dreams here, but we have to get some concrete facts and concrete actions to move this thing forward,” Bankruptcy Judge Hilary Barnes said in the telephone hearing Tuesday.  She set a Dec. 13 evidentiary hearing in person to get some answers.

Tuesday’s hearing was a continuation of a previous hearing in which a different judge awarded a temporary restraining order preventing the town of Windsor from pulling its temporary occupancy permits at the complex. After hearing attorneys’ arguments, Barnes opted to grant a preliminary injunction for 60 days, allowing operations to continue as usual at the sports complex. That was all on the assurance that Katofsky had received $260 million in funding, which his attorney argued was contingent on the temporary occupancy permits staying in place.

The hearing Tuesday continued with Katofsky’s attorney, Jeanette McPherson, arguing her motion to force the court-appointed receiver to turn over the dome property to Katofsky.

Arguing to keep the receiver in place, Richard Holley, the attorney for U.S. Eagle Federal Credit Union, poked holes in several claims about the dome being under the ownership of the Future Legends 5 LLC, as well as questioned the new loans that Katofsky has claimed he was able to get. He also claimed that Katofsky was “fabricating” the creditors in the Future Legends 5 LLC bankruptcy paperwork.

“He tells us this dome property is worth some $75 million and the purchase price for this property is $1,” Holley said. Holley said Katofsky produced a contract for sale of the dome to Future Legends 5 LLC dated in May 2022, but a year later, he took out two extra loans from U.S. Eagle, which were to Future Legends LLC.

“U.S. Eagle didn’t work with Legends 5. They dealt with Katofsky for sure, but no one was dealing with Legends 5,” Holley said.

Holley told the judge that Katofsky had failed in his management of the dome, and the receiver noted a variety of problems with the complex’s management in his first assessment of the property, including a host of unpaid bills.

“This property is in shambles, the whole operation is in a shambles,” Holley said. “There’s no reason to think anything is going to change. The debtor hasn’t indicated that someone other than Katosfky will manage it … And what we see is they didn’t run the property properly in the first place. (The receiver) talks about the challenges and problems that exist. … They’re either unwilling or unable to pay utilities, general liability insurance, vendors, all of these things described by the receiver who is a disinterested third party and represents the court to assess the situation. The debtor hasn’t suggested in any way that this management style is in any way going to be changing.”

Jennifer Salisbury, attorney for the court-appointed receiver, said the paperwork involving the dome was “clear as day” under the ownership of Future Legends LLC.

“If you look at the lease agreement where Future Legends 5 is the landlord, it was entered into right before the designation of the receivership, when the U.S. Eagle loan was already in default,” she said.

Jeannette McPherson, representing Katofsky in the hearing, said the charges being leveled at him were unfair.

“There’s speculation here that needs to be sorted out, that would be helpful as part of an evidentiary hearing a lot of questioning regarding the documents, with that speculation, really, I think is an unfairness to Mr.  Katofsky with the narrative, ‘He hasn’t done anything, we don’t trust him.’”

Barnes questioned why U.S. Eagle would fight to keep the receiver on the job in light of the report that Katofsky had received $260 million in funding, with which he had planned to pay off his debts and finish construction. Katofskly reporter earlier that he had secured another $40 million loan, but the paperwork he filed in court, Holley noted, was labeled by the bank as being for discussion purposes only. 

“What we’re saying, if the debtor has financing and (paying the loans) that’s a helluva deal,” Holley said. “That’s perfectly fine. But we don’t have confidence in their ability to do so. They haven’t given us anything upon which we can have any belief or confidence, even basic things like loan documents which are oddly not attached as an exhibit” in this case.

“At this point, is preserving this property the question we ask ourselves?  Is this debtor the entity that’s going to preserve and protect the property?” Holley asked. “They’ve given us nothing to give us confidence.”

This article was first published by BizWest, an independent news organization, and is published under a license agreement. © 2024 BizWest Media LLC.

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