Future Legends lender calls bankruptcy case a ‘charade’ that must end

WINDSOR — An attorney for one of Future Legends’ main creditors has requested that the U.S. Bankruptcy Court dismiss the case because it’s a fabrication and there is no money with which to sustain a reorganization plan.

In court documents filed Monday, Richard Holley, attorney for U.S. Eagle Federal Credit Union, which lent Future Legends LLC more than $45 million to build the massive sports complex, called the Chapter 11 bankruptcy case a “charade” and said it is time to end it.

The filing comes on the heels of Future Legends 5 LLC’s filing its plan of reorganization, which Holley states is “is void of substance and the plan is blatantly unconfirmable.”

“The plain facts are that as things currently stand, the debtor has no cash, no income and no actual financing lined up to fund its proposed plan,” the filing states. “… The debtor has not demonstrated that it can sustain a plan of reorganization.”

The Future Legends Sports Complex project is a 118-acre facility that is home to three semi-professional sports teams, and is used by youth sports leagues and Windsor recreation. The project was supposed to be a national draw for youth sports for tournaments and tourism, bringing in 1 million visitors annually. But to date, only the collegiate stadium is completed. The dome, which is used for indoor soccer and other sports, is functional but not complete. The entire complex also is under the ownership of seven limited liability companies, with loans linked to different LLCs and parcels in the property, complicating matters about which entity owes or owns what.

The complex has been mired in lawsuits for the last couple of years for non-payment for construction work, as well.

At the last hearing involving Future Legends 5’s bankruptcy, Judge Hilary Barnes ordered a purported new lender in the case to produce paperwork evidencing a $260 million loan that Future Legends managing partner Jeff Katofsky had reported would be in hand by the end of February and could pay off all debt and reboot construction of the entire project. The purported lender, Phoenix Capital Solutions, has not complied with that court order, according to Holley’s filing to dismiss the case.

In an interview last month, Katofsky said he was insulted that others did not believe the loan’s validity, especially after he, as an attorney and an “officer of the court,” testified to the fact. He said he believes U.S. Eagle Federal Credit Union will not accept payment on its outstanding loan because he suspects they have buyers in hand ready to take over the property.

“This is about people trying to take it away to try to make extra money …,” Katofsky said. “I’m trying to figure out how to build something phenomenal and other people are trying to figure out how to steal money from this.”

Complicating the case is the discrepancy on who the real owner of the dome property is. Last fall, after three major portions of the property were put into receivership in state court: the dome, the arena and the dormitories. Of the three, the dome is the only operational and money-making entity.  After being placed into receivership, Katofsky produced a lease claiming that Future Legends 5 LLC owned the dome, not Future Legends LLC, and he filed for bankruptcy on Future Legends 5, which would effectively stop the receiver from taking over the dome property. According to paperwork filed in court, Future Legends 5 purchased the dome for $1, in what Holley called a “violation of the Loan and Security agreement, which required written consent from both U.S. Eagle and the USDA (which guaranteed some of the Future legends’ loans on the property).”

In the most recent court filing, Holley complained that the FL5 reorganization plan was fruitless because it had no income, based on monthly operating reports filed in court to date, and that the $260 million loan could not be verified.

“The lynchpin of the Debtor’s reorganization efforts is alleged outside financing,” the filing stated, adding that Future Legends 5 “has not generated $1 in revenue” since the bankruptcy filing. Holley explained that the reorganization plan calls for the $260 million financing to occur by the end of March 2025, instead of the end of February as Katofsky has promised in earlier court hearings. The plan also notes that only “allowed claims” are to be paid and no distribution is to be made to any disputed claims. “The debtor disputes all but $621,000 of the general unsecured claims estimated at $13,086,613.55 and all of the secured claims, including the claim of U.S. Eagle.” Total secured claims come to roughly $26.9 million.

“Under the debtor’s outrageous proposal, no creditor holding a claim or interest will receive a ballot to vote to accept or reject the plan,” the filing reports.

“The debtor’s sole source of income is the sham lease of the dome property which generates $50,000 per quarter from Future Legends LLC,’ the filing reported. The filing states that the lease’s validity “stretches the imagination.”

The filing states that the plan of reorganization cannot be funded by the lease payments, which if they were being paid would generate at most $200,000 a year, and could in no way satisfy claims on record.

“The purported lease payments are woefully insufficient to satisfy administrative expenses much less purported claims,” the filing states.

While Future Legends 5’s plan has relied upon the purported $260 million loan to pay off all debts by the end of February, the reorganization plan now states that in “March of 2025, the proposed exit lender will issue a commitment letter.”

Holley states that the creditors listed in the bankruptcy are actually creditors of Future Legends LLC, meaning that a bankruptcy filing for Future Legends 5 makes no sense.

The matter has been set for a hearing on March 28.

Case cited: 

Case No. 24-51031, Chapter 11 Bankruptcy, In re: Future Legends 5 LLC, in United States Bankruptcy Court, District of Nevada, filed Oct. 15, 2024. 

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