In an effort to stabilize operations and bring sustainability to the Prescott Valley Events Center, the Manager of the facility filed for reorganization under federal bankruptcy laws on August 14, 2015. According to a press release sent out by the Events Center, the filing is “…consistent with the operators and Town’s desires to make the events Center economically viable moving forward. It comes after months of work to put together a plan that would be acceptable to all parties and create a future for the Events Center.”
The Events Center has experienced economic pressures for some time from a variety of sources. That made this a difficult decision, but a necessary one, according to Brad Fain, speaking for the Fain Signature Group. In October, Global Entertainment Corporation filed for Chapter 7 bankruptcy, which is often called a ‘liquidation bankruptcy’. Chapter 7 debtors seek for a discharge of obligations to pay their debts and must cease business operations. That’s not what the Prescott Valley Events Center (PVEC) is doing. The PVEC is seeking to reorganize their debts to a manageable level and continue operating by filing Chapter 11.
“The decision to file is a very serious matter and one that was not taken lightly. Given the financial problems that the Events Center was left with after the Chapter 7 filing by Global Entertainment Corporation in October of 2014 this step was inevitable,” said Fain on behalf of the Fain Signature Group. "Prior to the Global filing, the Events Center was financially hurt and struggled to gain momentum while facing two major threats over past 7 years: the litigation brought by the bondholder and the Great Recession. Both of these threats put a chokehold on the building and its ability to attract entertainment, spectators and sponsors. The bondholder litigation seems to have finally concluded and business seems to be improving in the region."
Gary Spiker, General Manager of the Prescott Valley Events Center is optimistic. “We see a bright future for the Events Center. Going forward we are working with several parties to bring a new start to the Events Center. With the litigation behind us, a stabilizing economy and great partners with the Town and the community we look to reenergize the Events Center,” Spiker continued. “Since late January when the new management took over we have had approximately 24 events in the Events Center, and all but 2 were financially positive events. We still have a lot to improve upon, and we need to get bigger, more exciting and more profitable events in the Events Center, secure a major tenant and make continuous improvements to the operations, but we are headed in the right direction.”
"With this filing we are moving forward with a plan that we see making this a sustainable operation. We are prepared to work through the process, but in the meantime it’s business as usual at the Events Center. All scheduled shows and events will go on, and the staff continues to book new events for the balance of 2015 and into 2016,” Spiker said.
Response from the Town of Prescott Valley
In a subsequent press release from Prescott Valley Town Manager Larry Tarkowski, it was acknowledged that this reorganization filing is “one more step in the ongoing process of ensuring long-term viability of the Center.”
“The Town appreciates PVEC LLC’s continued commitment honoring its role as lessee and operator of the Center,” Tarkowski said. “We are encouraged by the proposal to develop a long-term plan that works through the short-term financial challenges in order to maintain the value of the Center for the entire community.”
The financial relationships associated with the Events Center were complex, as is often the case. The Town’s press release provided background on the situation:
"On May 12, 2005, the Town of Prescott Valley (Town) entered into a development agreement with a downtown land owner (Fain) and a company that built and operated events centers (Global) in order to finance and build the Center. In turn, Fain and Global formed the Prescott Valley Events Center, LLC (PVEC LLC), which then entered into a loan agreement with the Yavapai County Industrial Development Authority to issue taxable, non-municipal bonds and use the proceeds to construct the Center. In the development agreement, the Town committed a portion of the Transaction Privilege Taxes collected in the downtown and related areas to assist in paying off these non-municipal bonds. The Town also created a community facilities district to which the newly-built Center would be conveyed and that would then lease the Center to PVEC LLC for operation.
"It was anticipated that revenues from Center operations would cover all operating expenses and provide surpluses to help pay off the bonds. Unfortunately, a number of factors (including a national recession) combined so that revenues were inadequate to cover operation expenses, much less help with bond payments. For the most part, only the Town payments under the development agreement were available to pay bonds. And, though the Town made all required payments under the development agreement (and the payments were substantial) those payments did not fully cover bond payments. Therefore, the bondholders initiated litigation in 2009 against all parties involved in any way with the bonds (including the Town, Fain and Global). After years of pre-trial activity, in 2013 judgment was entered in favor of the Town on the final claim against it (essentially taking the Town out of the case). Other defendants then reached settlement agreements. When Fain and Global negotiated a settlement agreement, the Town participated in order to avoid an appeal by the bondholders of its favorable rulings. The Town Council approved the final settlement outline on October 16, 2014. Certain defendants later filed their own appeal, which temporarily held up this settlement. But, a dismissal of that appeal on August 3, 2015 has now made that settlement final.
"In the settlement agreement, Fain committed through PVEC LLC to make reasonable efforts to arrange for a new hockey team in the Center and continue Center operations. However, with Global having filed its own bankruptcy Fain indicated it would likely be necessary to reorganize PVEC LLC and obtain other revenue sources, all as part of a bankruptcy plan.”
As reiterated in the Town press release, "It is noted that this step comes shortly after dismissal of an appeal that had temporarily held up a settlement of multi-year, multi-party litigation involving the bonds which financed the Center. That settlement is now final."