Hawthorne Race Course, Inc. and three affiliated Carey family debtors are mid-case in the Northern District of Illinois before Judge Timothy A. Barnes, operating under a finalized debtor-in-possession facility while running a compressed Section 363 sale of the historic Cicero racetrack and related real estate. The debtors filed Chapter 11 on February 27, 2026 Voluntary PetitionDkt. 1 after prepetition senior lender Signature Bank declined to advance further liquidity.
The filing was driven by approximately $56.9 million of prepetition funded debt. Signature Bank held first-lien claims of roughly $51.6 million across a term loan and a line of credit secured by substantially all personal property and mortgages on the Race Course and Crestwood properties, behind which sat a $5.0 million junior mortgage held by Latto Capital and a $300,000 junior note held by the Carey family Marital Trust DIP Financing MotionDkt. 14.
The debtors sought a priming DIP facility on the petition date; after the Official Committee of Unsecured Creditors contested the fees, collateral reach, and sale timeline, the court entered a Final DIP Financing Order on April 22, 2026 authorizing Derby DIP LLC to provide up to $20 million at 13% with section 364(c)(1) superpriority and priming liens, access above $18.1 million conditioned on a stalking-horse bid or sale order of at least $85 million, and adequate-protection payments of $75,000 per month to Signature Bank and $10,000 per month to Latto Capital Final DIP Financing OrderDkt. 232.
The case is now sale-driven. A July 1, 2026 order reset the bid deadline to July 10, the auction to July 14, and the sale hearing to July 20 Order Rescheduling Sale HearingDkt. 400. Contested matters track alongside the sale: creditor Christine Tuma seeks stay relief on July 7 to pursue Employment Practices Liability insurance coverage for retaliatory-discharge claims Motion for Relief from StayDkt. 396, and an adversary proceeding by Saratoga Harness Racing over pari-mutuel wagering trust funds continues, with the court recently expanding Carey White Boland Murnighan & Murray's role as special counsel to defend it Order Employing Carey WhiteDkt. 399.
