Bankruptcy leaves State Fair with an uncertain fate
- March 28, 2012
Many people want to save the State Fair of Virginia, but holding a fair this year would take “a miracle,” says G. William “Billy” Beale. [“State Fair took odd ride to bankruptcy court,” February issue.]
Beale is chairman of SFVA Inc., the bankrupt nonprofit group that produced the fair. SFVA filed for Chapter 7 liquidation in early March after failing to restructure its debt with 13 lenders that loaned more than $80 million to develop new fairgrounds in Caroline County.
SFVA had filed for Chapter 11 reorganization in December, hoping to work out a deal. Those hopes vanished when lenders rejected a $5.5 million offer from an unnamed commercial real estate company to buy the fairgrounds and lease it to SFVA.
Now the 360-acre fairgrounds, Meadow Event Park, could be headed to the auction block and the fate of all events produced by SFVA, including the fair, Strawberry Hill Races and the Celtic Festival & Highland Games, is uncertain.
Beale, who is CEO of Union First Market Bankshares in Richmond, says any other organization trying to hold a fair this year faces logistical and financial hurdles. The process of lining up acts and vendors typically begins in early spring and requires cash on hand.
SFVA sold its longtime home in Henrico County to Richmond International Raceway for $47 million in 1999 and held its first fair in Caroline County in 2009. In an arrangement proposed by its lenders, SFVA was to repay its debts using cash flow from its $42 million investment portfolio rather than money from its events. (SFVA events historically had been marginally profitable in good years and sometimes lost money because of bad weather.) The investment portfolio and the Meadow Event Park were used to secure the debts.
SFVA ran into trouble when the value of its portfolio dropped sharply during the financial crisis of 2008-09. SFVA officials say lenders insisted that the portfolio be taken to cash just before the stock market began to recover. “We had to take our losses at the bottom of the market and lock them in rather than ride the market back up,” says Beale. “We were dead ducks.”