Epic Poker League’s Bankruptcy Saga Continues

March 21, 2012

Epic Poker, which was declared bankrupt by its parent company, Federated Sports and Gaming, was in the news again recently when reports surfaced that a court rejected the company’s reorganization plans. Clarifying the issue, Jeffrey Pollack, the executive chairman of Federated Sports mentioned that neither the budget nor plans for reorganization have been rejected by the courts.

Creditors of Epic Poker

According to bankruptcy filings, Epic Poker League owes over $5 million to more than 100 creditors. The maximum amount is owed to 2 firms – All In Production and Pinnacle Entertainment. All In Production is the company which sold the Heartland Poker Tour to Epic Poker. Other big creditors of Epic Poker include a law firm called Kirkland & Ellis, a television production house, 411 Productions, Savage Tournaments and a public relations company, Rogers and Cowan.

The creditors’ list also includes a few small poker companies, a charitable institution for disabled children in the US and a few independent contractors.

Court Documents Reveal Unpaid Acquisition and Big Loans

According to court documents, Federated Sports and Gaming has paid millions of dollars for the acquisition of Heartland Poker Tour – the only profitable business of the company. The acquisition deal was settled at $2.95 million. Heartland Poker Tour which holds poker tournaments across 15 US states was acquired by Federated Sports in June 2011. The Heartland Poker Tour started its operations in 2005 and conducted its 100th event recently. The events in the Heartland Poker Tour are broadcast to over 100 million homes in the US every week.

Federated Sports borrowed money from Pinnacle Entertainment through a Secured Promissory Note. $2 million was borrowed from Pinnacle of which $1 million was used for clearing debts owed to All In Production. After receiving the payment, All In Production made an extension of the due date for the remaining debt to 31st March, 2012. The due date for the money owed to Pinnacle was 29th February, a day after which Federated Sports and Gaming declared itself to be bankrupt. The declaration held back All In Productions from taking back the ownership of Heartland Poker Tour.

A budget submitted by Federated Sports and Gaming recently revealed that the company used about $458,092 from the operations of Heartland Poker Tour to clear employee salaries.

Re-Organization Attempts

David Goldberg, the CEO of Federated Sports stated that re-organization proposals have been submitted to the bankruptcy court, which is considering the matter. A formal plan for re-organization has not yet been submitted, but the company provided quite a few motions to the court. A proposal has been submitted regarding the use of cash collateral for which the company will require the consent of its creditors.

2 Tournaments Canceled by Epic Poker League

Three live poker tournaments were conducted by Epic Poker this year, each offering $400,000 as prize pool. Due to the re-organizing attempts by Federated Sports, the 4th and 5th tournaments might now be canceled. The 5th tournament had announced a prize pool of over a million dollars, which was to be distributed among the top 25 players of the event.