Bankruptcy judge appoints trustee to manage BK Racing

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CHARLOTTE, North Carolina – A U.S. Bankruptcy Judge assigned a trustee to take over BK Racing and replace car owner Ron Devine as the team’s financial decision maker Wednesday evening.

“It’s a sad day for BK,” Devine said after leaving the federal courthouse.

Said NASCAR in a statement: “We have a clear process around charter member governance. It is incumbent upon charter members to be ready to race and compete at the highest level.”

The judge’s decision allows the team to continue to race. One of the roles of the trustee will be to determine if the team remains a viable business and can make money. If not, an option would be to sell the team’s assets, including its charter.

“I think it’s in everyone’s best interests that this business continue in the short run,” Judge J. Craig Whitley said in making his ruling.

The team ranks 35th in car owner points after Gray Gaulding‘s 36th-place finish Monday at Martinsville Speedway.

Matthew Smith, managing director of The Finley Group, will oversee the BK Racing’s finances.

“The goal is to find a way to race as long as we can,” Smith said on the stand Wednesday.

Smith, a member of the North Carolina Motorsports Advisory Council for three years, noted that it was not clear how much cash BK Racing has, citing incomplete records and documents not filed in court.

Union Bank & Trust claims it is owed more $8 million. The IRS states that the team owes more than $2 million. Creditors have until April 26 to file claims.

BK Racing filed for Chapter 11 bankruptcy on Feb. 15. Devine said on Feb. 16 that he filed for bankruptcy “because the bank wouldn’t stop trying to get a receiver (to oversee the team’s collateral). The only reason they wanted to get a receiver was to push the charter off to their third-party offer. That’s where the problem was.’’

BK Racing has not shown a profit since debuting in 2012. Court documents show that the team lost nearly $30 million from 2014-16.

A former employee and a current employee of the team both testified Wednesday of paychecks that bounced last year. Former tire specialist Jason Postma testified he had a BK payroll check bounce in September 2017 and had BK payroll checks bounce in November 2017 and December 2017 before leaving the team.

“We need someone to step in temporarily and stop this from snowballing,’’ testified Jeff Lemons, who runs the machine shop at BK Racing, on having a trustee appointed.

The team sold one of its charters before the 2017 season to Front Row Motorsports for $2 million. Devine, who spent five hours on the stand over two days, stated in court and he thought the bank’s goal is to sell the charter to recoup some of money owed.

“I’m disappointed, obviously,” Devine said of Wednesday’s decision. “We’ll see. The judge made his ruling. I respect that. We’ll talk about if there’s a next step, an appeal or anything like that.”

Devine said he planned to talk to sponsor EarthWater, which had signed an agreement last week to sponsor the team for the rest of year. The contract is valued at $3.6 million and can be paid in cash, EarthWater stock and product. There is a clause in the contract that the contract is null and void if Devine is not operating the team.

The judge encouraged Devine and BK Racing’s employees to work with Smith, the trustee, to help the team recover from its financial debt. Devine said he was unsure if he would do so.

“My sense is that he probably just wants me to get out of his way,” Devine said.

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Friday 5: Passion on and off the track

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There’s been much to talk about this season but some of the conversation has centered more on what has happened off the track.

Maybe Kyle Busch can help return the talk to the track this weekend at Martinsville Speedway.

Admittedly, three of the first five races having a margin of victory of 2.6 seconds or more (last week Martin Truex Jr. won by 11.6 seconds) takes away some of the excitement for some even as Kevin Harvick won three races in a row.

Other than Harvick’s dominance, some of the buzzy topics this season has been Harvick talking about the need to build up grassroots racing, why Busch wasn’t interviewed on TV after last weekend’s race at Auto Club (and then his responses to Twitter trolls) and how Austin Dillon and members of his team got tattoos on their rear end after winning the Daytona 500.

All worthy topics to generate conversation, but the discussion on the racing hasn’t been as paramount to this point.

Martinsville comes just in time to change that. The series is back at the track for the first time since Denny Hamlin’s contact knocked Chase Elliott out of the lead late in the fall race and fans saw a level of emotion they hadn’t seen from Elliott. If you don’t recall, Busch went on to win that race.

Last spring had its excitement with Ricky Stenhouse Jr. bumping Busch out of the way to stay on the lead lap, opening the door for Elliott to win a stage. Later in that race, Brad Keselowski and Kyle Busch engaged in a spellbinding duel before Keselowski pulled away and went on to win. Busch finished second.

Right now, Busch is one of the main drivers who stirs the drink in a sport that has seen fan favorites Dale Earnhardt Jr., Jeff Gordon and Tony Stewart, among others, retire.

Even Earnhardt said as much on his podcast this week.

“The one thing that I’ve learned over the last several years … was the sport needs people like Kyle,’’ Earnhardt said on the Dale Jr. Download. “Even if you don’t like the guy, the sport needs all kinds of personalities, and we can’t have 40 heroes out there racing.

“We can’t have 40 Captain Americas out there competing against each other. You gotta have a Batman, you gotta have a Robin, you gotta have a Superman, you gotta have a Joker. You gotta have all of that to create storylines and create rivalries.”

The sport’s best rivalry is Keselowski and Busch. It’s one that simmers and then explodes, whether it is in their duel at Martinsville last year, their contact at Watkins Glen, Busch’s Twitter response to Keselowski after Keselowski’s comments about Toyota’s dominance entering the playoffs or Busch simply saying at the news conference before last year’s Miami championship race of Busch: “Sometimes you just don’t like a guy.’’

This weekend could be a chance for such feelings to bubble or maybe from somebody else. With an off weekend afterward, it would give fans something to talk about.

2. An impassioned defense

BK Racing car owner Ron Devine was combative at times, calling the procedure “nonsense” while on the stand for about 2 1/2 hours Thursday in federal bankruptcy court.

Devine, who turned to address the judge at times when answering questions from attorneys, was on the stand defending his right to run BK Racing despite millions of dollars in losses in recent years and unpaid bills.

Union Bank & Trust, which claims it is owed more than $8 million in loans from Devine, seeks to have a trustee put in charge of the team. Union Bank & Trust stated in documents filed in U.S. Bankruptcy court that BK Racing had lost about $30 million from 2014-16.

MORE: Court filing lists expenses, revenue for each race 

MORE: Rare peek into race purses, payouts

Devine said on the stand that the team had signed a sponsor agreement Wednesday with EarthWater for $3.6 million for the rest of the season. The amount is to be paid in cash, shares of stock and product. Devine said that if the judge ruled to have a bank-appointed trustee run the team, the sponsor would not remain, noting a line that in the agreement that the deal was null and void if Devine was not running the team.

Devine, who said his organization had “low teens” in terms of full-time employees, stated that those employees would quit if a trustee took over. Devine said the only reason the bank wanted a trustee was to sell the team’s charter. He accused the bank of soliciting bids for the charter.

Turning to the judge, Devine said of having a trustee run the team instead of him: “There’s no way he can operate the team. He has no knowledge and ability to operate my team.’’

Devine estimated he had spent half a million dollars of his own money since December to offset deficits at BK Racing. During the testimony, Devine confirmed that he sold one of the team’s charters before the 2017 season to Front Row Motorsports for $2 million.

“I can run this race team,’’ Devine said in court.

The matter has been continued until Wednesday.

3. West Coast review

While Kevin Harvick dominated the West Coast swing, winning two of the three races, Kyle Busch had the best average finish for the events at Las Vegas, Phoenix and Fontana.

Of course, Harvick’s 35th-place finish Sunday after contact with Kyle Larson ruined his average finish.

Here’s who had the best average finish for the three races:

2.3 — Kyle Busch

3.3 — Martin Truex Jr.

7.7 — Kyle Larson

8.0 — Erik Jones

8.3 — Brad Keselowski

Here’s who scored the most points in the three races:

147 — Martin Truex Jr.

146 — Kyle Busch

125 — Brad Keselowski

120 — Kyle Larson

115 — Kevin Harvick

Kevin Harvick, Kyle Busch and Martin Truex Jr. combined to lead 75.2 percent of the laps run on the West Coast swing. Harvick led 252 laps, Busch led 200 laps and Truex led 134 laps.

4. In case you missed it …

Only three drivers scored a top-10 finish in each of the three West Coast swing races: Kyle Busch, Martin Truex Jr. and Erik Jones.

5. Back in time

Jimmie Johnson has nine career Martinsville victories (in 32 starts for a winning percentage of 28.1 percent) but has two top-10 finishes — including a win in October 2016 — in the last seven starts there. He’s led only in two of those seven races. He once had a streak of 17 consecutive top-10 finishes there, including six wins.

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BK Racing owner explains reason for filing Chapter 11 bankruptcy

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DAYTONA BEACH, Florida — BK Racing owner Ron Devine said his team filed Chapter 11 bankruptcy to keep Union Bank & Trust from taking control of the team’s charter and selling it.

BK Racing filed Chapter 11 bankruptcy Thursday afternoon in Western District Court of North Carolina. In its bankruptcy filing, BK Racing estimated the number of its creditors as 50-99. The team estimated its assets as more than 10 million and estimated liabilities of more than $10 million.

The filing came shortly before a hearing was scheduled Thursday in Mecklenburg County Superior Court on Union Bank and Trust’s request to have a receiver to oversee BK Racing’s collateral. Union Bank & Trust claims that BK Racing owes it more than $8 million in outstanding loans. Among the most valuable pieces of BK Racing’s collateral is the charter it has for the No. 23 car that Gray Gaulding will drive in the Daytona 500.

“I filed (Chapter 11 bankruptcy) because the bank wouldn’t stop trying to get a receiver (to oversee the team’s collateral),’’ Devine said. “The only reason they wanted to get a receiver was to push the charter off to their third-party offer. That’s where the problem was.’’

Devine said he felt that he and the bank came close to resolving their issues before time ran out. He plans to meet with the bank next week and continue discussions.

The Chapter 11 bankruptcy listed 20 creditors with the largest unsecured claims. The largest was to Race Engines Plus for $569,539.95. Devine said matters have been resolved for the team to use the company’s engine and race this weekend but more needs to be done.

“We’re either going to fix it or we’re going to have to change,’’ Devine said of the engine company. “I think the relationship is what has to be fixed between me and Joey (Arrington, founder of Race Engines Plus). Fixed or changed or something. I actually think (Chapter) 11 will help us be able to have a conversation.’’

So how does Devine, who has owned various businesses and been involved in commercial and residential real estate development for more than 30 years, find himself in a such a financial position with his race team?

“I think it’s a tough business,’’ he said. “I think it’s an expensive learning curve. You’ve got to decide where you are taking the company. I took it down a very independent route. Probably wasn’t the smartest. I think the right thing to do is get an alignment.

“If I had any inclination of getting out, I would have let them do the receiver and just gone quietly into the sunset. I still see in the last unpioneered sport in the country, that NASCAR is going to be one of the premier sports in this country and I want to be a part of that. I still believe that. I think it’s going to be spectacular. I think it’s going through a transition. It’s headed in the right direction.’’

How does he get his team to where he wants to be competitively?

“We got to stop the nonsense,’’ Devine said. “We’ve got to get this thing worked out with this bank. Then we’ve got to get ourself together and on a platform that we can run and race competitively.’’

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Investment group purchases minority ownership share of BK Racing

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The Lynch Racing Co., a division of Sport Venture Group, announced Friday that it has acquired a minority ownership share in NASCAR Cup organization BK Racing from Iowa City Capital Partners.

“We’re constantly trying to improve and I think this is a step in the right direction to do that,” BK Racing majority owner Ron Devine told NBC Sports in a phone interview. “I think it’s a welcoming transaction for us and I’m excited about it. There’s a lot of work to do between now and that green flag at Daytona, but we’re on it.”

Devine said discussions are still taking place with Lynch Racing/SVG to gauge how much involvement there will be, but added, “I’m pleased, let’s just say that.”

“We look forward to working with Ron (Devine) going forward to enhance the value of the charter(s),” Ron Konersmann, Chairman of Sport Venture Group, said in a media release.

Anthony Marlowe, owner of Iowa City Capital Partners, is selling his share of BK Racing to Lynch Racing/SVG to focus on other areas of NASCAR involvement.

“Short term, I plan on moving from owner to sponsor, perhaps even a Series partner,” Marlowe told NBC Sports. “Long term, I am open to reinvesting in the sport if the right opportunity presents itself.

“With the right strategy, I think NASCAR can re-grow its market share. It needs to find a way for teams to build franchise value. … I’ve been a fan myself for many years, proud to have been involved, I proposed to my wife at the track. We love racing.”

An investor and entrepreneur, Marlowe purchased 15 percent of Swan Racing in 2013, then acquired 49 percent of Swan’s assets as it was closing and merged them into BK Racing in April 2014 for a 10 percent share of BK Racing.

BK Racing was founded in 2012 when Devine and Wayne Press acquired Red Bull Racing. It fields two teams in the NASCAR Cup Series and holds a NASCAR charter for the No. 23 Toyota Camry and the No. 83 Toyota Camry. BK Racing holds a NASCAR charter for the No. 23, but does not have a charter for the No. 83, having sold its charter before the 2017 season.

The No. 23 finished 35th in the 2017 Cup season owners standings, while the No. 83 was the highest-finishing “open” (unchartered) car in Cup, finishing 36th in the owners standings with a rotating cast of drivers.

“Without Ron, the majority owner, and managing partner, subsidizing the team, the team wouldn’t exist,” Marlowe said. “The reality is that most teams across all of the motorsports around the world, including stock car racing, at all levels operate because of someone like Ron. Ron at this stage in his life races for a living, and is determined to make it work in NASCAR.”

Marlowe said the addition of a venture group as an investor in BKR could help take the organization to bigger heights.

“The team has been dramatically underfunded vs. other teams since before my involvement, due to limited sponsorship sales, and lack of a competitive engine program,” Marlowe said. “I think it is clear to all incoming, outgoing and existing parties that some significant changes would go a long way to ensure it continues as a viable entity.”

BK Racing cars do not turn a lap in practice, qualifying Friday at Charlotte

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CONCORD, North Carolina — Both of BK Racing’s cars did not go on track Friday, missing Cup practice and qualifying Friday at Charlotte Motor Speedway.

“Bills were not paid,’’ Brett Moffitt, driver of the No. 83 BK Racing Toyota, told NBC Sports.

BK Racing owner Ron Devine declined comment to NBC Sports when informed of Moffitt’s comment.

Asked if his cars would be on track for Saturday’s practices, Devine texted NBC Sports: “Wait and see.’’

NASCAR confirmed Saturday that BK Racing’s cars are able to compete in Sunday’s race. Both BK Racing cars passed qualifying inspection and were prepared to practice Saturday before both sessions were canceled by rain. LaJoie will start 39th in the No. 23 car, and Moffitt will start 40th in the No. 83 car.

Moffitt, who drove the No. 83 two weekends ago at New Hampshire Motor Speedway for BK Racing, said this was not a new issue.

“We had an issue similar to this at Loudon and it got taken care of earlier in the day,’’ Moffitt said. “We’ll see about this one. You just wait and find out. That’s about all we can do.’’

Moffitt and LaJoie both took part in all three practice sessions at New Hampshire, qualified and raced. Moffitt finished 32nd and LaJoie placed 27th.

The No. 23 car for BK Racing, which has a charter, has run every race this season. The No. 83 car for BK Racing, which does not have a charter, has run all but two races this season.

In January, KickintheTires.net reported an arbitration ruling was signed by North Carolina Superior Court Judge Richard Doughton that BK Racing was to pay Race Engines Plus $1,462,648. The money was owned from 2013-15 for use of its engines, parts and rent. The ruling states that Race Engines Plus was not wrong to withhold engines and engines parts to the team in the offseason in 2014 and following a split between the two entities in April 2015. The ruling also stated that Race Engines Plus was to return engines and engine parts that were still being held as of Dec. 2016.

In August, Fronstretch.com reported on some of the financial difficulties BK Racing had had and that Devine said that Gray Gaulding, who drove for the team earlier this season, owed him $560,000 in sponsorship money, while owing him $1.36 million overall.

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