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Bankruptcy judge approves sale of BK Racing to Front Row Motorsports

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CHARLOTTE, N.C. — A day after he put his team in Chapter 11 bankruptcy, BK Racing owner Ron Devine alternated between being combative and conciliatory as he spoke to reporters outside his hauler in the Daytona International Speedway garage.

Losses in the millions, a pile of debt and a bank eager to get more than $8 million back in loans and accrued interest led Devine to go to court to protect his team and its charter — the one item that gave his underfunded team its greatest value.

The paperwork was filed, according to court documents, about 30 minutes before a Feb. 15 hearing in Mecklenburg County Superior Court. That hearing was in regards to Union Bank & Trust’s request of a receiver to operate BK Racing and a preliminary injunction to prevent the team from selling or leasing its charter.

“We’ll get it resolved,” Devine said 48 hours before the Daytona 500. “I promise you, we will get it resolved. The bank wants it resolved, and I want it resolved. We will get it resolved. And I’ll see you in Homestead (for the season finale).

“We will be in Homestead.”

Devine was right six months ago. It got resolved.

But left him without a team.

Judge J. Craig Whitley approved the sale of BK Racing — a team Devine helped bring to Cup in 2012 — to Front Row Motorsports for $2.08 million on Thursday.

In announcing his decision, Whitley called the matter “just a bad situation and we’re doing the best we can with it. I don’t expect anybody to be delighted by it, but it is what it is.”

Devine and the team’s engine supplier objected to the sale Thursday. During an early recess, Devine spoke with the attorney for Union Bank & Trust. After the brief discussion, Devine shook his head, walked away and said: “Then that will do it. Jesus Christ.”

Devine and the team’s engine builder urged the judge to let the team continue through the rest of the season and be sold then. Devine stated that he would be an interested buyer then. Devine, it was noted in court, had made an unqualified bid to get the team back.

On the stand, Devine made a last-minute appeal to the judge not to sell the team: “This is wrong to occur during the season. There is the ability to run the team through the end of the season.”

Devine called it a “misconception that this team is on the brink of collapse.”

Trustee Matt Smith, appointed by the court to take over the team from Devine in late March, said Thursday morning on the stand that “cash continues to be very, very tight.”

Smith also said on the stand that “without sponsorship, I run about $30,000 to $50,000 in the hole” per race. Smith expressed concerns that he would be able to run the team through the end of the season.

The charter requires teams to compete each weekend. If the team missed races, it would allow NASCAR to take the charter back and leave BK Racing with little value. While Smith and many others expressed disappointment that the bidding didn’t generate any more money, Smith recommended the sale take place.

When Devine questioned Smith on cross examination about how long it took for him to provide info on the team’s financial status, Smith said: “The business records you had were atrocious.”

After the hearing, Devine said: “That trustee at the very least ought to be embarrassed. He should have stopped it with one bidder. I just think he was in over his head.”

The judge didn’t see it that way and awarded the charter and assets to Front Row Motorsports. The judge also approved the sale of equipment and 19 chassis (primarily in storage and in various stages of readiness) for $265,000 to Obaika Racing and a hauler to Rick Ware Racing for $35,000.

Front Row Motorsports gets BK Racing’s charter, which guarantees a starting spot in every race and a set amount of money per event, and some of its assets, including the cars it is running. Front Row Motorsports was expected to close on the sale as early as Thursday afternoon. All of BK Racing’s employees will be retained as part of the agreement.

Front Row Motorsports now owns both charters that went to BK Racing when the charter system was created before the 2016 season. BK Racing sold a charter to Front Row Motorsports in December 2016 for $2 million, a sale that did not include any other assets.

Front Row Motorsports, a Ford team will run the former BK Racing team, a Toyota team, as a separate entity through the end of the season.

Jerry Freeze, general manager of Front Row Motorsports who attended court Thursday, said the team will not change manufacturers after this season. He also said he did not know who the driver of the BK team will be for next weekend’s Southern 500 at Darlington Raceway. Or if the car number will change from No. 23 to No. 35, a number Front Row Motorsports has used for a third entry at times.

Freeze said the team wants to expand to three full-time cars but admits it will be challenging to find the sponsorship at this point to do so for next year. An option for the team would be to lease two of its charters to other teams — it already leases a charter to TriStar Motorsports and could continue that relationship. Charters can be leased once every five years.

“You’ve got to imagine we’ve been assessing the market for who would need to lease a charter next year and who might be interested in buying one of the other charters that we have,” Freeze said after the hearing. “So we think there’s a market out there for sure. It was worth taking the chance and opportunity to see if we could get this one.”

Front Row Motorsports’ bid topped a bid from Mike Beam, president of GMS Racing.

That a Cup team’s fate was settled in a U.S. Bankruptcy courtroom showed how far BK Racing had fallen. Six weeks after Devine filed Chapter 11 bankruptcy, he lost control of the team when Smith was assigned as trustee. Devine called the judge’s action then “a sad day for BK.’’

It wouldn’t have to come to that had the team been more fiscally responsible. Court documents show that team lost $29.5 million from 2014-16. Court documents show that the team “budgeted” for a loss of $1.358 million in 2017 in what was described as a “skeletal budget.”

Then, there was the millions owed Union Bank & Trust for the numerous loans (now up to more than $9 million). The IRS filed court documents on March 12 that stated it had a secured claim of $2.5 million and a priority claim of $328,792.47 owed. A former employee and current employee at the time testified in March about having paychecks bounce last year. A former employee said he had a paycheck bounce in September 2017, November 2017 and December 2017 before leaving the team.

In May, court documents listed secured claims against the team at $31.6 million. That included $15 million to the Virginia Racers Group, which included Devine and started the team. Court documents also listed unsecured claims at $773,569.17 and non-priority unsecured claims at more than $5 million.

Smith decided this summer that it was in the best interest to sell the team.

“One of the reasons, and I know that Mr. Devine is in the room and probably doesn’t want to hear this, but I think one of the reasons this team is in trouble is it had the wrong owner,” Smith said in court on July 26. “So I believe the right owner, transition of ownership, would be the best thing for this team.”

Smith stated that day that “the cash flow (for the team) is exceptionally tight” and questioned then about going beyond the end of the season.

With all the money spent, BK Racing rarely ran anywhere close to the front. The organization, which fielded up to four cars at times, had three top-10 finishes in its history.

Sunday, in its last race as BK Racing, Blake Jones finished 27th, 15 laps behind the leaders. Only three other cars that made it to the finish ran fewer laps than Jones.

“It’s a tough business,” Devine said in February at Daytona when asked why he didn’t align with another team to help defray costs. “I think it’s an expensive learning curve. I also think … you’ve got to decide where you are taking the company and I took it down a very independent route, which probably wasn’t the smartest (thing).”

But Devine was not deterred Thursday. As he stood outside the federal courthouse awaiting an Uber ride to the airport, he said he still wanted to be in NASCAR as an owner.

“I’ve got other options,” he said.

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Report: Justin Allgaier returning to JR Motorsports in 2020

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Justin Allgaier confirmed to Catchfence.com Friday that he will remain with JR Motorsports in 2020.

It will be Allgaier’s fifth season in the Xfinity Series with JRM.

“I will be back next year. Same deal,” Allgaier told Catchfence.com “Everything is good. We’re doing the same thing next that we are doing right now.”

Allgaier, 33, is fourth is the point standings entering this weekend’s race at Road America (3 p.m. Saturday on NBCSN).

Allgaier is the only driver in the top six in points without a win this year.

 

Xfinity Series practice report from Road America

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Christopher Bell was fastest in the final Xfinity Series practice Friday at Road America.

Bell posted a top speed of 108.562 mph around the road course.

The top five was completed by Matt DiBenedetto (108.106 mph), AJ Allmendinger (108.091), Justin Haley (107.927) and Cole Custer (107.895).

Chase Briscoe recorded the most laps in the session with 19.

The session was stopped with about 50 minutes left for a hard crash by Brandon Jones exiting Turn 11. Jones will go to a backup car for Saturday’s race.

Just before Jones’ wreck, the left-rear truck arm mount broke on Jeremy Clements‘ No. 51 Chevrolet and his car stalled on the track.

The red flag was brought out for the second time when Preston Pardus’ No. 43 Chevrolet stalled on the track. His car then stalled a second time in the final minute of the session.

The session had a third red flag when Josh Williams‘ car stalled on the track.

Click here for the practice report.

First Practice

Bell was fastest, posting a top speed of 108.559 mph around the road course.

The top five was completed by defending race winner Justin Allgaier (108.530 mph), Cindric (108.346), DiBenedetto (108.139) and Allmendinger (107.967).

Chase Briscoe recorded the most laps with 14.

The session was stopped once for debris with 35 minutes left in the session.

Minor incidents in the session included Noah Gragson briefly going off course and a spin by Dexter Bean.

Click here for the practice report.

Updated entry lists for Xfinity, Truck Series this weekend

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While the NASCAR Cup Series will be off this weekend, that doesn’t mean there won’t be any racing.

On the contrary, the Xfinity Series will be racing Saturday at Road America and the Truck Series will compete Sunday at Canadian Tire Motorsport Park.

Here are the entry lists for both series:

Xfinity – CTECH Manufacturing 180 (3 p.m. ET Saturday on NBCSN)

There are 38 cars entered.

Regan Smith will be in the No. 8 J.R. Motorsports Chevrolet.

A.J. Allmendinger will drive the No. 10 Kaulig Racing Chevrolet.

Saturday’s Cup runner-up, Matt DiBenedetto, will drive the No. 18 Joe Gibbs Racing Toyota.

Ryan Vargas is entered in JD Motorsports’ No. 4 Chevrolet for his second start of the year.

Click here for the entry list.

Trucks – Chevrolet Silverado 250 (2:30 p.m. ET Sunday on FS1)

There are only 29 Trucks listed for the entry list. A full field would be 32 trucks.

Alex Tagliani is entered in Kyle Busch Motorsports’ No. 51 Toyota for his first start of the year.

Dylan Lupton is entered in Young’s Motorsports’ No. 20 Chevrolet.

Click here for the entry list.

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Friday schedule for Xfinity Series at Road America

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The NASCAR Xfinity Series hits the track today with two practices at Road America in preparation for Saturday’s race.

The wunderground.com forecast for Friday calls for partly cloudy skies with a high of 69 degrees and a 10% chance of rain during the day.

Here is today’s schedule at Road America:

(All times are Eastern)

10:30 a.m. – 7 p.m. – Xfinity garage open

1:35 – 2:25 p.m. – Xfinity practice (NBC Sports App)

3:35 – 4:55 – Final Xfinity practice (NBC Sports App)