Carolina Panthers: Contractors Talk Failed SC Project
When SteelFab began work on the massive Carolina Panthers Rock Hill headquarters project two summers ago, it had no idea how high the price of steel would go.
Over a two-year period during the coronavirus pandemic, as SteelFab ordered materials for the 700,000 square foot headquarters building, steel prices rose in some cases by 215%. Other prices such as labor have also skyrocketed.
That meant the Rock Hill project was already becoming a “financial loser” for the subcontractor, SteelFab president and CEO Glenn Sherrill told the Charlotte Observer in an exclusive interview.
But after the project was shut down in March and contractors received stop-work orders, SteelFab’s cash flow was worsened by another factor. In June, GT Real Estate Holdings, LLC, the billionaire Panthers owner company David Tepper created for the project, filed for Chapter 11 bankruptcy.
The filing was made “to effect an orderly liquidation of the project,” GT Real Estate Holdings said at the time. The project was halted due to a disagreement between the town of Rock Hill and the company, even though construction had already begun.
Now, as the bankruptcy case progresses, SteelFab — one of many subcontractors on the project — has written in federal bankruptcy court filings that it owes $4.6 million for work already done. . GT Real Estate Holdings owes nearly $77 million, according to federal bankruptcy court records.
The company does not know when or if it will be reimbursed, Sherrill told the Observer. In the meantime, the company sends monthly invoices to GT Real Estate Holdings for about $6,400 because it was forced to store about 200 tons of steel in an offsite property. These materials could not be delivered to the site due to the halt in construction and lack of space at SteelFab’s plant, Sherrill said.
There were other impacts on the business. SteelFab had to find other work for its crew.
Sherrill said he thinks other entrepreneurs are facing similar issues.
“It’s hard to quantify what this has done to our business, but the disruption is significant,” Sherill said.
The loss SteelFab was incurring due to rising steel prices was “exacerbated” by Tepper’s “unwillingness to pay its bills,” Sherrill said.
Blythe Development Company, another contractor, told the Observer it owed $2.6 million. The Charlotte company has done work on the site, which means clearing and grading the roughly 240 acres off Interstate 77 as well as erosion control. Blythe also worked installing water, sewer and utility lines, the company’s vice president of operations, Luke Blythe, said in an interview.
The company is large enough not to be greatly affected by the non-payment, but Blythe said not being reimbursed for the $2.6 million was a “huge loss”. With inflation pushing up fuel prices and other costs like labor, the company’s bottom line has been hit, Blythe said. Although they were able to pay their employees, non-payment could affect employee bonuses and raises.
“It definitely flows a long distance,” Blythe said. “It’s not just about not getting paid. It affects businesses and families.
Reached Tuesday, a spokesperson for Tepper Sports & Entertainment declined to comment.
In a statement earlier this month, GT Real Estate Holdings wrote that it had “faced various claims, some valid and some not, from suppliers, contractors and other third parties, including York County, SC”.
“GTRE is taking this action to ensure that legitimate claims are dealt with as fairly and expeditiously as possible through a court-supervised process, and to bring about the orderly and safe end of the project. GTRE intends to resolve its legitimate obligations.
In the interests of creditors
GT Real Estate Holdings’ proposed plan in the bankruptcy process is in the “best interests” of all potential creditors in the case in federal court in Delaware, according to its bankruptcy filings. The company wrote that its path forward will “maximize the value of the domain.”
Creditors and a bankruptcy judge in the case are due to meet Wednesday morning in the case. Attorneys representing GT Real Estate, the City of Rock Hill and other parties named in the case met with a bankruptcy judge for two hours on June 6.
Meanwhile, several of the potential creditors have joined general contractor and project construction management firm Mascaro/Barton Malow in moving the case from federal bankruptcy court in Delaware to federal courts in North Carolina. South.
Creditors say the case belongs in South Carolina, where the property is located and where the decision must be made, according to the records.
GT Real Estate objected to moving the case, according to court documents. The company says the venue change would not benefit GT Real Estate Holdings, creditors or other parties. The company argued, among other reasons, that Mascaro/Barton Malow could present its concerns about the Delaware bankruptcy plan “as well as it could in a South Carolina bankruptcy court,” the records say.
But there are other impacts on the Charlotte area to consider, Mascaro/Barton Malow’s attorneys wrote in court documents.
“The negative impact of the proposed winding down of the Project on the City of Rock Hill and York County, South Carolina, residents and businesses cannot be overstated,” the attorneys wrote.
Lawyers in the case told the Herald of Rock Hill on Tuesday that a decision on a venue change remains pending and will likely be scheduled for oral argument next week.
Other Contractor Privileges
A review of federal bankruptcy filings shows that SteelFab is among seven contractors and subcontractors that filed liens against GT Real Estate Holdings.
One of them is Mascaro/Barton Malow.
The joint venture lists a lien of $67.8 million, according to court records. Other companies list liens in lower amounts, including Baker Roofing Company for around $119,000. In total, liens filed in publicly available court records total approximately $77 million.
Attempts to join Mascaro/Barton Malow on Monday were unsuccessful.
York County says it owes him $21 million, according to court records.
Questioning business decisions
SteelFab’s contract for the project was about $55 million, Sherrill said. The company used 10,000 tons of steel to construct the state-of-the-art facility. The steel work was nearly complete and can still be seen standing upright from Interstate 77.
SteelFab isn’t used to not getting paid for its work, Sherrill said. He can remember a company that ran out of cash and couldn’t pay it.
For the Rock Hill project, Sherrill reflects on how he’s connected to one of the sport’s wealthiest owners.
Sherrill questioned Tepper’s business practices, wondering why the Panthers owner couldn’t take out a loan or find a way to pay to complete the project instead of filing for bankruptcy.
The SteelFab executive says his team of up to 100 workers worked long hours to meet deadlines. This included working 6 and a half days a week.
Sherrill said SteelFab has been able to pay all of its hourly workers, but the money owed to it means the company has been unable to pay its suppliers — a ripple effect of not receiving the $4.6 million from GT Real Estate Holdings.
He asked why a dispute between GT Real Estate Holdings and Rock Hill should involve the construction crews.
For Blythe, the other contractor, the Rock Hill project was something he said his company aimed to work on. As a Charlottean native and Panthers fan, he saw the project as a positive for the city of South Carolina and something his company could be proud of. He called the construction halt and bankruptcy filing “disappointing”.
Earlier this year, Forbes magazine’s annual ranking of the world’s richest sports team owners pegged Tepper’s net worth at $16.7 billion, earning him a No. 8 spot on the list. listing.
“I never imagined there could be a chance that he would shut down the job and not pay us,” Sherrill said.
Highlighting Tepper’s net worth, Sherrill said, “Paying his bills is no problem if he wanted to do the right thing.”
(Rock Hill) Herald editor Andrew Dys contributed to this report.