Magna Entertainment creditor lawsuits OK'd by judge
Last Updated: Tuesday, August 18, 2009 | 3:15 PM ET
The Associated Press
A Delaware bankruptcy judge says creditors of horse-track owner Magna Entertainment Corp. can pursue claims against the company's parent and its chairman, Frank Stronach.
Judge Mary Walrath on Tuesday authorized Magna's creditors committee to prosecute claims against Stronach, his Ontario-based MI Developments, and other individuals on behalf of Magna's bankruptcy estate.
The creditors claim Magna directors could have avoided bankruptcy by selling company assets, but instead engaged in sham financial transactions intended to benefit Stronach, who is chairman of both Magna and its MID parent. They say Stronach propped up Magna with equity infusions disguised as secured loans to ensure that he retained control of MEC assets.
MID disputes the allegations and says it will file a motion to dismiss the complaint.
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