BK Racing files for Chapter 11 bankruptcy, may still compete in Daytona 500

DAYTONA BEACH, Fla. -- BK Racing has filed for Chapter 11 bankruptcy, which likely would allow the team to compete in the Daytona 500 this weekend and potentially operate while coming up with a plan to pay debtors.

The filing Thursday came less than an hour before a hearing on a request from Union Bank & Trust to appoint a receiver to take over BK Racing assets, which include a charter, NASCAR's version of a franchise that guarantees a spot in every race. The bankruptcy filing halts all other court proceedings.

"We have a clear process around charter member governance," NASCAR said in a statement Thursday. "It is incumbent upon charter members to be ready to race and compete at the highest level. BK Racing remains the holder of the charter."

BK Racing could still have competed as a nonchartered team for one of the four open spots in the field, but a noncharter team gets 35 percent of what a charter team earns per race.

NASCAR still could revoke BK Racing's charter because of the bankruptcy filing. The sanctioning body did not indicate whether it would pursue that route in bankruptcy court.

Gray Gaulding is scheduled to compete Thursday night in a Daytona 500 qualifying race. The team's engine builder, Race Engines Plus, refused to start the motor in single-car qualifying inspection last Sunday and the car must start the 150-miler Thursday in order to compete Sunday.

"BK will do everything it can to continue to race," BK Racing owner Ron Devine said in a text.

In its bankruptcy filing, BK Racing says it owes REP $569,539, although REP has sued Devine, claiming it is owed $647,084.

In total, BK Racing says it has more than $10 million in assets and liabilities, according to the bankruptcy filing. According to a temporary restraining order issued Jan. 26 to keep BK Racing from selling assets, Union Bank & Trust established it was owed more than $8 million in loan payments and fees. BK Racing also faces a lawsuit alleging missing payments on a $2 million private loan.

As of last week, BK Racing also was facing a federal tax lien of more than $667,000 and owes the North Carolina department of commerce fees of approximately $66,000, according to separate court records.

According to its bankruptcy filing, BK Racing owes unsecured creditors $1.2 million, with REP as its biggest unsecured debt. Among the other racing debts are $94,999 to Champion Tire & Wheel (which transports pit boxes and provides wheels to teams), Moroso Performance (auto parts, $72,507) and Champion Air (air travel, $70,550).

Gaulding said Wednesday he would just try to focus on his job.

"I'm not really worried about all the other stuff," Gaulding said. "My job is to go out there and drive, be focused and do the best I can for my team and BK Racing. I'm just excited about it.

"As a driver, things can be going on in the background or whatever. ... You've got to stay positive no matter what the outcome is."