Indiana Downs owner halts lawsuit amid bankruptcy

Cordish Cos., a real-estate developer trying to build a casino near Baltimore, must temporarily halt a defamation lawsuit against the chief executive officer of Shelbyville casino owner Indianapolis Downs LLC, a federal judge said Tuesday.

U.S. Bankruptcy Judge Brendan Linehan Shannon on Tuesday granted a request to suspend legal action against CEO Ross J. Mangano, saying the lawsuit would disrupt the company’s Chapter 11 bankruptcy. Indianapolis Downs owns the Indiana Downs horse track and Indiana Live casino.

Cordish filed suit in February, claiming it was defamed by competing casino companies and their executives, including Mangano, casino owner Penn National Gaming Inc. and horse-track owner Frank Stronach.

Mangano and Stronach allegedly were “part of an ongoing campaign designed to smear, defame and otherwise falsely portray the Cordish entities for the purpose of harming them economically and influencing both the Maryland state Legislature and lottery commission,” according to the suit.

Baltimore-based Cordish needs the support of the commission and state lawmakers to open its proposed casino. The company is fighting horse-track owner Indianapolis Downs in bankruptcy court in Wilmington, Del., over a management contract between the companies.

The Indiana Downs track opened in 2002, and the casino began operations in 2008. It has 2,000 slot machines and electronic table games. Revenue in 2010 was $270 million.

Indianapolis Downs filed for bankruptcy in April after failing to pay interest on time on $375 million in second lien notes, the company said in court papers. Last week, the casino laid off about 30 members of its 800-person staff.

Indianapolis Downs denied Cordish’s allegations in court papers. In a statement in February, Stronach’s company, MI Developments Inc., called the suit meritless.

Shannon’s order doesn’t prevent Cordish from pursuing its case against Stronach and the other defendants who are not involved in the bankruptcy.