Some of New York City Off-Track Betting Corp. creditors are poised to forgive nearly $100 million in debt.
Blank Rome, which serves as bankruptcy counsel for a committee of seven unsecured creditors for the large off-tracking betting company, released the following statement Aug. 25:
“The Committee is working with NYCOTB on a number of initiatives that will increase state-wide funding for education while restoring NYCOTB’s original legislative purpose—to provide support to the State of New York’s horse racing industry.
"The Committee’s proposal will forgive almost $100 million in pre-petition and post-petition debt owed by NYCOTB to its unsecured creditors and significantly reduce future revenue that is received by the tracks that are represented on the Committee. However, we believe that these proposed changes will make NYCOTB a more functional and viable concern going forward and we are willing to do our part in order to stabilize the state’s racing industry and find ways to increase education funding.”
The seven creditors are the New York Racing Association, Churchill Downs, Inc., Paramount Leasehold, L.P., Finger Lakes Racing Association, Empire Resorts/Monticello Raceway, Yonkers Racing Corp., and the public employee labor union District Council 37/Local 2021.
Charlie Hayward, NYRA’s president and chief executive officer, could not comment because details of the negotiations that would lead to wiping the financial slate clean are still ongoing.
“If an agreement is reached, then what would be forgiven is what was owed to these seven creditors only from the time NYCOTB filed for bankruptcy through July 31,” said Dwayne Andrews, a principle in the government relations group for Blank Rome. “We can’t go into specifics because it is still being negotiated. We are closer to an agreement.”
Andrews also added that what is agreed upon will still have to approved by the state Senate and Assembly, which is currently wrestling with an unresolved state budget.
In other related news Aug. 25, NYCOTB CEO Greg Rayburn is asking for concessions from the corporation’s largest union, which is District Council 37. Rayburn wants 400 job cuts and to end double pay for Sunday work, according to Bloomberg.com. The labor concessions must be made by Aug. 31 in order to avoid liquidation of NYCOTB and to get out of bankruptcy without having to cut workers’ wagers, Rayburn reportedly said in a conference call.
Besides the union concessions, Rayburn’s plan for restoring the financial health of NYCOTB includes having other creditors settle their claims for undisclosed amounts, reduce payments to racetracks by about $32 million annually, and have the state drop $10 million of claims. He also wants lawmakers in Albany to change state law but didn’t say what changes he would be seeking.
Jessica Basset, a spokeswoman for Rayburn, told Bloomberg.com that liquidation of the OTB is the least-preferable option and “would trigger hundreds of millions of dollars in claims, while the asset-value recovery would be a fraction of that amount.”
NYCOTB employed about 1,365 people at 68 betting parlors in New York City at the time of its bankruptcy filing. Rayburn said 10 or 11 betting locations will close soon.
