A federal bankruptcy court judge has paved the way for the New York Racing Association to emerge from Chapter 11 protection pending the outcome of a vote by creditors.
“It’s more than a step, it’s a giant leap toward exiting Chapter 11 and moving forward with the franchise,” Brian Rosen, NYRA’s bankruptcy attorney, said of the decision by Judge James Peck of the Southern District Bankruptcy Court in Manhattan.
Rosen said the Internal Revenue Service also dropped its $1.6-billion claim of back taxes owed by NYRA, accepting a deal in which NYRA would pay up to $25 million to settle the claim. IRS officials could not immediately be reached for comment.
Peck accepted a voluminous “disclosure statement” in which NYRA outlined its plan to end the bankruptcy protection, including paying in full the long line of creditors.
Its plan, however, is predicated upon the state legislature accepting a recent deal between NYRA and Gov. Eliot Spitzer in which NYRA would get a 30-year franchise extension. In return, NYRA would relinquish its ownership claims of Aqueduct, Belmont Park, and Saratoga; the state would also assist NYRA with $75 million in operating aid and write off more than $100 million in past obligations by NYRA.
If the approval by the legislature does not come by Dec. 31, the date the franchise expires, the bankruptcy reorganization plan would be off, and the land claim fight back on the table. NYRA has threatened racing could shut down in January if no deal for a franchise extension comes.
Rosen said NYRA can now begin soliciting creditors to sign onto its reorganization plan. Ballots are due Dec. 21 by creditors, Rosen said, with a Dec. 27 court date again before Peck at which the overall plan could be approved--though conditional on the legislature acting before Dec. 31.
The franchise situation is as muddled as it has been for months. Discussions are under way this week in secret at the Capitol, with Senate Majority Leader Joseph Bruno saying he believes the Senate is close to a deal with Spitzer. Bruno has floated the idea of breaking up the racetracks among different operators, which Spitzer opposes.
Bruno and Spitzer also want video lottery terminal casino at Belmont, which Assembly Speaker Sheldon Silver opposes; Aqueduct is already in line for a casino.
Still at play is who would operate the casino, or casinos, if there more than one opens. Six entities are vying for that potentially lucrative business.