By JACQUELINE PALANK
WASHINGTON (Dow Jones/AP) – The New York Racing Association is asking for few extra weeks to control its bankruptcy case as it awaits action from the state legislature to pass a law crucial to its Chapter 11 reorganization plan.
NYRA on Wednesday asked the U.S. Bankruptcy Court in Manhattan to extend the time in which it has the exclusive right to file a Chapter 11 plan to March 7 from Monday. Even though the association has already filed a plan and its creditors have voted in favor of the plan’s confirmation, NYRA wants to make sure competing parties aren’t able to offer rival plans.
Companies under Chapter 11 protection, like NYRA, must file a plan outlining how they will reorganize and repay creditors. Exclusive periods prevent creditors from proposing alternative proposals and allow the company to retain control of its bankruptcy case.
"NYRA has completed all of the necessary steps to emerge from the Chapter 11 process and more," the association said in court documents. "NYRA merely wants all parties to remain in place while the legislative process catches up to the swiftness of the bankruptcy process and the affirmative votes of NYRA’s creditors."
NYRA, which has operated New York’s three largest thoroughbred racing tracks under a state-awarded franchise since 1955, is awaiting legislation that would resolve a dispute between NYRA and the state over who owns the tracks. Its reorganization plan relies on the state to pass legislation to renew the franchise deal, which expired at the end of 2007.
NYRA and the state have already reached a tentative agreement that awards NYRA the franchise for the next 30 years in exchange for surrendering ownership of the tracks -Aqueduct, Belmont and Saratoga – to the state. Although the franchise expired Dec. 31 and hasn’t yet been officially renewed, NYRA has continued to operate the tracks as part of this agreement.
The Chapter 11 plan relies on this tentative agreement being made state law, and NYRA said it expects – but doesn’t guarantee – that both chambers of the state government will pass a bill by Wednesday.
Without an exclusivity extension, NYRA warned that competitors could jump in and offer their own plans, that would hurt all involved in its bankruptcy case.
"Terminating exclusivity at this time to permit an interloper to intervene and introduce a competing Chapter 11 plan would only plague this Chapter 11 case and cause confusion in (state capital) Albany and among NYRA’s creditors and delay the entire process," the association said.
NYRA said its request was not a strategic device or attempt to pressure creditors into supporting the plan, who already have voted in favor of the plan. Rather, an exclusivity an extension will "allow all parties breathing room to go back to the table" if the deal doesn’t pan out.
Bankruptcy Judge James M. Peck scheduled a hearing for next week Thursday to consider NYRA’s request and extended its exclusivity over the three days between the current expiration date and the hearing. NYRA said the state supports its request.