03/06/2009 12:00AM

$6 million for horsemen temporarily frozen


ARCADIA, Calif. - Approximately $6 million in horsemen's funds distributed at Golden Gate Fields and Santa Anita on Wednesday has been frozen by banks as part of the bankruptcy proceedings of the tracks' parent company, Magna Entertainment, said Drew Couto, the president of the Thoroughbred Owners of California.

Couto said the money was disbursed to horsemen prior to Magna's filing for Chapter 11 bankruptcy protection in Delaware court on Thursday, but the checks cannot be cashed until the bankruptcy court allows the funds to be released.

Couto said on Friday that he hoped the funds would be released to horsemen later that day, but feared it might not occur until next week. He said the TOC has hired an attorney to argue on behalf of California horsemen in Delaware courts on Monday, if the funds had not been released.

"What we've told horsemen is we have counsel in New York standing by to go in on our behalf," he said.

About $9 million in a trust formed Wednesday by the TOC also was not available to horsemen because of the logistics of launching the venture, Couto said. He expressed hope that the trust would be in place to distribute money on Saturday, even if that meant issuing hand-written checks. The TOC formed the trust in anticipation of the bankruptcy filing to administer horsemen's purse accounts through the track's paymasters of purses.

Speaking of the Magna bankruptcy, Couto said, "We'll have a couple of rough days, but people should realize the sky is not falling."

The larger issue of how Magna's bankruptcy will affect California racing was discussed in a one-hour meeting by the California Horse Racing Board at Santa Anita on Friday.

Gregg Scoggins, Magna's national director of regulatory affairs, told the board that the parent company will continue to operate its racetracks while attending to bankruptcy matters.

"We understand there are critical and important partners in our business - horsemen and fans," he said. "There is an appreciation for the roles these people play. We will do everything in our power, under bankruptcy law, to make sure this goes forward. I can understand everyone's anxiety."

The board took no action during the meeting, which was attended by approximately 100 horsemen and racing officials.

"I feel reassured," racing board chairman John Harris said at the conclusion of the meeting. "We'll know more as we go along."