11/28/2007 1:00AM

Bankruptcy court approves NYRA plan

EmailA U.S. bankruptcy court in Manhattan on Wednesday approved an amended reorganization plan submitted by the New York Racing Association and set a date for creditors to vote on the plan by Dec. 21, according to the bankruptcy attorney for NYRA.

NYRA submitted the plan to the court on Tuesday afternoon in advance of the Wednesday hearing. Though the approval of the plan will provide creditors of NYRA with an opportunity to weigh the association's proposals to emerge from bankruptcy, the plan itself is based on a deal with Gov. Eliot Spitzer that also needs the approval of both houses of the state legislature in order to go forward.

Brian Rosen, the attorney for NYRA, said that representatives of the state appeared at the hearing to voice their approval of the document.

"Everyone was very supportive of the plan, from the state to our creditors," Rosen said.

Under the Spitzer plan, which is supported by Sheldon Silver, the assembly speaker, NYRA would receive a 30-year extension on its franchise - which expires at the end of this year - in exchange for the state taking title to its three racetracks: Aqueduct, Belmont, and Saratoga. Also in the deal, the state would provide NYRA with $75 million to satisfy some existing debts and provide operating cash as it emerges from bankruptcy protection.

The Spitzer deal has been criticized by senate Republicans, and the senate majority leader, Joseph Bruno, has proposed an alternate plan that would create a state commission with the power to award racing licenses to operators for the three tracks. The commission would also select operators for a casino at Aqueduct and possibly Belmont.

According to officials in the offices of Bruno and Spitzer, negotiations are ongoing on a legislative deal to settle the franchise issue, but both sides said that little progress has been made to bring the two sides closer together. If the legislature approves a franchise deal that differs from the Spitzer agreement, then NYRA will likely need to submit a different bankruptcy plan.

Also at the Wednesday hearing, an attorney representing the Internal Revenue Service said that it has agreed with NYRA that the association owes "less than $25 million" to the IRS, according to Rosen. The IRS had earlier estimated NYRA's tax liability as being in excess of $1.6 billion.

The dispute with the IRS was scheduled to be heard in the bankruptcy court on Dec. 6 if the two sides had not come to a settlement.

Little in the amended reorganization plan is different from a previous plan filed by NYRA, other than NYRA's contention in the new document that all of its creditors would have their debts paid in full. The previous document contemplated settlements with creditors that did not always rise to the 100 percent mark.

In hearings on the franchise issue this fall, some senate Republicans criticized portions of the Spitzer deal as requiring the state to "bail out" NYRA. Officials for NYRA disputed that characterization in the amended plan, contending that the state would receive $1 billion in assets under the deal by taking title to the tracks.