10/23/2007 11:00PM

NYRA files reorganization plan

EmailThe New York Racing Association filed a reorganization plan in bankruptcy court on Tuesday that is based on a recommendation by New York Gov. Eliot Spitzer to award NYRA a 30-year extension on its franchise.

The plan, which was filed in U.S. Bankruptcy Court for the Southern District of New York, would require NYRA to give the state the titles to Aqueduct, Belmont, and Saratoga and extend NYRA's franchise until Dec. 31, 2037. The state would be required to provide NYRA with as much as $75 million to pay off its creditors and forgive NYRA's debts to the state, the reorganization plan states.

The reorganization plan is contingent upon an agreement among the state's Senate, Assembly, and Spitzer, and the plan will likely be pulled from bankruptcy court if an approved franchise agreement differs in any respect from the details of the plan.

NYRA filed for Chapter 11 bankruptcy in December 2006 as part of a strategy to find solutions to its financial struggles and also protect its assets while legislators began to contemplate how to award the franchise. NYRA's franchise to run racing at the three tracks - a franchise it has held since 1955 - expires at the end of this year.

In September, Spitzer recommended that NYRA receive the extension as part of a deal to settle the franchise issue, NYRA's bankruptcy, and a legal dispute over whether NYRA or the state owns the racetracks. The recommendation has been endorsed by the Assembly, but the Senate has recommended a different plan that would entail the creation of a new state authority that would have the power to select operators for the three tracks and a casino at Aqueduct.

The reorganization plan would also require NYRA to drop a lawsuit against the state in which it contended that the administration of former Gov. George Pataki interfered with the approval process to start construction on a casino at Aqueduct that has been approved for 4,500 slot machines. Slot machines were legalized at Aqueduct by legislation in 2001, but the casino has not yet been built.

In addition, as part of the reorganization, the state would have to drop its motion to dismiss NYRA's bankruptcy. The state filed the motion early this year.

According to the plan, NYRA would transfer the deeds of the racetracks to the state on the date in which the plan is accepted by the court. Officials in the Spitzer administration have said that they believed the state had a legitimate case to claim title to the land, but that they wanted to avoid litigation over the matter.