New York City Off-Track Betting Corporation was legally authorized to file bankruptcy under a little-used part of the code that is reserved for municipalities because of the broad powers of oversight conferred on Gov. David Paterson, the state-owned corporation argued Wednesday in a response to objections to its bankruptcy filing.\nThe response was filed in advance of a hearing scheduled for Jan. 20 to hear arguments about whether or not the offtrack betting company can reorganize under chapter 9. New York City OTB, the largest bet-taker in the United States, filed for Chapter 9 bankruptcy protection in early December, but last week the New York Racing Association filed an objection to the move, arguing that the legislature needed to authorize the decision and that the OTB company did not negotiate in good faith before filing for bankruptcy.\nIn its response, New York City OTB contends that Gov. Paterson s authorization was all that was required to go forward, in part because of the state s takeover of the company in 2008 from New York City. As part of the legislation authorizing the takeover, Paterson was given the power to appoint and remove board members of the organization. In addition, the response said, because the legislation included language calling the continued operation of New York City OTB to be of paramount importance to the public interest, the OTB company s decision to pursue protection in Chapter 9 dovetailed with the justifications outlined in previous case law for similar situations.\nThe response also claimed that New York City OTB would demonstrate that it satisfied several requirements for negotiations with its creditors before filing for bankruptcy, but the response itself was short on details.\n NYC OTB intends to show that it negotiated in good faith with creditors through the documentary and testimonial evidence to be introduced at the hearing, the response states. \nThe response also said that New York City OTB was limited in its ability to negotiate because of its contention that state law needs to be changed in order to restore the company to financial viability. In 2008, according to financial documents, New York City OTB paid out approximately $100 million of its $250 million to various racing interests in the state, under a complex mix of statutory requirements.\n NYC OTB cannot develop a viable financial or business plan until the legislature decides how much NYC OTB must pay to support the New York racing industry, the response said. Until the legislature sets that key financial determinant, any negotiation with creditors over a repayment plan is impracticable.