Churchill Downs, Suffolk OTB await ruling

Churchill Downs, the home of the Kentucky Derby, and Suffolk Off-Track Betting await a judge's ruling on whether the agency needed state or county approval to reorganize under federal bankruptcy protection.

The Kentucky track, which is a creditor, filed its objection six weeks after Suffolk OTB's March 18 bankruptcy filing, saying there is nothing in state law allowing the county legislature to authorize the Chapter 9 filing.

A hearing on the matter was held last month, and both sides await Bankruptcy Judge Carla Craig's ruling.

OTB officials have maintained that Suffolk County has the power to authorize a bankruptcy filing because the Suffolk Legislature created the agency in 1975, appoints its three-member board, receives all the profits and, if the operation were to go out of business, would receive all its assets.

However, Churchill Downs' lawyers maintain only the State Legislature has authority to permit the bankruptcy.

"The debtor has not cited a single provision empowering Suffolk County to authorize Suffolk OTB's bankruptcy filing or to otherwise terminate or restructure Suffolk OTB operations," track officials stated in court papers.

OTB officials worry the track's objection, if upheld, could slow efforts to reorganize under protection of the U.S Bankruptcy Court in Brooklyn, streamline its operation and develop a schedule to pay off its existing debts.

In a bid to knock Churchill Downs out as a creditor, Suffolk OTB last month paid the track the $15,000 it was owed in settlement money for OTB wagers.

Lee Park, a spokesman for the state Racing and Wagering Board which oversees Suffolk OTB, said the agency has no position on the dispute.