New York bankruptcy partner Chris Graham advises Suffolk Regional Off-Track Betting Corporation in a milestone $100 million reorganization plan; confirmed plan repays creditors in full, will bring casino to Long Island employing additional Suffolk OTB workers
In a milestone representation, McKenna Long & Aldridge has successfully represented the municipal debtor in the first-ever Chapter 9 bankruptcy debt adjustment plan confirmed in New York State.
The firm has acted as debtor's counsel to the Suffolk Regional Off-Track Betting Corporation—a New York public benefit corporation—whose Long Island-based betting operations were reorganized and expanded to include a Video Lottery Terminal casino (VLT Casino).
On October 31, 2014, Chief Bankruptcy Judge Carla E. Craig, overseeing the Suffolk filing, approved the $100 million plan of reorganization; the plan closed that same day and became effective November 3, 2014. The appeals process concluded on November 14, 2014.
The plan includes the development of a new electronic slot machine VLT Casino to be built in the hamlet of Medford, in the town of Brookhaven, in Suffolk County on Long Island. The Medford VLT Casino, slated to open by late 2015, expects to retain many of the employees who work at Suffolk OTB and add hundreds of additional VLT Casino workers.
Development of the VLT Casino will also create numerous construction jobs over the next 12 months.
McKenna Long bankruptcy partner Chris Graham, who led the legal team representing Suffolk OTB for nearly four years, hailed the plan for paying creditors back in full as well as for creating new jobs resulting from construction and operation of the new gaming facility.
"This is an exceptional plan in settling the legacy debts of Suffolk OTB while establishing a new revenue stream and source of economic development for Suffolk County," he said. "We're extremely pleased to have played a key role in what has turned out to be an historic municipal reorganization."
Mr. Graham also praised the collective efforts of all the parties involved—including the management team at Suffolk OTB, the New York State Racing Association, which chaired the Creditors' Committee, as well as the Teamsters' Union, New York State and Suffolk County. "Everyone ultimately understood the common interests at stake in reaching a workable plan that was fair to all constituents," he said.
The plan calls for Suffolk OTB to take a $65 million loan from Delaware North Companies Gaming & Entertainment, Inc. (Delaware North), the company selected to manage the new VLT Casino. Suffolk OTB will also have access to a follow-on line of credit, up to an additional $11.4 million, if needed. Mr. Graham noted that creditors, who are still owed some $21 million from the legacy debts, are expected to be paid back through the profits of the new VLT Casino operation, with all remaining profits flowing into Suffolk County's coffers.
James McManmon, general counsel of Suffolk OTB, commented: "As has been shown in other recent Chapter 9 cases, municipal reorganizations can be especially challenging given the divergent perspectives of the public and private stakeholders involved. That makes the outcome of our plan for Suffolk OTB especially gratifying, given the full return to creditors generated by the new gaming facility that will also bring added jobs and a welcome entertainment destination to Suffolk County. We could not have achieved this spectacular result without the incredible work of McKenna Long—particularly Chris Graham—whose timely and peerless advice impressively guided us through our complicated bankruptcy case."
Suffolk OTB's president, Philip C. Nolan, and its general counsel, James McManmon, led the executive management team of Suffolk OTB through its landmark case. Mr. Nolan said "It was a very difficult case, but we succeeded in large part due to the hard work and dedication of our people, particularly Jim McManmon, our general counsel, who worked tirelessly on the case."
Suffolk OTB's case was heard in the U.S. Bankruptcy Court for the Eastern District of New York, Chief Judge Carla E. Craig presiding. The case is captioned In re: Suffolk Regional OTB. The Creditors Committee was represented by Marc Richards and Andrew Eckstein of Blank Rome.
Mr. Graham is one of the deans of the New York bankruptcy bar, having practiced for more than 32 years, with a long list of successful representations on behalf of debtors, creditors, trustees and buyers. He also serves as managing partner of McKenna Long's New York City and Albany offices.