A representative from the Magna Entertainment Corp. assured the California Horse Racing Board March 6 that the company "is not going out of business" in spite of its bankruptcy petition and that horsemen purse accounts and customer winnings will be paid on an ongoing basis.
Gregg Scoggins, MEC's national director for regulatory affairs, also told the board that XpressBet, the company's state-licensed advance deposit wagering provider, is not a party to the bankruptcy proceedings and would not be affected.
"No, (MEC) is not going out of business," Scoggins said. "It is simply going through a reorganization."
The CHRB's special meeting at Santa Anita Park came a day after MEC filed for chapter 11 protection on March 5 in a Delaware federal court. The company is seeking to restructure its massive debt, which according to court documents, amounts to nearly $1 billion in liabilities. In addition to XpressBet, MEC owns and operates Santa Anita and Golden Gate Fields in California.
Anticipating the bankruptcy filing due to the company's ongoing financial uncertainty, the Thoroughbred Owners of California, in cooperation with Magna earlier in the week, transferred horsemen's funds held in paymaster accounts at Santa Anita and Golden Gate Fields to two accounts held in trust by the TOC.
Kirk Breed, the CHRB's executive director, said that auditors examined the accounts prior to the transfer of funds and "verified that all the accounts are in order."
Scoggins said that funds for horsemen's purses and to pay the betting public are being held apart from money needed for track operations.
"We are obligated to pay purses and they will be paid as we go," he said.
Scoggins, who was joined at the meeting by Brian Rosen, the lead attorney for MEC in bankruptcy proceedings, spent most of his time explaining the details of the court filing.
"We will do everything in our power, under bankruptcy law, to make sure this goes forward," Scoggins said. "I can understand everyone's anxiety."
The Delaware court was to hear several "first-day motions" on the filing March 6, including a wage plan as it pertains to company employees, so the Magna officials deferred on a couple of specific inquiries from board members and the public, saying they wanted to await rulings before responding.
“The key is it’s going to be an ongoing operation,” said John Harris, the board's chairman. “I think to the average fan and horsemen, there is not going to be a great uncertainty at all.”
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