OKMULGEE, Okla. (AP) _ A bankruptcy judge plans to rule next month on whether the city of Sallisaw should get control of Blue Ribbon Downs horse racetrack.
District Judge Tom Cornish heard arguments all day Tuesday on the city's motion to dismiss the track's bankruptcy petition.
The state's oldest racetrack sought protection from creditors by filing Chapter 11 bankruptcy in September, just as the city was about to get a ruling on its foreclosure attempt.
The city wants to use the track as part of an exposition- or fairgrounds-type operation, but must must convince the judge to approve its motion before that can happen.
Robert Inglish, attorney for Blue Ribbon Downs, said the track filed a lawsuit Monday against the city, claiming Sallisaw has violated bankruptcy code.
Race Horses Inc. is trying to work out an agreement so a potential buyer, Eric Spector, can step in, Inglish said.
``Spector is a major player with the horse-racing industry,'' he said.
Spector has offered $500,000 up front and an additional $2 million over a short time frame for the track, Inglish said.
The Sallisaw Municipal Trust Authority owns Blue Ribbon Downs, much like a mortgage company owns a house while a buyer makes payments.
The city filed a foreclosure petition in February, saying Race Horses Inc. had gone a year without making quarterly payments.
The trust authority lent $2.4 million to Race Horses Inc. in 1995 to help with a cash-flow problem. When Race Horses Inc. fell behind in its payments, the trust authorized the city attorney to begin foreclosure proceedings.
Race Horses Inc. is about $270,000 behind in loan payments and the track owners haven't paid anything since January 2001, City Attorney John Robert Montgomery said.
An audited financial statement filed with the Oklahoma Horse Racing Commission showed the racetrack lost about $750,000 last year and more than $1 million the year before.
The racetrack's financial problems have been blamed on competition from American Indian gaming facilities and the May collapse of the Interstate 40 bridge west of Sallisaw.
In 1995, the municpal authority helped Blue Ribbon by purchasing the note on the property. Race Horses Inc. was to repay Sallisaw about $2.5 million over the next 25 years.
In 1997, the track filed Chapter 11 bankruptcy while facing a $219,000 bill owed to the Oklahoma Horse Racing Commission and a $1.3 million judgment from a lawsuit filed by a former jockey.
Sallisaw helped the track satisfy its debt to the racing commission and come to a $275,000 agreement with the jockey.
Blue Ribbon Downs emerged from bankruptcy in 1999. Don Essary, general manager of Blue Ribbons Down, was unavailable for comment.
Blue Ribbon Downs has 84 live racing days a year, second only to Remington Park in Oklahoma City.