Vendor FAQ

COMMON QUESTIONS:

1. What does this filing mean for vendors?

   NYC OTB has recently filed for protection under chapter 9 of the Bankruptcy Code. The purpose of this filing is to provide NYC OTB with protection from its creditors while it develops and negotiates a plan for adjusting its debts. Please be assured that the chapter 9 filing does not mean that NYC OTB is going out of business. In fact, it will be business as usual for most of our operations during this time.

   The adjustment of debts of NYC OTB under chapter 9 will give us the time and protection necessary to further develop, obtain legislative approval of and implement a new business plan that we expect will help sustain the viability of NYC OTB well into the future. This is expected to result in a stronger, more financially-secure organization—one that is better able to serve its customers and work with you.

   Our relationships with our vendors and suppliers are very important to us. The chapter 9 process offers several tools intended to protect the interests of our key vendors to ensure that they remain valued business partners both during and after this process, as well as to protect our interests. It is important that you understand the following:

   • The Bankruptcy Code encourages suppliers to continue to do business with a chapter 9 debtor by granting priority status to payments for goods received and services rendered after the filing date of the chapter 9 case. This means that NYC OTB expects to pay suppliers in cash in full according to ordinary trade terms for all goods and services provided after December 1, 2009.
   • A significant percentage of key supplier relationships are governed by contractual relationships, and those key contracts are expected to be assumed as part of the reorganization process, with any pre‐bankruptcy amounts owing paid in full at the time of assumption.
   • The Bankruptcy Code’s automatic stay does not permit collection actions against us while we are in chapter 9. The Bankruptcy Court confirmed that restriction in an Order dated December 8, 2009, a copy of which is enclosed with this letter. Accordingly, we do not expect to be in a position to pay amounts owing to you as of December 1, 2009 as a condition to our ability to continue to do business with you, and any request that we do so might be viewed by the Bankruptcy Court as violating the automatic stay and the Bankruptcy Court’s order.

   Please be assured that NYC OTB is working diligently to pursue a favorable outcome for the company and our vendors and suppliers, and we hope to have a mutually beneficial business relationship going forward.

2. Will vendors/suppliers get paid during chapter 9?

   During this process, it will be business as usual for NYC OTB. All suppliers and vendors will continue to be paid in full for all goods and services provided after the filing date of the chapter 9 case. All such payments will be made, as they have been made historically, in the ordinary course of business and operations. These payments are given a priority under the Bankruptcy Code.

3. Will payments to vendors/suppliers be delayed?

   Suppliers and vendors who provide goods or services to NYC OTB after the filing date of the chapter 9 case will continue to be paid, as they have been paid historically, in the ordinary course of business and operations.

4. You still owe us money. Will vendors/suppliers get paid for these outstanding debts?

   The Bankruptcy Code precludes payment for “prepetition indebtedness,” including indebtedness arising from goods received or services rendered before the filing date of the chapter 9 case. Payment of most prepetition indebtedness will be settled as part of the implementation of NYC OTB’s plan of debt adjustment. This plan will be implemented, by its terms, following the solicitation of acceptances from certain classes of NYC OTB creditors and confirmation of NYC OTB’s plan of debt adjustment by the Bankruptcy Court.

5. Will vendors/suppliers need to file a claim with the Bankruptcy Court in order to get paid for prepetition indebtedness, including prepetition indebtedness arising from goods delivered or services rendered before the filing date?

   The procedure has not yet been established. If that is required, a proof of claim form and instructions about the claims process will be mailed to all vendors and suppliers.

6. Isn’t it risky to do business with a company in bankruptcy? Why should we continue to provide NYC OTB with good or services?

   NYC OTB has filed for bankruptcy so it will not have to go out of business. NYC OTB’s plan of debt adjustment and the business plan which is currently being developed are expected to help restore the financial stability of the organization. NYC OTB is expected to emerge stronger and become a better partner to vendors and suppliers.

7. How will vendor/supplier relationship with NYC OTB be affected going forward? Will you try to renegotiate terms of our agreement?

   It will be business as usual at NYC OTB, and our ability to purchase from vendors and suppliers on favorable terms and at competitive prices is critical to our future success. We hope our vendors and suppliers will see the long‐term gain to be realized and continue to work with us through this process.

8. Will you be closing any NYC OTB locations?

   The business plan being developed by NYC OTB currently calls for the elimination of a number of full-service locations.

9. Which branches are you planning to close?

   No exact closing locations or dates have been publicly announced.

10. When will decisions be made and when will landlords be notified?

    NYC OTB expects that the final determination of which branches will be closed will occur shortly before its emergence from chapter 9. NYC OTB will endeavor to notify all those affected as soon as possible once the final determination has been made.

11. Will you be responsible for payments according to the terms of your lease or can/will you break these leases?

    In some cases, the lease contracts expire over the next 24 months and will not be renewed. In some other cases, the lease contracts include early termination provisions which will be applicable. For some locations, negotiations with the landlord will be required. To the extent that these negotiations are not successful, the lease contracts will be exited in a manner permitted and authorized under chapter 9 of the Bankruptcy Code. The Bankruptcy Code provides for the manner by which the amount of rent that will be owed to the landlord if negotiations are unsuccessful will be calculated.

12. Will you still be able to pay rent on branches you are keeping open?

    NYC OTB expects to pay all rents in a timely manner.

13. Will you be asking for a lower rent or a renegotiation of the terms of your lease?

    Our ability to rent space on favorable terms and at competitive prices is critical to our future success. We hope our landlords continue to work with us through this process.

14. What is chapter 9?

    Chapter 9 is the chapter of the Bankruptcy Code that permits a municipality (which includes public entities such as cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts) to seek adjustment of its debts under the supervision of a United States Bankruptcy Court. As a public benefit corporation created by State statute and regulated by the State, NYC OTB is a municipality permitted to file for relief under chapter 9. The purpose of chapter 9 is to provide a financially distressed municipality protection from its creditors while it develops, negotiates and obtains court approval of a plan for adjusting its debts.

15. How long will NYC OTB be in chapter 9? What happens next?

    NYC OTB expects the chapter 9 case to proceed expeditiously. However, NYC OTB cannot confirm precisely when it will emerge from chapter 9, because it require the New York State Legislature to enact an overhaul of racing legislation and it will also require bankruptcy court approval. NYC OTB is committed to working with all stakeholders to create a better and more sustainable business for the benefit of New York City, New York State, the horse racing industry and, most importantly, the customers. NYC OTB will provide timely updates throughout the chapter 9 process.

16. Is there a chance that NYC OTB will go out of business completely?

    The purpose of this filing is to prevent NYC OTB from going out of business. The chapter 9 plan and the implementation of the business plan will help sustain the viability of NYC OTB going forward and will result in an improved wagering experience for customers. However, the New York State Legislature has to act by making necessary changes to the State racing laws which are necessary for any business plan to succeed.

17. How can I get more information?

    NYC OTB will be communicating with its vendors/suppliers as appropriate during this process.

    NYC OTB has also created a website dedicated entirely to the chapter 9 case and the reorganization process, www.nycotbfacts.com. The site contains, among other things, copies of key pleadings filed in the NYC OTB chapter 9 case.

    All documents filed with the Bankruptcy Court are available for inspection via the PACER system, which may be accessed on a subscription basis at the following internet address: https://ecf.nysb.uscourts.gov/.