In re Suffolk Regional Offtrack Betting Corp., 462 B.R. 397

Suffolk OTB filed for chapter 9 relief; Churchill Downs objected to entry of relief arguing Suffolk County lacked authority under §109(c)(2).
Court finds Suffolk OTB’s petition improper because County Resolution approving the filing exceeded Suffolk County’s authority under state law.
Operating Agreement and related documents show TrackNet acted as Churchill Downs’ agent and that Churchill Downs was a party to the Amended Term Sheet regardless of TrackNet’s dissolution.
Delaware law and Restatement agency principles support that Churchill Downs, as undisclosed principal, is a party to the Amended Term Sheet and TrackNet acted as its agent.
Court holds Suffolk OTB’s §109(c)(2) authorization deficiency requires dismissal under §921(c); equity does not override eligibility requirements.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Churchill Downs has standing to object	Churchill Downs lacks creditor or contract standing	TrackNet acted as Churchill Downs’ agent; Churchill is a party to the Amended Term Sheet	Churchill Downs has standing to object
Whether Suffolk OTB was authorized under §109(c)(2)	County Resolution authorized Suffolk OTB’s filing	Resolution exceeded Suffolk County’s authority and state law preempts local action	Suffolk OTB not authorized; petition dismissed under §921(c)
Whether Local Finance Law §85.80 and Racing and Wagering Law authorize filing	Statutes permit County to authorize filing for OTB	Statutes do not authorize Suffolk County to authorize Suffolk OTB’s bankruptcy filing; preemption	Resolution invalid; not authorized under §109(c)(2)

In re Refco Inc., 505 F.3d 109 (2d Cir. 2007) (standards for standing and party in interest in bankruptcy)
Brunswick Leasing Corp. v. Wis. Cent., Ltd., 136 F.3d 521 (7th Cir. 1998) (agency/undisclosed principals and contract liability)
In re Comcoach Corp, 698 F.2d 571 (2d Cir. 1983) (undisclosed principal and contract rights to third parties)