Chapter 11 filed by American Wagering

Jul 29, 2003 6:21 AM

American Wagering Inc. (BETM) announced Friday it had filed for Chapter 11 bankruptcy protection for itself and its subsidiary, Leroy’s Horse & Sports Place Inc.

Not affected by the filing were the company’s other subsidiaries: Computerized Bookmaking Systems (CBS), the dominant supplier of computerized sports wagering systems in Nevada, and AWI Manufacturing (formerly known as AWI Keno), a licensed manufacturer and distributor in Nevada of self-service race and sports wagering kiosks.

To ensure a smooth operation, during this bankruptcy protection period, the company has requested relief from the court to allow it to continue to pay winning wagers, make regular and timely payments to vendors, obtain debtor-in-possession financing, and pay employee wages without interruption.

"Over the last several quarters," said Victor Salerno, chairman, president and CEO, "we have reduced operating costs and increased profitability. However, due to a court verdict, Âí­reorganization through Chapter 11 offers the best way to provide uninterrupted service to our customers, safeguard the value of our businesses and assets, and ultimately, emerge as a stronger, healthier and more competitive company."

Pressuring the company has been a successful lawsuit filed by Michael Racusin charging breach of a contract to issue Racusin common stock of the company during the time when the company was considering going public. The court has Âí­entered a judgment in favor of Racusin that requires BETM to pay him $1,350,000 after offsets for amounts he has been paid previously.

Although the company has attempted to arrange for payment of the court judgment, negotiations have been complicated by Racusin’s attempt to seek interest payments on top of the prescribed judgment, Salerno explained.

"Filing for bankruptcy protection," he added, " provides the company with the best way to protect our assets and to continue our money-making operations."