SIST to appeal Chapter 11 ruling

Shawano Leader, Wisconsin/May 30, 2010

The Samanta Roy Institute of Science and Technology, Inc. filed notice of another appeal in the dismissal of its bankruptcy case last week, even as one of its creditors moved to place its racetrack property into receivership.

SIST filed a motion Friday seeking to keep in place a stay against any civil action pending its appeal to the Third Circuit Court of Appeals of a U.S. District Court ruling issued Tuesday.

"If the stay is not put into place during the pendency of the Third Circuit Appeal, then the appellants will be indelibly and irreparably harmed," the motion states.

The motion also states SIST expects one of its creditors - Southwest Guaranty Ltd. - may try to have the USA International Raceway placed into receivership if the stay is lifted.

However, an attorney for Southwest Guaranty contacted the Shawano County Sheriff's Department Friday, informing them the racetrack was now in receivership and requesting extra patrol of the facility.

Southwest filed a civil suit in December 2008 against SIST and its subsidiary U.S. Acquisitions and Oil Inc., which owns the USA International Raceway property, requesting a receiver be appointed for the racetrack over an allegedly defaulted $2.2 million mortgage.

As of Saturday, the Wisconsin Circuit Court Access web site did not show any new developments in Southwest's civil suit.

SIST's latest motion for appeal maintains the U.S. District Court erred in its decision and abused its discretion in its ruling Tuesday.

The district court upheld a ruling issued last September in U.S. Bankruptcy Court in Delaware dismissing the Chapter 11 petitions filed by SIST and several of its subsidiaries.

In his ruling Tuesday, U.S. District Court Judge Gregory M. Sleet found SIST's claims that the Bankruptcy Court committed legal error to be without merit.

"The Bankruptcy Court properly found gross mismanagement warranting termination of the automatic stay and dismissal of the case," Sleet stated in a footnote to the ruling Tuesday.

In the September ruling, U.S. Bankruptcy Judge Kevin Gross said a dismissal was necessary given SIST's mounting financial losses, the absence of a plan to rehabilitate, lengthy inaction in obtaining financing and a lack of effort to maximize the value of assets for the benefit of creditors.

Numerous civil cases against SIST and some of its subsidiaries involving more than $4 million in claims have languished in legal limbo since the original bankruptcy filings in March of last year.

According to the bankruptcy petition, SIST and its subsidiaries had more than $13.3 million in claims from various persons and entities at the time the petition was filed.

Shawano Mayor Lorna Marquardt, who has a defamation suit pending in which SIST is named as one of the defendants, said in an interview prior to the filing of SIST's motion Friday that she knew another appeal was a possibility.

Even beyond the Third Circuit Court, if that fails, is the possibility of an appeal to the Supreme Court, Marquardt acknowledged.

"Whether any other court will accept this case, I guess we'll just have to wait and see," Marquardt said. "But two federal courts have already ruled against it."

The more immediate issue, Marquardt said, is whether SIST will be granted a stay on civil actions like the court case she has pending.

"Even if the court accepts the case, if they don't put a stay on, then everything can proceed," she said, "and I think creditors right now are proceeding with their actions."

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