Racetrack to remain in receivership, judge says

The Shawano Leader/June 15, 2010

The racetrack owned by a subsidiary of the Samanta Roy Institute of Science and Technology, Inc. will remain in receivership after a court hearing Monday.

Shawano County Circuit Court Judge James Habeck reaffirmed his previous order appointing a receiver in the foreclosure case filed by Southwest Guaranty, Ltd., against SIST and its subsidiary U.S. Acquisitions and Oil, Inc.

Steven J. Krueger, an attorney with the Van Lieshout Law Office representing Southwest in the case, was appointed receiver. He took possession of the property, at W5901 County Road BE in Wescott, on June 4.

At Monday’s hearing, Krueger complained there had been little or no cooperation from the defendants and he accused them of taking steps to hinder the park’s operations.

"The defendants called WE Energies to shut off the power," he said. "They disconnected the phone lines."

He said insurance was cancelled and a group planning to use the racetrack was called and told the track was shut down.

"The defendants are attempting to sabotage, for lack of a better word, the operations at the park," Krueger said.

Krueger said utilities and insurance at the park have all since been put in his name.

Krueger also said there was property being stored by SIST somewhere off site that has not been turned over, including six go-karts, transponders valued at $20,000, and radios.

Also, Krueger said, there is about $3,000 in revenue from the weekend after the receivership order and prior to taking physical possession that has also not been turned over.

Krueger said the defendants’ failure to fully comply with other requests for information related to the racetrack is making operation of the facility a challenge.

"I would think it would be the goal of both the defendant and the receiver to operate the park at as much of a profit as possible," Krueger said.

SIST Attorney Rebekah Nett said Krueger had not provided adequate time to comply with the request for information.

She also said her client was waiting for the outcome of Monday’s hearing to see whether the situation might change before turning over the missing property.

Habeck found the explanation reasonable.

"I think you acted in good faith," he told Nett.

Habeck said he would be willing to sign an order for the turnover of the property, but he told Krueger he assumed that would happen now that the hearing had been held.

Nett argued there was no basis for an emergency appointment of a receiver and that Krueger took possession without proper notice.

"All of a sudden I get this call that there are sheriff’s deputies at the park," she said.

The sheriff’s department provided civil standby as Krueger took possession June 4.

Nett also argued the receivership does not give Krueger authority to run the racetrack operations. She said the defendant, U.S. Acquisitions and Oil, is only the landlord and that the business is operated by a tenant, Midwest Amusement Park, which was not a party to the civil suit.

"The (receivership) order did not give them any authority to operate the business of the tenant," Nett said.

Krueger called Midwest Amusement Park a "shell entity" created for the purpose of the bankruptcy petition filed by SIST last year.

Actually, state records show Midwest Amusement Park, LLC, was incorporated in Wisconsin in 2003, six years before the bankruptcy filing.

Krueger said he was not aware of any lease between Midwest Amusement Park and U.S. Acquisitions and Oil, or any record of rent being paid.

Nett said there is a lease, but she was unable to put her hands on a copy of it prior to Monday’s hearing.

Habeck on May 28 issued a temporary order for receivership of the property pending Monday’s hearing.

After the hearing, Habeck said there was no new information to suggest his original ruling was wrong.

Southwest originally filed suit in December 2008 alleging the USA International Raceway, which is operated by U.S. Acquisitions and Oil, and SIST defaulted on a $2.2 million loan.

All civil action against SIST and its subsidiaries was put on hold in March of last year when they filed for Chapter 11 bankruptcy protection.

A federal judge recently upheld a Bankruptcy Court ruling issued in September dismissing the bankruptcy case and lifting a stay on any civil litigation.

SIST is appealing that ruling to the Third Circuit Court of Appeals.

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