Judge delays some decisions in Texas Rangers bankruptcy case after creditors’ objectionsBy Angela K. Brown, AP
Tuesday, May 25, 2010
Creditors voice concerns over Rangers’ bankruptcy
FORT WORTH, Texas — A bankruptcy judge said Tuesday that the Texas Rangers can pay employees and conduct other normal business operations so the team won’t “go hungry,” but he delayed some decisions after creditors criticized the baseball club’s legal tactics.
A day after the Rangers filed for Chapter 11 bankruptcy protection, U.S. Bankruptcy Judge D. Michael Lynn ruled that the team could still meet its payroll, pay insurance and make a payment on a $420,000 credit card debt, joking that he did not want the players to go hungry or be stranded out of town.
But because of some creditors’ objections, the judge delayed until Wednesday a decision on the Rangers’ plan to pay the $75 million of the club’s debt tied up in owner Tom Hicks’ financially strapped ownership group. That would remove the team from the additional claims by creditors against Hicks Sports Group that have held up the stalled $575 million sale of the team.
Dennis Dunne, an attorney for the team’s top four lenders, said Hicks had rejected higher bids when he agreed to sell the team to a group led by Hall of Fame pitcher and team president Nolan Ryan and Pittsburgh attorney Chuck Greenberg.
Dunne also said the team is responsible for the full debt, now estimated at $550 million. Lenders’ concerns after Hicks Sports Group defaulted on $525 million in loans last year all but halted the sale.
“They chose to file for Chapter 11 protection to avail themselves (of the entire debt) … and show no intentions of conducting a fair, transparent market search … and are asking today to fast-track this case,” Dunne told the judge, adding that lenders do not want to own, manage or move the team.
No attorneys were in court for the top 30 unsecured creditors named in the bankruptcy filing — a list headed by Alex Rodriguez, who is owed $24.9 million in deferred compensation six years after he was traded.
The judge said he would decide Wednesday on who would provide interim funding for the team, after JPMorgan Chase matched the $6 million credit line and relaxed some of the terms of the Rangers’ proposed Major League Baseball loan contract.
That would give lenders more control, but Martin Sosland, representing the team, said the Rangers still wanted to accept the Major League Baseball contract because it had also made changes that were more favorable for the team.
The judge also set a June 15 hearing to address the Rangers’ financial disclosure statement, whether the team maximized its assets and how creditors are affected. Another hearing was set for July 9.
“Nothing will happen before July 1. I can guarantee you that,” Lynn said. “I want to accommodate the Rangers, but I want to do this right as well.”
The Rangers want the sale completed quickly so they can have financial flexibility at the non-waiver trading deadline July 31. There is also the amateur draft next month.
Tags: Athlete Compensation, Fort Worth, North America, Ownership Changes, Professional Baseball, Sports Business, Texas, United States