On Tuesday, a U.S. bankruptcy judge rendered no decision at a hearing that will determine the outcome in moving the Texas Rangers out of Chapter 11 bankruptcy, but not before making statements from the bench that appeared to side with the Rangers and MLB in their efforts to sell the club to a group of investors led by Chuck Greenberg and Nolan Ryan.
U.S. Bankruptcy Judge Michael Lynn listened to arguments that it was irrelevant whether creditors could garner more money if the process was opened back up to allow former bidder Jim Crane back into the mix.
Martin Sosland, a lawyer for the Rangers said after going over details on the bankruptcy code that are based upon the lien against the club, "They're entitled to $75 million, and they go away," Sosland said.
Judge Lynn sided with Sosland saying, "I'm inclined to agree with your position on the maximization of value. At this point, you're ahead on that one."
Roughly midway through the hearing, Lynn said repeatedly that it seemed that holding companies of the Rangers, not the Rangers themselves, should be at the center of any claims by creditors.
In going after the Rangers, as opposed to the holding companies, Judge Lynn said at one point to lawyers for the creditors, "Your horse is dead."
Chuck Greenberg said after the hearing that he was pleased with the proceedings.
“The judge reiterated his belief that the best interests of the Rangers are served by concluding the bankruptcy as soon as practicable,” said Greenberg. “He also restated his intentions to hold a confirmation hearing starting on July 9, and we’re pleased that the timetable that we desire in order to serve the best interests of all concerned, including Rangers fans, is still on target.”
Lynn has set a Tuesday status conference surrounding the involuntary bankruptcy petition filed by creditors against Rangers holding companies, which includes Rangers Equity Holdings, L.P., and Rangers Equity Holdings GP, LLC, both under HSG.
The July 9 confirmation hearing is still in place where concerns surrounding claims of breach of documents, such as claims of improper lease transfer of the Ballpark at Arlington could take place. Lawyers for the Rangers have said that these moves are inmaterial as there is no monetary gains to be had fhough such actions.
Judge Lynn is expected to render a decision next week on the “Prepackaged Plan” by Texas Rangers Baseball Partners, which includes the current owners of the Texas Rangers Baseball Club, and Rangers Baseball Express, the local investor group led by team Ryan and Greenberg is at the center of the involuntary bankruptcy case that is before Judge Lynn. That Plan was reached, without creditor visibility, and claims to remedy all secured and unsecured debt tied to just the Texas Rangers assets. It will be up to Lynn to see if, based upon the Plan, the creditors are impaired in any of the 12 Classes of Claims that are part of the bankruptcy code (see details on the prepackaged plan).
A report by the Star-Telegram adds clarity as to how the process moves forward over the next few days:
Lynn said he would soon permit mail-in balloting by some classes of creditors on the pre-packaged bankruptcy plan that includes the $575 million sale to the Greenberg-Ryan group.
But the federal judge said he could still rule that the lenders were not damaged by the bankruptcy, rendering the vote meaningless. Attorneys said voting could be as early as next week.
If Judge Lynn finds that there are no Class impairments, the creditors in the case would have no voting right to block the Prepackaged Plan. At that point, they could move to appeal the case to a federal court within the district, but any appeal would become "moot" as Texas Rangers Baseball Partners can still consummate the sale/Plan over an appeal. The only way for the creditors to prevent that from happening wuld be by having the judge issue a stay on the Plan, but that action is seen to be rare.
Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to Forbes SportsMoney blog. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.
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