Orantes Law Firm
Dodgers may soon emerge from bankruptcy under new management
The Los Angeles Dodgers are one step closer to emerging from Chapter 11 bankruptcy after a Delaware bankruptcy court scheduled a hearing next week to approve a new reorganization plan that would sell the team to new management on April 30.
The Dodgers filed for protection under Chapter 11 of the Bankruptcy Code in June following the owner’s dispute with Major League Baseball (MLB) that left the franchise short of cash. A bankruptcy court required the team’s owner, who was accused of looting funds, to sell the team and accept MLB’s bankruptcy financing. The Dodgers then looked into possible media deals, entering into talks with Fox Sports without MLB’s permission.
After months of negotiation with a retired bankruptcy judge acting as mediator, the parties reached an agreement on the sale and media rights. The settlement allows the bankruptcy court to consider a new reorganization plan that sells the team for $2.15 billion to Guggenheim Baseball Management, a group including CEO Mark Walter, baseball executive Stan Kasten and former basketball star Magic Johnson.
Part of the purchase price is funded from the existing debt financing from MLB. The court will decide whether the plan follows a fair auction process.
The Dodger’s lawyers say the plan is a generous one that will fully compensate the team’s creditors for their allowed claims. If the bankruptcy court confirms the plan, the team will emerge from Chapter 11 bankruptcy after nearly a year under the court’s supervision. MLB is expected to raise questions about ownership of stadium parking and the court’s ability to resolve future issues, but experts say the court is likely to confirm the plan.
The Dodgers’ Chapter 11 bankruptcy is one of many examples where businesses were able to emerge from bankruptcy with effective reorganization plans. To learn more about Chapter 11 bankruptcy, speak with an experienced bankruptcy lawyer.
Source: CBS Los Angeles, “Dodgers Sale on Track to Exit Bankruptcy By April 30th,” Apr. 6, 2012.