After further inspection, press reports regarding a U.S. Bankruptcy judge’s ruling saying creditors had veto power over a “prepackaged plan” that would exit the Texas Rangers from voluntary bankruptcy may not be as detrimental as initially believed.
While Judge Michal Lynn said in his conclusion, “The court will not direct any changes to the Plan. However, unless the treatment of the Lenders is modified, the Plan (as modified to date) will not be confirmable absent acceptance by the Lenders, the only class of creditors that is impaired under the present iteration of the Plan,” he left the window open for TRBP to amend the Plan to address the needs of the Lenders, and setting up a situation where veto power could be revoked.
On page 28 of the ruling Lynn writes, “In the context presented to the court, this, in turn, presents the question of whether a plan providing for the sale of the Rangers, to leave the Lenders unimpaired, must give effect to sections 4.4.1(c)(i)(3) and 4.4.2(b)(i) of the Pledge Agreement. In other words, must the plan grant the Lenders an effective veto over any proposed sale of the Rangers? The court concludes section 1124(1) does not so require.”
Lynn said that the Plan needed to be modified to allow the creditors the same rights as Texas Rangers Baseball Partners.
“The Lenders, however, have rights vis-à-vis Debtor other than just payment of the $75,000,000 for which Debtor is obligated to them.30 Debtor is part of the HSG family of entities, and, as such, it has assumed obligations to the Lenders in addition to the guaranty. In order for the Lenders to be unimpaired, their treatment under a plan must recognize and preserve those rights.”
As part of the process of meeting the goals of Judge Lynn’s opinion, the Lenders and Rangers Baseball Express, LLC, the group led by Greenberg and Ryan have agreed to continued mediation. In Lynn's ruling it is noted that the court has appointed Russell F. Nelms to serve as mediator.
Texas Rangers Baseball Partners, released two statements regarding today’s ruling.
“We are pleased that the Judge remains committed to completing the sale of the Rangers expeditiously and we are confident that necessary changes to the plan can be made to achieve that outcome,” adding, “Texas Rangers Baseball Partners wants what is best for the Rangers and supports an independent review of the Greenberg-Ryan transaction. During the review, Nolan Ryan and the Rangers management team will continue to direct and administer the Club under Mr. Hicks’ ownership.”
Major League Baseball also released a statement solidifying their position in support of the Greenberg/Ryan group.
“We are encouraged that Judge Lynn ruled that the Texas Rangers do not need to seek the maximum value for the team in the current bankruptcy case. We also remain confident that the procedure to be put in place to evaluate the plan previously submitted to the court for the sale of the team will permit the sale on a timely basis to the team’s chosen bidder, the Greenberg-Ryan Group.”
A statement by Rangers Baseball Express, the propective investor group led by Chuck Greenberg and Nolan Ryan were expected to release a statement shortly.
In keeping with trying to have the sale completed as hastily as possible to allow the club to be active at the trade deadline, Judge Lynn made it very clear that he wanted the case wrapped up by July 31,
READ THE 28 PAGE OPINION FROM JUDGE LYNN
EDITOR'S NOTE: Maury Brown will be on KTCK The Ticket in Dallas (1310AM and 104.1FM) following the conclusion of Tuesday’s Rangers game to talk today’s events.
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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