The Los Angeles Dodgers’ request to borrow as much as $150 million from a JPMorgan Chase & Co. (JPM) unit should be rejected because a loan fee wasn’t properly disclosed, the U.S. Trustee that oversees bankruptcies told a judge.
“The debtors did not properly disclose a significant fee that is both material and essential” to the transaction, U.S. Trustee Roberta DeAngelis said in a filing yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.
The Dodgers sought permission for the loan when it filed for bankruptcy protection on June 27, according to the filing. The loan with JPMorgan’s Highbridge Capital Management LLC requires a $4.5 million fee and refers to a “fee letter” without disclosing any additional amounts or obligations that might be required of the Dodgers, the trustee said.
On July 11, the team sought permission to file the fee letter under seal. Without disclosure, the Highbridge loan can’t be meaningfully compared with an alternative financing proposal, DeAngelis said. She said she would object to all fee payments until all financing terms are fully disclosed and approved.
In a separate filing yesterday, the Dodgers asked the bankruptcy court for permission to hire Blackstone Group LP as an adviser to restructure some liabilities and to sell its media rights.
Major League Baseball also accused the Dodgers of treating two fired employees unfairly by not immediately seeking court approval to give them severance payments.
The team, which has asked the court’s permission to pay severance to some employees immediately, put off seeking the authority to pay two “highly compensated” non-player workers, attorneys for league Commissioner Bud Selig said in a court filing yesterday.
“This discriminatory practice should not be allowed,” according to the filing, which didn’t name the employees or say why the Dodgers haven’t sought quick payment for them.
The Dodgers filed for bankruptcy after Selig rejected a proposed television-rights deal Frank McCourt, the team’s owner, negotiated with News Corp. (NWSA)’s Fox Sports.
“MLB’s objection is based solely on the fact that the Dodgers are not paying severance to a former employee who is now a well paid officer at MLB,” Sidney Levinson, a bankruptcy attorney for the team, said in an e-mailed statement. “We will address the issue with the bankruptcy court next week.”
The bankruptcy case is In re Los Angeles Dodgers LLC, 11- 12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).