Dodgers’ Bankruptcy Recovery Plan Hinges on $2 Billion Team Sale
Major League Baseball’s Los Angeles Dodgers said creditors will be paid in full and the team is expected to exit Chapter 11 by April 30 under an amended reorganization plan.
The plan, filed yesterday in federal bankruptcy court in Wilmington, Delaware, rests on a $2 billion sale of all the equity in the team to Guggenheim Baseball LP, the Dodgers said in a statement today. A hearing to seek court approval of the amended plan is set for April 13, with the sale to close on or before April 30, according to court filings.
“By any measure, the plan is a remarkable outcome for the debtors, their estates, and all parties in interest, especially taking into account where these cases began,” lawyers for the team said in a filing.
“When the debtors entered bankruptcy on June 27, 2011, they did not have enough cash to meet payroll that was due in three days, and they were embroiled in a bitter dispute with Major league Baseball.”
Basketball Hall of Famer Magic Johnson and a group of investors that includes Guggenheim Partners Chief Executive Officer Mark Walter won an auction for the team on March 28, with their bid more than doubling the previous record amount paid for a major U.S. professional sports franchise.
Johnson’s group includes former Atlanta Braves and Washington Nationals President Stan Kasten, who will relocate to Los Angeles and run the Dodgers.
The terms of the plan are supported by “all of the major constituents” in the case, including MLB, News Corp. (NWSA)’s Fox Sports -- which holds the club’s television rights through the 2013 season -- and the official committee of unsecured creditors, according to the team’s filing.
Creditors are receiving payment in full, meaning they are “deemed to have voted to accept the plan,” according to yesterday’s filing.
The amended plan “provides for the payment of all allowed claims of creditors in full, includes a substantial distribution for debtors’ equity interest holder, and provides a solid foundation for the long-term success of Los Angeles Dodgers and its affiliates,” the company said.
Team owner Frank McCourt put the Dodgers into bankruptcy in June, claiming MLB Commissioner Bud Selig forced the club into a cash crisis by rejecting a new contract with Fox Sports.
Once under court protection, McCourt lost the support of Fox when he tried to solicit bids for a new television deal earlier than allowed under the Fox Sports contract. After mediation sessions, McCourt settled his dispute with MLB in November and dropped his effort to sell the television rights early in January.
As part of the $2.15 billion purchase of the franchise, parking lots and undeveloped land surrounding Dodger Stadium were sold for $150 million to a joint venture of McCourt and affiliates of Guggenheim Baseball Management LLC.
The Dodgers have won six World Series titles, tied for fifth most in baseball. Five of them came in Los Angeles, where Duke Snider, Sandy Koufax, Steve Garvey, Fernando Valenzuela and Kirk Gibson led the team to championships.
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