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MLB objects to Dodgers' pursuit of financing
Just hours after Major League Baseball objected to the bankruptcy filing by the Los Angeles Dodgers, accusing team owner Frank McCourt of siphoning off more than $100 million in club revenue and driving the Dodgers into a liquidity crisis, a Delaware judge on Tuesday granted several routine motions that will allow the team to continue operations.
Judge Kevin Gross authorized the Dodgers to continue paying vendors, utility providers and employees, and to keep up with tax and insurance obligations. The granting of such motions is routine in first-day hearings in bankruptcy court, but Gross noted that the baseball club's case is unique in some aspects.
"I haven't seen a wage motion quite like this one," the judge said, referring to the team's 44-page motion to continue paying hundreds of full-time and part-time employees, including about 250 players, most of whom are in the minor league ranks.
Gross also granted the team's request to honor payments it is required to make under collective bargaining agreements.
"The seamless, uninterrupted operation of the team is vital," said Richard Seltzer, an attorney for the Major League Baseball Players Association.
After granting several of the motions, Gross ordered a 30-minute recess, allowing time for discussions between attorneys for the Dodgers and MLB, which opposes the team's request for authorization to enter into a $150 million financing arrangement.
"It's a foregone conclusion that a loan is going to be approved," said Dodgers attorney Bruce Bennett. "We have to decide which one and on what terms."
Saying that MLB can provide debtors with "substantially better terms," the MLB objection accuses Dodgers owner Frank McCourt of "having siphoned off well over $100 million of club revenues and obviously unable to properly distinguish between his personal interests and those of the club."
MLB says that the Dodgers face "a liquidity crisis so severe that, absent extraordinary measures, the Club would be unable to make its payroll."
Selig has appointed overseer Tom Schieffer to investigate Dodgers finances. He also has rejected a Dodgers proposed TV deal with Fox that would have provided the cash to fund McCourt's divorce settlement with his wife, Jamie. Facing the prospect of missing payroll, McCourt and the Dodgers filed for bankruptcy in a Delaware court on Monday.
Dodgers officials said they reached out to numerous banks and investors and while several parties expressed interest in providing financing, they received only one commitment -- from Highbridge Principal Strategies. If approved by a judge, the financing would come in two chunks from the investment firm, $60 million up front with the remainder being paid at a later date.
According to Bloomberg News, the Dodgers must pay a hefty 10 percent interest rate plus fees on the loan, and Highbridge receives first claim on the Dodgers' assets.
MLB's objection says that the league's solution to the Dodgers' debt crisis is "less expensive and otherwise superior" to the loan the Dodgers want approved. The league says its proposal eliminates $4.5 million in fees, reduces the interest rate by 3 percent, does not require the Dodgers to encumber their assets, does not impose an artificial deadline to work out a TV deal, has fewer default triggers and complies with bankruptcy code.
The objection says that the Dodgers may have looked around for financing, but the team didn't come to MLB, with which it has its "most significant strategic relationship."
The league asks that a number of questions be answered in Chapter 11 proceedings: Whether the Dodgers' cases were properly filed, whether Schieffer can continue to perform his duties as monitor and whether Frank McCourt can retain control of the team in bankruptcy.
But the objection says that the first priority is to make sure that the Dodgers "have sufficient liquidity to continue operations on an uninterrupted basis."
Thomas Lauria, an attorney representing Selig's office, disagreed with Bennett that the league and the team were adversaries, saying the league views the Dodgers as one of its "cherished crown jewels," and an "essential component" of the league. Lauria did suggest, however, that the league was at loggerheads with McCourt, whom he blamed for "today's sorry mess."
In addition to the dispute with the league over financing, the Dodgers are facing a challenge from McCourt's estranged wife, Jamie, who is battling in a California divorce court for half of his ownership assets.
"Jamie McCourt is a presumptive owner of 50 percent of assets," said Laura Davis Jones, an attorney representing her.
Jones urged the judge to do only what is minimally necessary to preserve the assets of the team.
"Nothing should be done today that locks the future of this case into concrete," she said.
Source: AP
Judge Kevin Gross authorized the Dodgers to continue paying vendors, utility providers and employees, and to keep up with tax and insurance obligations. The granting of such motions is routine in first-day hearings in bankruptcy court, but Gross noted that the baseball club's case is unique in some aspects.
"I haven't seen a wage motion quite like this one," the judge said, referring to the team's 44-page motion to continue paying hundreds of full-time and part-time employees, including about 250 players, most of whom are in the minor league ranks.
Gross also granted the team's request to honor payments it is required to make under collective bargaining agreements.
"The seamless, uninterrupted operation of the team is vital," said Richard Seltzer, an attorney for the Major League Baseball Players Association.
After granting several of the motions, Gross ordered a 30-minute recess, allowing time for discussions between attorneys for the Dodgers and MLB, which opposes the team's request for authorization to enter into a $150 million financing arrangement.
"It's a foregone conclusion that a loan is going to be approved," said Dodgers attorney Bruce Bennett. "We have to decide which one and on what terms."
Saying that MLB can provide debtors with "substantially better terms," the MLB objection accuses Dodgers owner Frank McCourt of "having siphoned off well over $100 million of club revenues and obviously unable to properly distinguish between his personal interests and those of the club."
MLB says that the Dodgers face "a liquidity crisis so severe that, absent extraordinary measures, the Club would be unable to make its payroll."
Selig has appointed overseer Tom Schieffer to investigate Dodgers finances. He also has rejected a Dodgers proposed TV deal with Fox that would have provided the cash to fund McCourt's divorce settlement with his wife, Jamie. Facing the prospect of missing payroll, McCourt and the Dodgers filed for bankruptcy in a Delaware court on Monday.
Dodgers officials said they reached out to numerous banks and investors and while several parties expressed interest in providing financing, they received only one commitment -- from Highbridge Principal Strategies. If approved by a judge, the financing would come in two chunks from the investment firm, $60 million up front with the remainder being paid at a later date.
According to Bloomberg News, the Dodgers must pay a hefty 10 percent interest rate plus fees on the loan, and Highbridge receives first claim on the Dodgers' assets.
MLB's objection says that the league's solution to the Dodgers' debt crisis is "less expensive and otherwise superior" to the loan the Dodgers want approved. The league says its proposal eliminates $4.5 million in fees, reduces the interest rate by 3 percent, does not require the Dodgers to encumber their assets, does not impose an artificial deadline to work out a TV deal, has fewer default triggers and complies with bankruptcy code.
The objection says that the Dodgers may have looked around for financing, but the team didn't come to MLB, with which it has its "most significant strategic relationship."
The league asks that a number of questions be answered in Chapter 11 proceedings: Whether the Dodgers' cases were properly filed, whether Schieffer can continue to perform his duties as monitor and whether Frank McCourt can retain control of the team in bankruptcy.
But the objection says that the first priority is to make sure that the Dodgers "have sufficient liquidity to continue operations on an uninterrupted basis."
Thomas Lauria, an attorney representing Selig's office, disagreed with Bennett that the league and the team were adversaries, saying the league views the Dodgers as one of its "cherished crown jewels," and an "essential component" of the league. Lauria did suggest, however, that the league was at loggerheads with McCourt, whom he blamed for "today's sorry mess."
In addition to the dispute with the league over financing, the Dodgers are facing a challenge from McCourt's estranged wife, Jamie, who is battling in a California divorce court for half of his ownership assets.
"Jamie McCourt is a presumptive owner of 50 percent of assets," said Laura Davis Jones, an attorney representing her.
Jones urged the judge to do only what is minimally necessary to preserve the assets of the team.
"Nothing should be done today that locks the future of this case into concrete," she said.
Source: AP