Creditors jeopardize Rangers auction
FORT WORTH, Texas -- Angry creditors have thrown plans for an Aug. 4 auction of the Texas Rangers into jeopardy, saying they don't like the bidding procedures and arguing that the lease for the team's ballpark should be severed from the sale.
U.S. Bankruptcy Judge D. Michael Lynn on Monday granted a motion to seal the creditors' request to reconsider the bidding procedures that are heavily controlled by Major League Baseball. Lynn approved the procedures last week after making some changes, including delaying the auction for two weeks to give potential buyers more time to secure financing.
Attorneys for Major League Baseball said the creditors' motion filed last week was rehashing arguments already rejected by the judge, including claims that the bidding process would prevent a fair and competitive sale.
Lynn set a Tuesday hearing to consider the objections and possibly rule on a separate lawsuit, filed by creditor JP Morgan Chase Bank, seeking to remove the Rangers Ballpark lease from the sale.
JP Morgan contends the team's parent company, Hicks Sports Group, transferred the lease to the team just before the bankruptcy filing without the bank's approval, as required in its loan agreement. The bank contends that the ballpark lease is not the team's property.
If the judge rules in favor of the bank, the ballpark would be cut from the deal -- something outside experts said could scare off potential buyers.
"It could be detrimental," said Jason T. Rodriguez, a bankruptcy attorney not involved in the case. "A bidder wants a package wrapped up with a bow on top, and removing the ballpark lease would take away a critical part of the deal."
In several court hearings, creditors have raised concerns over "midnight transfers" that were done in the days before the team's May bankruptcy filing.
The team filed for Chapter 11 protection with a plan to repay lenders $75 million and sell the team to a group led by Hall of Fame pitcher and team president Nolan Ryan and Pittsburgh sports attorney Chuck Greenberg. The Rangers' purchase agreement with that group, which bid about $575 million, includes the ballpark lease.
That group was chosen late last year after a bidding process, but the sale was stalled by creditors who were concerned since team owner Tom Hicks' sports group had defaulted on $525 million in loans.
The Greenberg-Ryan group agreed to waive its exclusivity rights and allow the bidding process to reopen as long as certain procedures were in place for the auction.
Copyright 2010 by The Associated Press