May 25, 2010 4:35 PM
The Mickey Tettleton Chronicles: Seeking to Speed Sale, Rangers File for Bankruptcy
Posted by Brian Baxter
In baseball terms, the long-awaited sale of the Texas Rangers moved one step closer to home Monday as the Major League Baseball franchise filed for bankruptcy in Fort Worth in a bid to restart a stalled $575 million sale.
The Chapter 11 filing comes almost seven months after Pepper Hamilton partner Charles "Chuck" Greenberg teamed up with Hall of Fame pitcher and current team president Nolan Ryan to front a consortium of investors keen on purchasing the team from debt-saddled Thomas Hicks, who has been using Weil, Gotshal & Manges to help him unwind his sports holdings.
But as previously reported by The Am Law Daily's Zach Lowe, creditors owed more than $500 million by Hicks and unsatisfied by the terms of sale to the Greenberg-Ryan group turned to Latham & Watkins and Milbank, Tweed, Hadley & McCloy. Lowe reported that the league had tapped Paul, Weiss, Rifkind, Wharton & Garrison for counsel, while the prospective ownership group turned to Foley & Lardner sports industry practice chair Mary Braza, longtime outside counsel to MLB.
Earlier this month Lowe noted that the continued deadlock with creditors over the Rangers sale could lead MLB commissioner Bud Selig to invoke the league's "best interests" rule to seize the team and invalidate loans held by creditors. The Chapter 11 filing and plan of reorganization by the Rangers is designed to break the four-month stalemate, although a U.S. trustee has disagreed with the team's labeling of the plan as "prepackaged." (As expected, creditors are concerned about the voluntary filing by the team.)
A letter dated May 24, 2010, from Selig to Hicks attached to the team's bankruptcy filing states that Selig authorized the Rangers to pursue Chapter 11 as a means of expediting a sale. Copied on the letter are current MLB executives Robert DuPuy, John McHale, Jr., Jonathan Mariner, and Thomas Ostertag. (DuPuy, a former Foley & Lardner partner, is the league's president and COO, while Ostertag serves as general counsel.)
Paul Weiss chairman Brad Karp, finance practice cochair Jordan Yarett, litigation partner Susanna Buergel, bankruptcy partner Stephen Shimshak, and bankruptcy counsel Diane Meyers are advising MLB on the Rangers sale and in the team's bankruptcy proceedings along with Dallas firm Stutzman, Bromberg, Esserman & Plifka.
In addition to Braza, the Greenberg/Ryan group has turned to Foley & Lardner bankruptcy partner Michael Small and bankruptcy litigation partner Robert Simon from Fort Worth's Barlow Garsek & Simon for counsel.
Weil corporate partner Glenn West and restructuring partner Martin Sosland are leading a team from the firm advising Hicks on the Rangers sale and bankruptcy filing. Other Weil lawyers working on the matter include corporate partner Michael Saslaw, restructuring partners Ronit Berkovich and Stephen Youngman, tax partners Jared Rusman and Michael Kam, banking and finance partner Warren Buhle, litigation partners Vance Beagles, Yolanda Garcia, and Ray Guy, and litigation counsel Paul Ferrillo.
Bankruptcy court records show that Weil received more than $7.7 million in fees in the year prior to the Chapter 11 filing, roughly $5.7 million of which was related to the sale of the team. Partners and counsel are billing between $725 and $990 per hour, while associates are being paid between $395 and $685.
Fort Worth bankruptcy boutique Forshey Prostok is serving as conflicts counsel to the debtor. The firm has not yet submitted billing statements with the bankruptcy court.
The Rangers will be able to continue operations while in Chapter 11. Last year the Chicago Cubs filed for bankruptcy as part of the team's $845 million sale by bankrupt parent Tribune. (As reported by The Am Law Daily, Paul Weiss and Foley & Lardner also advised clients in the sales process for the Cubs.)
According to a list of unsecured creditors in the Rangers bankruptcy, the team owes millions in deferred compensation to several current and former players. Alex Rodriguez tops the list at nearly $25 million, followed by lesser sums for Kevin Millwood ($12.9 million), Michael Young ($3.9 million), Vicente Padilla ($1.7 million), Mickey "Froot Loops" Tettleton ($1.4 million), and Mark McLemore ($970,000).
MLBPA executive director Michael Weiner, a former general counsel for the union, told The Associated Press that he has "been assured that all contractual commitments to players will be honored in full."
Jack Kinzie, chair of the bankruptcy and insolvency practice at Baker Botts in Dallas, is advising the Major League Baseball Players Association along with associates C. Luckey McDowell and Ian Roberts. Partners Richard Seltzer, Babette Ceccotti, and Bruce Levine from New York labor firm Cohen, Weiss and Simon are also representing the union.
LeBron's Legal Issues
With the clock ticking on where LeBron James will play basketball next year, the blogosphere was abuzz last week over a salacious online report linking the Cleveland Cavaliers's early exit from the playoffs to a personal rift between James and one of his teammates.
James turned quickly to his go-to outside lawyer Frederick Nance--a regional managing partner at Squire, Sanders & Dempsey and former candidate for NFL commissioner--to issue a cease and desist letter to the author of the offending post. Nance, no stranger to sports litigation disputes in and around Cleveland, called the report "categorically false and per se defamatory."
"No thinking person could believe such rubbish," he added.
In other legal-centric LeBron news, Forbes speculated that the New York Knicks might be able to use its publicly traded MSG stock to land the soon-to-be free agent. Alas, it turns out that such a ploy would be against NBA rules--bad news for The Am Law Daily's woebegone Knicks-fan contingent.
Around the Horn
-- If the Knicks have any hope of luring Lebron to New York this summer, they'll have to overcome one large obstacle in salary cap albatross Eddy Curry, who has been beset by his own share of legal issues. Now it turns out that Curry, who is making $10 million per year, can't pay his bills. The AP reports that after Curry defaulted on a $575,000 loan with an 85 percent interest rate, a Manhattan court has ordered him to pay $1.2 million to lender Allstar Capital, represented by Akerman Senterfitt's Donald David. But poor Eddy can't pay, detailing a list of extravagant expenses in a court filing.
-- A former walk-on wide receiver for the 1989 and 1990 Stanford Cardinal football teams, Ronald Machen now has a new position: U.S. attorney for the District of Columbia. Machen, once named one of The American Lawyer's Fab Fifty Young Litigators while a partner at Wilmer Cutler Pickering Hale and Dorr, was sworn in yesterday, according to sibling publication The Blog of Legal Times.
-- Retired NFL defensive lineman Warren Sapp is looking to sack lawyer/admitted Ponzi-schemer Scott Rothstein. The Palm Beach Post reports that Sapp is trying to recover nearly $103,000 from a trust account set up Rothstein Rosenfeldt Adler prior to the firm's collapse last year. Sapp, represented by Fort Lauderdale's Seth Lehrman, filed the forfeiture claim in the federal criminal case against Rothstein.
-- Former baseball star Bobby Bonilla has hired Day Pitney litigation partner Ernest Mattei for a dispute over marital assets following Bonilla's divorce last year, the Greenwich Time reports. Mattei told the paper that Bobby Bo's ex-wife, Migdalia, should feel free to take what she wants because most of his client's investments are worthless.
-- A litigation dispute over an ownership stake in the New York Yankees's AAA franchise, the Scranton/Wilkes-Barre Yankees, has paid Buchanan Ingersoll & Rooney and Scranton firm Myers Brier & Kelly a total of more than $30,000, according to The Citizens Voice. (Perhaps Kei Igawa would be willing to kick in to help cover the legal bills.)Make a comment