July 14, 2009 3:25 PM

Things Get Clearer in Cubs Land

Posted by Zach Lowe

Rarely has a major deal changed course as often and as quickly as the pending $900 million sale of the Chicago Cubs, Wrigley Field, and assorted (and related) broadcasting rights to one of two buyers who have emerged as finalists for the Tribune Company's lovable losers.

In January--only a month after Tribune, represented by Sidley Austin, filed for Chapter 11 protection--the Trib reportedly struck a deal to sell the team to a group led by Tom Ricketts, whose father founded TD Ameritrade Holding Co. (Foley & Lardner is advising Ricketts.) Only several months passed by and the deal didn't close. That allowed Leo Hindery and Marc Utay, private equity players who retained Paul, Weiss, Rifkind, Wharton & Garrison and Dow Lohnes for the deal, to re-enter the bidding late in the game with an offer that includes less cash up front but a larger continuing minority stake in the Cubs for Tribune. 

And then on Monday came the bombshell: The Cubs might become the first baseball team in nearly 40 years to file for bankruptcy, presumably in order to clear the team's books for a sale. 

So what the heck is actually going on? The Am Law Daily spoke with four sources close to the matter, and the four explained the current state of things. None could reveal their names, because the talks are confidential and the deal is far from closed.

Tribune's board of directors is meeting Wednesday, and may select a winner between the Utay/Hindery and Ricketts groups by the end of the day, sources say. At that point, the creditors committee in the Tribune bankruptcy case will have a chance to approve or vote down the deal. Chadbourne & Parke is serving as lead counsel for the committee; Howard Seife, head of Chadbourne's restructuring practice, declined to comment when reached by The Am Law Daily today. 

Blake Rubin, a partner at McDermott, Will & Emery who is negotiating the Cubs deal for Tribune, also declined to comment. Lead partners at Cravath, Swaine & Moore, which is advising JPMorgan Chase as a prospective lender for a Cubs buyer, also declined to comment Tuesday.

The lead attorneys for the prospective buyers also declined to comment.

Should the committee approve the proposed sale, Tribune plans to have the Cubs seek bankruptcy protection in a quick process that could last anywhere from a few days to several weeks, according to several sources. (All agree that the idea of a one-day bankruptcy procedure, which has been floated in some news stories, is unrealistic). The Chapter 11 process would clean up the team's books in preparation for a sale. 

After that, at least three-fourths of Major League Baseball owners would have to approve the deal. That process may begin as the Cubs are moving through bankruptcy, according to lawyers working on the deal.

The process could take anywhere from a month to four months, sources say. 

So strap in, and get ready for a long race to see who can own a team still waiting for its first World Series title since 1908.

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