The Work

June 4, 2010 6:09 PM

The Bankruptcy Files: A-Rod Steps Into Rangers Bankruptcy Fray

Posted by Brian Baxter

As creditors continue to fight over ownership of the Texas Rangers baseball team, a lineup of lawyers that could fill a 40-man roster has started to come together. And a creditors committee in the bankruptcy case for the Dallas-based franchise has brought on a big-name lawyer.

Bloomberg reported on Friday that the U.S. trustee had appointed New York Yankees star Alex Rodriguez to the creditors committee in the bankruptcy case. As noted in the team's Chapter 11 filing, Rodriguez is owed $24.9 million by the team he once played for prior to joining the Yankees in 2004.

Joseph Wielebinski, head of the insolvency and restructuring group at Texas firm Munsch Hardt Kopf & Harr, is representing Rodriguez in the bankruptcy and will pinch hit for the baseball star on the creditors committee, according to court filings. A call to Wielebinski's office in Dallas wasn't immediately returned by the time of this post.

K&L Gates was selected from among "six or seven other firms" to represent the creditors committee itself, says Jeffrey Fine, a bankruptcy partner in the firm's Dallas office. K&L Gates beat out other firms vying for the assignment like Sidley Austin and Greenberg Traurig, Fine says, and the firm already is working to get up to speed on the complex case.

As we've previously reported, debt-saddled Rangers owner Thomas Hicks retained Weil, Gotshal & Manges to sell the team as a means of repaying more than $500 million owed to creditors. Late last year a leading contender for the team emerged--Charles "Chuck" Greenberg, the head of the sports practice at Pepper Hamilton in Pittsburgh, who has advised clients on several notable sports deals and is part owner of three minor league baseball teams.

Greenberg turned to lawyers from Foley & Lardner, longtime outside counsel to Major League Baseball, to help him clinch a deal for the team. By January, Greenberg appeared to have beaten out Houston businessman Jim Crane--advised by Proskauer Rose--for control of the Rangers. But complications soon arose over the proposed sale when lenders blocked the deal.

The transaction had to be approved by both MLB and a group of 40 creditors holding some $525 million in Hicks debt. But as reported by The Am Law Daily in April, negotiations stalled as the creditors group split into two groups: an ad hoc committee of funds represented by Milbank, Tweed, Hadley & McCloy, and another group of banks led by JPMorgan Chase and advised by Latham & Watkins.

For its part, MLB and the office of commissioner Bud Selig retained Paul, Weiss, Rifkind, Wharton & Garrison to advise the league during negotiations transferring ownership of the Rangers from Hicks to a new buyer. But the bankruptcy filing by the team late last month to help smooth a potential sale to Greenberg has complicated matters.

Some creditors feel the team's bankruptcy is a strategic move to force a sale to Greenberg's group, which includes current Rangers president Nolan Ryan, instead of other bidders that could be offering more money for the franchise that would, in turn, be used to pay off creditors.

The Dallas Morning News reported this week that former Wachtell, Lipton, Rosen & Katz associate George Postolos, now a prominent sports consultant who made a play for the NBA's Charlotte Bobcats earlier this year and advised Crane on his bid for the Rangers, was in the courtroom but declined to comment.

The competing interests and debate over the value of the assets in the bankruptcy have brought in enough lawyers to field their own baseball team.

Mitchell Seider, global cochair of the insolvency practice at Latham, is advising JPMorgan as administrative agent for first-lien creditors along with corporate partners David Teh and Ronan Wicks.

Dennis Dunne, head of Milbank's financial restructuring practice, is counsel to the ad hoc group of first-lien lenders along with bankruptcy partner Andrew Leblanc and restructuring of counsel Dennis O'Donnell.

Clifford Chance financial restructuring partners Andrew Brozman and Thomas Schulte are representing GSP Finance, administrative agent for second lien creditors, along with Gardere Wynne Sewell bankruptcy partner Holland O'Neil.

In addition to its team of lawyers from Paul Weiss led by chairman Brad Karp and finance practice cochair Jordan Yarett, MLB also is being advised by Robert Kheel, an adjunct professor at Columbia Law School and former litigation partner at Willkie Farr & Gallagher in New York. (Dallas's Stutzman, Bromberg, Esserman & Plifka is serving as the league's local counsel.)

Weil restructuring partners Martin Sosland, Ronit Berkovitch, and Stephen Youngman are representing the Rangers as lead debtor's counsel, with Jeff Prostok from Fort Worth bankruptcy boutique Forshey Prostok serving as local counsel.

Given the fact that Rodriguez and several other players are owed millions in deferred compensation by the Rangers, the Major League Baseball Players Association has retained Baker Botts bankruptcy chair Jack Kinzie to advise the union on the team's Chapter 11 proceedings along with New York labor firm Cohen, Weiss and Simon.

It all makes K&L Gates's Fine wish he had his own lineup card as a cheat sheet when entering the crowded bankruptcy courtroom in Fort Worth. Fine says that the initial hearings have been "standing room only," but he hopes that the novelty will wear off as the case drags on.

Unless A-Rod makes an appearance, of course.

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