The bankruptcy involving Tom Hicks and the Texas Rangers is getting more complication, as J.P. Morgan Chase filed suit late Friday, alleging that Hicks improperly transferred the lease to Rangers Ballpark in Arlington from a collateralized status to the team, limiting the amount the bank could recover in a bankruptcy action.
The bankruptcy involving Tom Hicks and the Texas Rangers is getting more complication, as J.P. Morgan Chase filed suit late Friday, alleging that Hicks improperly transferred the lease to Rangers Ballpark in Arlington from a collateralized status to the team, limiting the amount the bank could recover in a bankruptcy action.
Hicks Sports Group (HSG) had a $425-million revolving line of credit with J.P. Morgan Chase, backed by the team’s lease on the ballpark. In 2009, HSG allegedly made changes to the lease that transferred the lease directly to the team. The action is tantamount to someone unilaterally transferring ownership of a house and bypassing any liens on the house in the form of a mortgage.
J.P. Morgan Chase wants to have the bankruptcy court overseeing the sale of the Rangers to remove the team’s lease from the assets in the sale. Of course, this dramatically drives down the value of the Rangers: you have left a franchise agreement but no place to play.
The end result, more than likely, will be a decision by the bankruptcy court as to whether Chase has a valid lien; if so, the bank will be added to the team’s creditors.
There’s been talk that additional bidders could arise for the team, but we’re not expecting a huge war. Mark Cuban has expressed interest in the team, but we’re not sure he’s really serious: he’s also expressed interest in buying the Dallas Stars, another Texas team on the block, and it would make much more economic sense for him to buy the Stars and combine operations with his NBA team, the Dallas Mavericks. We doubt Cuban has the financial wherewithal to buy both the Stars and a chunk of the Rangers. But his words put him in the headlines, and that’s usually all that matters with Cuban.
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