Frank McCourt is pushing for bankruptcy court to approve an onerous hedge-fund financing plan instead of a lower-interest loan from Major League Baseball because he’d personally be on the hook for fees, according to papers filed yesterday.
The battle between McCourt and Major league Baseball is getting intense and nasty, as the pair are fighting it out in a Delaware bankruptcy court over the terms of protection and finances. The Los Angeles Dodgers are seeing bankruptcy protection and have arranged $150 million in Debtor-in-Possession (DIP) financing from a JP Morgan hedge fund under some pretty onerous terms — 10+% interest, etc. Major League Baseball, ostensibly to preserve the value of the franchise and to prevent McCourt from taking any more money out of it and Dodger Stadium, is contesting the arrangement, saying it will lend the Dodgers DIP financing at a much lower interest rate with more liberal repayment terms,
In papers filed yesterday, Major League Baseball lawyers sought to distance the interests of McCourt from the interests of debtors, saying that the hedge-fund loan would be collateralized by team assets (thus subject to liens) while the MLB would not. In addition, the hedge-fund loan would contain $15 million in fees; MLB is not charging fees.
McCourt’s argument: since Major League Baseball is attempting to drive him from the owners’ box, he shouldn’t be forced to become a debtor.
A hearing on the matter is scheduled for July 20. More from the New York Times.
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