The liquidation of the Tom Hicks sports empire took another step closer to reality yesterday when the Texas Rangers filed a pre-packaged Chapter 11 bankruptcy petition in an effort to get approval to sell the club to a group led by attorney Steve Greenberg and Nolan Ryan. The group already has the approval of Major League Baseball Commissioner Bud Selig. An interesting graphic from the Wall Street Journal attempting to illuminate the transaction is below:
Hicks and the Greenberg-Ryan group have had a deal since January which would involve the purchase of the team, the rights to operate the stadium and 150 acres adjacent to the Ballpark at Arlington for about $530 million. The problem, however, is that the creditors, led by hedge fund and vulture investor Monarch Capital have refused to approve the sale, contending that the deal does not return enough money to them. The bankruptcy is an attempt to force the creditors to accept the deal and forestall the possibility that the creditors could force a sale to one of the other two groups who have bid for the team, at least one of which was a higher bid returning more to the creditors. As has been the case with every sale of a team in the Selig era, the Greenberg-Ryan group have won favor in part due to their close ties to the Commissioner.
Monarch had threatened to take the club into involuntary bankruptcy but this filing would seem to preempt that. However, expect Monarch and other creditors to fight this reorganization plan in an attempt to at least force the Greenberg-Ryan group to pay more. The backing of the Commissioner may be enough to forestall the possibility of another serious bidder entering an auction but Monarch will certainly push the bankruptcy judge hard to determine why this lower value will proveide the best return to creditors, which is one of the stated goals of any bankruptcy proceeding. The club however contends that sale of the team would produce enough money to pay the Rangers� creditors in full, including players, like Alex Rodriguez, the club's largest unsecured creditor, who were still owed millions of dollars in deferred compensation.
