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Bankruptcy thoughts (tl;dr is fine)

 

I listened to myself on the LSB Radio and didn’t think I conveyed everything I had to say (or accurately for that matter). Since it’s zero hour I figured I’d put this together.

 

Cuban/Monarch Dealings

 

It would be odd for Monarch to enter into new financing.  I checked their website and they specialize in buying debt of distressed assets.  Why would they get into the business of new financing?  Sure, Cuban could just be assuming some of the debt they purchased but that doesn’t really seem like Monarch’s business plan which seems to be liquidation of debt for a profit.  I don’t really think the two are in bed together.

 

Cuban/Crane

 

Tough call here.  I think this would be a bad marriage.  Cuban (I believe) was kept out of the Cubs sale.  Crane possibly backed out of the deal on the Astros.  The two together would seem toxic to MLB.

 

Auction Rules

 

This was actually conveyed OK by me (and moreso by Maury).  Someone(s) need to submit a bid exceeding the Greenberg/Stalking-horse bid by $15MM.  If that happens then an auction begins with each party going up in increments of $2MM.  Eventually, the Rangers and CRO approve.

 

Here’s where it gets a little odd.  The Asset Purchase Agreement (APA) previously submitted by Greenberg controls the terms although a bidder can add, change or subtract provisions from the APA.  That could be an issue.  The US Trustee (who oversees BR compliance) has only small issues with the APA (broad exculpation from third-party claims and governmental claims).  So the APA seems pretty OK but if a bidder starts putting new terms in or deleting some out it could their undoing. It's not just the money but the terms as well. 

 

The bidding procedures have been challenged often by the lenders.  Judge Lynn recently said they are mostly fine.  He made two changes recently (7/30 I believe) in which he said the breakup fee was unclear.  Now Greenberg must decide beforehand whether he wants a $10MM breakup fee OR 125% of his expenses (capped at $13MM).  The timing of the auction, etc., are all fine by Judge Lynn.

 

One new thing just occurred which is CRO Snyder voted to reject the Rangers plan.  Not great news but I suppose not unexpected since it was based on their older offer which didn’t include the additional $40MM

 

Lenders’ Motivations

 

As I mentioned during the LSB Radio show, the lenders made a recent motion at almost midnight on Sunday.  The basic premise was the transfer of the ballpark lease (there was another issue but that’s what I’ll focus on).  The motion was made by JP Morgan who hold basically blanket security interests in HSG.  This means everything HSG has is covered by their loans.  The question I have is why do they care if the ballpark lease is transferred from one HSG entity to another?  It’s still collateral covered by the loan.  Granted, the transfer shifted the lease to the loan capped at $75MM but at the end of the day does that matter?  By including the lease in the BR case, it becomes liquidated that much faster instead of the lender having to go after HSG for the value of the lease.  Legally the lender’s motion may make sense but factually it may not so why file it?  Just to delay?

 

That’s about all I got for now. Oh yeah, nothing in here is legal advice. Just musings.

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