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Tuesday, June 28, 2011

News From Delaware As Frank Gets To Use His Own DIP Financing

Sadly, it looks like Frank will get to use his own line of credit for debtor-in-possession financing, subject to a later hearing on July 20. A $4.5M exit fee will be reduced to $250,000 if MLB takes over the financing. The apparent compromise struck is that the proposed media rights auction will not happen during bankruptcy proceedings.

Apparently, this means that MLB's line that the Dodgers didn't have authority to file bankruptcy is a non-starter, or at least that MLB is rescinding that line of attack. MLB's initial response was a fireball; as Jon pointed out on Twitter, the founding of Dodger Divorce can be seen on page 8, point 18.

Bill Shaikin has a fuller account at the LAT's Dodger blog.

It shocked me to realized that I haven't updated the list of firings since 2005. Mike Petriello of MSTI asked about it earlier in the day and, well, wow.

Steve Dilbeck is just wrong. Angelenos are very forgiving; it starts with winning.

Update: Tim Brown:

MLB will move within days to have its monitors -- Schieffer and Allen -- re-installed at Dodger Stadium. Also, will request a trustee...

Sources: MLB very happy with events today in Delaware. Most important thing to delete media rights auction. Figure out rest in 3 weeks.

As I estimated. The important thing was to hack off another avenue where Frank might get future revenues so he could further indebt the team.

Update 2: Frank will only get $60M of the $150M DIP financing. MLB plans on filing additional motions to control the team by restoring the monitors.

Update 3: Keep this It's About The Money post handy in another tab while re-reading which entities are generating revenue, versus the list at Dodger Divorce which are going into bankruptcy. Los Angeles Dodgers, LA Holdco, LA Real Estate Holding Company, LA Real Estate, and Los Angeles Dodgers Holding Company (all LLCs -- omitted for the sake of clarity) are all entities filing for bankruptcy protection. Yet according to the IATM post, the money-generating parts of the McCourt empire are Blue LandCo, LA Real Estate, and Dodgers Tickets LLCs. We know that the McCourts heavily indebted Dodgers Tickets to get the mansions, but why is Blue LandCo not part of the bankruptcy filing? Could it be that Frank is paying himself first while keeping the team, its former trading partners, and Vin Scully hanging?

Update 4: MLB is likely to file a motion to terminate the Dodgers' franchise within days.

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One of the key strategies for MLB will be to obtain the appointment of a Trustee who has no allegiance to McCourt, because it seems pretty clear that the various Dodger entities have viable causes of action against the McCourts (both of them) for breach of fiduciary duty. I cannot remember exactly what Frank's title was (I know Jamie was CEO of some entity or entities), but basically, as the managers/general partners/officers/directors, they owed duties to the entities not to use them for personal gain, not to borrow against the assets for their personal use (rather than for use of the club). Simply stated, the Dodgers should sue the McCourts, but that can only happen if Frank is removed from controlling them (because he's not going to sue himself).

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