SBD/July 15, 2011/Franchises

MLB Formally Objects To McCourt's Proposed Financing From HighBridge Capital

MLB argued McCourt has substantial personal stake in interim financing deal
MLB late Thursday in Delaware bankruptcy court filed a formal objection to Dodgers Owner Frank McCourt's proposed interim financing from Highbridge Capital Management, saying he has a "substantial personal financial stake" in the deal. In addition to arguing that MLB's own interim financing proposal is financially superior, the league said in the filing McCourt would "personally benefit" by an undisclosed amount, creating an inherent conflict of interest. The amount, along with several other financial points surrounding the rival proposals, are redacted in the file. But more broadly, MLB claims McCourt is simply continuing the use of excess amounts of Dodgers assets for his personal use, precisely the kind of behavior that led the club to declare bankruptcy. "Clearly, Mr. McCourt has not allowed these bankruptcy cases to change his practice of using [the Dodgers] as his personal piggy-bank." Another sentence in the filing begins, "At the very same time that Mr. McCourt was negotiating the Highbridge [debtors-in-posssesion] financing --," but the rest of the paragraph is redacted. Bankruptcy court Judge Kevin Gross on Wednesday will hold a hearing in Wilmington to rule on the interim financing bids. As it has in the past, MLB claims its interim financing proposal is superior to Highbridge's due the lack of an additional $15M in fees and financing costs in the Highbridge bid, and an interest rate three percentage points lower.

OUTLINES MISMANGEMENT OF TEAM: MLB in the objection also extensively outlines alleged mismanagement of the Dodgers by McCourt, including the extraction of a redacted sum of money in direct and indirect payments to him and his family. The sum is believed to be into nine figures. Additionally, the filing outlines the beating of MLB Giants fan Bryan Stow in the Dodger Stadium parking lot, an incident that "highlighted the apparent deficiencies in security provided by [the Dodgers], which compromised the safety of fans and patrons to the detriment of the Dodgers and Major League Baseball. This deficiency was further exacerbated by the extraordinary number of complaints received by the Commissioner." MLB's filing also outlines an ongoing dispute regarding league-appointed club monitor, Tom Schieffer. The Dodgers claim the bankruptcy rules enjoin Schieffer from continuing his duties, a position MLB challenged in a letter to McCourt's attorneys. But the league said it has received no response.
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