SBJ/20100628/This Week's News

Ruling shifts power in sale of Rangers

The attempted sale of the Texas Rangers gained an additional wrinkle last week with a federal bankruptcy judge’s ruling that gave lenders some powers to block the deal and removed team owner Tom Hicks from a position to vote on the deal.

The team and MLB still hope to have their plan to sell the club to a group led by Chuck Greenberg and Nolan Ryan approved next month, but that will now largely be in the hands of William Snyder, the chief restructuring officer (CRO) appointed by the judge to decide whether the sale is fair to the lenders.

Meanwhile, a second potential bidder, sources said, has been in touch with the creditors: Jeff Beck, a Dallas businessman who was the money behind Dennis Gilbert’s spurned offer for the team last year. Sources said Beck was making his overture without Gilbert.

Houston businessman Jim Crane, another spurned bidder, also has been in touch about submitting another bid with the creditors, who were meeting with Snyder last week.

“You can’t read this decision and say now ‘I know what is going to happen in this case,’” said Paul Rubin, a bankruptcy attorney at Herrick Feinstein who reviewed the judge’s opinion at the request of SportsBusiness Journal. “The appointment of a CRO is significant.”

The Rangers, Greenberg and MLB all issued positive statements last week, indicating that they thought the team’s bankruptcy plan, which ends with the sale, would be approved.

The Rangers’ parent company, Hicks Sports Group, defaulted on its debt March 31, 2009, and soon after put the Rangers up for sale. MLB took over the sales process on Jan. 16 and, over the creditors’ objections, chose Greenberg as the prospective buyer. The creditors refused to release their lien, and the team filed for Chapter 11 bankruptcy protection on May 24.

Judge Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas appears to have walked somewhat of a tightrope to the question of whether the lenders can block the sale because of their consent rights in their loan document. As of the end of last week, they could, according to his ruling, but he may have left a path in his decision for the team to change the Greenberg agreement and negate the lenders’ veto.

Creditor sources disagree with that conclusion, but if it is true, the judge may be seeking an outcome in which neither side gets to make the decision whether the Greenberg sale goes forward. If the agreement can truly be restructured to take away the lenders’ veto, that removes the creditors from the decision. Lynn also removed Hicks from the decision, though, essentially leaving the choice in the court’s hands, awaiting Snyder’s recommendation.

Snyder was meeting with all parties last week. He is an accomplished CRO who oversaw the emergence from bankruptcy in late December of chicken producer Pilgrim’s Pride.

Beck, who did not return calls seeking comment, is the founder of Dallas-based real estate company Beck Ventures. He also was the founder and chief executive of Capital Senior Living Corp., a large developer and operator of senior living communities.

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