By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
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In an affidavit included in the filing, Rangers Chief Financial Officer Kellie Fischer said the club has experienced "cash flow deficiencies" since 2005 despite capital contributions, expense reductions and loans to HSG "in excess of $100,000,000" by Hicks. Lawyers for the team asked the court to OK the "prepackaged" plan—a financial reorganization aimed at shortening and simplifying the bankruptcy process—within 45 days.
Hicks acknowledged his readiness to bolt the professional sports business in The Dallas Morning News, calling it "a brutal invasion of privacy."
"I lost a lot of money," he said. "That was only because I wanted to win."
In a mediation session, the parties agreed to appoint William Snyder as the chief restructuring officer, meaning he'd be charged with giving an independent review of the sale and ensure that the deal with the Greenberg-Ryan group was transparent and fair—which eventually meant opening up the team for auction, basically to ensure that the Greenberg-Ryan offer was the best deal on the table.
Lynn also ordered the Rangers to submit a revised plan to allow the lenders to pursue a lawsuit against Hicks to recover whatever funds they believe they're owed at the end of the sale.
In a Fort Worth courtroom smaller than the Rangers locker room, dozens of lawyers waged a battle over time. The creditors needed more of it to allow for new bidders to emerge with higher offers, while the team and prospective ownership group saw the trade deadline looming and no chance to improve the AL West Division leader without an infusion of cash.
Selig, who months earlier had threatened to use MLB's "best interests of baseball" clause to seize control of the team, made it clear on July 6 during a conference call for the All-Star Game who he hoped would emerge as the winner. And he didn't mince words when talking about Hicks either.
"Tom Hicks put the club into bankruptcy...This has everything to do with Mr. Hicks and Mr. Hicks' personal economic situation...I would have liked to have the Ryan-Greenberg group approved a while ago."
Selig's motives for openly supporting Greenberg and Ryan are unclear, although Greenberg offered a compelling sales pitch in December after the two were chosen by Hicks. "If they had a Mount Rushmore of baseball in Texas, Nolan would be the first face chiseled out...The Rangers and Ryan belong together," he said.
Greenberg and Ryan also hired Milwaukee-based Foley & Lardner to perform legal work, securing MLB's most trusted law firm in the process. MLB Chief Operating Officer Bob DuPuy, who has attended several of the Rangers' bankruptcy hearings, is a former partner at Foley & Lardner, which has served MLB since the late 1980s. As the principal outside counsel for MLB, Foley & Lardner attorneys work closely with Selig and DuPuy, who served as counsel to the commissioner when Selig owned the Brewers and DuPuy worked at Foley & Lardner. Joe Ricketts, who recently won the bid for the Chicago Cubs over Jim Crane and Mark Cuban, retained Foley & Lardner to assist him in the bidding process.
On July 8, the Rangers abandoned their plan for a July 16 auction after Snyder expressed his disapproval of the terms. Accusing Snyder of hijacking the sale, Greenberg and Ryan four days later actually filed a lawsuit against the Rangers, accusing the team of breaching the purchase agreement signed by both parties on May 23. The suit argued that if the club were to be sold to someone else, the difference between the two bids is owed to Greenberg and Ryan, leaving the creditors with no incentive to support a higher bid.
Dallas bankruptcy lawyer Polk calls the pending suit "genius" because there's no downside, while the upside is that the argument could ultimately win in court. As for Ryan suing his employer? "This thing is so crazy and so acrimonious anyway, it wasn't going to cause any further acrimony."
During yet another tug of war over timing on July 13, Andrew Leblanc, an attorney for the creditors, argued that there's no longer a rush to beat the July 31 trade deadline—that target date "proved false" after the Rangers traded for Bengie Molina and Cliff Lee. But Greenberg and Ryan pushed a new deadline: Their funding commitments evaporate on August 12.
Lynn scheduled an August 4 auction based on a date that Lou Strubeck, Snyder's attorney, said his client believed would allow potential bidders to secure funding. Because Greenberg and Ryan had already signed two agreements to purchase the team and had invested considerable time and money in the process, they were given "stalking horse" status, meaning their $500 million bid for the team is starting point for the auction. Additionally, Lynn granted a $10 million break-up fee to Greenberg and Ryan "partly to shut them up," and their bid must be bested by $15 million.
Essentially, any new bidder would need to put at least $515 million on the table. Anyone willing to top the high bid must do so in $2 million increments during the auction, and if someone other than Greenberg and Ryan wins, $10 million of the proceeds kick back to them to cover expenses. Confirmation of the winner takes place at 10:30 a.m. August 4.
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