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Once again, the Texas Rangers Baseball Partners Information Site provides us with a wealth of morning must-reads -- chief among them, the 12-page objection filed yesterday in Fort Worth bankruptcy court by the Texas Attorney General's Office and the Texas Comptroller of Public Accounts. Greg Abbott's objection comes one day after United States Trustee William Neary filed his own objection -- to Tom Hicks' law firm, Weil Gotshal & Manges, claiming it has "divided loyalties." To which the firm replied: Do not.
But it's the AG's objection with which we concern ourselves this morning. The objection -- written by Jason Starks, an assistant attorney general in the Bankruptcy & Collection Division -- concerns a provision in the Rangers' amended Chapter 11 plan, filed at the end of June, that says after the court OK's the plan, well, "all Persons who have held, hold, or may hold Claims against the Debtor" are outta luck. Says the AG's office, sure, up till now that's been common practice in bankruptcy litigation -- the old "You Snooze, You Lose" provision. But, says the AG's office, a Supreme Court decision in March concerning student-loan debt demands the court take another look at tradition:
While the Supreme Court upheld the effectiveness of such a provision with respect to a creditor who failed to object to it, the Supreme Court went on to deal with arguments that approving plans containing provisions contrary to the Bankruptcy Code would invite "bad faith litigation tactics" and leave the door open for "unscrupulous debtors" to abuse the bankruptcy process by filing improper plans in hopes that a court and creditors would overlook the provisions. If a court or creditor discovers the improper plan provisions, then the debtors could simply amend the plan to eliminate them, making it a "no risk" proposition to propose a plan that includes improper provisions.
The AG's office is but the latest to get in the objection line: Among those who recently filed objections: SEG of Ohio, which is tied up with Hicks Sports Group in Tarrant County District Court over the failed Glorypark development, and the New Era Cap company. Meanwhile, mediation continues in advance of a hearing tomorrow morning and that July 16 auction.