A Delaware judge on Friday rejected the Los Angeles Dodgers’ proposed $150 million bankruptcy financing plan, directing the team to instead negotiate a loan deal with Major League Baseball.
Judge Kevin Gross said in an eight-page order that the team had failed to show that the terms of its secured financing with hedge fund Highbridge Capital were fair, given the more favorable financial terms in MLB’s unsecured loan offer.
The Dodgers previously rejected MLB’s offer and had refused to negotiate with the league, arguing that its financing proposal was simply an attempt by baseball commissioner Bud Selig to take control of the team and force a sale.
While acknowledging an “underlying feud” between Selig and Dodgers owner Frank McCourt, Gross said he was basing his decision on debtor-in-possession, or DIP, financing on the narrowest grounds possible and leaving arguments over the team’s management for later.
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“The court finds that the Baseball loan is not a vehicle for Baseball to control debtors,” wrote Gross, who ordered the team to negotiate with MLB cooperatively and in good faith.
“Debtors and Baseball are entitled to the other’s full cooperation in finalizing and administering an unsecured loan facility,” he said.
Bruce Bennett, an attorney for the Dodgers, said he had spoken with McCourt, and that the Dodgers owner was satisfied and that the team has already asked the league for a draft credit agreement.
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