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McCourtBKRuling

McCourtBKRuling

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Published by gmaddaus
Judge Kevin Gross's ruling denying Frank McCourt's bankruptcy loan, requiring him to seek financing from Major League Baseball, and bringing the McCourt era one step closer to its end.
Judge Kevin Gross's ruling denying Frank McCourt's bankruptcy loan, requiring him to seek financing from Major League Baseball, and bringing the McCourt era one step closer to its end.

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Published by: gmaddaus on Jul 22, 2011
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07/22/2011

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INTHEUNITEDSTATESBANKRUPTCYCOURTFORTHEDISTRICTOFDELAWARE
fure)
)
LOSANGELESDODGERSLLC.,
etal.,)
)
Debtors.)Chapter11CaseNo.11-12010(KG)(JointlyAdministered)
Re:DktNo.13MEMORANDUMORDER
OnJune27,2011,LosAngelesDodgersLLC,!andaffiliates,debtorsanddebtorsinpossessionintheabove-captionedcases(the"Debtors"),filedtheEmergencyMotionforInterimandFinalOrders(I)AuthorizingDebtorstoObtainPostpetitionFinancingpursuantto11U.S.C.§§105,362,and364,and(II)SchedulingaFinalHearingPursuanttoBankruptcyRule4001(b)and(c)[D.1.13](the"Motion").DebtorssoughttheCourt'sapprovalofproposedfinancingfurtherdescribedbelow.TheDebtorsandobjectingpartiesreachedagreementonrevisedterms.TheCourtenteredanorderonJune28,2011[D.1.52](the"InterimDIPOrder")that,amongotherthings,approvedtheMotiononaninterimbasisonthetermssetforthintheInterimDIPOrderandscheduledandheldanevidentiaryhearingonJuly20,2011.Debtorsseekauthoritytoobtainfinalapprovalofpostpetitionfinancingconsistingofasuperprioritydelayeddrawtermloanfacilityinanaggregateprincipalamountofupto$150,000,000(the"DIPFacility").Debtorsreceivedaninitialdrawof$60millionuponentryoftheInterimOrderandtheremaining$90millionwouldbeavailablefromtimetotimefollowingentryofafinalorder.
!
ThisentityownstheLosAngelesDodgersMajorLeagueBaseballteam(the"Dodgers")whoserichandsuccessfulhistoryisofmythicalproportions.Itsgreatformerplayers,managersandexecutivescouldjustifytheirownhalloffame.FormerlytheBrooklynDodgers,theteamnameisderivedfromfanswhousedto"dodge"thatcity'strolleys.
 
TheproposedlendersareagroupintheHighbridgeSeniorLoanFundIIfamilyoffunds("Highbridge")2,withwhomDebtorshaveenteredintoaCreditandSecurityAgreementontermsmorefullydescribedbelow(the"HighbridgeLoan").TheOfficeoftheCommissionerofBaseball(the"Commissioner"),doingbusinessasMajorLeagueBaseball("Baseball")hasobjected'totheMotionandthetermsoftheHighbridgeLoanandhasproposeditsownloan(the"BaseballLoan")whichitcharacterizesasanunsecuredloan.Debtorsdisputethenatureoftheloan."Baseballfairlycountersthat,todate,Debtorshaveflatlyrefusedtonegotiateitsproposal.Baseballispreparedimmediatelytoengageingoodfaithnegotiationstowardanunsecuredloanonthetermsplacedontherecord.
2
HighbridgePrincipalStrategic,LLC,istheproposedSeniorManagingAgent.
3
TheOfficeoftheUnitedStatesTrusteeandtheOfficialCommitteeofUnsecuredCreditors(the"Committee")alsoobjectedtotheMotion.TheCommitteewithdrewitsobjectionasexplainedbelow.
4
Debtors'argumentthattheBaseballLoanisnotunsecuredispremature,asnegotiationsandcourtreviewhavenotoccurred.Therefore,Debtors'relianceuponcasessuchas
InreSnowshoeCo..Inc.,789
F.2d1085
(4th
Cir.1986)forthepropositionthatconditionedloansareproblematicdoesnotchangetheCourt'sview.
2
 
TheessentialtermsoftheHighbridgeLoanareasfollows:
Amount:
$150,000,000multipledrawtermloans(ofwhich$60,000,000hasbeenfunded)
Rate:
LIBORplus6.00%5forLIBORLoanswithaLIBORfloorof3.00%
TimingofInterestPayments:
PaidattheendofanInterestPeriod/monthlyduringtermofthefacility
NumberofBorrowings:
BorrowermayonlyspecifyuptotwoBorrowingDatesduringany30dayperiod
Fees:
ClosingdatefeespaidperFeeLetter:Closingcommitmentpayment:3.5%oftheDIPLoanCommitment($5,250,000),whichhasalreadybeenpaidAgentfee:$50,000(paidannually)AdditionalCreditAgreementFees:Delayeddrawfee:0.50%ofundrawncommitmentDeferredcommitmentfee:$4,500,000uponearlierofrepaymentinfullandmaturityAuditandcollateralmonitoringfees
Maturity:
June27,2012(beforeexpirationofFoxSport'srightoffirstnegotiation)
Security:
AllAssetsoftheLoanParties
DebtPriority:
Super-priorityadministrativeexpenseclaimsundersection364(c),seniortoallotheradministrativeexpenseclaimsTheCourtwilldecidetheMotiononthenarrowestgroundspossible,i.e.,applyingtheapplicablesectionoftheBankruptcyCodetothedisputeandleavingtoalater,moreappropriateday,theissuessurroundingtheunderlyingfeudbetweentheCommissionerandDebtors'principal,Frank
5
TheOfficialCommitteeofUnsecuredCreditorswithdrewitsobjectiontotheMotionwhenHighbridgeagreedtolowertheinterestratebyonepercent,fromLIBORplus7%toLlBORplus6%,andtoremoveitslienonavoidanceactions.
3

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