After a slew of hearings, court filings and even a lawsuit filed last week by Greenberg and Ryan against the Rangers, federal bankruptcy judge Michael Lynn has set an Aug. 4 auction for the club — but not surprisingly, that decision has prompted more bickering.
At issue now are the rules governing the Aug. 4 auction for the Rangers, who filed for bankruptcy in May and have been financed by MLB since last season. In the latest salvos, attorneys for the club’s creditors — which include everyone from New York City hedge funds to Texas tax authorities to hat maker New Era (which has not been paid for supplying the Rangers’ official caps) — filed opposition Thursday to the auction rules and date.
They argue that Aug. 4 is too soon for rival bidders to arrange financing and “participate meaningfully” in the auction, and that the rules governing the bidding are still “too skewed to the advantage” of the Greenberg-Ryan bid.
Under the proposed rules for the Aug. 4 auction, the Greenberg-Ryan bid would be granted “stalking horse” status, meaning rivals would have to outbid their offer by at least $15 million, and Greenberg-Ryan would receive a sizable break-up fee if a rival group won the auction. The creditors’ described the auction date and bidding rules as an attempt “to whitewash and jam through confirmation of a fundamentally flawed plan” to sell the Rangers.
The club’s creditors have long objected to the terms of the $575 million deal to sell the club, its ballpark and nearby real estate to the Greenberg-Ryan group. They contend that the Rangers and MLB ignored higher bids, and that the Greenberg deal only pays back a fraction of the overall debt incurred by former Rangers owner Tom Hicks, whose holding company — which also owned the National Hockey League’s Dallas Stars — defaulted on nearly $600 million of loans last year.
In a response filed today, lawyers for the Rangers hit back, calling the creditors “myopic” and “reckless” for attempting to delay the auction. In one strongly worded section of their filing, the club’s attorneys all but challenged the creditors to an Old West-style duel. For months, they wrote, the creditors “have been saying that there are others who are ‘ready, willing and able’ to pay more. Talk, however, is cheap; nor does it pay claims against a bankruptcy estate. The time to put up or shut up is here.”
Another hearing regarding the bidding procedures has been scheduled for Tuesday. If the auction does take place on Aug. 4, it’s not entirely clear who else may attempt to bid for the Rangers. The leading candidates include a group led by Houston businessman Jim Crane, who in 2008 backed out of a handshake agreement to purchase the Houston Astros; and a group fronted by Dallas businessman Jeff Beck, who was previously aligned with former sports agent Dennis Gilbert’s bid for the Rangers last year.
Gilbert, a close confidante of MLB commissioner Bud Selig and “special assistant” to Chicago White Sox chairman Jerry Reinsdorf, has not divulged whether he will re-enter the bidding, either with Beck or another group. Reached on vacation in East Hampton, NY, Gilbert said he had no comment but would “review documents” next week.