Bankruptcy Judge Michael Lynn said he had never before seen a fight over who would provide Chapter 11 bankruptcy financing for a bankruptcy company because securing such financing is usually an uphill battle. But this is the exact type of drama that broke out when senior creditors of the Texas Rangers offered to loan the bankrupt team nearly twice what Major League Baseball (MLB) offered at a fraction of the interest — a floating rate of 1.64 percent compared with the MLB’s 7 percent. But there was a catch that the Texas Rangers were not going to buy-the lender’s wanted the Texas Rangers financing deal to delete any reference to the proposed sale of the team to Chuck Greenberg and Nolan Ryan. Unfortunately, for the lenders in this Chapter 11 bankruptcy, the bankruptcy judge did not side with them.
In the end, the judge selected MLB, which was forced by the unstructured auction to drastically lower the interest rate it had been charging on an $18.45 million loan to keep the Rangers afloat since last summer and on as much as $21.5 million of bankruptcy financing. The deal could save the franchise hundreds of thousands of dollars, if not millions, attorneys said.
However, the bankruptcy judge did remove the mention of the proposed Greenberg-Ryan deal as part of the refinancing agreement. Furthermore, he urged the Texas Rangers to make a commitment to their fiduciary responsibilities to lenders by being open to talks with other potential buyers who may offer a better deal than the MLB. A matter of fact, the bankruptcy judge chided the team’s CFO, Kellie Fischer because she did not give a blunt and direct answer when asked if she would accept a far superior purchase offer from lenders.