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Star-Telegram.com:

ARLINGTON -- The sale of the Texas Rangers has landed in a courthouse after the club voluntarily filed for Chapter 11 bankruptcy to help break a logjam that has kept Chuck Greenberg and Nolan Ryan from taking ownership.

The deal first agreed upon in January between Hicks Sports Group and Rangers Baseball Express remains in place. Documents were filed Monday in U.S. Bankruptcy Court in Fort Worth with the hopes that the original deal can be completed through a "voluntary, prepackaged, court-supervised" process.

Seeking a judge's help allows the sale to move forward without the approval of the 40 lenders who hold some $525 million in Hicks Sports Group debt, which has been in default since March 2009.

Greenberg, Ryan and Tom Hicks are hopeful that Judge D. Michael Lynn will reach a favorable verdict by early July that would allow Rangers Baseball Express -- and the cash infusion it will bring -- to be in place so that the Rangers can take on payroll at the July 31 trade deadline.

Until then, the team will continue to operate within the budget that was approved by Major League Baseball over the off-season and will have access of up to $11.5 million in new loans from MLB.

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The key component of the petition contends that lenders led by Monarch Alternative Capital are entitled only to the Rangers' guarantee of the Hicks Sports Group debt -- amounting to $75 million. Once that is paid, Hicks and Greenberg expect the court to lift the liens on the ballclub.

Professional sports is watching to see if the judge determines that the franchise can be separated from its parent company's financial obligation, said Marc Ganis, a consultant who advised the Tribune Co. on the sale of the Chicago Cubs. Ganis said that the outcome could have immense impact on future financing of major league franchises.....

Dallas attorney Bill Siegel agreed that a legal victory for the Rangers could hurt future attempts to finance a team purchase.

Cowles & Thompson Bankruptcy Attorney William "Bill" Siegel in Star-Telegram

"This is the type of business dispute that will send chills up the spines of lenders everywhere," said Siegel, a bankruptcy specialist with Cowles & Thompson. If Hicks wins, "lenders will not be willing to stick their necks out on projects that have a high potential to fall short on returning the full value of the investment."

Hicks and Greenberg expressed confidence that Judge Lynn will approve the bankruptcy, but others warned that it's far too early to predict the outcome.

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Said Siegel: "By filing bankruptcy, the team loses an element of control. But they may not have had any choice because they couldn't get lender approval to release the liens."

There have been precedents. Sales of the Cubs and Phoenix Coyotes involved bankruptcy courts, but Ganis said the issues were radically different with neither questioning a team's relationship to a holding company.

All remaining Rangers debts, which include deferred compensation owed to former players, will also be guaranteed under the terms of the sale.

The remaining money -- estimated to be between $280 million and $290 million -- will move upstream from the Texas Rangers Baseball Partners to Hicks Sports Group, and the parent company will use it to satisfy its debts.

The majority of that money will go to the Hicks Sports Group lenders, but baseball is also owed more than $18 million in loans to the club the past year.

The Rangers' side is anticipating that the lenders, who have been led by Monarch Alternative Capital, will try to intervene by filing motions to halt the bankruptcy process.

http://www.star-telegram.com/2010/05/24/2213588/bankruptcy-next-step-in-texas.html

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