LA Dodgers Filed Chapter 11 Bankruptcy
On June 27, 2011 the Los Angeles Dodgers, LLC, a Delaware Corporation, filed for protection under Chapter 11 of the United States Bankruptcy Code.
The filing was done as what most are calling a last ditch effort for current owner Frank McCourt¹ to try and prevent the Commissioner of Major League Baseball from torpedoing McCourt’s ability to enter into certain deals to generate revenue to keep the finances of the team afloat.
The filing listed approximately $1 billion in assets and $500,000 million in debts, the largest unsecured debt being some $21 million owed on the contract to Manny Ramirez, who retired recently after being traded from the Dodgers.
Chapter 11 is a complex and involved reorganization proceeding in which creditors get to vote for or against a plan of repayment. It is not necessary for all creditors to vote in favor of the plan of reorganization, but there are requirements for the minimum number that need to approve the plan.
Many corporations take advantage of very liberal laws in the State of Delaware even though their primary business is operated outside of that State. Nonetheless, it is somewhat problematic that a bankruptcy judge in Delaware may decide the fate of the Los Angeles Dodgers.
¹ Ownership may rest in both Frank McCourt and spouse Jamie McCourt, but as of the writing of this post, the California Family Law Court has not made a determination on that issue.