Dodgers bankruptcy: Creditors concerned about Frank McCourt's financing plan
The committee representing unsecured creditors in the Dodgers' bankruptcy case raised concerns Monday about Frank McCourt's proposed financing. In a hearing on Wednesday, a judge is scheduled to decide whether the Dodgers should be financed through the bankruptcy proceedings by a loan arranged by McCourt or one proposed by Major League Baseball.
"There can be no question the [proposed MLB financing] is economically superior," an attorney for the creditors' committee wrote in a filing Monday. "Yet the committee understands the [Dodgers'] concerns with the proposed [MLB financing] given the tense relationship between the parties."
McCourt's attorneys have argued that their client should not be compelled to be financed by MLB, since they say the league has a "hostile" relationship with the Dodgers.
McCourt's proposed financing includes a higher rate of interest, which the committee says would result in an additional $4.5 million in interest payments over the course of a year, and about $10 million in fees. The MLB offer carries no fees.
"The fees and interest associated with [McCourt's proposed loan] are excessive, particularly ... where [the lender] has almost no risk that it will not be repaid in full," the committee filing read.
The committee did not ask the bankruptcy judge to reject McCourt's proposed loan. However, the committee did ask the judge to consider ordering modifications to that loan if he approves it, including elimination of (a) the Dodgers assets as collateral for the loan and (b) the requirement that the lenders approve any sale of the Dodgers, so long as the lenders get repaid.
-- Bill Shaikin
Photo: Frank McCourt. Credit: Damian Dovarganes / Associated Press