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Bankruptcy judge unlikely to assign a Dodgers trustee, law professor says

June 27, 2011 |  3:13 pm

Photo: Los Angeles Dodgers owner Frank McCourt standing outside of  Dodger Stadium. Credit: Lucy Nicholson / Reuters Major League Baseball's veto authority over the Dodgers’ proposed contract with Fox Sports is probably an unenforceable condition, said Lynn M. LoPucki, a UCLA bankruptcy law professor.

“Most obligations that one can have are dischargeable in bankruptcy,” LoPucki said. “So if the bankruptcy court allows borrowing [by the Dodgers] in violation of the legal rights of MLB, then MLB has a claim for damages against the debtor’s estate.... What MLB needs is some theory that turns their veto into a property right which the bankruptcy judge can address.”

Photos: The Dodgers and the McCourts

LoPucki said he doubted that the bankruptcy judge would assign a trustee to take over operation of the Dodgers, even if MLB or one of the other creditors makes an argument that McCourt has engaged in gross mismanagement of the team’s finances.

“Trustees are rarely appointed. There is a strong presumption in bankruptcy courts that the debtor will remain in possession during the bankruptcy case,” he said. “I’d be especially surprised if a Delaware bankruptcy court appointed a trustee because cases of large debtors come from all over the country to Delaware, and the Delaware courts depend on these cases coming.”

The tiny eastern state has been a magnet for corporate registrations and filings for more than a century but in the last 20 years has emerged as the preferred venue for major public entities filing for bankruptcy, LoPucki said.

“Some people say that’s because they’ve developed a reputation for doing an excellent job. But some of us think they have developed a reputation for ruling for one side in a case, and that is the side that brings them the case,” he said.


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Photo: Los Angeles Dodgers owner Frank McCourt standing outside of  Dodger Stadium. Credit: Lucy Nicholson / Reuters