MLB Team Texas Rangers Go Into Bankruptcy To Facilitate Sale
Bankruptcy is not always for liquidation as the bankruptcy filing of the Texas Rangers reveals. Sometimes, it can be done to facilitate the sale of a MLB team or other business.
Bankruptcy is usually looked at as the financial last resort for a business or individuals. Often, it is. Sometimes you’ve just made such a haberdash of things that there really isn’t any choice but to start over again. In theory, this is exactly why the bankruptcy code was enacted and exists today.
There are other occasions, however, where a bankruptcy filing actually facilitates the growth or stability of a business. This usually occurs where the current owners of a business cannot keep running it due to massive debts. They need to sell, but can’t given the massive debts that no buyer wants to take on. This is exactly what is happening with the Texas Rangers of Major League Baseball.
The Rangers are owned through business entities by Tom Hicks. Hicks also owns the NHL Dallas Stars and the Liverpool Football Club in England. He is having massive financial problems and is reportedly trying to sell all the teams. The Rangers face large debts, but have found a buyer in the form of a group led by Nolan Ryan. There is just one problem. The creditors of the Rangers do not want to agree to the reduced amounts they would receive if they allowed the sale to go through. Things are at a loggerhead.
To overcome the problem, the Rangers have filed bankruptcy. The reason is leverage. The current owner wants the bankruptcy judge to reduce the debt amounts owed to the creditors. This is a fairly common act by the judge, and the creditors know it. As a result, they are put under more pressure to accept the deal on the table with the group led by Nolan Ryan. It is a classic case of the team using the bankruptcy court not to get a fresh start per se, but as a negotiating ploy.
Is there any chance of the Texas Rangers being liquidated by the bankruptcy court? No. This is purely a business maneuver and you can expect a deal to be reached relatively soon with the team coming out of bankruptcy with a new owner – Nolan Ryan and his investor group.