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July 15, 2010

Bankruptcy judge delays Texas Rangers auction to Aug. 4

FORT WORTH – A U.S. bankruptcy judge, puckishly declaring he wanted to make each side equally displeased, on Tuesday pushed the date of the Texas Rangers auction back to Aug. 4 and said the team could emerge from bankruptcy the same day.

"We're going to get this process on the road," Bankruptcy Judge Michael Lynn said. "I know this doesn't make all of us happy. But if that's so, I've done something right in this case."

Earlier, an attorney for club president Nolan Ryan and Pittsburgh sports attorney Chuck Greenberg softened his stance on a breach-of-contract lawsuit filed Monday against two entities that own the team. The attorney, Tom Lauria, did not formally withdraw the headline-grabbing suit but defused his maneuver by not requesting an injunction to stop the team's restructuring officer from courting new bidders.

Tuesday's courtroom tug-of-war featured the Greenberg-Ryan group's argument that the new auction should occur well before Aug. 12, when its financing agreements purportedly expire. But major lenders wanted a date in September, asserting that an earlier date might not give potential rival bidders – Houston businessman Jim Crane and Dallas investor Jeff Beck – enough time to arrange funding.

Under the judge's bidding procedures, the Greenberg-Ryan group will still make the opening, or "stalking horse," bid. The next bid must be at least $15 million higher, down from the $20 million originally proposed. Subsequent bids each must go up at least $2 million.

During the hearing, Lauria disclosed that his clients' group was upping the cash portion of their starting bid to $306.7 million from $304 million after shedding some contractual commitments, including a much-criticized aircraft lease. If their purchase agreement remains the basis of the auction, the reorganized team that could emerge Aug. 4 would fully pay off former player Alex Rodriguez and other unsecured creditors, who are owed some $204 million.

A $70 million side deal for property near the Ballpark in Arlington, which would bring the deal's value to more than $580 million, will not be part of the auction, Lynn said. Lenders, who are owed $525 million, alleged that the land's value was inflated as a backdoor way to put millions in team owner Tom Hicks' pocket.

In March 2009, Hicks defaulted on payments to those lenders, prompting him to sell the team. But when lenders blocked the sale to Greenberg, the team resorted to bankruptcy court to push through a deal.

Any rival bid must be presented by 8 p.m. on Aug. 3. The auction begins the next morning in Fort Worth's federal courthouse. That would be followed hours later by a hearing on whether to confirm the Rangers bankruptcy plan and sale, Lynn said.

After the auction, Major League Baseball will still be able to reject the highest bidder and approve the next highest bid – something lenders opposed. But if that happens, the judge can determine if the league acted in good faith, according to the revised procedures.

Greenberg and Ryan would receive a $15 million "breakup" fee if it loses, Lynn said, to cover their expenses to date and "partly to shut them up" – meaning forestalling further legal action.

After a call to league headquarters, an attorney for Major League Baseball said that both Crane and Beck are approved to bid, but members of their respective groups would need to be vetted. Whoever wins the auction must then be approved by team owners.

"I don't believe Major League Baseball can frustrate this process any longer," Lynn said when an attorney for major creditors asked about pro-Greenberg remarks by baseball Commissioner Bud Selig.

At another point, Andrew Leblanc, a creditors' attorney, complained that he had received no evidence corroborating the Aug. 12 deadline, mentioned in Lauria's suit Monday, for Greenberg-Ryan's financing. But Lynn said that Lauria knows he could lose his law license if he misled the court. Lauria remained poker-faced.

The judge also was curt with Michael Rochelle, representing lead lender Chase Bank and Lynn's former law partner, when Rochelle brought up the $70 million land deal. Lynn said the property was not in bankruptcy and not a matter before the court.

That didn't keep two other lawyers from speaking about the parking lots near the Ballpark in Arlington, themselves the subject of a lawsuit involving Hicks and developers.

One of the attorneys, Josh Osborne, representing the city of Arlington, stood before the judge to say, "We want our land back."

www.dallasnews.com

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