FORT WORTH, Texas -- The Texas Rangers will have to change its bankruptcy plan -- although not the amount the team owes -- to avoid having it killed by upset creditors, a federal bankruptcy judge said Tuesday.
U.S. Bankruptcy Judge D. Michael Lynn said in a written ruling that creditors and team owners were adversely affected by the Rangers' plan to pay creditors $75 million and sell the club to a group led by Hall of Fame pitcher and team president Nolan Ryan and Pittsburgh attorney Chuck Greenberg.
The ruling allows the team and two groups of creditors to vote on the plan. Because creditors have said they would vote against it, the Rangers are expected to change the plan before a vote happens.
The judge said he was not ordering changes to the plan and essentially rejected creditors' arguments that the team owed them more. But Lynn took issue with some creditors' rights that were taken away.
"The court concludes that ... [the Rangers] must grant them their rights under their loan documents prospectively. While payment of the $75,000,000 plus interest will satisfy and discharge debtor's monetary obligations as required by [a bankruptcy code], in order for the plan to be confirmed without the acceptance of the lenders ... the treatment of the lenders must be modified," Lynn wrote.
In a statement, Rangers spokesman Mark A. Semer said the team was pleased "that the judge remains committed to completing the sale of the Rangers expeditiously, and we are confident that necessary changes to the plan can be made to achieve that outcome." He declined to elaborate.
Attorneys for the creditors did not return calls to the Associated Press.
A final decision on the plan is expected at a July 9 hearing, well before the July 31 non-waiver trading deadline in which the AL West-leading Rangers could add players and look to improve the team for a pennant run.
The judge has already ruled that the unsecured creditors in the case were not adversely affected by the Rangers' plan because they would be paid in full, plus interest. Topping the list of the 30 unsecured creditors is New York Yankees star Alex Rodriguez, who is owed $24.9 million in deferred compensation six years after he was traded.
Experts said bankruptcy plans are often changed but this ruling is likely to trigger quick action by the Rangers.
"The judge has opened the door to the lenders voting and thereby killing the plan as it was filed," said Jason T. Rodriguez, a Dallas bankruptcy attorney who is not involved in the case.
The team's $575 million sale to Greenberg and Ryan's group was announced earlier this year, but has been stalled by creditors' concerns over the financially strapped Hicks Sports Group.
At a hearing last week, creditors argued that the team doesn't just owe $75 million but is obligated to pay more than $525 million in loans that team owner Tom Hicks' ownership group defaulted on last year.
Andrew LeBlanc, an attorney for some creditors, said the bankruptcy filing took away creditors' rights in the original loan agreement, which stipulated that lenders had to approve the team's sale. LeBlanc also said the bidding process should reopen because the Greenberg-Ryan bid was not the highest.
During the hearing, the judge said he understood why the team may not have chosen the highest bidder because money isn't the only factor in such a deal.
A statement from Major League Baseball noted that stance in a statement Tuesday.
"We are encouraged that Judge Lynn ruled that the Texas Rangers do not need to seek the maximum value for the team in the current bankruptcy case," the league said, adding that it was confident that the team could still be sold to Greenberg and Ryan's group on a timely basis.
The Rangers went into Tuesday night's game against Pittsburgh with a 3½-game lead over the Los Angeles Angels, the largest lead in any division in baseball. They were coming off a road trip when they won eight consecutive games. Texas hasn't been to the playoffs since 1999.
While Rangers general manager Jon Daniels is hoping for "an expeditious resolution," he said the court proceedings haven't changed the way the team is operating.
"We can operate normally within the budget that was set last fall," Daniels said. "We went into the offseason and the season with the expectation that we were going to be a good club and may want and need to have some ability to upgrade the club. Nothing's changed in that regard."