In re Texas Rangers Baseball Partners

Thomas Hicks owned Hicks Sports Group (HSG), which in turn owned two partnerships: the Rangers Equity Holding General Partnership (REHGP) and the Rangers Equity Holding Limited Partnership (REHLP). REHPG and REHLP, in turn, owned the Texas Rangers Baseball Partners (TRBP) (debtor) and thus the Texas Rangers baseball team. HSG borrowed $525 million from a group of lenders that included JPMorgan (the lenders) (creditors). HSG defaulted. TRBP received a third-lien bridge loan from the Major League Baseball (MLB) organization on the condition that the team be put up for sale. Star pitcher Nolan Ryan was mistakenly named the winner of the resulting auction. Although Hicks was determined to sell the team to Ryan, the lenders were equally determined to veto the sale—as was their right under a pledge agreement—in hopes of obtaining a higher price in a new auction. TRBP filed for bankruptcy with a prepackaged plan under which the lenders were supposedly not impaired, thus making their consent irrelevant because unimpaired creditors were automatically deemed to have accepted the plan. The lenders claimed that they were impaired because their contractual right to veto the sale was denied. Meanwhile, the lenders filed involuntary bankruptcy petitions against REHGP and REHLP, triggering fiduciary duties owed to creditors in bankruptcy. Some modifications were made to the plan with regard to interest payments.