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Dodgers File for Bankruptcy: Wise Move for Frank McCourt?

By Cynthia Hsu, Esq. on June 28, 2011 | Last updated on March 21, 2019

The Dodgers bankruptcy filing seems to be just one of the latest developments in the baseball team's role in owner Frank McCourt's divorce from Jamie McCourt. The Dodgers' Chapter 11 filing will now likely allow McCourt to keep the team running.

The bankruptcy was filed in Delaware, reports USA Today.

McCourt had been seeking approval of a TV deal with Fox Sports, reportedly worth up to $3 billion. Major League Baseball Commissioner Bud Selig had blocked the deal.

Selig had originally said that the deal was not in the best interest of baseball fans, baseball, or the team itself, according to USA Today. The $3 billion deal with Fox would have given the broadcasting company a 17-year contract with the team, Reuters reports.

The deal would have also resulted in a $385 million upfront payment, reports Reuters. Selig criticized the use of this payment to partially pay for some of McCourt's costly divorce battle.

Is the bankruptcy filing a wise move for McCourt? It could be, if he wants the TV deal to be pushed through. During any bankruptcy proceeding, one of the court's top priorities is ensuring that the company's creditors get paid. And, in order to pay off creditors, the Dodgers very well may need to sell the TV rights to somebody.

For now, McCourt has asked the bankruptcy court to hold a "competitive sales process" for the team's TV rights, according to USA Today.

And, in most cases, the team will continue to function as-is to most viewers and fans. A Chapter 11 bankruptcy proceeding allows companies to reorganize themselves. The reorganization plan is then implemented so that the company will become profitable again.

Reorganization can mean that creditors and other lenders of the business will renegotiate their contracts or leases to either discharge the debt or agree on different terms.

So, the Dodgers bankruptcy filing may actually do the team some good. And, maybe the Dodgers' Chapter 11 filing will also help McCourt settle whatever payment he has worked out with his ex-wife.

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