The Tribune Company is considering declaring the Chicago Cubs bankrupt in a legal maneuver designed to expedite the sale of the team. It sounds bad, but there’s really no concern.
The key to the deal, for a team being sold for a reported $900 million that routinely draws 3 million fans a year to Wrigley Field, as well as pocketing vast merchandising and TV dollars, is that a firm does not need to be on the verge of failure to seek bankruptcy protection.
“It’s not true in a lot of countries, but in the United States it is,” Lawless said. “You don’t have to be insolvent to declare bankruptcy.”
In theory, the Cubs would simply go into bankruptcy court, register their creditors, then go about business as usual.
“If you’re solvent,” Lawless said, “the creditors should be paid 100 percent.”
“You take it in the front door, and it’s just like you’re getting radiation,” said New York University Assistant Professor Michael Cramer, former president of the Texas Rangers. “It comes out the other door about a half-minute later. It’s clean.”
“It scrubs it clean,” added Eric Fisher of the Sports Business Journal. Daily Herald.
The cool part of the Cubs entering bankruptcy? Technically, they could nullify contracts (be afraid, Alfonso Soriano). They won’t for a variety of reasons… but they could.
At least one source is saying that Tom Ricketts has been told the deal is done, though, so this maneuver may not be necessary.
Isn’t Soriano a Cubs creditor, due 100% if the team is solvent?
Only if he’s a secured creditor, which I can’t fathom he is.
These contracts may not actually be cancel-able (I’m not a bankruptcy lawyer), I just think it’s fun to think about.
I was always told to never give up on my dreams, Ace!
You were lied to.