Tuesday, December 09, 2008

The Cubs Next Chapter - Number 11

At CNBC, the've been following the Trib bankruptcy very closely:

Rubin told me that a parent corporation can file for bankruptcy without the subsidiary filing. The point of doing this is to make it easier to sell the Cubs without all the rules associated with the bankruptcy court, including timely filings of financial information. Another bankruptcy lawyer friend of mine told me that it would also allow the Cubs employees, and anyone associated with dealing with the Cubs, to better operate on a "business as usual" basis.

This all does not mean, however, that the Cubs sale will be free from everything that goes on with the bankruptcy because the creditors will still get the proceeds from the sale of the team. And who knows what's going to happen with free agents? You think the court isn't going to get involved if the Cubs sign a big free agent like Jake Peavy or Bobby Abreu in the offseason?

What this means is that the court will be very involved in the sale process. There can be no sweetheart deals now for the John Canning's of the world. The team will go to the highest bidder. Anything less and the creditors would petition the court to accept the higher offer (a higher offer yields the creditors more cash to retire debt).

Now, one supposes that the #2 bidder could win out if their bid was so close to the #1 bid that the creditors would only see a negligible difference in proceeds received.

As long as the court knows that the best deal for the creditors is the one accepted, the court will stay out of it. If a Mark Cuban rides in with an offer 10% above the prevailing offer, it's going to be hard for the court to reject his bid.

What's also going to be interesting to watch is if there was a bid placed by Tokarz/Malek group. We haven't heard from them in a long time. One bets that they are out as their bid was backed by a publicly traded entity. Such an entity could, one day, end up just like the Trib.

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