The following item from Crain’s Chicago Business speaks for itself as to today’s use of chapter 11 to manage/resolve risks and “liabilities.” In some instances, though, the table is being set for constitutional law battles ahead on just how much a bankruptcy judge can do to alter rights arising under state law or the law of other nations.
http://www.chicagobusiness.com/cgi-bin/news.pl?id=34725&ba=1
Cubs may file for bankruptcy protection to speed sale: report By: Todd J. Behme July 13, 2009
(Crain’s) — Tribune Co. may file for Chapter 11 bankruptcy protection for the Chicago Cubs to smooth the sale of the team, according to a report.
A short bankruptcy would be a legal move to prevent the Cubs from having any liability related to the bankruptcy case of Tribune, which filed for Chapter 11 protection in December, Bloomberg News said, citing four unnamed sources familiar with the matter. Spokesman for Tribune, Major League Baseball and Tom Ricketts declined to comment to Bloomberg. The Ricketts family reportedly has reached a deal with Tribune to buy the team. It’s possible the team could be sold without a bankruptcy protection filing, the sources told Bloomberg.
A Chapter 11 filing could ensure that the team isn’t tangled up with Tribune’s creditors, Michael J. Cramer, an assistant professor of sports management at New York University and who formerly was president of the Texas Rangers, told Bloomberg.
“This would make sense for Major League Baseball,” he told the news service. “They would like to see that asset be stand-alone, very clean, not tied up in other issues.”
A filing by the Cubs would be meant to provide for quick selling of the team assets, the sources told Bloomberg.
Filing for bankruptcy protection would not mean that the Cubs are having financial problems, Gregory A. Cross, head of the bankruptcy practice at law firm Venable LLP, told Bloomberg.
“You do not have to be insolvent to be in bankruptcy,” Mr. Cross, who is not involved in the matter, told Bloomberg. “All you need is a legitimate business reason.”