The Chapter 11 Game Goes On – Cubs to Use Chapter 11 for a Quick Cleansing and Injunction
This prior post reported on the possibility that the Tribune would put the Cubs into chapter 11 to cleanse the entity of risks. It’s now happening as reported in this article in the Tribune, which states that the Cubs want a short stay so that the entity can get all the benefits of chapter 11, but no detriments:
“In court papers, Tribune Co. lawyers outlined a two-step process for court approval, which includes having the team file for bankruptcy at a later date. The company wants the team to be in bankruptcy for just a few days, according to court documents. An extended stay in court could damage the Cubs’ baseball operations, team Chairman Crane Kenney said in court papers.”The process of competing for player talent in MLB is incomparably fierce, and by operating in Chapter 11 the Cubs would face a severe competitive disadvantage in their ability to retain, acquire or trade for players, based on the perception that the transaction would require Bankruptcy Court approval or might be unwound at a later date,” Kenney said.” I (emphasis added).
So, now we have yet another example of chapter 11 being used more or less solely to obtain injunctive relief against the possibility of future claims. One has to wonder what has happened to chapter 11 when it can be used for benefits but not detriments, with little or no notice to the rest of the world, and does not save any jobs or a business and instead is just legal engineering. For much more on this topic from a lawyer who argued for tort claimants in Chrysler, go to this blog by bankruptcy lawyer Steve Jakubowski.
All that said, I still love and so will repeat the comment I heard when discussing the Cub’s possible use of chapter 11 with a colleague who is a bankruptcy law expert and a Brooklyn native. The response was brilliant; he said:
“It is the bottom of the 8th in a crucial game against the Cardinals. Cards lead 4 to 3. There are 2 outs. Cubs have the bases loaded with Derek Lee at bat. The count is 2 and 0. Would you need bankruptcy court approval to put “on” the take sign ?”