* Judge says will try to rule Thursday on loan
* Judge says will not let loan dictate terms
* Hearing reveals battles to come over law, TV rights
(Recasts throughout that judge says case will get tougher,
adds details on key issues in case)
By Tom Hals
WILMINGTON, Del., July 20 The judge overseeing
the Los Angeles Dodgers bankruptcy case said he would try to
decide by the end of Thursday the contentious question of which
loan the team should take to stay afloat -- but said he
expected even rougher battles ahead.
Judge Kevin Gross declined to rule late on Wednesday on
whether the Dodgers could borrow $150 million from a hedge
fund, as they prefer, or should take a cheaper loan from Major
League Baseball that the team has called a "deal with the
The judge said he would try to rule on the loan question by
the end of business on Thursday, but said this was not the key
issue in the case.
"To me this is about dollars and cents," said Gross. "This
is not the control issue the parties think that it is because
MLB, if it gets the (loan), isn't going to dictate the terms."
Amid a slump in attendance this year, the Dodgers need the
money to keep the team operating during its bankruptcy until it
can sell its cable TV rights and stabilize its finances.
At the end of a particularly contentious nine-hour hearing
on Wednesday, Gross said he expected the going to get tougher
when he addresses the issue of whether to apply the rules of
MLB or bankruptcy.
The hearings will become "a little more of a bare-knuckled
process than it is right now," he said.
Bankruptcy loans are often a means of exerting control over
companies in Chapter 11 and the team's proposal to borrow the
money from the Highbridge Capital unit of JPMorgan Chase & Co
(JPM.N) became a major battle.
MLB offered a competing deal that it said could save the
Dodgers $14 million.
Baseball Commissioner Bud Selig rejected a proposed $3
billion TV deal the team reached with Fox Sports last month,
and days later owner Frank McCourt put the Dodgers in
bankruptcy in a dramatic bid to prevent seizure by the league.
JOINED AT THE HIP
The team argued that the Highbridge loan should be approved
because under the deference that courts show to companies --
the business judgment rule -- the team should not be forced to
borrow from an adversary.
"Is it unreasonable to say you don't want to do business
with a lender who is fundamentally opposed to your business
plan?" asked team attorney Bruce Bennett. "They want a forced
sale (of the team) where they can decide who can bid. That's
not the kind of reorganization we want."
MLB's attorney reminded the judge that the team's value
depends on its membership in baseball.
"They have already done the deal with the devil. It's
inescapable. We are linked at the hip. Our success is tied to
their success and vice versa," said Tom Lauria.
MLB would not retreat from one central point -- that the
team must abide by all league rules that McCourt agreed to when
he bought the team in 2004.
"The Dodgers don't get four strikes where opponents get
three," said the MLB lawyer, Lauria.
MLB said its disagreements were directed not at the Dodgers
but at McCourt, who they said used the bankruptcy loan as a way
to benefit his own finances.
"He can't support his lifestyle," said Lauria, who said the
financing was used as a way to free up cash for McCourt's
McCourt is waging a simultaneous divorce-court fight with
ex-wife Jamie McCourt, who also claims ownership of the team.
The team will soon present its plans to auction its cable
TV rights, a move likely to bring Fox Sports into the case as
An attorney for the broadcaster said it feared the Dodgers
would reject its current cable TV rights deal in order to
conduct the auction of future rights.
In addition, the team appeared to lose goodwill with the
U.S. Trustee, a Department of Justice official who oversees
bankruptcy cases, over accusations the team did not fully
disclose fees in its Highbridge loan proposal.
"I feel lied to," said an attorney from the Trustee's
office. "For a case to start that way. We have to question if
the entire case is going to be tainted."
The bankruptcy case is In re: Los Angeles Dodgers LLC, U.S.
Bankruptcy Court, District of Delaware, No. 11-12010.
(Reporting by Tom Hals; Editing by Gary Hill)