Last month, our Miami bankruptcy law blog discussed Frank McCourt’s announcement that his Major League Baseball team, the Dodgers, was filing for bankruptcy protection. The initial Chapter 11 bankruptcy filing reported that the team had between $500 million and $1 billion in assets and between $100 million and $500 million in liabilities.
In addition to listing assets and liabilities in the bankruptcy filing, McCourt also requested that he be granted a $150 million loan by the lender of his choice in order to fund the team while in bankruptcy. However, a U.S. Bankruptcy judge denied McCourt’s request last week claiming that McCourt’s judgment was compromised when negotiating the loan and that the loan would not have been in the best interest of the Dodgers.
On July 22, the judge ordered McCourt to negotiate a loan with the MLB because the loan with McCourt’s lender of choice would have cost the team more. The MLB can offer a loan at a lower interest rate with no other fees.
McCourt’s attorney argued that the debtor was entitled to choose his own lender under bankruptcy law, but the judge ruled that because McCourt had failed to disclose his personal interest in the loan, he had therefore forfeited his right to choose his own lender.
When an individual files for bankruptcy protection, he or she will be making a decision that will significantly affect his or her financial future. An individual will want to be sure that he or she works with an experienced bankruptcy attorney in Florida who fully understands the individual’s financial situation and needs.
It is not only important to ensure that one’s bankruptcy filing is the best way to resolve an individual’s financial situation, but it is also important that the individual files a plan that does not have any discrepancies. Because the Southern District of Florida Bankruptcy Courts operate under strict federal laws, it is important that an individual’s Chapter 7 or Chapter 13 filing is accurate and honest in order to prevent any confusion in the courts.
Los Angeles Times: “McCourt must negotiate with MLB,” Bill Shaikin, 23 July 2011