WILMINGTON, Del. -- A Delaware bankruptcy judge on Monday approved Tribune Co.'s request for quick court action on the company's planned sale of the Chicago Cubs.
The family of billionaire Joe Ricketts, founder of TD Ameritrade, has agreed to buy a 95 percent stake in the team and its Wrigley Field home for $845 million, but the deal must be approved by the bankruptcy court, as well as Major League Baseball.
Judge Kevin Carey approved Tribune attorneys' proposals regarding notification to interested parties, including creditors of both the Tribune and the Cubs.
The process approved by the judge calls for any objections to be filed by Sept. 17, followed by a Sept. 24 court hearing on Tribune's motion for court approval of the deal. Carey also approved break-up fees ranging from $5 million to $20 million to be paid if it falls through.
The plan filed by Tribune attorneys calls for a separate bankruptcy filing by Chicago National League Ball Club, a Tribune affiliate that is not involved in the company's Chapter 11 case. That filing would come after Carey approves the sale as part of Tribune's bankruptcy reorganization and escrow financing documents are in place.
Tribune attorneys said the filing by CNLBC is needed to ensure that Tribune obtains the necessary court approval for its obligations, that the Cubs' assets are transferred free and clear of all liens and claims, and that contracts to which either Tribune or CNLBC is a party can be assumed and assigned to the new owner.
"It's a very important transaction for the debtors and its creditors," Tribune attorney Bryan Krakauer told Carey.
Tribune attorneys anticipate that CNLBC's bankruptcy would last no more than two or three days, and suggest that any longer period would not be acceptable to the Ricketts family or lenders, and could have a detrimental effect on the Cubs, especially regarding player contract negotiations and sponsorship agreements.
"Potential sponsors will doubtless be reluctant to direct their advertising spending towards an entity in Chapter 11, regardless of the assurances that are provided about that process," Tribune attorneys wrote in a court filing.
Tribune attorneys assert in court papers that the sale to the Ricketts family is the result of a painstaking search for a buyer that began more than two years ago and represents "one of the most extensive marketing processes for a business presented to a bankruptcy court." As such, they argue, it should not be subject to a further search or a bankruptcy auction. Any auction process will likely result in expiration of deadlines and potentially oblige Tribune to pay a breakup fee, they warned.
Krakauer noted, for example, that if court approval of the deal is not obtained by Nov. 6, Tribune would owe $5 million to the Ricketts family.
While approving the proposed sale process, Carey expressed concern about Tribune's assertion that no auction for the Cubs is needed.
At the same time, Carey said he was not "looking askance" at the deal, but merely ensuring due process. Regarding an alternative offer for the Cubs being submitted, Carey said that scenario was unlikely, given the circumstances, but that "you never say never in this court."
While acknowledging the unusual circumstances surrounding the Cubs sale, David LeMay, an attorney for Tribune's committee of unsecured creditors, said the committee is satisfied with the process and the proposed sale.
"The timing of the transaction ... at least did leave us with the ability to know that every tire had been kicked, every stone had been turned over," he told the judge.