Review of Cubs sale likely

NEW YORK -- Although the Chicago Cubs aren't part of Tribune Co.'s Chapter 11 bankruptcy filing, experts say a federal court overseeing the case is likely to review the baseball team's impending sale anyhow.

It's not yet clear whether such a review would be a mere formality or whether it could derail or delay a sale. Bankruptcy lawyers said Friday it ultimately could rest on whether creditors and the court believe Tribune could have gotten more than $900 million -- what the billionaire Ricketts family has agreed to pay for the Cubs and related properties.

Only one thing seems certain: The sale alone won't immediately lift Tribune out of bankruptcy protection, even though $900 million would be plenty for a $593 million principal payment Tribune has due this coming June.

The bankruptcy filing allows the company to suspend further payments as it seeks to restructure its operations amid a severe downturn in advertising revenue because of the recession and the shift of readers to the Internet.

The Ricketts family announced Thursday that it has been selected by Tribune as the winning bidder for the Cubs, Wrigley Field and a 25 percent interest in a regional sports network. Details are still being finalized, and the sale ultimately needs the approval of other baseball owners.

When Tribune -- which also owns the Los Angeles Times, Chicago Tribune, The (Baltimore) Sun, The Hartford Courant and other dailies, as well as 23 television stations -- sought bankruptcy protection last month, it left the sports properties off the filing.

Creditors could still object to the exclusion, and Tribune could voluntarily agree to a court review as a precaution. The Ricketts family could also condition the sale on bankruptcy court approval to avoid problems later.

Tribune and Ricketts officials declined comment Friday, as did two leading creditors, Merrill Lynch Capital Corp. and Highland Capital Management LP. Representatives for a creditors committee did not immediately return phone messages.

One thing working in Chicago-based Tribune's favor is the fact that its intent to sell the Cubs has long been known, giving creditors and other parties time to scrutinize the process and raise objections along the way.

"The train has already left the station," said Ira L. Herman, a bankruptcy lawyer at Thompson & Knight LLP in New York. "There has been a robust sales process, and the assets have been fully exposed to the marketplace."

John Penn, a bankruptcy lawyer at Haynes and Boone LLP in Fort Worth, Texas, said creditors who object risk losing a share of the proceeds, if the sale ends up falling through.

"What you don't want to do from a creditor's standpoint is jeopardize a good sale by reaching for a great sale," he said.

That said, Penn said, the bankruptcy court overseeing the case in Wilmington, Del., might still need to scrutinize the sale for any effects on properties that are part of the Tribune filing. That could include any sponsorship deals with the Chicago Tribune or broadcasting rights for Tribune-owned stations.

Regardless of what happens with the Cubs, Tribune remains under bankruptcy protection, weighed down by $13 billion in debt, mostly from the company's going-private transaction a year ago led by Chicago real estate mogul Sam Zell.

Although proceeds from a Cubs sale would help Tribune with near-term payments, "the rapid deterioration in the core business was more a factor in the bankruptcy," said Mike Simonton, a bond analyst at Fitch Ratings.

He said Tribune will need more restructuring "to emerge as a company that can sustain its debt load."