By Emily E. Kiser
Dodgers’ Season Ticket Holders Appointed to the Official Unsecured Creditors’ Committee
Watching the final out of Game 7 of the 2011 World Series provided a standstill moment across the St. Louis metropolitan area as hundreds of thousands of St. Louisans watched David Murphy’s pop fly take flight, seconds later to land in the glove of Allen Craig—and earn the Cardinals their eleventh World Series Championship.
In Los Angeles, Dodgers season ticket holders, arguably the most loyal fans of the club (a simple Google search of “Los Angeles Dodgers” produces results that could easily be a plot line for a soap opera—those with season tickets must be loyal) are in a continuous standstill moment. Only their moment is not due to a play-off game, but because of the Dodgers’ ongoing Chapter 11 bankruptcy.
For those loyal fans of the Boys in Blue, however, there was a small victory on October 25, 2011. This victory came via an Order entered by Judge Kevin Gross which allowed for two individuals who represented season-ticket holders to be a part of the Official Unsecured Creditors’ Committee. Getting a spot on the Official Unsecured Creditors’ Committee is tantamount to getting a seat at the “Big Kid Table” on Thanksgiving—it gives one status, power and first dibs on the Bankrupt’s offerings.
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11/3/11 8:08 AM
Bankruptcy, Business Law | Comments Off |
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Dodgers’ Season Ticket Holders—The Best Seats in the House and Now, a Seat at the Big Kids’ Table
By Emily E. Kiser
Los Angeles Dodgers and Major League Baseball continue to battle in Dodgers’ Bankruptcy
As the best of the best (albeit, without Cardinals great Albert Pujols) in Major League Baseball (MLB) battled it out in Phoenix, Arizona for home field advantage for this year’s World Series, MLB and the Los Angeles Dodgers continue to battle it out within the Dodgers’ bankruptcy in Wilmington, Delaware.
The Dodgers’ filing of Chapter 11 bankruptcy in late June was only one of many hardships the Boys in Blue have had to endure in the club’s recent past. Current owner Frank McCourt’s divorce has put the team’s dirty laundry, instead of their win-loss record, in the forefront of media attention and speculation.
And while Chapter 11 bankruptcies are becoming common parlance in big business, the Dodgers’ bankruptcy hasn’t been without some unique aspects. For example, the court briefly allowed for hostile (to put it nicely) fan mail to be filed with the Court and subsequently posted to the bankruptcy docket, available for all to see, at the low cost of $.08 per page. Unfortunately for the rest of us, an Order of the Court entered on July 8 removed these letters from public view, only to be replaced with a document that reads “Image Removed From Docket: Per Order at Docket 160.” Darn.
Recently, the Court sided with MLB and overruled a motion by the Dodgers for document production and the deposition of MLB Commissioner Bud Selig. The Dodgers’ motion argued that this would allow the team (read—Owner, Frank McCourt) to prove its claims that Selig and MLB were essentially the “Big Bad Wolves” of baseball, while the Dodgers were, in effect, “Little Blue Riding Hood.” The Court found the request to be overly burdensome. And while the ramifications of the Court’s ruling in the short term indicate that the MLB and Selig are closed to the peering eyes and aggressive questioning of the Dodgers’ attorneys, it makes the hearing set for July 20 that much more significant.
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07/13/11 1:42 PM
Bankruptcy, Business Law | Comments Off |
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Midsummer Classic Heats Up: And I’m not talking about the All-Star Game
By A. Thomas DeWoskin
I just came across an article on guarding against preferential transfers. If you own a business and one of your customers files bankruptcy, not only are you likely to lose the money the customer currently owes to you, but you might also have to give back some money you’ve recently collected! The bankruptcy laws may deem those payments to be “preferential payments” or “preferences,” which have to be returned to the bankrupt company or to its Trustee. The bankruptcy laws on preference recovery are some of the most unfair laws around because there is no “preferring” requirement to a preference. It’s all just a matter of timing.
If you receive a demand to return a preferential transfer, see a qualified business bankruptcy lawyer immediately. This is not a matter for a consumer bankruptcy lawyers who file cheap bankruptcies for people that have too many credit cards.
There are several defenses to a preference demand. The most common involve “new value” and the “ordinary course of business.”
The “new value” defense is pretty simple – if the debtor paid you an old $10,000 account receivable before it filed bankruptcy, the payment might be recoverable from you as a preference. If, after you receive the money, you extend $10,000 in additional credit, the “new value,” to the debtor, they cancel each other out. Obviously, that defense is a matter of luck, since you don’t know when or if the customer is going to file bankruptcy.
The “ordinary course” defense, however, is something you might be able to prepare for. The bankruptcy laws provide that payments in the ordinary course of business are not recoverable preferences. If you regularly bill your customers on thirty-day terms and it regularly pays according to terms, those payments are being made in the ordinary course of business, the payments you received before the bankruptcy filing generally are safe.
But suppose your customer starts to pay more slowly, or only makes partial payments. You, being a good business person, react to protect yourself. You put the customer on fifteen-day terms, or demand that it provide collateral for future shipments, or take some other action to insure collection. You’ve done the right thing, but future payments are no longer being made in the ordinary course of business! By taking responsible action, you’ve made yourself liable to a preference demand if your customer files bankruptcy.
So – what to do? You try to turn the “out of the ordinary” into the “ordinary”:
- First, make your best efforts to keep the customer as close to ordinary terms as possible for as long as possible.
- If these efforts are not successful, at least try to keep the customer within industry standards.
- If neither attempt works, institute the new terms at the first sign of trouble. If enough time passes before the bankruptcy filing, the new terms will have become the ordinary terms.
As an additional option, you could enter into a new contract with the customer. The new contract could set out the new terms, and provide that you are not obligated to sell to the customer at all. If you choose to sell, however, these are the new ordinary terms of the arrangement.
Being forced to return substantial preferential payments can send your business into bankruptcy itself. Be sure that your accounts receivable staff is sensitive to customer behavior, to the industry’s rumor mill, and anything else that may suggest coming trouble. Review the situation with a bankruptcy attorney to discuss what strategies your company could take, and stay off the receiving end of preference demand letters.
The content of our blogs are never to be construed as specific legal advice and blog-related correspondence never implies the existence of an attorney-client relationship. Please refer to our Disclaimer for more information.
07/6/11 12:23 PM
Bankruptcy, Business Law | Comments Off |
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Protecting Against Preference Demands in a Bankruptcy Case
