Yesterday, the Texas Rangers Baseball Club filed for Chapter 11 bankruptcy protection. This was a "prepackaged" bankruptcy filing, designed to ease the sale of the club to its new prospective owners, led by Hall of Famer (and current Rangers Club President) Nolan Ryan, for $575 million.
As my website makes clear, my practice is almost solely devoted to bankruptcy representation for consumers and small businesses. The odds of Jason Norbury being counsel for a $525 million Chapter 11 case are so small as to be zero. So why would I use up valuable blog space talking about a case that bears no resemblance to what I do, or what you, the reader would likely encounter?
One, I am a baseball fan and I find the intersection of work and play entertaining. But secondly, to discuss the concept of "prepackaged" bankruptcies. You may recall that GM filed such a case in the last couple of years. The idea behind the prepackaging is that you get enough creditors to sign off on what you are doing (the bankruptcy plan) that it will get approved by the court in as short a time as possible.
In many respects, this is not all that different from what a Chapter 13 bankruptcy does for consumers. Most of the time, we file a Chapter 13 case knowing what the available rules are, and how they require the treatment of your creditors. This avoids messy and expensive litigation and hearings, and streamlines the process to allow regular folk to keep their home out of foreclosure, cure tax delinquencies, and make a "fair" payment to their unsecured creditors.
So while the term "prepackaged" may drag up images of collusion and smoke-filled back room deals, it usually is merely designed to expedite the transition of the company into its new form, and keep the wheels of the business turning. The rules of a Chapter 13 do much the same for most people.
And finally, this document should make you feel better about yourself, because you don't have to pay Alex Rodriguez $26 million to hit home runs for the Yankees.
