One source of financing — barring additional bank borrowing — is coming from within Sterling Equities, the parent company of the Mets. Recently, $40 million became available to buy two more of the minority shares. All of it went to offset losses, said two people familiar with the team’s finances.

Can someone explain this? What does that mean? Are the Wilpons borrowing from Sterling to offset Mets losses? I guess my confusion is with the phrase "became available to buy." There are situations in which the use of the passive voice is acceptable; this is not one of them.

Isn't all of this talk silly? The Wilpons will own the Mets as long as they want to and Selig is Commissioner. If things get worse, won't they just file a Chapter 13 and continue to hold on to the team? The only ones who will continue to suffer are the fans -- especially in the case of a bankruptcy.

Isn't all of this talk silly? The Wilpons will own the Mets as long as they want to and Selig is Commissioner.

In light of Selig's current claim that he plans to retire after the 2012 season, it would seem to be a relevant question.

Can someone explain this? What does that mean? Are the Wilpons borrowing from Sterling to offset Mets losses? I guess my confusion is with the phrase "became available to buy." There are situations in which the use of the passive voice is acceptable; this is not one of them.

The Wilpons had announced that in lieu of the Einhorn deal, they were going to sell 10 different $20 million shares of the Mets. Sterling is going to buy two of them with cash that they have made available. It isn't a loan since Sterling can claim that they have traded cash for a piece of the team. It does imply that the Mets can't get decent loans but Sterling could, so we might see Sterling take up more of those shares if they can raise the cash.

Isn't all of this talk silly? The Wilpons will own the Mets as long as they want to and Selig is Commissioner. If things get worse, won't they just file a Chapter 13 and continue to hold on to the team? The only ones who will continue to suffer are the fans -- especially in the case of a bankruptcy.

Not quite, unless Selig is willing to continually loan them money from MLB.

At some point, they will fail to make an interest payment to their creditors (JPM is the biggest, IIRC). At that point, the creditors can force bankruptcy, and since they have no other way of paying off the debt, the bankruptcy court will order a sale of the team.

That's what happened to McCourt with the Dodgers; bankruptcy bought him a little time, but eventually led to the order to sell. Once you're in bankruptcy court, MLB's leverage is much more limited. A Federal bankruptcy judge has a lot of leeway.

Sterling is going to buy two of them with cash that they have made available. It isn't a loan since Sterling can claim that they have traded cash for a piece of the team. It does imply that the Mets can't get decent loans but Sterling could, so we might see Sterling take up more of those shares if they can raise the cash.

That's an odd transaction. AFAIK, Wilpon and Katz own both the Mets and Sterling. So, they are buying equity from themselves.

If Sterling has debt outstanding, I'm sure those creditors are pissed.

Can someone explain this?

Sure. The only suckers the Mets can find for the $20 M minority shares are themselves.

At some point, they will fail to make an interest payment to their creditors (JPM is the biggest, IIRC). At that point, the creditors can force bankruptcy, and since they have no other way of paying off the debt, the bankruptcy court will order a sale of the team.

IANA-Bankruptcy-L but is that true? I thought that they could, under some circumstances, reorganize under Chapter 13 without selling. I know for example that a single asset creditor probably can't reorganize (i.e. if the Mets filed) but wouldn't Sterling LP or a Wilpons corporation be able to do so?

Andy will want to know why we are linking to articles that are behind a paywall for some.

The NYTimes doesn't really have a paywall, they have this crappy thing that doesn't block anything.

Speaking of "IANA-Bankruptcy-L," and my apologies for a possible threadjack, but can any of the lawyers here explain why we're hearing so much about Bryan Stow during the LAD sale and bankruptcy processes? I understand Stow is a possible creditor if the LAD are ultimately assigned any liability for the assault that took place, but as far as I can tell, a trial date hasn't even been set in Stow's civil case. If the LAD are supposed to be sold, and exit bankruptcy, no later than May or June 2012, then why is Stow considered a creditor when it could be three-plus years before a final judgment is entered in his case?

IANA-Bankruptcy-L but is that true? I thought that they could, under some circumstances, reorganize under Chapter 13 without selling. I know for example that a single asset creditor probably can't reorganize (i.e. if the Mets filed) but wouldn't Sterling LP or a Wilpons corporation be able to do so?

ya can't declare a Chapter 13 if you have more than something like 335k in unsecured debt or if you have over a million in secured debt. I seriously doubt that the Mets are beneath either one of those caps. Gonna have to be a Chapter 11.

Speaking of "IANA-Bankruptcy-L," and my apologies for a possible threadjack, but can any of the lawyers here explain why we're hearing so much about Bryan Stow during the LAD sale and bankruptcy processes? I understand Stow is a possible creditor if the LAD are ultimately assigned any liability for the assault that took place, but as far as I can tell, a trial date hasn't even been set in Stow's civil case. If the LAD are supposed to be sold, and exit bankruptcy, no later than May or June 2012, then why is Stow considered a creditor when it could be three-plus years before a final judgment is entered in his case?

That's an interesting question. My guess is that Stow's lawyers are using the threat of a civil suit as leverage to get into the Chapter 11 negotiating room so that they can work out a quick compensation through the BK court and thereby avoid having to get a civil judgement whatsoever. BK cases are infinitely preferable to civil cases in terms of man hours, even in a complex BK like the Dodgers. Once the Chapter 11 has been worked out, it's basically over.... One and done. Civil cases are murky affairs in even the best of circumstances.

That's an interesting question. My guess is that Stow's lawyers are using the threat of a civil suit as leverage to get into the Chapter 11 negotiating room so that they can work out a quick compensation through the BK court and thereby avoid having to get a civil judgement whatsoever.

So it's mostly a p.r. ploy, then? I can understand a new buyer probably would want the decks cleared as much as possible, but I don't see how Stow has any additional legal leverage. I've always thought the M.O. in these cases (as a corporate defendant) is to try to drag them out for as long as possible, and it seems like that would be especially true if McCourt has cash-flow problems.

I keep seeing Stow's lawyer talk about McCourt "doing the right thing," but it seems like he's more concerned with McCourt doing the easy thing. I can't say that I blame Stow's lawyer, but I don't understand why the media seems to be blindly taking the bait, other than it giving them one additional storyline with which to beat up the unpopular McCourt.

So it's mostly a p.r. ploy, then?

No, they have to be creditors in the bankruptcy because of when the claim accrued. If Stow ever wants to be paid he can't circumvent the bankruptcy by waiting for it to run its course. Just because the claim is of an unknown value doesn't mean it's not a debt.

No, they have to be creditors in the bankruptcy because of when the claim accrued. If Stow ever wants to be paid he can't circumvent the bankruptcy by waiting for it to run its course. Just because the claim is of an unknown value doesn't mean it's not a debt.

Also this.

No, they have to be creditors in the bankruptcy because of when the claim accrued. If Stow ever wants to be paid he can't circumvent the bankruptcy by waiting for it to run its course. Just because the claim is of an unknown value doesn't mean it's not a debt.

Interesting. A quick Google search shows that California has a two-year SOL for personal injury cases, which apparently means Stow would have had until April 2013 to file his lawsuit. The bankruptcy case trumps that? Or do you mean that, since Stow had already filed his lawsuit, he had to file as a potential creditor, event though any potential judgment was years down the road?

Either way, does the bankruptcy actually give Stow any added legal leverage, or is this more about capitalizing on the timing (i.e., LAD being sold) than the actual bankruptcy case? Without knowing anything about bankruptcy, it seems strange that Stow is on the creditor's committee despite basically having no chance of securing a judgment before the LAD exit bankruptcy. (I understand Stow being allowed to file a piece of paper that preserves his rights; I don't understand his attorney having a seat at the table and a central voice in the process.)

Interesting. A quick Google search shows that California has a two-year SOL for personal injury cases, which apparently means Stow would have had until April 2013 to file his lawsuit. The bankruptcy case trumps that? Or do you mean that, since Stow had already filed his lawsuit, he had to file as a potential creditor, event though any potential judgment was years down the road?

The second one.

Either way, does the bankruptcy actually give Stow any added legal leverage, or is this more about capitalizing on the timing (i.e., LAD being sold) than the actual bankruptcy case? Without knowing anything about bankruptcy, it seems strange that Stow is on the creditor's committee despite basically having no chance of securing a judgment before the LAD exit bankruptcy. (I understand Stow being allowed to file a piece of paper that preserves his rights; I don't understand his attorney having a seat at the table and a central voice in the process.)

I expect that Stow's lawyer is looking for a reasonable settlement rather than a judgement, and being on the creditors committee is a quick and easy way to get one. That's my guess anyway. Could be wrong. If there is someone out there with experience in Chapter 11s, I'd love to hear their opinion; that kind of work is so rare that it's always nice to get the voice of someone with experience doing them professionally.

Alex — Thanks for the feedback; very interesting. I don't know enough about the Stow case to know whether McCourt and/or the LAD should write him a seven- or eight-figure check, but it seems almost bizarre that someone who literally has a $0 claim at the moment has been given a central voice in the resolution of the LAD bankruptcy case. Until the Stow case is adjudicated in civil court, it seems like random T-shirt vendors have bigger actual claims at the moment. Really interesting.

Alex — Thanks for the feedback; very interesting. I don't know enough about the Stow case to know whether McCourt and/or the LAD should write him a seven- or eight-figure check, but it seems almost bizarre that someone who literally has a $0 claim at the moment has been given a central voice in the resolution of the LAD bankruptcy case. Until the Stow case is adjudicated in civil court, it seems like random T-shirt vendors have bigger actual claims at the moment. Really interesting.

Not really. The Stows are in line for a payday; it makes too much sense for the Dodgers to settle. It shouldn't be difficult fort Stow's attorney to find some applicable case history and then use that as a chip at the negotiating table. Calculate something reasonable, go from there. Judge/Trustee might just order some mediation and leave things at that.

The Dodgers bankruptcy will return money to equity. Stows claim will be estimated for purposes of voting on a plan, but that doesn't matter since unsecured will be unimpaired and deemed to accept. Mostly likely there will be some agreement of a size of an escrow account to find which will roughly estimate the most likely size of the Stow settlement and then stow and the OldDodgers LLC will fight it out , and if his claim is less than the amount art aside in escrow any residual will be distributed ratably to the equity ( or, if whatsisname holds 100% of equity, to whstisname).

Not really. The Stows are in line for a payday; it makes too much sense for the Dodgers to settle. ...

Again, I don't know enough about the case to make any firm judgments, but from the little I know, it seems crazy for the LAD to settle at anywhere near the numbers being floated by Stow's attorney ($50 to $100 million).

It seems like the foul-ball cases: If you settle the first one, then it could open the floodgates. Obviously, the Stow case is different in many ways, but (1) altercations occur in sports teams' stadiums and parking lots all the time, so the possible precedent seems dangerous; and (2) I don't understand how LAD could be deemed solely or even mostly responsible for the attack on Stow. In what kind of Looney Tunes world is a property owner 90 or 100 percent responsible for a brief felonious assault that occurs on a property while the actual attackers are only zero or 10 percent responsible? It doesn't make any sense to me.

Again, I don't know enough about the case to make any firm judgments, but from the little I know, it seems crazy for the LAD to settle at anywhere near the numbers being floated by Stow's attorney ($50 to $100 million).

It seems like the foul-ball cases: If you settle the first one, then it could open the floodgates. Obviously, the Stow case is different in many ways, but (1) altercations occur in sports teams' stadiums and parking lots all the time, so the possible precedent seems dangerous; and (2) I don't understand how LAD could be deemed solely or even mostly responsible for the attack on Stow. In what kind of Looney Tunes world is a landlord 90 or 100 percent responsible for a brief felonious assault on a property while the actual attackers are only zero or 10 percent responsible? It doesn't make any sense to me.

There are several entities being sued, including the two men that are currently suspected of attacking Stow. I don't see a judgement in 8 figures being at all unreasonable given that he'll never work again and have huge hospital bills for the rest of his life.

IIRC, once the jury has settled on a judgement, they then divide responsibility, with each party paying whatever their share of the fault it (and if they assign some fault to Stow, then that money is simply removed from the equation). Even if it's $20 million and the Dodgers get 10% fault, it'd be $2 million.

Even if it's $20 million and the Dodgers get 10% fault, it'd be $2 million.

If the LAD could make the Stow case go away for $2M, that seems like a wise move. But the lawyer has been floating $50M to $100M, which implies the case as a whole is a $250M to $500M case (assuming 10 to 20 percent liability for LAD), which seems preposterous.

If the LAD could make the Stow case go away for $2M, that seems like a wise move. But the lawyer has been floating $50M to $100M, which implies the case as a whole is a $250M to $500M case (assuming 10 to 20 percent liability for LAD), which seems preposterous.

I would guess that the LAD share of it is significantly higher than 10%. And I have no idea what sort of judgement there would be. I was using those numbers as an illustration.

“We do not publicly address specific issues pertaining to our finances including inaccurate, speculative and ongoing fabrications.”

But those are the most fun!

I would guess that the LAD share of it is significantly higher than 10%.

This is the part of the storyline I don't understand. I brought this up in #11 partly because I ran across a story from last week in which two of Stow's friends went on the record for the first time about the attack. They basically said that two guys ran up from behind, hit Stow in the head, and then kicked him while he was down. No specific time estimate was given, but the whole thing seemed to be over in a matter of seconds per the description given.

Unless (1) the LAD are expected to have a security guard stationed every 10 feet, or (2) there was a pattern of other crimes/assaults at Dodger Stadium that hasn't been reported and wasn't addressed by the LAD, this seems like a random act of violence for which the LAD's liability is low or non-existent.

If the LAD's share of liability is "significantly higher than 10%," the numbers get dicey in a hurry. If the LAD's share gets bumped up to 30 percent, that leaves the two assailants shouldering no more than 35 percent liability each, which seems nuts. I know the LAD are the main target because the assailants aren't millionaires, but it seems crazy that the LAD could face more liability than the actual assailants.

And I have no idea what sort of judgement there would be. I was using those numbers as an illustration.

Understood. I was just using the $2M as a number at which it would seem obviously beneficial to the LAD to make the case (and bad press) go away. But once that number gets to $5M or $10M, it seems like battling until the end of time would be preferable.

Paul DePodesta continues to amaze with his bad luck. http://en.wikipedia.org/wiki/Paul_DePodesta

But the lawyer has been floating $50M to $100M

That's what they do. Seems to me that means he'll go away for $10MM.

This is the part of the storyline I don't understand. I brought this up in #11 partly because I ran across a story from last week in which two of Stow's friends went on the record for the first time about the attack. They basically said that two guys ran up from behind, hit Stow in the head, and then kicked him while he was down. No specific time estimate was given, but the whole thing seemed to be over in a matter of seconds per the description given.

Unless (1) the LAD are expected to have a security guard stationed every 10 feet, or (2) there was a pattern of other crimes/assaults at Dodger Stadium that hasn't been reported and wasn't addressed by the LAD, this seems like a random act of violence for which the LAD's liability is low or non-existent.

IIRC, and IANAL (But I did stay at a Holiday Inn Express last night) the argument is that:
1-There has been a history of altercations at Dodger Stadium, increasingly so in recent years. Especially at Dodger/Giants games.
2-There is inadequate lighting in the parking lots, creating an unsafe environment and
3-The Dodgers have little or no parking lot security and do not hire off duty officers to patrol the lots on gameday

All of which may or may not be a big deal, but the Dodgers problem is that security and lighting are pretty much industry standard,almost every other team provides them-thus the lawyer is going to argue that because the Dodgers failed to live up to industry norms on safety, they hold tort liability for negligence.

Isn't all of this talk silly? The Wilpons will own the Mets as long as they want to and Selig is Commissioner. If things get worse, won't they just file a Chapter 13 and continue to hold on to the team?

1: As someone else mentioned they can't file under 13, they'd have to go under 11.
2: An 11 plan is supposed to get creditors at least as much as a chapter 7 liquidation would.
3: During an 11 a debtor is still supposed to make debt service payments on secured debt as well as paying all ongoing expenses- that5's the stuff that's really killing the Mets cashflow and filing for 11 would not alleviate.
4: Filing for an 11 simultaneously bought McCourt some time and SEALED his fate.

Basically the Wilpons have to keep their secured creditors at bay- if they can't do that and are forced to file (or their creditors gang up and file an involuntary Bkr) to buy time- that means they are screwed no matter what they or Selig want- absent that, yeah, it would seem they can keep the team as long as they want/Selig [next commish] allows

Basically they are massively over-leveraged. Think of a business that makes widgits- it costs $10 to make a widgit (wages, materials, transportation/shipping etc), and they can sell for $12. That business is profitable, but oh wait, the owners pledged the factory as security for a debt, and the payments on that debt average about $3 per widgit produced... guess what, while making widgits is profitable the company is still running a negative cashflow- the company either has to: 1 sell more widgits; 2 raise the price for widgits; 3 make widgits more cheaply or 4 refinance or repay that debt. [5] The BKR solution is to sell off the profitable parts of a company- the factory that makes widgits- free and clear of that debt - that is of course the LAST solution the Wilpons want (in act I'm sure they do not see that as a solution at all).

What the Wilpons are trying to do is both 3 and 4. 3 involves cutting expenses, no re-siging Reyes, cutting a GCL club, probably bunch of other stuff as well, 4 involves raising capital to pay down that debt load- of course they are saying that none of the money they are raising via the sale of minority sales is earmarked for that- but that's nonsense- money is fungible, Joe Schmoe investor's $20m may go to payroll and other expenses, but all that does is free up $20m somewhere else to pay down the JPMC debt.

What about joint and several liability? If the court finds the Dodgers partially liable, aren't they on the hook for the whole thing to the extent the others cannot pay?