MLB Says Texas Rangers' Lawyers "Decided to Rewrite History" in Request for $5.4 Million in Bankruptcy Fees, Claims Tom Hicks "Appeared" to Use Bidding Process to Hold Onto Franchise
The Texas Rangers' incredible October playoff run made this summer's messy bankruptcy saga easier to forget, but the court filings continue, with Major League Baseball alleging that the team's law firm deviated "sharply from the facts" when portraying MLB as "iron-fisted and overbearing."
Sam Merten Former MLB president and COO Bob DuPuy (foreground) and attorney Sandy Esserman leave Fort Worth's federal courthouse during this summer's bankruptcy hearings. DuPuy, who resigned effective October 31, was credited by MLB.com with helping broker the Texas Rangers' sale and facilitating negotiations between Tom Hicks and the lenders.
In a response filed Monday to an application for $5.4 million in attorney's fees and expenses by Weil, Gotshal & Manges LLP -- the law firm handling the Rangers' bankruptcy and representing former owner Tom Hicks in several other cases -- MLB attorney Sandy Esserman urged U.S. Bankruptcy Judge Michael Lynn to make no findings of fact in regard to Weil's request, claiming that the firm "decided to rewrite history" in doing so.
"While MLB does not object to Weil's being paid for its hard work in this case, that work should stand on its own merits, undiminished by Weil's gratuitous attack on MLB," he wrote.
In Weil's October 12 request for reimbursement, attorney Martin Sosland argued that it's "uncontroverted" that MLB controlled the Rangers prior to the May 24 bankruptcy filing. While fighting for attorney's fees totaling nearly 9,000 hours at an average rate of $584.05 per hour including paralegals, he took credit for enabling the club to eventually "break free from MLB's control" and ending the stalemate between MLB and lenders owed approximately $600 million by Hicks because he defaulted on loans tied to the Rangers in March 2009. Sosland also praised his firm for removing "strings" attached by MLB to the $40 million it leant the team in 2009 to stay afloat following the default.
"As part of the Voluntary Support Agreement, MLB not only required the debtor to conduct a sale of its assets, but dictated the manner in which the process would be conducted as well as the identity of the winning bidder," he wrote.
MLB declined to take control of the Rangers in spring 2009, according to Esserman's response, even though the team's lawyers offered to "turn over the keys to the franchise." Esserman also claims that Sosland's application is "disingenuously attempting to create the impression that MLB not only ran the club but also made all decisions relating to its sale."
As a condition of loaning the Rangers $15 million in June 2009 to meet payroll obligations, Esserman points out that Hicks agreed to finalize the sale of the team in order to ensure repayment. And when Hicks asked for another $25 million in November to address an "additional cash flow shortage," MLB insisted that Hicks select a winning bid by December 15 because there seemed to be no sense of urgency on his part to complete the sale.
"In fact, on several occasions Tom Hicks appeared to use the bidding process merely as an avenue to solicit members of the various bidding groups to provide funding to him so that he might retain control of the club," Esserman wrote.
Also on Monday, U.S. Trustee William Neary, who in July unsuccessfully attempted to remove Weil from the case because of a conflict of interest, filed an objection to Sosland's request for fees, arguing that the amount should be reduced stemming from Weil's history with Hicks. Neary claimed that transfers made shortly before the bankruptcy filing and the pre-packaged bankruptcy plan "benefited Hicks-related entities."
"In addition, the United States Trustee contends that facts developed through documents and testimony during the deposition of [Weil managing partner] Glenn West further demonstrate Weil, Gotshal & Manges LLP's lack of disinterest," he wrote. "These items are under seal."
In other Rangers' post-bankruptcy news, Mark Cuban and Jim Crane's hearing for attorney's fees is set for January 31 at 1:30 p.m. in Judge Lynn's courtroom.