## Facts

- Los Angeles Dodgers LLC and affiliates (debtors) filed Chapter 11 cases in June 2011.
- The debtors had a long-term local television-rights agreement with Fox Sports Net West 2, LLC (Fox) running through the 2013 season.
- The agreement gave Fox (1) an exclusive negotiation period for renewal (Oct. 15–Nov. 30, 2012) during which the debtors could not negotiate with others and (2) certain matching rights against third-party offers.
- The debtors later entered a settlement with Major League Baseball requiring a sale of the franchise by a specified date and permitting (if the debtors chose) a sale structure that packaged future local broadcast rights with the franchise.
- To facilitate a sale process, the debtors moved in bankruptcy court to (1) advance Fox’s exclusive negotiation window to a 45-day period beginning Nov. 30, 2011, and (2) eliminate Fox’s matching rights.
- The bankruptcy court granted the motion, concluding the exclusive negotiation period was unenforceable against a debtor in bankruptcy and that the modifications were necessary to maximize estate value and ensure full payment to creditors.
- Fox appealed and sought an emergency stay pending appeal to prevent implementation of the modifications during appellate review.

## Issues

1. Whether Fox showed a reasonable likelihood of success (or a substantial case) on appeal challenging the bankruptcy court’s alteration of the contract and its findings on enforceability, materiality, and necessity.
2. Whether Fox would suffer irreparable harm absent a stay.
3. Whether a stay would substantially harm the debtors, MLB, or other parties.
4. Whether the public interest favored preserving the status quo pending appeal.

## Decision

- The district court granted Fox’s motion for a stay pending appeal.
- The court found Fox presented a substantial case on the merits, including serious questions about:
  - whether exclusive negotiation provisions are categorically unenforceable in bankruptcy;
  - whether advancing the window and eliminating matching rights materially altered the bargain; and
  - whether the record supported the bankruptcy court’s finding that the changes were necessary to maximize value or pay creditors.
- The court held Fox would suffer irreparable harm from loss of contractual protections and negotiating leverage not readily remediable after the fact.
- The court determined the debtors’ asserted harms from delay were limited and not clearly irreparable, as the stay preserved the status quo and the sale process could proceed under existing terms.
- The court concluded the public interest favored preventing potentially irreversible changes to contract rights before meaningful appellate review.

## Legal Principles

- A stay pending appeal in bankruptcy is evaluated under a four-factor test: likelihood of success, irreparable harm to the movant, harm to other parties, and the public interest.
- Under Third Circuit practice, a “substantial case on the merits” may support a stay when combined with strong showings on irreparable harm and the balance of equities.
- Loss of bargained-for contractual rights—such as exclusivity and matching protections—may constitute irreparable harm when their deprivation cannot be fully remedied by later relief.
- Findings that contract modifications are “necessary” to maximize estate value or satisfy creditors must be supported by the evidentiary record; “helpful” is not equivalent to “required.”

## Conclusion

The district court stayed enforcement of a bankruptcy order that advanced Fox’s exclusive renewal negotiation window and eliminated its matching rights, holding that Fox showed a substantial case on appeal, irreparable harm from impaired contract protections, and that the balance of harms and public interest favored maintaining the preexisting contractual framework during appellate review.


In re Los Angeles Dodgers LLC, 465 B.R. 18 (D. Del. 2011)