## Facts

- Texas Rangers Baseball Partners (TRBP) owned the Texas Rangers Major League Baseball club and filed for Chapter 11 amid heavy leverage associated with Hicks-controlled ownership entities.
- A group led by Nolan Ryan and Chuck Greenberg (Rangers Baseball Express, LLC) agreed to buy substantially all TRBP assets under an asset purchase agreement intended to serve as the stalking-horse bid.
- The proposed stalking-horse protections included a break-up fee of about 2% of the purchase price plus expense reimbursement if Express were outbid.
- A syndicate of first-lien secured lenders (with JPMorgan Chase Bank, N.A. as agent) claimed credit-document consent rights that effectively allowed them to block any sale they disfavored.
- The lenders objected that the Express deal undervalued the franchise, favored insiders, and used Chapter 11 to circumvent lenders’ contractual approval rights.
- A court-appointed chief restructuring officer proposed an expedited auction process using the Express APA as the bid floor, with court-approved bidding procedures.
- After an initial bidding-procedures order, the first-lien lenders sought reconsideration or modification, challenging the bid protections and fairness of the sale structure at the pre-auction, pre-confirmation stage.

## Issues

1. Whether TRBP could use a Chapter 11 plan process and court-supervised auction to pursue a sale notwithstanding secured lenders’ prepetition contractual veto/consent rights.
2. Whether the proposed stalking-horse protections (including the break-up fee and expenses) reflected sound business judgment and avoided chilling bidding in a value-maximizing auction.
3. Whether the sale and plan structure improperly benefited insiders at the secured lenders’ expense, including through allocation of value or releases inconsistent with bankruptcy priorities and confirmation requirements.

## Decision

- The court allowed the Express transaction to remain the stalking-horse baseline and permitted the auction process to proceed.
- The court rejected efforts to block the auction outright based solely on prepetition lender consent rights, emphasizing that bankruptcy processes can override private control rights if statutory requirements are satisfied.
- The court granted lender objections in part by modifying and conditioning bidding procedures and bid protections to preserve auction integrity and prevent insider-driven overreach.
- The court cautioned that any plan emerging from the sale would face strict scrutiny and could not divert value to equity or insiders at the expense of secured creditors absent compliance with confirmation and cramdown standards.

## Legal Principles

- Prepetition contractual consent or veto rights held by secured lenders are not absolute in Chapter 11 and may be overcome through a process that satisfies the Bankruptcy Code’s confirmation and distribution rules.
- Bid protections for a stalking-horse purchaser may be approved when they reasonably compensate risk and help establish a bid floor, but they must not chill bidding or function as an anti-competitive lockup.
- Court-supervised auctions are a primary mechanism to test market value and to support later findings relevant to confirmation, including valuation and fair-and-equitable treatment.
- Transactions influenced by insiders are subject to heightened scrutiny; sale procedures and any resulting plan must reflect creditor-priority rules and cannot be used to extract value for equity owners at secured lenders’ expense.

## Conclusion

The bankruptcy court permitted TRBP to proceed toward an open, competitive auction using Express as the stalking horse, while limiting and conditioning bid protections and emphasizing that lender consent rights yield to Chapter 11’s statutory framework and that any ultimate plan must treat secured creditors in accordance with the Code’s valuation and priority requirements.


In re Texas Rangers Baseball Partners, 431 B.R. 706 (Bankr. N.D. Tex. 2010)