(Reuters) – The Texas Rangers baseball team filed for Chapter 11 bankruptcy protection on Monday to ease the sale of the team to a group led by team president and Hall of Fame pitcher Nolan Ryan for about $575 million.
The “prepackaged” filing calls for creditors to be paid in full, and has the support of Major League Baseball, current Rangers ownership and Ryan’s group.
Rangers Baseball Express, the group led by Ryan and his partner Chuck Greenberg, a Pittsburgh-based lawyer at Pepper Hamilton LLP, is also buying the lease for the Rangers’ Ballpark in Arlington, as well as nearby land.
According to the Rangers, the plan would fully pay lenders of HSG Sports Group, an ownership group led by longtime private equity executive Thomas Hicks that bought the team in 1998 from investors including then-Texas Governor George W. Bush.
The Rangers filed for Chapter 11 protection from creditors with the U.S. bankruptcy court in Fort Worth, Texas.
Alex Rodriguez, now the New York Yankees’ third baseman, is the team’s largest unsecured creditor, the filing shows.
The bankruptcy filing is “the best way to complete the sale and smoothly transition to new ownership, which we expect will occur by midsummer,” Ryan said in a statement. He said the bankruptcy will not affect day-to-day operations.
In a statement, Baseball Commissioner Bud Selig added that the bankruptcy filing “serves the best interests of the team, its fans, Major League Baseball and all other parties.”
It was not immediately clear whether Rangers creditors would agree to the Chapter 11 plan. Lenders to the Hicks group had declared a default on $525 million of loans in April 2009.
Earlier this month, The New York Times said the top lender, Monarch Alternative Capital LP, told baseball owners that lenders would not agree to a sale to Ryan’s group “at a price below fair market value.”
Monarch, which is based in New York, did not immediately return a request for comment.
CUBS ALSO FILED BANKRUPTCY
Hicks co-founded private equity firm Hicks, Muse, Tate & Furst Inc, and would remain chairman emeritus of the Rangers should the bankruptcy plan be approved. He also owns half of the English Premier League’s Liverpool soccer club.
The Rangers are the second Major League Baseball team to seek bankruptcy protection in the last year.
In October, the Chicago Cubs filed for court protection in connection with the team’s $845 million sale by Tribune Co to the family of Tom Ricketts, whose father founded the brokerage TD Ameritrade Holding Corp (AMTD.O).
Forbes magazine this year estimated that the Rangers and the ballpark lease are worth a combined $480 million.
Rodriguez signed a 10-year, $252 million contract with the Rangers in 2000. The team traded him to the Yankees in 2004, but agreed to pay an estimated $67 million of the amount still due under his contract.
Scott Boras, the agent for Rodriguez, did not immediately return a call seeking comment.
According to the bankruptcy filing, the Rangers have between $100 million and $500 million of assets and between $100 million and $500 million of liabilities.
Ryan pitched in the major leagues for 27 years, including five for the Rangers. He retired after the 1993 season.
The case is In re: Texas Rangers Baseball Partners, U.S. Bankruptcy Court, Northern District of Texas, No. 10-43400. (Reporting by Jonathan Stempel in New York and Santosh Nadgir in Bangalore; Editing by Robert MacMillan and Gerald E. McCormick)