First Lien Lenders Objection

8/9/2019 First Lien Lenders Objection

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Mitchell A. Seider, SBT #18000550LATHAM & WATKINS LLP885 Third AvenueNew York, NY [email protected]

Michael R. Buzz Rochelle, SBT #17126700

Scott M. DeWolf, SBT #24009990ROCHELLE MCCULLOUGH LLP325 North Saint Paul St., Suite 4500Dallas, TX [email protected] [email protected]

ATTORNEYS FOR JP MORGAN CHASE

BANK, N.A. AS FIRST LIEN AGENT

Dennis F. Dunne (admittedpro hac vice)MILBANK, TWEED, HADLEY & MCCLOY LLP1 Chase Manhattan PlazaNew York, NY 10005-1413Tel.: 212.530.5000Fax: [email protected]

Andrew M. Leblanc (admittedpro hac vice)MILBANK, TWEED, HADLEY & MCCLOY LLP

1850 K Street, N.W., Suite 1100Washington, DC 20006Tel.: 202.835.7500Fax: [email protected]

Daniel C. Stewart, SBT #19206500Paul E. Heath, SBT #09355050Richard H. London, SBT #24032678VINSON & ELKINS LLP

2001 Ross Avenue, Suite 3700Dallas, TX 75201Tel: 214.220.7700Fax: [email protected]@[email protected]

ATTORNEYS FOR THE AD HOCGROUP OF FIRST LIEN LENDERS

Jennifer C. DeMarco, (admittedpro hac vice)David A. Sullivan, (admittedpro hac vice)CLIFFORD CHANCE US LLP

31 West 52nd Street

New York, New York 10019-6131Tel: 212.878.8000Fax: 212.878.8375

[email protected] [email protected]

Holland N. O'Neil, SBT #14864700GARDERE WYNNE SEWELL LLP

1601 Elm Street, Suite 3000Dallas, Texas 75201Tel: 214.999.4961Fax: [email protected]

ATTORNEYS FOR GSP FINANCE LLC, AS

SECOND LIEN AGENT

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

In re:

TEXAS RANGERS BASEBALL

PARTNERS

Debtor.

Case No. 10-43400 (DML)-11

(Chapter 11)

JOINT OBJECTION OF AD HOC GROUP OF FIRST LIEN LENDERS, JP MORGAN

CHASE BANK, N.A., AS FIRST LIEN AGENT, AND GSP FINANCE LLC, AS SECOND

LIEN AGENT, TO CONFIRMATION OF DEBTORS SECOND AMENDED PLAN

Case 10-43400-dml11 Doc 451 Filed 07/28/10 Entered 07/28/10 16:12:39 DescMain Document Page 1 of 61
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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TABLE OF CONTENTS

Page(s)

PRELIMINARY STATEMENT .................................................................................................1

UPDATED STATEMENT OF RELEVANT FACTS .................................................................5

ARGUMENT .............................................................................................................................8

I. SECOND AMENDED PLAN FAILS TO COMPLY WITH SECTIONS1129(a)(7) AND 1129(a)(10)...........................................................................................9

A. Lenders Claims Are Impaired Within Definition of Impairment inMemorandum Opinion......................................................................................... 9

B. Impairment of Lenders Claims Goes Further .................................................... 11

C. Second Amended Plan Fails to Satisfy Section 1129(a)(10) of theBankruptcy Code ...............................................................................................14

D. Second Amended Plan Fails to Satisfy Section 1129(a)(7) of theBankruptcy Code ...............................................................................................15

II. SECOND AMENDED PLAN FAILS TO COMPLY WITH SECTION1129(A)(1) ....................................................................................................................16

A. Second Amended Plan Violates Section 502(a) of the Bankruptcy Code ............ 16

B. Second Amended Plan Violates Section 524(e) of the Bankruptcy Code ............ 18

1. Exculpation Provision Is Illegal Under Existing Fifth Circuit Law.......... 19

2. Indemnification Provision Is Impermissible............................................ 21

C. Second Amended Plan Violates Section 1141(d)(3) of the BankruptcyCode..................................................................................................................22

D. Second Amended Plan Violates Section 1123(a)(5) of the BankruptcyCode..................................................................................................................23

1. Second Amended Plan Fails to Provide Adequate Means forImplementation Regarding Compliance With May APA ........................ 23

2. Second Amended Plan Fails to Provide Proper Means ofImplementation Regarding Treatment of Class 8 .................................... 25



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3. Second Amended Plan, in Conjunction with Land Sale Agreement,Authorizes an Improper Release of Valuable Estate Causes ofAction ....................................................................................................26

III. SECOND AMENDED PLAN FAILS TO COMPLY WITH SECTION1129(A)(2) ....................................................................................................................31

A. Debtor Lacked Authority to File Second Amended Plan in Violation ofFed. R. Bankr. P. 9001....................................................................................... 31

B. Second Amended Plan Fails to Comply with Section 1125 of theBankruptcy Code ...............................................................................................32

C. Debtors Conduct Violates Due Process.............................................................33

IV. SECOND AMENDED PLAN FAILS TO COMPLY WITH SECTION1129(A)(3) ....................................................................................................................34

A. Second Amended Plan Is a Bad Faith Attempt to Vitiate Lenders Rightsunder Pledge Agreement ....................................................................................35

B. Second Amended Plan Is a Bad Faith Attempt to Obtain Approval ofTransactions Violating State Law.......................................................................36

C. Second Amended Plan Was Proposed in Bad Faith Because It SanctionsViolations of Fiduciary Duties ........................................................................... 38

1. Debtors Management Violated Its Duty of Loyalty ............................... 39

2. Debtor Violated Its Duty to Maximize Value..........................................42

V. SECOND AMENDED PLAN FAILS TO COMPLY WITH SECTION1129(A)(5) ....................................................................................................................44

VI. SECOND AMENDED PLAN FAILS TO SATISFY SECTION 1129(A)(11) ............... 45

VII. SECOND AMENDED PLAN FAILS TO SATISFY CRAMDOWNREQUIREMENTS OF SECTION 1129(B) ................................................................... 47

CONCLUSION ........................................................................................................................49



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TABLE OF AUTHORITIES

Page(s)

CASES

Airline Pilots Assn, Intl v. American Natl Bank & Trust Co. (In re Ionosphere Clubs,Inc.),156 B.R. 414 (S.D.N.Y. 1993), aff'd, 17 F.3d 600 (2d Cir. 1994) ........................................ 27

August v. August,2009 WL 458778 (Del. Ch. Feb. 20, 2009).......................................................................... 37

Avery Point CLO, Ltd. v. Texas Rangers Baseball Partners,No. 10-04098 (Bankr. N.D. Tex, June 11, 2010) ................................................................. 25

B.M. Brite v. Sun Country Dev., Inc. (In re Sun Country Dev., Inc.),764 F.2d 406 (5th Cir. 1985) ...............................................................................................34

Bank of New York Trust Co. v. Official Unsecured Creditors Comm. (In re PacificLumber Co.),584 F.3d 229 (5th Cir. 2009) ...............................................................................................19

Bennett v. Gemmill (In re Combined Metals Reduction Co.),557 F.2d 179 (9th Cir. 1977) ...............................................................................................39

Cajun Electric, 119 F.3dat 356.................................................................................................28

Conn. Gen. Life Ins. Co. v. United Cos. Fin. Corp. (In re Foster Mortgage Corp.),68 F.3d 914 (5th Cir. 1995)........................................................................................... 27, 28

Crestar Bank v. Walker (In re Walker),165 B.R. 994 (E.D. Va. 1994) ....................................................................................... 23, 46

Fed. Sav. & Loan Inc. Corp. v. D & F Constr. (In re D & F Constr.),865 F.2d 673 (5th Cir. 1989) ...............................................................................................48

Fin. Sec. Assurance, Inc. v. T-H New Orleans Ltd. Pship (In re T-H New Orleans LtdPship),116 F.3d 790 (5th Cir. 1997) ...............................................................................................34

Gallagher & Ascher Co. v. Simon,687 F.2d 1067 (7th Cir. 1982) .............................................................................................18

Gearhart Indus., Inc. v. Smith Intl, Inc.,741 F.2d 707 (5th Cir. 1984) ................................................................................... 39, 40, 44



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In re 50-Off Stores, Inc.,231 B.R. 592 (Bankr. W.D. Tex. 1999) ............................................................................... 34

In re Allied Gaming Mgmt., Inc.,209 B.R. 201 (Bankr. W.D. La. 1997).................................................................................41

In re Bidermann Indus. U.S.A. Inc.,203 B.R. 547 (Bankr. S.D.N.Y. 1997) .................................................................................43

In re Big Rivers Elec. Corp.,233 B.R. 726 (Bankr. W.D. Ky. 1998), affd, 233 B.R. 739 (W.D. Ky. 1998)......................43

In re Block Shim Dev. Co.-Irving,939 F.2d 289 (5th Cir. 1991) ...............................................................................................34

In re Chadda,2007 Bankr. LEXIS 4213 (Bankr. E.D. Pa. Nov. 9, 2007) ................................................... 47

In re Clarkson,767 F.2d 417 (8th Cir. 1985) ...............................................................................................45

In re Conseco, Inc.,330 B.R. 673 (Bankr. N.D. Ill. 2005)...................................................................................26

In re Coram Healthcare Corp.,271 B.R. 228 (Bankr. D. Del. 2001) .............................................................................. 39, 41

In re Coram Healthcare Corp.,315 B.R. 321 (Bankr. D. Del. 2004) ....................................................................................27

In re Cypresswood Land Partners, I,409 B.R. 396 (Bankr. S.D. Tex. 2009)...................................................................................8

In re Embrace Sys. Corp.,178 B.R. 112 (Bankr. W.D. Mich. 1995) ....................................................................... 42, 43

In re Energy Coop., Inc.,886 F.2d 921 (7th Cir. 1989) ...............................................................................................27

In re Fiesta Homes of Ga., Inc.,

125 B.R. 321 (Bankr. S.D. Ga. 1990) ..................................................................................26

In re Gen. Electrodynamics Corp.,368 B.R. 543 (Bankr. N.D. Tex. 2007)................................................................................ 46

In re Grodel Mfg., Inc.,33 B.R. 693 (Bankr. D. Conn. 1983) ...................................................................................42



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In re Gulf Coast Oil Corp.,404 B.R. 407 (Bankr. S.D. Tex. 2009)................................................................................. 43

In re Herbys Foods, Inc.,2 F.3d 128 (5th Cir. 1993) .....................................................................................................9

In re Idearc Inc.,423 B.R. 138 (Bankr. N.D. Tex. 2009).......................................................................... 23, 31

In re Internet Navigator Inc.,289 B.R. 128 (Bankr. N.D. Iowa 2003) .................................................................................8

In re Kennedy,158 B.R. 589 (Bankr. D.N.J. 1993)......................................................................................48

In re M&S Assocs., Ltd.,138 B.R. 845 (Bankr. W.D. Tex. 1992) ......................................................................... 11, 45

In re Madison Hotel Assocs.,749 F.2d 410 (7th Cir. 1984) ......................................................................................... 11, 34

In re Matco Elecs. Group, Inc.,287 B.R. 68 (Bankr. N.D.N.Y. 2002) ...................................................................... 27, 28, 31

In re Mirant Corp.,348 B.R. 725 (Bankr. N.D. Tex. 2006).......................................................................... 28, 29

In re Pilgrims Pride Corp.,2010 WL 200000 .......................................................................................................... 19, 20

In re Polytherm Indus., Inc.,33 B.R. 823 (W.D. Wis. 1983) ............................................................................................44

In re Premier Network Servs., Inc.,Case No. 04-33402-HDH-11, 2005 WL 6443642 (Bankr. N.D. Tex. July 1, 2005)..............45

In re Repurchase Corp.,332 B.R. 336 (Bankr. N.D. Ill. 2005)...................................................................................47

In re Scioto Valley Mortgage Co.,

88 B.R. 168 (Bankr. S.D. Ohio 1988)..................................................................................44

In re Suncruz Casinos, LLC,342 B.R. 370 (Bankr. S.D. Fla. 2006).................................................................................. 23

In re Sutton,78 B.R. 341 (Bankr. S.D. Fla. 1987).................................................................................... 23



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In re TCI 2 Holdings, LLC,2010 Bankr. LEXIS 1169 (Bankr. D.N.J. Apr. 12, 2010)..................................................... 38

In re Trism, Inc.,286 B.R. 744 (Bankr. W.D. Mo. 2002)................................................................................ 27

In re USA Detergents, Inc.,418 B.R. 533 (Bankr. D. Del. 2009) ....................................................................................20

In re Wonder Corp. of America,70 B.R. 1018 (Bankr. D. Conn. 1987) .................................................................................34

In re Wool Growers Cent. Storage Co.,371 B.R. 768 (Bankr. N.D. Tex. 2007)................................................................................ 18

Intl Bankers Life Ins. Co. v. Holloway,368 S.W.2d 567 (Tex. 1963) ...............................................................................................40

JPMorgan Chase Bank, N.A. v. Rangers Ballpark LLC,No. 10-04124 (Bankr. N.D. Tex. July 16, 2010) .................................................................. 25

L & J Anaheim Assocs. v. Kawasaki Leasing Intl, Inc. (In re L & J Anaheim Assocs.),995 F.2d 940 (9th Cir. 1993) ................................................................................... 11, 12, 13

Lopez-Stubbe v. Rodriguez-Estrada (In re San Juan Hotel Corp.),847 F.2d 931 (1st Cir. 1988)................................................................................................39

Meinhard v. Salmon,164 N.E. 545 (N.Y. 1928) ...................................................................................................20

Miller v. Broadway,No. 07-0122, 2007 U.S. Dist. LEXIS 93895 (W.D. La. Dec. 19, 2007)..................................8

Mims v. Kennedy Capital Mgmt., Inc. (In re Performance Nutrition, Inc.),239 B.R. 93 (Bankr. N.D. Tex. 1999)...................................................................... 40, 41, 44

Mission Iowa Wind Co. v. Enron Corp.,291 B.R. 39 (S.D.N.Y. 2003) ..............................................................................................44

Morton v. Morton (In re Morton),

298 B.R. 301 (B.A.P. 6th Cir. 2003).................................................................................... 18

Natl Convenience Stores Inc. v. Shields (In re Schepps Food Stores, Inc.),160 B.R. 792 (Bankr. S.D. Tex. 1993)................................................................................. 40

Official Comm. of Unsecured Creditors v. Cajun Elect. Power Coop., Inc. (In re CajunElect. Power Coop., Inc.),119 F.3d 349 (5th Cir. 1997) ...............................................................................................27



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Pepper v. Litton,308 U.S. 295 (1939)..............................................................................................................9

Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson,390 U.S. 414 (1968)............................................................................................................27

Resolution Trust Corp. v. Acton,844 F. Supp. 307 (N.D. Tex. 1994)......................................................................................40

Rodriguez v. Drive Financial Servs., L.P. (In re Trout),--- F.3d ----, 2010 WL 2510427 (10th Cir. June 23, 2010) ................................................... 37

U.S. v. Kolstad (In re Kolstad),928 F.2d 171 (5th Cir. 1991) ...............................................................................................17

Unsecured Creditors Comm. v. General Homes Corp. (In re General Homes Corp.),199 B.R. 148 (S.D. Tex. 1996) ............................................................................................ 40

West v. Seiffert (In re Houston Drywall, Inc.),No. 05-95161-H4-7, 2008 Bankr. LEXIS 4060 (Bankr. S.D. Tex. July 10, 2008)................ 20

Wolf v. Weinstein,372 U.S. 633 (1963)............................................................................................................39

STATUTES

11 U.S.C. 101(31)(B)............................................................................................................. 44

11 U.S.C. 1127(c) ............................................................................................................ 32, 33

11 U.S.C. 1129(a)(5)(b) .........................................................................................................44

11 U.S.C. 1129(b)(1)..............................................................................................................47

Del. Code Ann. Tit. 6 1304(a)................................................................................................. 37

Del. Code Ann. Tit. 6 1307(a)(1) ............................................................................................36

Tex. Bus. & Com. Code 24.005(a) .........................................................................................37

Tex. Bus. & Com. Code 24.008(a)(1)..................................................................................... 36

RULES

Bankruptcy Rule 9019 ........................................................................................................ 27, 28



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Fed. R. Bankr. P. 9001..............................................................................................................31

Rule 9001(5) of the Federal Rules of Bankruptcy Procedure ............................................... 31, 32

OTHER AUTHORITIES

7 COLLIER ON BANKRUPTCY 1129.02[5] .................................................................................44

124 Cong. Rec. 32,407 (1978)...................................................................................................48

H.H. Rep. No. 95-595 ...............................................................................................................23

S. Rep. No. 95-989 (1978) ........................................................................................................23



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PRELIMINARY STATEMENT

The plan for which the Debtor1 is seeking confirmation (the Second Amended

Plan) is the result of a determined effort by the Debtor to circumvent the basic protections that

the Lenders negotiated for and received in their prepetition agreements. There is no mystery as

to why the Second Amended Plan has the continued support of the Debtor: the transactions

incorporated therein provide the Debtors ultimate equity holder, Thomas O. Hicks, with more

than $70 million of value, a piece of equity in, and the title of Chairman Emeritus of, the first-

place Texas Rangers, a full and complete indemnity, and other benefits that he has extracted for

himself in connection with agreeing to sell the Texas Rangers for less than would have been

available from another buyer in a fair auction, all the while leaving the Lenders, who are owed

more than $600 million from Hicks affiliates, to suffer substantial losses.

MLB supports confirmation of the Second Amended Plan as it would permit the

Office of the Commissioner of Baseball to select the owner of the Texas Rangers without regard

to the price buyers are willing to pay for it, and more important without having the Court

consider whether the Bankruptcy Codes prohibitions on anti-assignment provisions in contracts

permits MLB to enforce the provisions of the Major League Constitution granting the owners of

MLB franchises (not the Commissioner of Baseball) the right to approve a proposed purchaser of

a franchise. [REDACTED]

1 Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed tothem in the Joint Brief Regarding Certain Issues Related to Proposed Plan of Reorganization andDisclosure Statement, filed by the Lender Parties on June 11, 2010 (the June 11 Brief) or the SecondAmended Plan (as defined below), as appropriate.



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Despite the Debtors current contention that it has proposed the Second Amended

Plan in good faith, [REDACTED]

The minimum requirements for confirmation of a plan set forth in section 1129 of

the Bankruptcy Code require the Debtor to do significantly more than it has done here to satisfy

its fiduciary duties as a debtor in possession. Thus, the Second Amended Plan cannot be

confirmed.

The most basic failing of the Second Amended Plan is that, despite certain last-

minute superficial changes made by the Debtor, it continues to impair the substantial legal,

equitable, and contractual rights of the Lenders. To address the Courts preliminary conclusion

that the Lenders claims could be rendered unimpaired under certain circumstances, the Debtor

responded by adding a single passage stating [o]n and after the Effective Date, the holders of

Allowed [Class 2 and 3] Claims shall retain all existing contractual rights against the Debtor or

its affiliates to which they are entitled under the [Credit Agreements] and related documents.

(Second Amended Plan at 12.) This single passage alone is not meaningful because the Lenders

existing rights are fundamentally altered by numerous other provisions of the Second

Amended Plan, including, for example, the purported discharge of the Debtor, the expansive

releases and exculpation granted to various non-Debtor parties, and the sale of substantially all of

the Debtors assets. Based on the preliminary voting report the Lenders have received from the



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Debtors voting agent, the two Classes in which their Claims are classified have unanimously

rejected the Second Amended Plan.2 Thus, the Second Amended Plan fails the fundamental

requirement that there be at least one impaired accepting class of Claims.

This Court has also concluded that the original plan impaired the interests of the

Debtors equity holders. The Debtor has made no changes, superficial or otherwise, to attempt to

change that treatment. The Lender Parties believe that the Debtors equity holders, through their

Chief Restructuring Officer (the CRO), will also vote against the Second Amended Plan when

their vote is cast. The equity holders rejection of the Second Amended Plan has two fatal

implications for its confirmation: first, because the equity holders are notconsenting to the

Second Amended Plan, the Debtor has a duty to maximize the value of its assets which the

Debtor has not done by conducting an auction on three weeks notice following the concerted

efforts by the Debtor, MLB, and the Proposed Purchaser to chill the bidding; and second, the

Second Amended Plan must satisfy sections 1129(a)(7) and 1129(b) of the Bankruptcy Code,

which it does not.

The Second Amended Plan fails to comply with multiple other provisions of the

Bankruptcy Code, thus failing to satisfy sections 1129(a)(1) and 1129(a)(2) of the Bankruptcy

Code. The Second Amended Plan is the product of a series of backroom deals between

conflicted parties designed to benefit insiders, most notably, Tom Hicks, at the expense of the

Debtors creditors and other stakeholders. These deals, which were struck on the eve, and in

anticipation of, bankruptcy (subsequently referred to by the parties in interest as the Midnight

Transfers) and which are necessary predicates for the Second Amended Plan, when taken

2 The official voting report is not expected to be filed until after the deadline for filing this brief.



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together with the Debtors stated goal of [REDACTED] demonstrate that the Second Amended

Plan cannot meet the good faith requirement of section 1129(a)(3) of the Bankruptcy Code.

The Debtor also cannot show adequate means for implementing the Second

Amended Plan or that such plan is feasible. The Midnight Transfers included multiple void and

voidable transfers, certain of which are already being challenged by various parties, and others

that are subject to later challenge. If those transactions are avoided (and some of them, as

demonstrated below, are void ab initio), then the conditions precedent to the confirmation of the

Second Amended Plan cannot be fulfilled. Accordingly, the Second Amended Plan cannot be

implemented.

3

The Greenberg Groups unwavering rush to a confirmation hearing like a

shopper who grabs a mistakenly underpriced item and runs to the cash register before someone

realizes the error makes it practically impossible to hold a fair auction of the Texas Rangers,

and has the unfortunate consequence of harming the true stakeholders in this process: the

Lenders, the Debtors equity holders, and the Texas Rangers and their fans. Everyone is harmed,

except for the Greenberg Group, who will either (a) succeed in buying the Texas Rangers for less

than even ithad been willing to pay, or (b) receive a windfall termination fee of at least $10

million to which it is not entitled under applicable law.4

The Bankruptcy Code requires that the Court deny confirmation of the Second

Amended Plan.

3 Similarly, the Second Amended Plan requires the payment to Hicks of $5 million in respect of a so-called Overdraft Protection Line of Credit, which cannot be paid because, in reality, it was an equityinfusion that the Lenders expect will be re-characterized as such.

4 The Lender Parties reserve the right to contest the enforceability of the Debtors purported obligation topay such fee.



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UPDATED STATEMENT OF RELEVANT FACTS

The Lender Parties hereby incorporate and respectfully refer the Court to the

relevant factual background set forth in detail in the June 11 Brief, including the description of

the Midnight Transfers. (See June 11 Brief at 4-19.) The following is a summary of the relevant

developments that have occurred since the filing of the June 11 Brief.

On June 22, 2010, the Court issued an opinion (the Memorandum Opinion)

with respect to the four questions briefed in the June 11 Brief. Among other things, the Court

determined that both the Claims in Classes 2 and 3 and the Equity Interests in Class 12 are

impaired, and suggested ways in which the then current plan dated June 17, 2010 (the First

Amended Plan) could be further modified to render the Claims in Classes 2 and 3 unimpaired.

(Memorandum Opinion at 25.) With respect to the Equity Interests, the Court specifically

determined that their prepetition approval of the original plan was insufficient to establish their

acceptance of the First Amended Plan. Therefore, the Equity Interests would need to vote on the

First Amended Plan or any subsequent iterations thereof. (Id. at 26-27.)

On June 25, 2010, the Debtor filed the Second Amended Plan, where it purported

to comply with the Courts suggestions set forth in the Memorandum Opinion with respect to

rendering the Claims in Classes 2 and 3 unimpaired.5 On that same date, the Court scheduled the

confirmation hearing for July 9, 2010, and set July 2, 2010 as both the voting deadline and the

deadline for filing objections to the Second Amended Plan.6 On July 1, 2010, however, before

the Lender Parties had a chance to file their objection to the confirmation of the Second

Amended Plan, the Court rescheduled the confirmation hearing for July 22, 2010 and set July 15,

5 The Debtor failed to file an amended disclosure statement with respect to the Second Amended Plan.

6 See Order Granting Motion for Reconsideration, Resetting Mediation, and Resetting Hearing onConfirmation [Docket No. 275], dated June 25, 2010.



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2010 as both the new voting deadline and the deadline for filing objections to the Second

Amended Plan.7

Thereafter, on July 5, 2010, the Debtor filed a motion [Docket No. 310] (the

Initial Sale Motion) seeking approval of certain bidding procedures (endorsed by the CRO) for

the sale of the Texas Rangers, with the May APA serving as a stalking horse bid. Before the

Lender Parties had an opportunity to file their objection to these bidding procedures, the CRO,

having determined that potential bidders required more time to become qualified bidders and to

obtain the necessary financing, and wishing to avoid a one-legged auction that was not a fair

process (Hrg Tr. (July 20, 2010), at 24:22-26:7), withdrew his support of these bidding

procedures, and the Debtor had no choice but to withdraw the Initial Sale Motion.8

Thereafter, on July 13, 2010, the Debtor filed its second motion [Docket No. 352]

(the Second Sale Motion), seeking approval of slightly revised bidding procedures (the

Debtor Bidding Procedures). The day prior, in connection with the commencement of the

Proposed Purchaser Adversary9, Rangers Baseball Express LLC (the Proposed Purchaser) filed

an emergency motion for a preliminary injunction and temporary restraining order [Proposed

Purchaser Adversary, Docket No. 3] (the TRO Request), seeking to compel the Debtor to

comply with the May APA a prepetition contract that has not been assumed by the Debtor. It

appears that another set of bidding procedures for the sale of the TRBP Assets (the Purchaser

7 See Agreed Order Modifying Mediation Schedule and Resetting Hearing and Deadlines forConfirmation of the Debtors Plan [Docket No. 304], dated July 1, 2010. The Court subsequently

rescheduled the confirmation hearing again for August 4, 2010 and set July 28, 2010 as the new deadlinefor voting and filing confirmation objections. See Order Resetting Hearing on Confirmation of DebtorsPlan of reorganization and Related Deadlines [Docket No. 388], dated July 19, 2010.

8 See Debtors Notice of Withdrawal of Initial Sale Motion [Docket No. 326], dated July 8, 2010.

9 Rangers Baseball Express LLC v. Texas Rangers Baseball Partners, Adv. Pro. No. 10-04121 (July 12,2010) (Lynn, J.) (the Proposed Purchaser Adversary).



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Bidding Procedures) was attached to the TRO Request presented to the Court.10 At the hearing

on the TRO Request held on less than twenty-four hour notice (the July 13 Hearing), the

Court, sua sponte, proposed and adopted its own bidding procedures (the Bidding Procedures),

based almost entirely on the Purchaser Bidding Procedures.11 Despite the Lender Parties

emergency motion to reconsider the Bidding Procedures [Docket No. 367] (the Motion for

Reconsideration), after almost three days of evidentiary hearings, the Court confirmed that the

Bidding Procedures will remain in place.

As set forth in detail in the Motion for Reconsideration, the Bidding Procedures

fail to establish a fair, open and competitive sale process in that they (a) establish an impossibly

abbreviated schedule on which the potential bidders have to make all the necessary arrangements

for their bids,12 and (b) without any evidentiary support from a single estate fiduciary, provide

10 The Lender Parties were never served with the Purchaser Bidding Procedures (and they were not madeavailable on the docket), but, from the Courts remarks at the July 13 Hearing (as defined below), itappears that the Court did receive a copy and, indeed, used the Purchaser Bidding Procedures as itstemplate for the Bidding Procedures (as defined below).

11 See Order Adopting Bidding Procedures [Docket No. 363], dated July 15, 2010.

12 Under the Bidding Procedures, the potential bidders have less than three weeks to gain pre-approvalfrom the MLB, conduct their due diligence, obtain equity commitments, become sufficiently comfortablewith their ability to obtain financing that they post a non-refundable $15 million deposit, analyze the MayAPA (including all the intricacies and implications of the Midnight Transfers that are inextricably tied

therewith) and negotiate an acceptable form thereof to constitute a qualified bid. See Hrg Tr. (July 20,2010), at 184:21-185:4 (Q Do you believe that period of time thats been provided for in the bidprocedures is adequate for alternative bidders to consider putting forth an alternative transaction? ALook. Could somebody throw in a bid? Yes. Would it be the best bid youre going to get? No. I think,if I were advising a prospective buyer, and Ive done it many times, I would tell the buyer that, given theamount of time they have, they would not be able to do the level of due diligence they need to do to makea reasoned bid here.); see also Hrg Tr. (July 20, 2010), at 44:8-14; Hrg Tr. (July 22, 2010), at 36:7-13;Hrg Tr. (July 20, 2010), at 183:16-20.



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highly inappropriate and completely unnecessary bidding protections to the Proposed Purchaser

that could only further chill the bidding.13

Because the auction for the Texas Rangers is to be held a week after the deadline

for filing this brief, the Lender Parties do not know, as of this time, the outcome of the auction

or, for that matter, whether an auction will even be held. Given the compressed time that the

potential bidders were given under the Bidding Procedures, the Lender Parties have to assume

that either (i) no potential bidder (other than the Proposed Purchaser) would be in a position to

bid, or (ii) to the extent that any competing bid(s) is submitted, it likely would not be the best

possible bid that a potential bidder could have come forward with if it had been given an

appropriate amount of time.

ARGUMENT

It is axiomatic that unless the so-called cramdown provision of Section 1129(b)

is properly invoked, a plan may not be confirmed if even one of the requirements listed in

Section 1129(a) is not met. Miller v. Broadway, No. 07-0122, 2007 U.S. Dist. LEXIS 93895, at

*8 (W.D. La. Dec. 19, 2007). The Debtor, as the proponent of the Second Amended Plan, bears

the burden of proof with respect to each and every element of section 1129. See, e.g., In re

Cypresswood Land Partners, I, 409 B.R. 396, 422 (Bankr. S.D. Tex. 2009) (citing In re Internet

Navigator Inc., 289 B.R. 128, 131 (Bankr. N.D. Iowa 2003)) (The proponent of the plan bears

the burden of proof with respect to each element of 1129(a) and 1129(b) under a

13 See Hrg Tr. (July 22, 2010), at 70:2-5 (Q What Im asking you is, in order for there to be a bid forthe Rangers, is it necessary for the Rangers to offer a break-up fee? A No.); Hrg Tr. (July 20, 2010), at191:11-14, 191:19-20 (Q Mr. Galatioto, based on your discussions with other bidders in this case, whateffect do you think it would have on the bid process to have Mr. Greenberg have the protection of at least$10 million worth of overbid value? . . . A I think its going to make it more difficult for any bidder,obviously.); Hrg Tr. (July 20, 2010), at 39:14-18. (So the only thing I think thats a huge concern tothem would be the amount of the break-up fee, because they have to overbid that. . .And so that could bean impediment.)



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preponderance of the evidence standard.).14 The Second Amended Plan cannot be confirmed

because it fails to comply not with just one, but at least with seven, elements of section 1129(a)

of the Bankruptcy Code. Specifically, as demonstrated below, the Second Amended Plan fails to

comply with sections 1129(a)(1), 1129(a)(2), 1129(a)(3), 1129(a)(5), 1129(a)(7), 1129(a)(10)

and 1129(a)(11) of the Bankruptcy Code. Moreover, because Classes 2, 3 (and presumably 12)

voted to reject the Second Amended Plan, the Court cannot confirm the Second Amended Plan

for its failure to comply with section 1129(a)(8).

Even were the Court to determine that section 1129(a)(8) is the only requirement

of section 1129(a) of the Bankruptcy Code that the Second Amended Plan fails to satisfy and

considers proceeding under section 1129(b) of the Bankruptcy Code,15 the Second Amended

Plan still cannot be confirmed because it fails to meet the requirements of that section as well.

I. SECOND AMENDED PLAN FAILS TO COMPLY WITH SECTIONS1129(a)(7) AND 1129(a)(10)

A. Lenders Claims Are Impaired Within Definition of Impairment inMemorandum Opinion

The Debtor has failed to remedy the impairment that the Court found to exist in

the First Amended Plan. In the Memorandum Opinion, the Court stated that to render the

Lenders claims unimpaired, the Debtors plan must, on and after the Effective Date, put the

Lenders in the position to exercise all of the rights under the Credit Agreements and the Pledge

14 While the preponderance of the evidence is the general standard, transactions involving insiders requirea higher level of scrutiny. In this case, due to the number of suspect insider transactions, a higher level of

scrutiny is justified. See Pepper v. Litton, 308 U.S. 295 (1939) ( fiduciaries are subject to rigorousscrutiny and where any of their contracts or engagements with the corporation is challenged, the burden ison the [fiduciary] not only to prove the good faith of the transaction, but also to show its inherent fairnessfrom the viewpoint of the corporation and those interested therein.); In re Herbys Foods, Inc., 2 F.3d128 (5th Cir. 1993) (holding that claims by insiders are subject to rigorous scrutiny).

15 The Lender Parties respectfully submit that the Court should decline to confirm the Second AmendedPlan under section 1129(b) of the Bankruptcy Code because the Debtor did not move for confirmationunder that section.



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Agreement that they enjoyed as of the Petition Date. The Second Amended Plan does not do this

and, as such, still fails to render the Lenders Claims unimpaired.

In its haste to ensure that the Texas Rangers are sold to the Proposed Purchaser,

the Debtor evidently did not properly analyze the Memorandum Opinion and failed to amend

the First Amended Plan in a way that would satisfy the Courts mandate. The addition of an

entirely self-serving assertion in sections 4.2(b) and 4.3(b) of the Second Amended Plan that the

Lenders shall retain all existing contractual rights against the Debtor and its affiliates to which

they are entitled by the [Credit Agreements] and related documents is meaningless at best and is

belied by a plethora of other, more specific provisions of the Second Amended Plan that in fact

impair the Lenders rights.16

For example, if the Lenders are deprived of their right to withhold their consent

with respect to the disposition of their collateral in violation of section 4.4.1(c)(i)(1) of the

Pledge Agreement, they have, at the very least, a cause of action for the breach of that provision.

Yet, not only does the Second Amended Plan fail to preserve these rights, but numerous of its

provisions consistently purport to negate these valuable causes of action. Specifically, (i)

sections 4.2(b) and 4.3(b) of the Second Amended Plan each state unequivocally that the

distribution of the $75 million plus postpetition interest is in full satisfaction, settlement, release

and discharge of the First Lien Holder Claims and the Second Lien Holder Claims,

respectively;17 (ii) section 6.3 of the Second Amended Plan purports to release the Collateral

16 In addition, because the Lenders are the sole economic beneficiaries of the Equity Debtors, any post-Effective Date damages awarded to the Lenders could only be paid from the Lenders own pockets. Suchtreatment strips the Lenders of valuable rights without any meaningful recourse, thus resulting inunquestionable impairment.

17 Each of these definitions covers any Claim arising under or in connection with their respective CreditAgreements (emphasis added).



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Agents liens even though the Court has clearly agreed with the Credit Parties that, even upon

the payment of the cash distribution, the Debtor would owe Obligations to the Lenders, all of

which constitute secured claims under the terms of the Credit Agreements and are entitled to the

benefit of the liens that secured them as of the Petition Date; (iii) section 11.3 of the Second

Amended Plan purports to discharge all Claims against the Debtor;18 and (iv) section 11.4 of the

Second Amended Plan purports to exculpate both the Debtor and some other potential

defendants from any liability for any actions taken since the Petition Date a period during

which willful violations of the various provisions of the Credit Agreements continued. These

specific provisions of the Second Amended Plan have the clear effect of altering the rights that

the Lenders had vis--vis the Debtor and other parties as of the Petition Date, thus rendering the

Lenders Claims impaired.

B. Impairment of Lenders Claims Goes FurtherFurthermore, the Lender Parties respectfully disagree with the Memorandum

Opinion on the issue of impairment, and respectfully submit that the Second Amended Plan

impairs Claims in Classes 2 and 3 in more ways than set forth above. Courts have held that the

Bankruptcy Code contains a presumption of impairment that has been interpreted to include even

minimal impairment. See In re M&S Assocs., Ltd., 138 B.R. 845, 853 (Bankr. W.D. Tex. 1992).

Congress define[d] impairment in the broadest possible terms . . . . L & J Anaheim Assocs. v.

Kawasaki Leasing Intl, Inc. (In re L & J Anaheim Assocs.), 995 F.2d 940, 942 (9th Cir. 1993)

(citing In re Madison Hotel Assocs., 749 F.2d 410, 418 (7th Cir. 1984)). [A]ny alteration of the

rights constitutes impairment even if the value of the rights is enhanced. L & J, 995 F.2dat

942.

18 As discussed in Section II.B below, the Debtor obviously is not entitled to a discharge in any case.



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Section 1124 of the Bankruptcy Code provides, exclusively, two methods to

render a claim or interest unimpaired, either by leaving rights unaltered or by assumption and

cure. Section 1124(1) provides that a claim may be unimpaired if a plan leaves unaltered the

legal, equitable, and contractual rights to which such claim or interest entitles the holder of such

claim or interest, while section 1124(2) provides that notwithstanding any right to accelerated

payment, a claim may be unimpaired if a plan cures outstanding defaults, reinstates the maturity

of such claim or interest, compensates for pecuniary losses arising from non-monetary breaches,

and does not otherwise alter the legal, equitable, or contractual rights to which such claim or

interest entitles the holder of such claim or interest. 11 U.S.C. 1124. Where, as here, the

Debtor does not propose to cure existing defaults as required by section 1124(2) of the

Bankruptcy Code, the only way to render a class of claims or interests unimpaired is by leaving

all rights of the claimants in such class unaltered, as required by section 1124(1) of the

Bankruptcy Code. A debtor arguing unimpairment pursuant to section 1124(1) has the burden of

proving that all rights of creditors in the relevant class remain unaltered by the plan.

For example, in L & J Anaheim Assocs., the Ninth Circuit analyzed whether a

proposed plan would impair a secured creditor where, under the proposed plan, that creditors

collateral would be sold at auction and the proceeds of such sale would be paid to the creditor.

995 F.2d at 941. In finding that such treatment constituted impairment, the court noted that,

under its credit and security documents, the creditor had the right to exercise all rights and

remedies under the California Uniform Commercial Code, which was a contractual right for

which [the creditor] bargained in exchange for extending financing to [the debtor]. Id. at 943.

The proposed plan, premised as it was on a bankruptcy auction that left the creditor unable to



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invoke the substantive remedies or procedural mechanism[] available under applicable state

law, altered the creditors rights, leaving it impaired. Id.

Here, the Second Amended Plan provides treatment that alters the contractual

rights of the Lenders, and thus renders them impaired. The Debtor has two capacities under the

Credit Agreements: (i) it is a Credit Party, and as such it undertook a number of direct

obligations to the Lenders, and (ii) it is a Guarantor, and, in that capacity, it guaranteed a

limited portion of the borrowers financial obligations under the Credit Agreements. In its role

as a Credit Party, the Debtor agreed to comply with specified covenants at all times until

repayment in full of all Obligations under the Credit Agreements. (See First Lien Credit

Agreement 6.) While the repayment of $75,000,000 of the Obligations to the Lenders as

holders of Class 2 and 3 Claims as contemplated by the Second Amended Plan may satisfy the

Debtors guaranty of the Obligations of the other Credit Parties, it does not excuse the Debtor

from compliance with the various protective covenants set forth in the Credit Agreements.

The covenants set forth in the Credit Agreements were intended to protect the

Lenders right to repayment of up to $540 million of credit extended to HSG and its affiliates.

To that end, these covenants impose absolute limits on the Debtors ability to take actions that

are potentially detrimental to the Lenders rights, including the critical protection of requiring the

Lenders consent if the Debtor sought to dispose of significant assets. (First Lien Credit

Agreement 6.9; Second Lien Credit Agreement 6.9.) This particular covenant is a crucial

part of the Lenders bargain for as long as there remains any balance owing to the Lenders by

any of the Credit Parties, even if the $75 million portion of the Obligations that the Debtor

directly guaranteed has been paid in full. Indeed, this very covenant together with

corresponding protections of the Pledge Agreement is what protected the Lenders prepetition



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from having a below-market sale of the Debtors assets imposed on them.19 The impairment of

the Lenders fundamental rights is clearly demonstrated by the simple fact that the Lenders had

the unquestioned right to consent to the sale of the Debtors assets before the Petition Date

(which restriction the Debtor cited as the reason it filed for bankruptcy),20 and the Second

Amended Plan deprives the Lenders of that right.21

C. Second Amended Plan Fails to Satisfy Section 1129(a)(10) of theBankruptcy Code

Section 1129(a)(10) provides that [i]f a class of claim is impaired under the plan,

at least one class of claim that is impaired under the plan has accepted the plan. 11 U.S.C.

1129(a)(10).

As demonstrated above, Classes 2 and 3 are impaired under the Second Amended

Plan. Moreover, they are the only impaired classes of Claims under the Second Amended Plan.

Accordingly, for the Second Amended Plan to be confirmable under section 1129(a)(10), there

must be an affirmative vote of either Class 2 or Class 3. Because Classes 2 and 3 voted to reject

19 The Court inquired of counsel why the Lenders had not taken action prepetition to prevent the sale tothe Proposed Purchaser. (Hrg Tr. (June 15, 2010), at 147:1-5.) Any such action was unnecessary giventhat no party ever contested the Lenders prepetition consent right, and thus the Lenders did not have tofile a lawsuit to stop the sale. Furthermore, the Credit Agreements provide that no failure, delay, orforbearance by the Agents to exercise any of their rights or powers constitutes a waiver of any such rightsor powers. (First Lien Credit Agreement, 10.9; Second Lien Credit Agreement, 10.9.) Finally, theFirst Lien Agent delivered several reservation of rights letters to HSG, each of which was introduced intothe record at the June 15 hearing. (Hrg Tr. (June 15, 2010), at 38:11-22.)

20 (See Hrg Tr. (May 25, 2010) at 18:18-23); see also, [REDACTED]

21 The Lenders rights against the non-Debtor obligors under the Credit Agreements are further impairedby the Debtors attempt to transfer title to the Lenders collateral free and clear of the Lenders liens.



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the Second Amended Plan, it fails to satisfy the requirements of section 1129(a)(10), and cannot

be confirmed.

D. Second Amended Plan Fails to Satisfy Section 1129(a)(7) of theBankruptcy Code

Section 1129(a)(7) of the Bankruptcy Code states that, with respect to any

impaired class of claims or interests, unless such class has accepted the plan, such class must, for

the plan to be confirmable, receive or retain under the plan on account of such claim or interest

property of a value, as of the effective date of the plan, that is not less than the amount that such

holder would so receive or retain if the debtor were liquidated under chapter 7 of this title on

such date. 11 U.S.C. 1129(a)(7). Accordingly, because Classes 2, 3 (Claims) and 12

(Interests) are impaired and have rejected the Second Amended Plan, for the Second Amended

Plan to be confirmable, it has to comply with the foregoing best interests test. The Second

Amended Plan fails to comply with the best interests test and, thus, cannot be confirmed.

Simply stated, the best interests test requires the proponent of a plan to

demonstrate, with respect to each holder of an impaired claim or interest, either that (i) such

holder has voted in favor of the plan or (ii) such holder will receive or retain on account of such

claim or interest, property of a value, as of the effective date of the plan, that is not less than the

amount that such holder would so receive . . . if the debtor were liquidated under chapter 7 . . . on

such date. 11 U.S.C. 1129(a)(7). As demonstrated above, the Second Amended Plan seeks to

strip valuable rights from the Lenders without any consideration. In a chapter 7 liquidation, the

Lenders would be entitled to a claim for monetary damages for these breaches. The Second

Amended Plan, however, proposes to cap the Lenders recovery at $75 million. Therefore, the

Debtors cannot satisfy the best interest test with respect to Classes 2 and 3.



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Furthermore, if this case were to be converted to chapter 7, it is very likely that

the chapter 7 trustee, with adequate time to allow potential bidders to put together their best bids,

would be able to sell the Texas Rangers at a purchase price higher than that proposed by the May

APA. As noted in the June 11 Brief, both Crane and the Greenberg Group were willing to pay

more cash for fewer assets when compared to the sale underlying the Second Amended Plan. As

the costs and expenses incurred by a chapter 7 trustee are unlikely to be very high, a chapter 7

liquidation should provide the holders of the Interests in Class 12 with more value than they

stand to receive under the Second Amended Plan.

II.

SECOND AMENDED PLAN FAILS TO COMPLY WITH SECTION1129(A)(1)

The Second Amended Plan cannot be confirmed because it fails to comply with

section 1129(a)(1) of the Bankruptcy Code, which provides that a plan, to be confirmable, must

comply with the applicable provisions of the Bankruptcy Code. The Second Amended Plan

violates numerous applicable provisions of the Bankruptcy Code.

A. Second Amended Plan Violates Section 502(a) of the Bankruptcy CodeSince the Petition Date, the Lender Parties have consistently expressed their

concern that the Debtors management and other insiders have improperly influenced the

Debtors conduct to achieve ends that conflict with the best interests of the Debtors creditors

and other stakeholders. The Debtor now seeks confirmation of a plan that improperly abridges

the rights of parties in interest from objecting to allowance of insiders claims before any such

party has been given a fair opportunity to investigate such claims. The Debtor cannot justify a

premature termination of the investigation and objection rights of parties in interest in this

contested case. Accordingly, the provisions of the Second Amended Plan that purport to allow



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certain claims while terminating the rights of the parties in interest to contest such allowance

violate section 502(a) of the Bankruptcy Code (additional evidence of the Debtors bad faith).

The Plan allows the following claims (collectively, the Allowed Insider

Claims):

The Overdraft Protection Claim, a claim asserted by insider Thomas O. Hicks foradvances made under a purported loan. (See Second Amended Plan 1.62.)22

The MLB Prepetition Claim, a claim asserted by MLB for repayment of rescuefinancing provided in connection with the Original VSA, an agreement that, as

amended by the Modified VSA, gave MLB control of the Debtors business and

the prepetition sale process. (See Second Amended Plan 4.4(b).)

The MLB Postpetition Claim, a claim asserted by MLB arising under agreementsbetween the Debtor and MLB pursuant to which MLB obtained control rights

over the Debtors business and reorganization. (See Second Amended Plan

2.1.)

The Lender Parties submit that allowance of the Allowed Insider Claims under the

Second Amended Plan totally negates the procedures established under section 502 of the

Bankruptcy Code and violates due process. Pursuant to section 502(a) of the Bankruptcy Code,

any party in interest has the right to object to a claim asserted against the estate. Absent order of

the court, the ability of a party in interest to object to a prepetition claim is not time constrained.

U.S. v. Kolstad (In re Kolstad), 928 F.2d 171, 174 (5th Cir. 1991) (There is no bar date or

deadline for filing objections.). Under section 502(b) of the Bankruptcy Code, upon the

objection of a party in interest, the court must determine whether the claim should be allowed



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after notice and a hearing. In the context of a hearing on a claim objection, one court has

stated:

Due process mandates that there be an opportunity for some kind of hearing

before a person is finally deprived of his or her property, and that such hearingoccur at a meaningful time and in a meaningful manner. The contours of dueprocess are flexible, however, and the requirement of a hearing is limited to thatwhich is appropriate to the nature of the case.

Morton v. Morton (In re Morton), 298 B.R. 301, 307 (B.A.P. 6th Cir. 2003) (quoting Gallagher

& Ascher Co. v. Simon, 687 F.2d 1067, 1077 (7th Cir. 1982)).

With respect to most claims, the Debtor appears to understand the importance of

notice, a hearing and a meaningful opportunity for parties in interest to object. (See Second

Amended Plan 8.2.) (Except insofar as a Claim is Allowed under the Prepackaged Plan, the

Debtor, the Purchaser (to the extent the Claim is assumed under the Asset Purchase Agreement)

or any other party in interest shall be entitled to object to Claims.) (emphasis added). However,

by specifically allowing the Allowed Insider Claims, the Second Amended Plan establishes a

different playing field for the Debtors insiders.

The Second Amended Plans allowance of the Allowed Insider Claims deprives

the CRO, the Lender Parties and all other parties in interest of their rights under section 502(a) of

the Bankruptcy Code and of due process.

B. Second Amended Plan Violates Section 524(e) of the Bankruptcy CodeThe Second Amended Plan also violates section 524(e) of the Bankruptcy Code

by providing for illegal non-Debtor releases and impermissible indemnification provisions. See,

e.g., In re Wool Growers Cent. Storage Co., 371 B.R. 768 (Bankr. N.D. Tex. 2007) (denying

confirmation due to plan provisions which released directors from potential liability).

22 The Second Amended Plan purports to allow such claim despite the pending Objection to OverdraftProtection Agreement Claim [Docket No. 375] filed by the First Lien Agent on July 16, 2010.



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In relevant part, the Second Amended Plan provides full exculpation to, among

others, the DIP Lender, the Proposed Purchaser, MLB, and their respective directors, officers,

employees, agents and representatives for any cause of action for any act taken or omitted to be

taken since the Petition Date. (Second Amended Plan 11.4.) Similarly, section 11.7 of the

Second Amended Plan provides that all of the Debtors indemnification obligations to its

partners or officers, or its direct or its indirect parent entities partners, members, shareholders,

managers, directors or officers, who were partners or officers of the Debtor or its direct or

indirect parent entities partners, members, shareholders, managers, directors or officers shall

not be disputed and shall be assumed by the Post-Effective Date Debtor.

Both of these provisions of the Second Amended Plan violate well-settled Fifth

Circuit law.

1. Exculpation Provision Is Illegal Under Existing Fifth CircuitLaw

Section 11.4 of the Second Amended Plan (the Exculpation Provision) is

nothing more than an impermissible, disguised non-Debtor release which is impermissible in the

Fifth Circuit. The Fifth Circuit has made it clear on multiple occasions that a chapter 11 plan

cannot provide non-consensual non-Debtor releases and/or permanent injunctions. See Bank of

New York Trust Co. v. Official Unsecured Creditors Comm. (In re Pacific Lumber Co.), 584

F.3d 229, 252 (5th Cir. 2009) (noting the Fifth Circuit precedents seem broadly to foreclose

non-consensual non-debtor releases and permanent injunctions.); In re Pilgrims Pride Corp.,

2010 WL 200000, at *5 (Because Pacific Lumber is binding precedent, the court may not, over

objection, approve through confirmation of the plan, third-party protections).23

23 The Lender Parties are not asserting that the Exculpation Provision is impermissible as to anyCommittee.



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The Exculpation Provision exculpates not only the Debtor, but also non-Debtor

parties such as MLB, the DIP Lender, the Purchaser, and each of their respective directors,

officers, partners, agents and advisors from any [postpetition] act in connection with this case,

the Second Amended Plan, or any contract, instrument, document or other agreement related

thereto.24 (SeeExculpation Provision.) In addition, while the Exculpation Provision purports

to carve back claims for willful misconduct, gross negligence, actual fraud, or criminal

conduct, it would effectively exculpate the partners, directors and officers of the Debtor that

committed breaches of their duty of loyalty in the postpetition period.25 Absent the Exculpation

Provision, the Debtors partners, directors and officers would not have such protection.

26

Furthermore, as to MLB and the Proposed Purchaser, there may be postpetition claims that could

be asserted against them. The Exculpation Provision, however, effectively releases all

postpetition claims against MLB and the Proposed Purchaser short of gross negligence, willful

misconduct, fraud or criminal conduct. There is no basis, either in fact or in law, to provide

24

In fact, as this Court has observed in connection with identical exculpation provision, the language inthe Second Amended Plan also arguably may cover some actions taken by third parties prior tobankruptcy in anticipation of bankruptcy. In re Pilgrims Pride, 2010 WL 200000, at *2 fn. 6.

25Section 152.204(a) of the Texas Business Organizations Code (TBOC) prescribes that a partner owesto the partnership and the other parties both a duty of loyalty and a duty of care. Section 152.204(b) ofthe TBOC further provides that [a] partner shall discharge the partners duties to the partnership and theother partners under this code or under the partnership agreement and exercise any rights and powers inthe conduct . . . of the partnership business . . . (1) in good faith and (2) in a manner the partnerreasonably believes to be in the best interest of the partnership. A partners duty of loyalty has beendescribed as a rule of undivided loyalty [that] is relentless and supreme. West v. Seiffert (In re HoustonDrywall, Inc.), No. 05-95161-H4-7, 2008 Bankr. LEXIS 4060, at *99 (Bankr. S.D. Tex. July 10, 2008)

(quoting Meinhard v. Salmon, 164 N.E. 545, 548 (N.Y. 1928)).26 Although the TRBP Partnership Agreement purports to supplant any conflicting provision of the TexasRevised Partnership Act, Section 152.02 of the TBOC provides that a partnership agreement may noteliminate any of the duties of loyalty or care or the obligation of good faith. See also, In re USADetergents, Inc., 418 B.R. 533, 545 (Bankr. D. Del. 2009) (holding that a breach of duty of loyalty claimis not subject to the exculpation defense provided in the debtors corporate documents).



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either MLB or the Proposed Purchaser with any such protections. Accordingly, the Second

Amended Plan is unconfirmable because it contains an impermissible release of non-Debtors in

violation of section 524(e) of the Bankruptcy Code.

2. Indemnification Provision Is ImpermissibleSection 11.7 of the Second Amended Plan (the Indemnification Provision) is

also impermissible under section 524(e) of the Bankruptcy Code as it too functions as an

impermissible third party release of the Lenders claims against the beneficiaries of

indemnification agreements with the Debtor. Under the Indemnification Provision, the Debtor

has attempted to enlarge the indemnification obligations to, among others, the Debtors partners,

directors and officers beyond those that existed immediately prior to the Debtors bankruptcy. In

connection with the Midnight Transfers, the Debtor entered into new indemnification agreements

with Lynn Nolan Ryan, Jr., Thomas O. Hicks, Lori McCutcheon, Thomas O. Hicks, Jr., Joseph

B. Armes and Mack H. Hicks, all Hicks affiliates. Additionally, the prior version of the Land

Sale Agreement was amended to add the Debtor as a party thereto for the first time, solely for the

purpose of indemnifying BRE and its affiliates, including Tom Hicks. (See Land Sale

Agreement at 6.12.)

Under the Indemnification Provision, the Second Amended Plan obligates the

Post-Effective Date Debtor for the Debtors obligations under prepetition indemnification

agreements with affiliates including (i) the Debtors partners and officers and (ii) the officers,

directors or shareholders of the Debtors direct or indirect parent entities. Many of these

indemnification obligations did not even exist prior to the week of May 20, 2010.

Finally, the Indemnification Provision attempts to insulate the Midnight

Transfers from attack by, in essence, inserting a poison pill into the Second Amended Plan. That

is, if any indemnified person were to be sued, the Debtor will have an obligation to indemnify



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such person, and such obligation will be senior to the Lenders claims above $75 million. In

other words, if the Lender Parties were to sue any such indemnified person, any recovery they

might obtain would come out of their own pockets.

The Bankruptcy Code does not permit such provisions in a chapter 11 plan.

Consequently, the Second Amended Plan cannot be confirmed.

C. Second Amended Plan Violates Section 1141(d)(3) of the BankruptcyCode

Section 11.3 of the Second Amended Plan, in relevant part, provides:

Discharge of Claims

To the extent that the Debtor is entitled to a discharge, confirmation of thePrepackaged Plan effects a discharge of all Claims against the Debtor. To thefullest extent permitted by the applicable law (including, without limitation),section 105 of the Bankruptcy Code, and except as otherwise specificallyprovided herein, the treatment of all Claims against or Equity Interests in theDebtor under the Prepackaged Plan shall be in exchange for and in completesatisfaction, discharge and release of, all Claims against the Debtor of any naturewhatsoever, known or unknown, including any interest accrued or expensesincurred thereon from and after the Commencement Date, or against its Estate orproperty or interests in property. Except as otherwise provided in thePrepackaged Plan, upon the Effective Date, all Claims against the Debtor shall be

satisfied, discharged and released in full in exchange for the considerationprovided under the Prepackaged Plan. Except as otherwise provided in thePrepackaged Plan, all Persons shall be precluded from asserting against theDebtor, the Purchaser, the Post-Effective Date Debtor, or their respectiveproperties or interests in property, any other Claims based upon any act oromission, transaction or other activity of any kind or nature that occurred prior tothe Effective Date.

(Second Amended Plan 11.3.)

This provision violates section 1141(d)(3) of the Bankruptcy Code, which, in

relevant part, provides that confirmation of a plan does not discharge a debtor if (a) the plan

provides for the liquidation of all or substantially all of the property of the estate; (b) the debtor

does not engage in business after consummation of the plan; and (c) the debtor would be denied

a discharge under section 727(a) if the case were a case under chapter 7 of the Bankruptcy Code.



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The Second Amended Plan provides for the liquidation of all or substantially all

of the Debtors assets. Also, the Debtor will not engage in business after the consummation of

the Second Amended Plan. Further, the Debtor would be denied a discharge under section

727(a)(1) of the Bankruptcy Code because the Debtor is not an individual. See11 U.S.C

727(a)(1) (providing that the Court shall grant the debtor a discharge unless the debtor is not an

individual). The net effect of the provisions of 1141(d)(3) is that a corporate debtor which is

liquidated under chapter 11 and does not continue in business after its chapter 11 plan goes into

effect does not receive a bankruptcy discharge. In re Suncruz Casinos, LLC, 342 B.R. 370, 380

(Bankr. S.D. Fla. 2006). Accordingly, the Second Amended Plan is not confirmable because it

appears to provide the Debtor with an impermissible discharge.

D. Second Amended Plan Violates Section 1123(a)(5) of the BankruptcyCode

The legislative history of section 1129(a)(1), as well as applicable case law, make

it clear that the principal objective of this section is to ensure compliance with sections 1122 and

1123 of the Bankruptcy Code. See S. Rep. No. 95-989, at 126 (1978); H.H. Rep. No. 95-595, at

412 (1977); U.S. Code Cong. & Admin. News 1987, at pp. 5787, 5912, 6368. See also In re

Idearc Inc., 423 B.R. 138, 159 (Bankr. N.D. Tex. 2009). Section 1123(a)(5) requires that a plan

provides adequate means for its implementation, which the Second Amended Plan fails to do.27

1. Second Amended Plan Fails to Provide Adequate Means forImplementation Regarding Compliance With May APA

The Second Amended Plan can only be implemented if the terms and conditions

of the May APA can be satisfied and the sale thereunder can be closed. Since many of the terms

27 When evaluating whether a plan contains adequate means for its implementation, courts havedetermined that the absence of an adequate means of implementation demonstrates a lack of good faiththereby precluding confirmation of the plan of reorganization. Crestar Bank v. Walker (In re Walker),165 B.R. 994, 1003 (E.D. Va. 1994) (citing In re Sutton, 78 B.R. 341 (Bankr. S.D. Fla. 1987)).



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and conditions of the May APA cannot be satisfied, including, inter alia, conveyance of the

Ballpark Lease28 and the Centerfield Office Lease29 to the Proposed Purchaser, the Second

Amended Plan cannot be implemented.

Specifically, section 9.1 of the May APA provides for numerous conditions

precedent to the Proposed Purchasers obligations to close (the Conditions Precedent),

including that: (i) [TRBP] shall have delivered, or caused to be delivered, to Purchasers a duly

executed Assignment and Assumption Agreement (May APA at 9.1(i)); and (ii) [TRBP] shall

have caused the Title Company to issue to Purchasers leasehold title policies for each Leased

Property, which title policies shall contain only those title exceptions agreed upon by [Proposed

Purchaser] in accordance with Section 7.15. (May APA at 9.1(k).)

On May 22, 2010, two days before the Petition Date, the Debtor and Rangers

Ballpark executed an Assignment and Assumption Agreement, by which Rangers Ballpark

purported to assign to the Debtor its rights to the Ballpark Lease (the Ballpark Transfer) for

$10. On May 23, 2010, Emerald Diamond purported to transfer to the Debtor its rights, title and

interest to the Centerfield Office Property (the Centerfield Office Transfer).30 However, the

mortgage agreements with the Collateral Agent with respect to the Ballpark and the Centerfield

28 The Ballpark Lease is the lease of the Ballpark in Arlington from the City of Arlington and/or theArlington Sports Facilities Development Authority, Inc. (ASFDA). The Debtors leasehold interest inthe Ballpark Lease is subject to mortgages granted to each of the Agents for the benefit of the Lenders.

29 The centerfield office building, adjacent to the Ballpark, was constructed on the land leased from theCity of Arlington and/or ASFDA (the Centerfield Office Lease and, together with the office building,the Centerfield Office Property). The Centerfield Office Property was also pledged as collateral to theLenders.

30 The Debtor claims that, as a consideration for the purchase, it issued to Emerald Diamond a promissorynote in the amount of $15,055,081. (See Disclosure Statement [Docket No. 34] at 5.)



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Office Property (the Leasehold Deeds) prohibit the Ballpark Transfer and the Centerfield

Office Transfer without the prior written consent of the Agents.31

Neither Rangers Ballpark, Emerald Diamond, nor TRBP obtained the consent of

the Collateral Agent to either the Ballpark Transfer or the Centerfield Office Lease Transfer. As

a result, these purported assignments were void under the terms of the respective Leasehold

Deeds. Therefore, the Ballpark Lease remains the property of Rangers Ballpark, and the

Centerfield Office Lease remains the property of Emerald Diamond, in each case, subject to the

Collateral Agents rights under the Leasehold Deeds and the Credit Agreements.32 Accordingly,

these leases are not part of TRBPs estate, TRBP has no legal right to effectuate their transfer to

the Proposed Purchaser, and thus cannot satisfy the applicable Conditions Precedent. As such,

the Second Amended Plan fails to provide adequate means for its implementation.33

2. Second Amended Plan Fails to Provide Proper Means ofImplementation Regarding Treatment of Class 8

For the Second Amended Plan to comply with the Courts mandate expressed in

the Memorandum Opinion that the Lenders must be given exactly the same rights as they

31 Sections 3.11.1 of each Leasehold Deed provides as follows: Unless required under the terms of the[applicable lease], except as set forth in the Credit Agreement[s], [the lessee] shall not, without the priorwritten consent of [the Agents] (which may be granted or withheld in [Agents] reasonable discretion) (i)terminate, or surrender the [applicable lease], or (ii) enter into any modification of the [applicable lease]which materially impairs the practical realization of the security interest granted by this Deed of Trust,andany such attempted termination, modification or surrender without [Agents] written consent shall bevoid. (emphasis added)

32 The purported assignment of the Ballpark Lease was also not permitted under the terms of the CreditAgreements. Certain of the Lenders have filed a Complaint seeking to avoid the assignment of theBallpark Lease as a fraudulent transfer. See Avery Point CLO, Ltd. v. Texas Rangers Baseball Partners,No. 10-04098 (Bankr. N.D. Tex, June 11, 2010). See also Complaint, JPMorgan Chase Bank, N.A. v.Rangers Ballpark LLC, No. 10-04124 (Bankr. N.D. Tex. July 16, 2010) (seeking declaratory judgmentthat Ballpark Lease is not property of the Debtors estate).

33 In addition, the closing of the Land Sale Agreement is a condition precedent to the closing of the MayAPA, while the payment in full of Hicks claim on account of the Overdraft Protection Line of Creditis a condition precedent to the closing of the Land Sale Agreement.



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enjoyed as of the Petition Date, whatever causes of action the Lenders will have on the Effective

Date must be against the Debtor, not the Post-Effective Date Debtor, the latter being an entirely

distinct legal entity. See, e.g., In re Conseco, Inc., 330 B.R. 673, 682-83 (Bankr. N.D. Ill. 2005)

(The reorganized debtor is in fact a new legal entity separate and distinct from the debtor ... ).

As such, and at the very least, as of the Effective Date the Lenders must have an unliquidated

general unsecured claim in Class 8 of the Second Amended Plan.

The damages that the Lenders are entitled to assert against the Debtor are

potentially very significant.34 In light of this, until the Lenders damages claim against the

Debtor has been quantified, the Debtor cannot possibly promise payment in full to the holders of

allowed Claims in Class 8, let alone fail to provide for an adequate reserve for the payment of the

Lenders Class 8 Claim once it is allowed. Accordingly, the Second Amended Plan does not

provide adequate means for implementation. See, e.g., In re Fiesta Homes of Ga., Inc., 125 B.R.

321, 325 (Bankr. S.D. Ga. 1990) (refusing to confirm a plan where plan failed to provide

adequate means for consummating actions on which creditor recoveries depended).

3. Second Amended Plan, in Conjunction with Land SaleAgreement, Authorizes an Improper Release of Valuable

Estate Causes of Action

As previously noted, on the eve of its chapter 11 filing, the Debtor became party

to the Land Sale Agreement for the sole purpose of granting a release in favor of BRE and its

affiliates, including Hicks, from all actions in any way related to BRE or its affiliates (the BRE

34 These damages would equal at least the sum of (i) the difference between (x) the amount of thepurchase price payable to the Lenders by the Proposed Purchaser under the Second Amended Plan and (y)the amount of the purchase price payable by potential higher and better offers plus (ii) all professionalfees and other charges incurred by the Lender Parties and the estate plus (iii) additional costs due tointerest and operating losses resulting from the delays of the sale that were necessary to enable theProposed Purchaser to raise capital at the time when there was at least one alternative bidder ready toclose.



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Release). (See Land Sale Agreement 6.12.) The BRE Release, for which the Second

Amended Plan is seeking the Courts approval, amounts to an improper settlement of valuable

estate causes of action against corporate insiders and their affiliates for inadequate consideration

that cannot be approved under section 1123(b)(3)(a) and Bankruptcy Rule 9019. 35

For a bankruptcy court to approve a settlement, the Debtor must establish that the

settlement is fair, equitable, and in the best interests of the estate. Official Comm. of Unsecured

Creditors v. Cajun Elect. Power Coop., Inc. (In re Cajun Elect. Power Coop., Inc.), 119 F.3d 349,

355 (5th Cir. 1997) (citing Conn. Gen. Life Ins. Co. v. United Cos. Fin. Corp. (In re Foster

Mortgage Corp.), 68 F.3d 914, 917 (5th Cir. 1995)). The proponent of a settlement bears the

burden of proving that the settlement is fair and equitable and in the best interests of the estate.

In re Matco Elecs. Group, Inc., 287 B.R. 68, 75-76 (Bankr. N.D.N.Y. 2002); In re Trism, Inc.,

286 B.R. 744, 752 (Bankr. W.D. Mo. 2002). The court may not simply accept a [proponents]

word that the settlement is reasonable, nor may [it] merely rubber stamp a proposal. Airline

Pilots Assn, Intl v. American Natl Bank & Trust Co. (In re Ionosphere Clubs, Inc.), 156 B.R.

414, 426 (S.D.N.Y. 1993), aff'd, 17 F.3d 600 (2d Cir. 1994); see also In re Energy Coop., Inc.,

886 F.2d 921, 927 (7th Cir. 1989).

In assessing whether a settlement is in the best interests of the estate, the court

must consider: (1) the probability of success of litigation; (2) the complexity and likely duration

of the litigation; any attendant expense, inconvenience, or delay; and possible problems

collecting a judgment; (3) the interest of creditors with proper deference to their reasonable

35The standards for approval of a settlement under section 1123 are generally the same as those underRule 9019, though the court should consider all factors relevant to a full and fair assessment of thewisdom of the proposed compromise. In re Coram Healthcare Corp., 315 B.R. 321, 334-35 (Bankr. D.Del. 2004) (quoting Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson,390 U.S. 414, 424 (1968)).



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views; and (4) the extent to which the settlement is truly the product of arms-length

negotiations. In re Mirant Corp., 348 B.R. 725, 739-40 (Bankr. N.D. Tex. 2006) (citing Cajun

Electric, 119 F.3dat 356; Foster Mortgage Corp., 68 F.3d at 917). In the Fifth Circuit, courts

should carefully consider the wishes of the majority of the creditors. Foster Mortgage Corp.,

68 F.3d at 917. [I]n the bankrup

First Lien Lenders Objection

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