In slap at McCourt, MLB moves to oust Dodgers' bankruptcy lawyers

Major League Baseball wants lawyers representing the Los Angeles Dodgers to be disqualified from the team's bankruptcy case, claiming that their actions appear more in line with protecting owner Frank McCourt's finances than improving the bottom line for the baseball team.

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Major League Baseball wants lawyers representing the Los Angeles Dodgers to be disqualified from the team’s bankruptcy case, claiming that their actions appear more in line with protecting owner Frank McCourt’s finances than improving the bottom line for the baseball team. In a motion for disqualification filed on Sept. 23, Major League Baseball moved to disqualify Dewey & LeBoeuf and Young Conaway Stargatt & Taylor, local counsel in Wilmington, Del., where the Dodgers filed for Chapter 11 protection on June 27. The move came at the same time that Major League Baseball was attempting to force the sale of the Dodgers rather than move forward on a proposed reorganization plan. “It is clear that Debtors’ Counsel either cannot distinguish between the interests of Mr. McCourt and the best interests of the Debtors, or are simply ignoring the conflict and acting solely for Mr. McCourt because he ultimately controls the Dodgers’ purse strings,” wrote Eric Sutty, a partner at Fox Rothschild in Wilmington who represents Major League Baseball. Sutty said that lawyers for the Dodgers have supported moves that advance the interests of McCourt, not the team or other stakeholders in the bankruptcy, including Major League Baseball and 29 other baseball teams. For instance, Sutty said, lawyers for the Dodgers pushed to approve a financing deal to meet the team’s payroll that cost $14 million more than Major League Baseball’s proposal but helped McCourt avoid a $5.25 million commitment fee. U.S. Bankruptcy Judge Kevin Gross of the District of Delaware rejected the deal. Additionally, lawyers for the Dodgers have attempted to renegotiate the team’s television rights to provide financing — a move that would have benefited McCourt, not the Dodgers, Sutty wrote. The proposed deal would have guaranteed a $385 million loan and equity infusion but would have set aside 45% of the advance payment for McCourt’s personal debts, primarily involving the settlement of his divorce from Jamie McCourt. Jamie McCourt insists that she is half-owner of the Dodgers. “Mr. McCourt’s only source of income to maintain his own extravagant lifestyle and to fund his support obligations to Jamie McCourt is the Dodgers,” Sutty wrote, alleging that as of July 2011, McCourt had only $350,000 in his personal bank account but has siphoned off more than $180 million from the Dodgers. “As a result of his personal financial troubles, Mr. McCourt has continued to direct the Debtors to take actions and pursue transactions that were not in the best interests of Dodgers, but were instead designed to alleviate Mr. McCourt’s personal short-term financial woes.” Baseball commissioner Allan “Bud” Selig rejected the television rights deal. Sutty noted that an entity owned by McCourt paid the $350,000 retainers for the the team’s bankruptcy lawyers. McCourt, who is a significant stakeholder in the Dodgers bankruptcy, hasn’t appeared yet in the case. The disqualification motion mirrored a similar move by which Sutty has sought to terminate the period during which the Dodgers have exclusive permission to submit a reorganization plan. The team has indicated that it wants to sell the television rights, held by News Corporation’s Fox Sports, to keep itself afloat; Major League Baseball wants to sell the team. A hearing on the motion is scheduled for Oct. 12. Lawyers for the Dodgers — Bruce Bennett, a partner in the Los Angeles office of New York’s Dewey LeBeouf, and Robert Brady, a partner at Young Conaway — did not return calls for comment. Amanda Bronstad can be contacted at [email protected].

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