Bankruptcy Judge Forces Frank McCourt to Take MLB Loan

Delaware judge rejects loan from a hedge fund and delivers McCourt another setback

Last Updated: July 22, 2011 @ 5:24 PM

Los Angeles Dodgers’ owner Frank McCourt will be forced to accept a loan from Major League Baseball after a bankruptcy judge rejected a potential loan from a hedge fund on Friday.

McCourt had been seeking to get an outside loan that would enable him to pay off creditors without involving the league, which has made its displeasure with McCourt quite clear.

Instead, the judge rejected the loan McCourt wanted and pushed him in the direction of MLB. Bruce Bennett, McCourt’s lawyer, issued a statement suggesting that MLB did not have the right to intervene in matters of ownership.

 “The Baseball Loan must be independent of and uncoupled from Baseball’s oversight and governance of the Dodgers under the Major League Baseball Constitution,” Bennett said. “The Court, if necessary and as always, will provide ready access to Debtors in the hopefully unlikely event that Baseball strays from its obligations to act in good faith as Debtors' lenders.”

Also read: Baseball Commish Rejects Frank McCourt's Dodgers Deal With Fox

McCourt’s relationship with MLB has been especially rocky since Commissioner Bud Selig rejected McCourt’s TV pact with Fox. McCourt claimed that if Selig had approved the deal he would have resolved the team’s immediate financial troubles. Selig has said that the deal reflected both McCourt’s desire for and need of immediate funds.

The question of a TV deal lingers as the case continues. If McCourt is permitted to sell cable TV rights, he may be able to stay on as owner. If the court upholds MLB’s ownership rules, which grant Selig the right to approve those deals, it is unlikely McCourt will find a way out of his current situation.