Oct. 27 (Bloomberg) -- The Los Angeles Dodgers and Major League Baseball will postpone a courtroom fight that would decide the future of the team to try to settle their differences through a mediator, two people familiar with the talks said.
Retired U.S. District Court Judge Joseph Farnan has been trying to help craft a settlement between Dodgers’ owners Frank McCourt and Baseball Commissioner Bud Selig since July, according to court records.
The bankruptcy judge overseeing the team’s case yesterday delayed until Nov. 29 a hearing over control of the team to allow the two sides to try to settle, said the people, who declined to be identified because the talks are private. The two sides appeared to hit a “dead end” in the last few weeks as they got ready for the hearing, one of the people said. The people said they didn’t know when the team and MLB would start meeting.
At next month’s hearing in Wilmington, Delaware, where the team is in bankruptcy, McCourt and the Dodgers will seek approval to sell their future television rights to raise enough money to pay creditors in full and exit bankruptcy. Selig will try to persuade U.S. Bankruptcy Judge Kevin Gross to force a sale of the team.
Since filing for bankruptcy in June, the Dodgers have traded allegations with Selig about who is responsible for the team’s financial crisis.
Selig claimed in court papers that McCourt has mismanaged the Dodgers and “looted” $189 million from the team for his own purposes, including payments of personal debts. The Dodgers denied the allegation, saying Selig either approved all of the team’s financial transactions, or wasn’t required to review them under MLB rules.
The Dodgers accuse Selig of driving the team into bankruptcy by rejecting a proposed new television contract between the team and News Corp.’s Fox Sports earlier this year. Selig is unfairly trying to force McCourt out as owner, the Dodgers allege in court papers.
The court fight in November will turn on whether McCourt or Selig is acting in “bad faith.” To meet the legal definition of bad faith, MLB and the Dodgers are collecting evidence to try to undermine the other side’s motives for taking various financial actions related to the team.
The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Michael Bathon. Editors: Peter Blumberg, Glenn Holdcraft
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