(Updates with comment from judge in third paragraph.)
Nov. 8 (Bloomberg) -- The Los Angeles Dodgers won initial court approval to pay the team’s bankruptcy lawyers fees for six days of work that had been challenged by the U.S. Trustee.
U.S. Bankruptcy Judge Kevin Gross said today the work was necessary for the team to win approval of a loan to continue operating while in bankruptcy. Gross overruled an objection filed by Mark Kenney, a trial attorney with the U.S. Trustee’s office in Wilmington, Delaware.
“I am finding there was a benefit” to the legal work, Gross said. The team later will submit bills for the fees for Gross’s final approval.
Law firms Dewey & LeBoeuf LLP and Young Conaway Stargatt & Taylor LLP ran up $352,742 in legal bills during six days while trying to win approval for a loan offered by an affiliate of JPMorgan Chase & Co., according to court papers filed by the U.S. Trustee. Kenney argued in court today that because the Dodgers refused to negotiate with Major League Baseball for an alternative loan, the law firms should be penalized.
The two law firms said they were serving the best interest of their client by fighting for the JPMorgan-related loan in July instead of the MLB loan. That month, Gross rejected the loan from JPMorgan’s Highbridge Capital Management LLC. The Dodgers later accepted a loan from MLB that had fewer fees, a lower interest rate and fewer restrictions than the proposed Highbridge facility.
The U.S. Trustee’s office is an arm of the Justice Department responsible for monitoring all corporate bankruptcies and appointing committees to represent creditors. One of the office’s responsibilities is to ensure that companies and lawyers comply with the administrative requirements of the bankruptcy code.
After the Dodgers filed for bankruptcy in June, the team began fighting in court with baseball Commissioner Bud Selig over how to finance operations during bankruptcy. Last week, team owner Frank McCourt agreed to sell the team and the media rights to future games, ending a dispute with Selig.
The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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