One of the most prominent bankruptcy cases to make the news lately has been the ongoing reorganization of the Los Angeles Dodgers of Major League Baseball. Legal actions involving baseball tend to have unique circumstances, in part because many parties feel connected to baseball in ways that they do not regarding other people or businesses. One example was the effort by a group of prominent Dodgers season ticket holders, including the family of Frank Sinatra, to become a party to the Dodgers bankruptcy. Interestingly, the Dodgers relented and said that they did not object to the season ticket holders becoming a party to the bankruptcy.

Now, though, the Dodgers owner Frank McCourt is facing a different difficulty from one of the creditors in the Chapter 11 bankruptcy. Fox Sports is asking the bankruptcy court to throw out the entire case. The reason they object to the bankruptcy is that they believe the case was not filed by Frank McCourt in good faith. As they have put it, it seems the team did not so much want to reorganize its debts, but to void legally binding contracts and renegotiate them in ways that will be more lucrative, especially for Mr. McCourt, who is involved in a very public and expensive divorce.

Chapter 11 is a way for a business to reorganize its debt while remaining in operation, and then emerge from bankruptcy with debts paid off and able to make a fresh start. The equivalent chapter for reorganization for an individual would be Chapter 13. Under a reorganization, a debtor makes a plan to pay off his or her debts, usually over a period of two or three years. One advantage of reorganization is that the debtor does not have to sell their non-exempt property. In a liquidation bankruptcy, a debtor is forced to sell property that is not exempted.

In any bankruptcy, it is a good idea to have advice from a knowledgeable bankruptcy attorney who can advise how best to proceed.

Source: Thomson Reuters News & Insight "Fox Sports asks court to toss Dodgers' bankruptcy" Nov. 18, 2011