As I reported here yesterday morning, the Los Angeles Dodgers and four affiliated companies filed for Chapter 11 bankruptcy yesterday morning in Delaware Bankruptcy Court. The Dodgers’ mess is now in the hands of a bankruptcy judge located roughly 2,800 miles from Dodger Stadium.
Last week I wrote at length on why Dodgers’ owner Frank McCourt should be removed as owner of the Dodgers. Absent the bankruptcy filing, Major League Baseball would probably have seized control of the Dodgers later this week, once McCourt failed to meet his June 30 payroll. But the bankruptcy filing changes everything.
To explain what’s going on, I’ll answer questions I’ve seen asked in the media and on the internet.
With the bankruptcy filing in place, what happens now?
Let’s talk first about what doesn’t happen now. The Dodgers’ bankruptcy filing imposes an “automatic stay”, temporarily preventing nearly all action that might otherwise be taken by creditors against a company in bankruptcy. The automatic stay provides a debtor with a breathing spell. It buys time. As Maury Brown of bizofbaseball.com said today, it puts the team into a “holding pattern”.
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