Focusing my practice on Chapter 7 and Chapter 13 Bankruptcy in the Sacramento metropolitan area I take notice of headlines that might interest individuals considering filing for bankruptcy in the region.
Most of us are familiar with the controversy surrounding the Maloof’s proposed sale of the Sacramento Kings to a Seattle based investment group.
Well, it seems this melodrama has taken a turn for the more interesting to say the least. According to bankruptcy trustee David Flemmer, bankruptcy law could be what ultimately keeps the Kings in Sacramento. Although the Maloof’s own a controlling stake in the Sacramento Kings, they do not own the entire team. Their relationship with the minority shareholders could wind up killing the entire deal.
Robert A. Cook has a 7% share in the team and filed for Chapter 11 bankruptcy in 2011. While in bankruptcy an individual’s assets are controlled by the bankruptcy trustee. The trustee is charged with maximizing the value of a bankruptcy estate in order to distribute the maximum amount of money to the individual creditors. In this instance the trustee claims that the sale by the Maloof’s goes against the partnership agreements governing ownership of the Kings. Specifically, Flemmer claims that the agreement gives the minority shareholders the first right of refusal to buy the team. This matters because Flemmer intends to hold an auction for Cook’s 7% to the highest bidder. Both Ron Burkle and the Seattle investors have expressed an interest in buying Cook’s share of the franchise.
In essence this means if Bob Cook could receive more money for his 7% of the team from another source besides that offer made between the Maloof’s and Seattle, he would be legally obligated to go for the higher offer in order to maximize the amounts paid to his creditors. Few bankruptcy cases ever get to this point because most people who file for bankruptcy do not have any assets to distribute to the creditors. This is a legal technicality but an important one.
Oftentimes, a bankruptcy filing can be rather routine. In this case, however, Bob Cook’s share is worth somewhere between 34-40 million dollars. Due to the complexity of bankruptcy law this development could be the issue that unexpectedly keeps the Sacramento Kings from leaving.
As a Sacramento Bankruptcy Attorney I am delighted to point to an example of where bankruptcy law plays an important role in a high stakes situation that has gained national attention and can have a specific impact on the future of our region. If you or anyone you know has considered filing for bankruptcy they should discuss their options with a bankruptcy lawyer immediately.