Bankruptcy Update — XFL Looks to Sell by Mid-July

XFL’s Committee of Unsecured Creditors Have Filed an Objection to Sale

Earlier we reported that Dany Garcia, Dwayne Johnson and RedBird Capital had secured the rights to the XFL in $15M deal prior to the leagues bankruptcy auction. Shortly after the sale was announced on social media, XFL President John Pollack had the following to say:

“This is a Hollywood ending to our sale process and an awesome new start for the XFL. Dany, Dwayne and Gerry are a dream team ownership group and the XFL is in the best possible hands for the exciting journey ahead.”

The sale is technically not final, as such we have some more news to report. By looking at the latest court filings, the XFL’s committee of unsecured creditors have filed an objection to the deal.

It seems that the creditors are worried that $15 million is too low and is not in the best interest of the debtors estate.

While the Committee has been and remains supportive of a competitive sale process run by the Debtor that attracted a qualifying bid from the Proposed Buyer, the Debtor’s role as a fiduciary to the estate and its constituents does not end with securing that offer. Rather, the Debtor has an ongoing obligation to negotiate terms with the Proposed Buyer that are most favorable to the estate and do not unduly prejudice its creditors. The proposed APA, however, does not reflect such terms and seeks to strip the estate of valuable assets for no consideration. As such, the Committee has significant concerns that the Sale contemplated with the Proposed Buyer does not satisfy the sound business purpose test, and is not in the best interests of the Debtor’s estate.

So, what does this mean? Nothing yet. They are asking that the Debtor perform their own analysis to determine the true value of the organization and if each of the assets is maximized.

It is crucial that the Debtor perform an analysis to determine whether the value of each of the assets included in the Sale is truly maximized. Unless and until a thorough review and analysis of the value of the Purchased Claims is completed—or the Proposed Buyer removes the Purchased Claims from the Sale or provides additional consideration to support their purchase — unsecured creditors will be unduly prejudiced by the contemplated Sale.

We’ll need to see where this goes, but honestly I wouldn’t be too worried if I were an XFL fan. The fact that the league made it this far bodes well that negotiations will continue and we still could see the sale finalized by mid-August.

Prior to this post we learned that Dany Garcia is fully on-board with the idea of a 2021 return for the XFL. If this happens, it’s very likely that the league will utilize the ‘bubble’ concept that the NBA, NHL and MLS utilized for their returns.