Play Ball! Lessons from the Texas Rangers Bankruptcy Case

by Jim Ince

None of us would ever consider filing a bankruptcy as complicated as the one recently filed by the Texas Rangers. Most individuals have nowhere near the complexity of assets or the political and national exposure issues of a national franchise baseball team. However, there are some lessons that we can learn, even from a complicated case such as this.

First of all, it continually amazes those of us in the practice of bankruptcy that there is such a double standard for commercial entities and individuals. Individuals usually feel a lot of worry and guilt about the decision to file bankruptcy. This is not a bad way to react. It has been the experience of Bailey & Galyen that the best clients often feel the most reluctant to file. We have all been taught to pay our bills and to pay them on time. We do not represent clients who intended to get way over their heads into debt so that they can rush into a bankruptcy. Most people we help have been struggling to keep a roof over their heads, clothes on their kids and food on the table. Yes, all of us can look back at a purchase we should not have made, but the vast majority of economic failure has been the result of one of three reasons. The first reason is unanticipated medical debt. The second reason is often divorce, and the third reason is often job loss or a pay reduction.

The amazing aspect of corporate bankruptcy cases is that the companies or entities involved do not go through the soul searching and the stress that almost always haunt an individual who files for bankruptcy. As a matter of fact, they often “jump” into bankruptcy as a business planning tool. Unfortunately, the same warnings should apply to businesses that apply to individuals. They should be careful and make certain that the bankruptcy is the last resort they have. As the reader is probably aware, the Texas Rangers jumped into bankruptcy without apparently being aware that even the best laid plans still have to be approved by a judge. Ultimately, the case turned out as the Rangers had hoped, but it could have ended in a different manner.

As with the Texas Rangers, individuals should be told about the good, bad and ugly of what can happen during bankruptcy. The good news is that in the case of most individuals, they do not have unprotected assets. Virtually all of the individuals’ cases where there are no “extra” assets proceed exactly as the debtor plans them. If the client has certain other assets, such as a summer home, motor home or some other “toy,” that can be a problem, and it is critical that the client get very solid advice about the various options. Sometimes the client is willing just to let that “stuff” go. If so, that is very simple. If the debtor wants to keep those items, then an experienced bankruptcy attorney can advise them of the advantages of a Chapter 13 bankruptcy, which may allow the debtor to both pay back debt and keep the items that are important to the client.

The final lesson with the Texas Rangers is more subtle. During all of the court hearings, the Rangers were able to continue playing games and continue winning. The local media kept interviewing the Rangers players and asking them how the bankruptcy impacted the team. The answer was consistently that it did not. This is a great example of how bankruptcy works with individuals. Your life is not put on hold; you continue living your life mostly like you would have had you not filed. There are some adjustments, but largely your life continues unaffected.

If bankruptcy is an option that may be in your future, call our offices for a free initial consultation. We will evaluate your situation and make recommendations so that you know what is best for you.

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