How About Those Rangers! Lessons from the Texas Rangers Bankruptcy, Part 2

by James K. Ince

If you read my previous article, you know that I explored several lessons that could be learned even from a case as complex as the Texas Rangers bankruptcy case.  I discussed the double standard that involves corporate filings.  Corporations don’t have to feel bad and don’t ponder bankruptcy for the same length of time individuals often spend wondering if filing for bankruptcy is the right thing to do.  I then discussed the complexity of the case and the fact that individuals often have more control of their case if they file than did the Rangers.  I concluded by pointing out that the Rangers did not seem to suffer in their day-to-day operations and continued as though nothing had happened.  It is this aspect that I want to explore a little deeper.

Who could have imagined that in the same year the Texas Rangers became the first major league franchise to file for bankruptcy, they would be able to appear in the World Series?  That seems to be highly unlikely and almost against logic for most people who would analyze a bad financial situation.  In reality, most bankruptcy attorneys were probably not too surprised that the two could go hand in hand.

The Texas Rangers were saddled with two very big problems.  They had uninspiring ownership — the team was fundamentally sound, but the previous ownership had created insurmountable debt.  Even the great Nolan Ryan was not going to be able to take that franchise and grow it into a winning team with the debt level that existed.  That is the reason the team filed for bankruptcy.  Nolan Ryan saw that he could not make things happen without some help from the bankruptcy court.

How does this relate to an individual?  Most of us would like to save for a rainy day.  If 40 percent of our income is going to maintain debt payments, saving is just not an option.  That dishwasher may have just broken and there is no more credit on the credit card.  You cannot pay cash because your cash is going to pay for the television you bought four years ago or for the braces you had to put on the credit card so your children could have the medical care they needed.   This is really not unlike the situation in which the Texas Rangers found themselves.  Nolan Ryan needed to spend money to acquire new talent to make the team a success.  However, with the debt payments, the team could not afford to spend the money necessary to improve.

The Texas Rangers filed for bankruptcy to strip away those obligations and get a fresh start.  That is absolutely the purpose of a bankruptcy.  The fresh start is mentioned by Congress over and over again. What would happen if you were able to file for bankruptcy and strip away the debt payments you have?  In most of the cases in which people have a decent income, the ability to pay cash for items immediately returns.  Instead of living in the past, your ability to improve for the future is unlimited.  No, you do not need to win the World Series, but you likely need to save money, pay for college for the children or make those improvements on your house.

So, did the bankruptcy cause the Rangers to win the World Series?   Probably not.  Did the fact that the Rangers were put into a much better debt situation as a result of their bankruptcy allow the team’s management the freedom to get the talent they needed?  Absolutely!  You may be in the same situation, but you will not really know until you meet with a qualified bankruptcy attorney.  Come visit with one of our attorneys and see what we may be able to do with your crushing debt.  Come see what it is like to at least be able to get back into the game, if not win a World Series, with your finances.

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