My guess is the discovery is on the bad faith portions of this...and one the solvency of the company, generally. Wouldn't be the first time there was a ton of work put into a case only to be knocked out quickly on a technical issue. Comcast will try to make arguments that Astros/Rockets knew about the debts and consented to them, even if not technically so, I'm guessing. Even if it's a debt..it's not an undisputed debt. For an involuntary bankruptcy it's not enough to just be a debt..it has to be undisputed. Ultimately Comcast pulled this thing together to keep the Astros from walking away from their broadcast rights agreement...which apparently they were 3 days away from doing. Along the way, they'll see if they can get a trustee appointed to override their own partnership agreement. I doubt seriously Isgur will actually pull the trigger on bad faith....but it's there. It's a very colorable argument.
I disagree. Given the nature of the argument, I don't see how the judge can find the Astors' argument persuasive enough to dismiss the petition without finding that it was filed in bad faith for an impermissible purpose. If he dismisses the petition, I think it is likely that he does so based on a finding of bad faith, but without assessing fees and costs. That option is open to him. It certainly seems as though the argument of the Astros is an airtight argument. That being said, it is not a lock that the petition is dismissed. I have seen some strange things happen at the federal courthouse. As soon as I think I know all the answers, somebody changes the questions.
I don't see how in the world, from what's in the pleadings, the Comcast Creditors have shown that they have 3 "undisputed, bona fide" debts among the petitioners. I think Isgur can get away with dismissing it without granting a bad faith motion.
These involuntary petition disputes are hardly ever cut and dry. Anyway, don't expect to see the Rockets on TV any time soon.
The wording of the code is not "undisputed, bona fide debts" but debts that are not "the subject of a bona fide dispute as to validity or amount." The question is not whether the debt is bona fide, but whether the dispute is. Here is an article explaining what this phrase means according to one case: http://business-finance-restructuri...t-what-point-does-a-dispute-become-bona-fide/. Texas precedence may be different but I doubt that it is dramatically so. My memory is that courts in different circuits interpret this phrase pretty similarly. As indicated in the article, this question is not cut and dry and does require the court to dig into the facts (in that case, how certain Tennessee foreclosure proceedings were conducted). It was not enough that there were active lawsuits challenging the validity of the debts for the dispute to be "bona fide."
I'm not a lawyer, so most of this discussion has gone way over my head, but I did giggle when Refman used the term "bona ride" several times.
I hear ya. That's good information. Here's the language out of 303, specifically: (1) by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount, or an indenture trustee representing such a holder, if such noncontingent, undisputed claims aggregate at least $10,000 more than the value of any lien on property of the debtor securing such claims held by the holders of such claims; Here, the issue isn't solely whether they're disputed debts...but whether they're legitimate debts to begin with. According to the Astros, the partnership agreement between the parties specifies that in order to create a valid debt to an affiliate of one of the partners, you have to have approval from the other two partners. The Astros pleading is saying that didn't happen with 2 of them. That they were never even presented the opportunity to reject or approve those potential obligations. If that's the case...then it seems pretty evident that there's a "bona fide dispute as to liability..." The Astros don't have to even be right. They just have to present evidence of a "bona fide dispute." A partnership agreement that includes that requirement plus the absence of conclusory evidence of approval gets that job done. In addition, there's arguably "bona fide dispute as to amount" because the invoices that CSN received...and the amounts CSN has on its aging payables list...are different than the amounts claimed by the creditors to the bankruptcy. Again, those are technical requirements of an involuntary bankruptcy that allow the judge to dismiss the case without even going into the bad faith issues.
One more thing that isnt discussed. even though they are partners in the station arent they on the hook for carriage fees since the station is a separate entity.
Do you mean on the hook for paying for broadcasting rights? For paying the Rockets and Astros for the right to broadcast their content?
I agree that "if the Astros are correct" about these debts, the judge could find that there is a "bona fide dispute" with regard to them. The point is that the judge will need to dig into the facts in order to determine whether the Astros are indeed correct. "Bona fide" dispute doesn't require the court to find that the debts are invalid; however, it does require some level of evidence and is not a cake walk for the side seeking dismissal on this basis.
absolutely agreed...i think i'm a bit more optimistic than you about the dismissal of this case though.
It may or may not get dismissed. These things are just hard to tell by only reading the pleadings from one side when there is discovery going on and will be a hearing on the facts. If a law firm is any good, the pleadings that it produces are often going to make it sound like its client's side cannot possibly be wrong. They are spending (a lot of) money on discovery and holding a hearing on the facts instead of just having the judge make a decision based on the pleadings for a reason.
I'm well aware. Litigation is my business. I read the petition and found it to be a reach...I read the motion to dismiss, and it made the petition look even worse. That's all I've got to go on at this point. I'm aware there are depositions being taken and documents have already been produced. This isn't typical civil litigation. It's an involuntary bankruptcy where the burden is on the petitioners to meet some initial hurdles. My point is only that if the facts are: 1. That there is a partnership agreement which requires consent to enter into obligations with affiliates of the partners -- which makes perfect sense... and; 2. Comcast didn't get consent from the Astros and Rockets to enter into those obligations.... Then that's not exactly a lot of facts to establish. There's a difference in what you need to actually pull together given the question at hand. I can try a breach of contract/sworn account case in less than an hour. I may need a couple of weeks for a fraud case. Establishing that there's a partnership agreement...and that there was no consent (assuming Comcast can't produce one)...isn't exactly a lengthy difficult endeavor. And that only will kill the bankruptcy, because there's not enough creditors otherwise.
Because the Astros will walk...they were going to already, and were 3 days from being able to under their agreement for CSN's failure to pay them for broadcasting fees. If the Astros walk, it forces everyone's hand. It forces an implosion or an agreement otherwise. Which I believe leads to the Rockets being on the air either on CSN or some other channel sooner than it would if they continue their stalemate over carriage fees.
