XFL creditors seek to stop sale to The Rock's consortium
Earlier today it was announced that The Rock, along with Gerry Cardinale's RedBird Capital had purchased Vince McMahon's former football league the XFL for $15 million. The story also reported that The Rock's ex-wife and business partner, Dany Garcia, would also be a stakeholder.
However, several hours after the announcement was made PWInsider is reporting that the parent company of the XFL, the Official Committee of Unsecured Creditors of Alpha Entertainment, has filed a motion to halt the purchase of the XFL's assets to The Rock and Alpha Acquico LLC (RedBird Capital).
In the 13-page motion, the XFL's unsecured creditors have requested the court put a temporary stop to the deal. The creditors have stated that Alpha Entertainment:
"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."
The court filing also suggests that Alpha Entertainment's creditors are worried that the assets of the XFL in this deal are being sold at a value lower than it's true worth. Therefore, the creditors are concerned that due to low value of the sale, there is a possibility that they receive little to nothing from the eventual purchase from The Rock and his consortium:
"[Alpha Entertainment] failed to value significant assets that are now being included in the Sale, but were not contemplated as part of the assets to be purchased in the form asset purchase agreement prepared"
Creditors supporting The Rock's purchase of the XFL?
But, the court motion does state that the XFL creditors do "generally" support the purchase of the XFL and it's assets to The Rock and Alpha Acquico LLC. However, Alpha Entertainment's creditors wish to see the deal re-worked in order for the creditors who are still owed money to benefit from better terms of the sale:
"This Objection is filed to preserve the Committee’s right to submit these issues to the Court, including objections for the form of Sale Order, for adjudication if they cannot be resolved prior to the Sale Hearing. In the interim, the Committee will continue to engage in good faith negotiations with the Debtor and Proposed Buyer regarding the objections raised herein in an effort to resolve the issues consensually."
What are your thoughts about The Rock becoming a new part-owner of the XFL?