LA Dodgers filing for bankruptcy

27 June 2011 Last updated at 16:07 GMT Dodgers owner Frank McCourt said a television deal with the Fox network could have kept the team safe The Los Angeles Dodgers baseball club has filed for bankruptcy in a Delaware court, blaming Major League Baseball for not approving a television deal that could have kept the team secure.

Bankruptcy permits the Dodgers to use $150m (?94m) for daily operations and gives the team time to to seek a media deal, the club said in a statement.

The statement added that the team would not be disrupted by its financial woes.

But reports indicated the Dodgers could have trouble meeting its next payroll.

"There will be no disruption to the Dodgers day-to-day business, the baseball team, or to the Dodger fans," team owner Frank McCourt said in a statement.

Mr McCourt has reportedly been struggling to meet payroll, having been heavily in debt and locked in a divorce battle with his estranged wife.

Baseball Commissioner Bud Selig said last week that he would not approve a Dodgers television deal with the Fox television network that was reportedly worth $3bn (?1.8bn), saying it would not be in the best interests of the team, the game and fans.

The contract included a $385m upfront payment Mr McCourt has said is crucial to the team's financial stability.

The bankruptcy filings listed debts to several current and retired players

And not striking a deal has left Mr McCourt facing the prospect of missing the team payroll on 30 June, which could lead to a Major League Baseball takeover.

"We brought the commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago," Mr McCourt said.

"He's turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today," Mr McCourt added, referring to Mr Selig.

The Dodgers began seeing "cash flow difficulties" last year due to a decline in attendance at the games, according to the bankruptcy filing.

The documents list debts to current and former players, including retired star Manny Ramirez, who is owed more than $20m.

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Warning as bankruptcy costs rise

3 June 2011 Last updated at 14:17 GMT By Simon Gompertz Personal finance correspondent, BBC News There are various options for people who face insolvency The rise in the cost of going bankrupt could discourage people with financial problems from seeking a solution, debt experts are warning.

The fee for petitioning for bankruptcy rose by ?75 to ?525 at the start of the month. With the court fee added on, the total upfront cost is ?700.

The Insolvency Service said the increase was needed to cover the cost of administration.

The charges, including court fees, have gone up by 37% since March last year.

Insolvency practitioner Mark Sands, from RSM Tenon, has warned that the increase would put extra pressure on individuals who were likely to be under stress or depressed.

"So many people flounder around and do not see a way out," he said.

"They are going to be put off exploring bankruptcy as a solution."

Squeeze

The ?525 charge is a deposit to cover the cost of managing a bankruptcy, which allows the bankrupt person to throw off the burden of debt and make a fresh start.

The Insolvency Service recovers a full administration fee of ?1,715, less the deposit, from the bankrupt's assets or surplus income at a later stage. This sum is not being increased.

Continue reading the main story Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditorsIndividual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of yearsDebt Relief Orders: Introduced in April 2009, these allow consumers with debts of less than ?15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy"The fee is staying the same but we are increasing the proportion of that fee which we get on day one," said the deputy head of the Insolvency Service, Graham Horne.

The Insolvency Service has seen its income squeezed because of the falling value of homes and other assets which are recovered from bankrupts.

Currently, the ?1,715 fee is never fully paid in half of bankruptcies.

There has been some criticism of the rising cost.

"It is unfair to families who are struggling but I felt that any money I had was going to be taken anyway," said a recent bankrupt who spoke to BBC News,

Jon Elwes, from the Money Advice Trust, said: "This increase in the cost of going bankrupt is likely to swell the numbers of people falling through the net of the current insolvency regime.

"Our advisers at National Debtline speak to people everyday for whom bankruptcy would be the best solution to their debt problem, but for the fact they cannot afford the associated fees."

Lower cost

There is now a cheaper and easier alternative, the Debt Relief Order (DRO), which costs ?90.

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We have to strike a balance between giving bankrupts debt relief and a fresh start, and the need to provide some return to creditors”

End Quote Graham Horne Insolvency Service An increasing number of people who are in financial trouble and looking to escape their debts have been avoiding bankruptcy and taking this lower cost route.

In the first quarter of this year there were 6,788 DROs, a 20% rise on the previous year.

However, people can only ask for a DRO if their debts are less than ?15,000 and savings and assets are less than ?300.

"What if you have ?16,000 of debt?", said Mark Sands of RSM Tenon.

"You are faced with that barrier of hundreds of pounds before you can opt for bankruptcy to resolve your difficulties."

Una Farrell, from the Consumer Credit Counselling Service, said: "It is a very steep rise. We already have to do a lot of work helping our clients to get the money together to pay the fees."

But Mr Horne said the Insolvency Service was obliged by Parliament to break even, a task which had become increasingly difficult.

"It has always been our policy that if bankrupts can pay something towards their debts then they should," he said.

"We have to strike a balance between giving bankrupts debt relief and a fresh start, and the need to provide some return to creditors."

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