I am familar and I wouldn't bet there are personal guarantee

Posted on: May 21, 2020 at 13:23:24 CT

I am familiar with the personal guarantee of corporate debt scenario.

First, I would suggest at this level of transaction with this quality of assets you may find there are no personal guarantees whatsoever.

Secondly, many of the liabilities are construction costs and, again, there may be no guarantees of any of the construction contracts.

Thirdly, it was suggested that some of the liabilities will be damages for the Rams moving from St. Louis. Is Kroenke personally a defendant in that suit?

Fourthly, in a Chapter 11 the test for a plan (which can stretch out a number of years) is whether or not it pays unsecured creditors more than they would receive if the case was in Chapter 7, a liquidation. That means that that while secured claims have to be paid in full, unsecured claims, i.e. the St. Louis lawsuit damage award can be substantially discounted and St. Louis be forced to accept the discounted amount over its own objection in a "cram down" situation.

Fifth, the Rams are reportedly owned by Kroenke Sport and Entertainment (believe that's the name). It owns a substantial number of other sports franchises including the Denver Nuggets and Arsenal FC (London). The key issue is probably whether or not its guaranteed the loans. This intervening ownership almost certainly isolates Kroenke personally from any liability.

Sixth, Kroenke's wife has an estimated net worth of 8-9 million (presumably WalMart shares). I would be totally dumfounded that any of the deals were structured in such a way to create any exposure for her.

And lastly, let me assure you that in this level of dispute the legal talent gets very, very good and very, very expensive. And clients often get what there money pays for.