The pending sale of the XFL met a crucial benchmark on Friday as U.S. Bankruptcy Judge Laurie Selber Silverstein approved the transaction. The approval follows a brief hearing at the federal bankruptcy court in Wilmington, Del.
The deal, as first reported by Sportico’s Scott Soshnick, involves a group headlined by former WWE star Dwayne “The Rock’’ Johnson, businessperson Dany Garcia and RedBird Capital CEO Gerry Cardinale agreeing to pay $15 million to Vince McMahon’s Alpha Entertainment—which declared chapter 11 bankruptcy in April—in exchange for league assets. The group has also agreed to assume possible liabilities and pay cure amounts of up to $9.2 million for designated contracts.
The sale was complicated by the fact that thousands of creditors claim they are owed money from Alpha. A committee representing unsecured creditors filed an objection to the pending sale, arguing that it failed to maximize the sale price and unwittingly transfers assets to the buyer without accompanying compensation.
These critiques were rebutted by the sworn declarations of Alpha president and COO Jeffrey Pollack and Houlihan Lokey managing director Jay Weinberger, whom Alpha retained for the sale. Pollack and Houlihan both detailed steps taken by Alpha to attract bidders and both acknowledged the difficulty of selling a sports league through a bankruptcy process (particularly during an infectious disease pandemic that adds uncertainty and risk to the transaction).
According to a person familiar with the bankruptcy process, neither Pollack nor Houlihan faced cross examination during Friday’s hearing.
The deal is not yet complete. Closing conditions for the sale must still be met. Ordinarily, those conditions include approvals by attorneys involved in the transaction that various warranties and representations made by each side have been satisfied. If disagreements surface, the closing date could be pushed back. As of now, however, the deal is expected to close on or shortly after August 21.
Even after the sale goes through, the fallout of the XFL’s bankruptcy will continue. Creditors will need to be paid, and the order of which creditors are paid first—and how much they are paid—will be subject to court approvals and possible appeals. There’s a long road ahead, but it is a road that will have the XFL in the hands of new owners.