Diamond Pushes Back on Creditors Over Finance Plan Hearing

In response to unsecured creditors of Diamond Sports demanding an immediate court hearing to discuss Diamond’s debtor in possession (DIP) financing plan, Diamond on Thursday filed an objection, insisting the matter be discussed instead at a hearing already scheduled for Feb. 26.

The objection is the latest in a back-and-forth over Diamond’s plan to secure a $450 million agreement with the approval of U.S. Bankruptcy Judge Christopher Lopez. Diamond contends the financing would help it pay telecast rights fees to pro teams for the broadcast games via Bally Sports-branded RSNs and advance a commercial partnership with Amazon. The financing would also be used to pay down first lien creditors, which Diamond describes as essential to a successful reorganization under Chapter 11.

As Sportico detailed, the committee—which this week demanded a Friday hearing on the DIP financing—questions whether the financing agreement is “designed with the best interests of unsecured creditors in mind.” The committee also complains it was excluded from the bargaining table for DIP financing. 

Diamond flatly rejects the committee’s contention it was relegated to the dark during negotiations. As Diamond tells it, the committee “was kept abreast of these negotiations throughout and was provided with drafts” of all relevant documents. Diamond also claims the committee had “every opportunity to comment” and “advocate for whatever changes it deemed appropriate.” The committee, Diamond contends, instead “choose to lie in wait.”

Diamond also maintains its DIP plan “enjoys overwhelmingly broad creditor support” and warns the committee “is playing with fire” by trying to “recklessly throw a meritless monkey wrench into a key component of the Debtors’ reorganization.”

Creditors would more likely be paid, Diamond maintains, if the company can secure enough funding to successfully reorganize through the Chapter 11 process.