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Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 1 of 32

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re:

)

 

 

)

 

HOUSTON REGIONAL SPORTS

)

Chapter 11

NETWORK, L.P.

)

 

 

)

Case No. 13-35998

Alleged Debtor.

)

 

 

)

 

 

)

 

HOUSTON ASTROS’ OPPOSITION TO PETITIONING CREDITORS’ MOTION FOR APPOINTMENT OF A CHAPTER 11 TRUSTEE

Harry A. Perrin

Paul M. Basta, P.C. (pro hac vice)

Duston K. McFaul

Marc Kieselstein, P.C. (pro hac vice)

VINSON & ELKINS LLP

David S. Meyer (pro hac vice)

1001 Fannin Suite 2500

KIRKLAND & ELLIS LLP

Houston, Texas 77002

601 Lexington Avenue

Telephone: (713) 758-2548

New York, New York 10022

Facsimile: (713) 615-5016

Telephone: (212) 446-4800

hperrin@velaw.com

Facsimile: (212) 446-4900

dmcfaul@velaw.com

paul.basta@kirkland.com

 

marc.kieselstein@kirkland.com

 

david.meyer@kirkland.com

 

Jeffrey S. Powell (pro hac vice)

 

Thomas A. Clare, P.C. (pro hac vice)

 

Elizabeth M. Locke (pro hac vice)

 

KIRKLAND & ELLIS LLP

 

655 Fifteenth Street, N.W.

 

Washington, D.C. 20005

 

Telephone: (202) 879-5000

 

Facsimile: (202) 879-5200

 

jeff.powell@kirkland.com

 

thomas.clare@kirkland.com

 

elizabeth.locke@kirkland.com

October 15, 2013

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 2 of 32

 

TABLE OF CONTENTS

 

Page

TABLE OF AUTHORITIES

.......................................................................................................... ii

INTRODUCTION ..........................................................................................................................

1

BACKGROUND ............................................................................................................................

4

I.A TRUSTEE SHOULD NOT BE APPOINTED BECAUSE THE PETITION

SHOULD BE DISMISSED. ...............................................................................................

9

II.PETITIONING CREDITORS CANNOT DEMONSTRATE BY CLEAR AND CONVINCING EVIDENCE THAT APPOINTMENT OF A TRUSTEE IS

WARRANTED...................................................................................................................

9

A.The Strong Presumption Against Appointing Trustees In Chapter 11 Cases

Can Only Be Rebutted By Clear And Convincing Evidence. ................................

9

B.Petitioning Creditors Cannot Demonstrate That There Is Cause To

Appoint A Trustee Under Section 1104(a)(1). .....................................................

11

C.Petitioning Creditors Cannot Demonstrate That Appointing A Trustee Would Be In The Best Interests Of The Creditors And Equity Holders

Under Section 1104(a)(2). ....................................................................................

12

III.PETITIONING CREDITORS CANNOT DEMONSTRATE THAT APPOINTMENT OF A TRUSTEE WILL FACILITATE THE NETWORK’S

REORGANIZATION.......................................................................................................

17

A.The Astros Can Terminate The Media Rights Agreement Upon

Appointment Of A Trustee. ..................................................................................

18

B.Section 365(c)(1) Prevents A Trustee From Assigning The General Partner Agreement, The Limited Partnership Agreement, And The Astros’

Media Rights Agreement. .....................................................................................

19

C.The Astros’ Consent Rights May Not Be Stripped By A Plan Of

Reorganization. .....................................................................................................

20

D.There Is No Potential Impaired Accepting Class To Confirm A Plan Of

Reorganization. .....................................................................................................

21

i

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 3 of 32

 

TABLE OF AUTHORITIES

 

 

 

Page(s)

Cases

 

 

CML V, LLC v. Bax,

 

6 A.3d 238 (Del. Ch. 2010),

 

aff’d, 28 A.3d 1037 (Del. Super. Ct. 2011) ..............................................................................

15

Cypress Assocs., LLC v. Sunnyside Cogeneration Assocs. Project,

 

No. 1607-N, 2006 WL 668441 (Del. Ch. Mar. 8, 2006) ..........................................................

13

Hilco Capital, LP v. Fed. Ins. Co.,

 

978

A.2d 174 (Del. 2009) .........................................................................................................

13

In re Combustion Eng’g, Inc.,

 

391

F.3d 190 (3d Cir. 2004) .....................................................................................................

22

In re Dunes Hotel Assocs.,

 

188

B.R. 174 (Bankr. D.S.C. 1995 ...........................................................................................

22

In re Footstar, Inc.,

 

323

B.R. 566 (Bankr. S.D.N.Y. 2005)......................................................................................

20

In re G-I Holdings, Inc.,

 

295

B.R. 502 (D.N.J. 2003),

 

aff’d, 385 F.3d 313 (3d Cir. 2004)............................................................................................

10

In re G-I Holdings, Inc.,

 

385

F.3d 313 (3d Cir. 2004) .....................................................................................................

10

In re Harms,

 

10 B.R. 817 (Bankr. D. Colo. 1981).........................................................................................

19

In re Lil’ Things, Inc.,

 

220

B.R. 583 (Bankr. N.D. Tex. 1998).....................................................................................

19

In re Manda Ann Convalescent Home, Inc.,

 

No. 11-37950-H3-11, 2012 WL 2994422 (Bankr. S.D. Tex. July 20, 2012).....................

10, 17

In re Rachels Indus.,

 

109

B.R. 797 (Bankr. W.D. Tenn. 1990)..................................................................................

20

In re Rutenberg,

 

158

B.R. 230 (Bankr. M.D. Fla. 1993) .....................................................................................

17

In re Sundale, Ltd.,

 

400

B.R. 890 (Bankr. S.D. Fla. 2009) ......................................................................................

11

 

ii

 

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 4 of 32

In re Swann Land LLC,

 

No. 07-33181, 2007 WL 4146680 (E.D. Tenn. 2007)........................................................

17, 20

In re Tahkenitch Tree Farm P’ship,

 

156 B.R. 525 (Bankr. E.D. La. 1993) .......................................................................................

10

In re The 1031 Tax Grp., LLC,

 

374 B.R. 78 (Bankr. S.D.N.Y. 2007)........................................................................................

10

In re Travelot Co.,

 

286 B.R. 447 (Bankr. S.D. Ga. 2002).......................................................................................

20

In re Village at Camp Bowie I, L.P.,

 

710 F.3d 239 (5th Cir. 2013) ....................................................................................................

22

In re Williams,

 

850 F.2d 250 (5th Cir. 1988) ....................................................................................................

21

In re Windmill Durango Office, LLC,

 

481 B.R. 51 (BAP 9th Cir. 2012) .............................................................................................

22

N.L.R.B. v. Bildisco & Bildisco,

 

465 U.S. 513 (1984)..................................................................................................................

19

Official Comm. of Unsecured Creditors of Cybergenics Corp. ex. rel. Cybergenics Corp. v.

Chinery,

 

330 F.3d 548 (3d Cir. 2003) .....................................................................................................

10

Related Westpac LLC v. JER Snowmass LLC,

 

No. 5001-VCS, 2010 WL 2929708 (Del. Ch. July 23, 2010) ..................................................

13

Superior Vision Servs., Inc. v. ReliaStar Life Ins. Co.,

 

No. 1668-N, 2006 WL 2521426 (Del. Ch. Aug. 25, 2006) ......................................................

14

TravelCenters of Am., LLC v. Brog,

 

No. 3516-CC, 2008 WL 1746987 (Del. Ch. Apr. 3, 2008) ......................................................

13

Twin Bridges Ltd. P’ship v. Draper,

 

No. 2351-VCP, 2007 WL 2744609 (Del. Ch. Sept. 14, 2007).................................................

14

Statutes

 

11 U.S.C. § 101.............................................................................................................................

21

11 U.S.C. § 1104...........................................................................................................

8, 10, 11, 12

11 U.S.C. § 1129...............................................................................................................

18, 21, 22

11 U.S.C. § 365.................................................................................................................

18, 19, 20

iii

 

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 5 of 32

Del. Code Ann. tit. 6, § 17-1101...................................................................................................

14

Del. Code Ann. tit. 6, § 17-802.....................................................................................................

16

Del. Code Ann. tit. 6, § 18-1101...................................................................................................

14

Del. Code Ann. tit. 6, § 18-802.....................................................................................................

16

Del. Code Ann. tit. 8, § 303 ..........................................................................................................

14

Other Authorities

 

3 Collier on Bankruptcy ¶ 365.03[3] (16th ed. 2013)...................................................................

20

iv

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 6 of 32

INTRODUCTION1

Comcast’s Involuntary chapter 11 Petition, and its simultaneous request to appoint a trustee, is an attempt to circumvent the Astros’ bargained-for contract rights. Comcast, the Astros, and the Rockets entered into a partnership to televise Astros and Rockets games. The partnership was a negotiated transaction among highly sophisticated entities, whereby the parties agreed to require unanimous consent for key business decisions affecting the Network — including approving affiliation agreements with MVPDs, selling all or substantially all of the Network’s assets, and putting the Network into bankruptcy.

Comcast asserts that the extraordinary remedy of a trustee is necessary because there is “total gridlock” at the Network. There is no “gridlock” requiring appointment of a trustee. Comcast does not claim that there is any mismanagement, fraud, or improper conflict of interest in the partnership. Comcast likewise does not claim that there is distrust in the Network’s management. Nor could it; the Network is managed by Comcast Services, one of the Petitioning Creditors here.

The only genuine dispute among the partners is whether the Network should enter into certain long-term affiliation agreements with other MVPDs at rates that are significantly below the base rates in the Comcast Affiliation Agreement — rates that would devalue the Network and require a restructuring. The Astros have the contractual right to withhold their consent to proposed affiliation agreements. The Astros exercised their contractual right — in good faith and pursuant to their business judgment — in response to proposals that were significantly below the base rates in the Comcast Affiliation Agreement

1Defined terms herein have the meanings set forth in the Astros’ October 7, 2013 Motion to Dismiss Involuntary Petition for Chapter 11 (“Motion to Dismiss”) [Dkts. 64 & 79].

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 7 of 32

,2 and that would have locked in the Network into economically unfavorable long-term agreements.

Comcast seeks to appoint a trustee to resolve this so-called “gridlock.” But the partners anticipated the possibility that they might not always agree — and they contracted for mechanisms to override consent rights in some specified circumstances, but notably, not in others. The General Partner Agreement requires unanimous consent for the approval of affiliation agreements with key MVPDs. However, it also provides that, in the event that the Network had not entered into affiliation agreements with key MVPDs after the anniversary of the Network’s launch date, the Astros and the Rockets would have the right to cause the Network to enter into affiliation agreements (within certain parameters) without Comcast’s consent. No such right was given to Comcast. Yet, that is precisely what Comcast seeks in the guise of its Trustee Motion.

Comcast claims that a trustee is in the best interests of the creditors and the purported estate. But the ordinary course claims of third-party creditors are not at risk because both the Astros and Comcast have agreed to backstop those claims. Comcast’s admitted purpose in invoking this Court’s jurisdiction is to prevent the Astros from terminating their Media Rights Agreement and to “make a bid to acquire either the Network (under a plan of reorganization) or substantially all of its assets.” Am. Trustee Mot. ¶ 7.3 The Astros had the contractual right to terminate their Media Rights Agreement with the Network on September 30, 2013, after the

2Redactions herein are consistent with the Court’s October 10, 2013 Order Sealing Documents.

3On September 28, 2013, Petitioning Creditors filed the Original Trustee Motion [Dkt. 3], both as a sealed document and as a redacted public document. On September 30, during a hearing, the Court ordered Petitioning Creditors to file an amended motion, which was not to be redacted but could state more generally the issues in dispute. Sept. 30, 2013 Mot. Hr’g Tr. at 29-30. On October 7, 2013, Petitioning Creditors filed a Motion of Petitioning Creditors for Appointment of a Chapter 11 Trustee (the “Amended Trustee Motion”) [Dkt. 60], but their Original Trustee Motion “remain[s] the statements of [Comcast] for the purposes of evidence in a proceeding or case.” Sept. 30, 2013 Order ¶ 1 [Dkt. 15].

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Network missed two installment payments to the Astros under the Astros’ Media Rights Agreement this summer. One business day before the Astros were contractually permitted to terminate that agreement, Comcast — through four affiliated entities — threw the Network into bankruptcy so that it could accomplish in bankruptcy what it was prohibited from doing under the parties’ contracts.

The Trustee Motion should be denied because Comcast does not demonstrate, by clear and convincing evidence, that the extraordinary remedy of a trustee is merited. It should also be denied because Comcast’s request for a trustee is a road to nowhere. Appointing a trustee will not resolve this intra-partnership dispute. The Astros’ media rights and the parties’ agreements are personal services contracts; the Astros have a valid contractual right to terminate the Media Rights Agreement upon the appointment of a trustee (regardless of whether the trustee attempts to assign the Media Rights Agreement); and a trustee could not excise the Astros’ consent rights from the governing agreements. Thus, a trustee could not break the purported — and contractually contemplated — “gridlock” or facilitate a sale of the Network to Comcast unless the Court first determines that the Astros’ consent rights may be stripped away — they may not. Moreover, there is no potential impaired accepting class that could confirm a plan of reorganization as a matter of law. All roads in this chapter 11 proceeding lead to a dead end. For these reasons, and because the Petitioning Creditors have improperly invoked this Court’s jurisdiction to begin with, the Trustee Motion should be denied.

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BACKGROUND4

In 2010, after lengthy negotiations with the Astros and the Rockets, Comcast acquired a minority interest in the Network, which was formed to televise the teams’ games on a single cable channel. The Network is organized as a Delaware limited partnership among the Astros (46.5%), the Rockets (31%), and Comcast (22.5%), with a Delaware limited liability company (owned by the Astros, Rockets, and Comcast) serving as the Network’s General Partner. When Comcast joined the partnership, the partners expressly agreed to a detailed governance structure, which was set forth in the Network’s Limited Partnership Agreement and the General Partner Agreement, both of which are governed under Delaware law.

The Network is managed by the General Partner, which is governed by a Board comprised of two Comcast directors, one Astros director, and one Rockets director. The partners agreed that the following acts, among others, would require the unanimous consent of the Board members:

•entering into affiliation agreements with MVPDs to distribute the Network, see General Partner Agreement § 5.10(a) & Schedule C(10);

•modifying the Astros’ Media Rights Agreement, id. at Schedule C(11);

•selling all or substantially all of the Network’s assets, id. at Schedule C(8); and

•the “voluntary filing of a petition for bankruptcy,” id. at Schedule C(19).

The partners contemplated the possibility that there might not be unanimous consent in some circumstances, and chose to contract for mechanisms to address some of those situations, but not others. For example, the partners entered into the Key Distributors Side Letter, which

4The facts underlying this action are set forth more fully in the Motion to Dismiss, and are incorporated here by reference. Consistent paragraph 4 of the Court’s October 8, 2013 Initial Order on Astros’ Motion to Seal, the Astros will establish factual assertions in the Motion to Dismiss and this Opposition through witnesses and exhibits to be presented at the hearing on Petitioning Creditors’ Motion for Appointment of a Chapter 11 Trustee on October 28, 2013.

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allows the Rockets and the Astros, “without any further approval (including the approval of the Comcast Member or any Comcast Representative)” to enter into affiliation agreements with key distributors if the Network has not entered into affiliation agreements on the anniversary of the Network’s launch date. Oct. 29, 2010 Key Distributor Side Letter ¶ 1. No such right was provided to Comcast. The partners also contracted for a formula for establishing the annual budget in the event that the partners were not able to agree on one. General Partner Agreement Schedule C(3). By contrast, the partners chose not to establish a mechanism for overriding the teams’ consent rights upon a failure to agree to affiliation agreements with other MVPDs for the distribution of the Network’s service.

The media rights to televise Astros and Rockets games belong to the teams. Each of the teams has a separate Media Rights Agreement with the Network, under which the Network receives a license to feature the teams’ games on its channel. Under the Comcast Affiliation Agreement, the Network sells the right to broadcast the channel to Comcast Cable, which in turn makes the Network’s channel available in the homes of Houston sports fans. In addition, the Network is capitalized by equity contributions from Comcast, the Astros, and the Rockets, and by a $100 million loan from Comcast Lender. The Comcast loan is secured against substantially all of the Network’s assets, but Comcast did not take a security interest in the media rights themselves. The Network is not financed by bank loans or debt from unaffiliated third-party creditors.

The Astros have the right to terminate their Media Rights Agreement with the Network:

(1) if the Network fails to make a required media rights payment; (2) if a petition for bankruptcy is filed; or (3) if a trustee is appointed for the Network. Astros’ Media Rights Agreement §§12.3(D), 12.5(C). The Astros’ Media Rights Agreement also provides that “no … trustee in

5

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bankruptcy … shall have any right to continue this Agreement or to in any way use the rights granted under this Agreement if [the Astros] or Network exercises its right of termination.” Id. §12.5(C). In addition, because the Media Rights Agreement may be assigned in the sale of the Network, the Astros bargained for the right to withhold consent to such a sale. General Partner Agreement § 5.10(a) & Schedule C(8).

The Network is managed on a day-to-day basis by Comcast Services pursuant to a Management Services Contract. Comcast Services is responsible for identifying prospective MVPDs and negotiating affiliation agreements with MVPDs interested in carrying and eligible to distribute the Network’s service, among other things. Comcast Management Services Agreement Attachment B(9). Since the launch of the Network, Comcast Services has asked the Network to consider a handful of informal proposals for affiliation agreements with lower base rates than those contained in the Comcast Affiliation Agreement,

The Astros have carefully considered each proposal, and in each case, modeled the financial impact of the proposal to determine whether the Network would be able to operate profitably as a result. The Astros concluded that the proposals would lock the Network into receiving low rates which would not allow the Network to operate profitably and would ultimately lead to the dilution of the Astros’ equity in the Network. The Astros’ objective has always been to enter into affiliation agreements that would result in a profitable Network, regardless of whether the base rates in those agreements were below the rates in the Comcast Affiliation Agreement. And, the Astros have always been, and continue to be, willing to entertain unprofitable affiliation agreements if limited to a short term so as to allow for the Network to renegotiate longer term profitable deals.

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When, however, Comcast put forward proposals with terms — and in particular, base rates — that would have resulted in the Network not being profitable, the Astros exercised their consent right. The Astros rejected such proposals because approving them would have harmed the Network and the Astros. If the Network were not profitable on its own, the partners (or a subset of them) would have had to contribute additional capital to the Network. If the Astros did not contribute their pro rata share of any such capital call, their equity interest in the Network would be diluted. If, on the other hand, the Astros made their capital contribution and preserved their equity interest, their net media rights fees would have been reduced, offsetting the very the fees owed to them under the Media Rights Agreement. Alternatively, Comcast could have loaned additional funds to the Network, which would have required the Astros to help service a substantial debt. Faced with that Hobson’s choice, the Astros instead informed Comcast that they would exercise their consent right, refuse to approve affiliation agreements on terms that led to an unprofitable Network, and in turn protect the Network and the Astros. See See Oct. 7, 2013 Decl. of Margaret Barradas ¶ 4 [Dkt. 64-3].

In its Trustee Motion, Comcast generally alludes to capital calls and restructuring proposals offered over the past several months but insinuates that the Astros’ exercise of their bargained-for contract rights has “thwarted all efforts to engage in any constructive exercise to salvage the Network.” Am. Trustee Mot. ¶ 26; see id. ¶¶ 26-30. Not so. In May 2013, the partners agreed to make capital contributions to the Network, payable in three installments. All three partners funded their pro rata share of the first two capital calls, and agreed that the Astros’ pro rata contributions for these two calls would be placed in a special account and set aside to make the upcoming media rights payments to the Astros. When it came time to fund the final installment, the Astros once again agreed to fund their pro rata share. But Comcast refused to

7

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fund its pro rata share unless all three partners agreed to fund. The Rockets elected to secure an appraisal of the Network prior to making a funding decision.

The Astros and Comcast have each offered multiple proposals to restructure and recapitalize the Network over the past several months, and senior executives from all three partners have met to discuss and advance the proposals. Those negotiations were still ongoing

— and actively underway — when the Petitioning Creditors interrupted them with the filing of the Involuntary Petition. On September 27, 2013, the Astros sent a detailed restructuring proposal and term sheet to Comcast officers for consideration. Although the Astros received electronic confirmation that their proposal was received by a senior Comcast officer, they received no response or counteroffer from Comcast. Instead, the four Petitioning Creditors — “each an affiliate of Comcast” — filed the Involuntary Petition against the Network. Am. Trustee Mot. ¶ 5; see Mot. Hr’g Tr. at 12.

Fifty-seven days after the Network failed to make its required July 31 media rights payment to the Astros, and one business day before the Astros were contractually permitted to terminate their Media Rights Agreement with the Network — Comcast Services, Comcast Lender, Comcast Media, and Comcast California improperly threw the Network into involuntary chapter 11 bankruptcy to prevent the Astros from terminating the agreement. At the same time, they filed a motion to appoint a trustee under Section 1104(a).

The Petitioning Creditors allege that there is “deadlock” at the Network, but the only purported deadlock identified in their Trustee Motion is that the Astros have exercised their consent rights with respect to affiliation agreement proposals that would have jeopardized the Network and the Astros’ interest in it. The Astros are unaware of any undisputed bona fide,

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noncontingent third-party claims that were due and owing at the time the Petitioning Creditors

filed the Involuntary Petition.

ARGUMENT

I.A TRUSTEE SHOULD NOT BE APPOINTED BECAUSE THE PETITION SHOULD BE DISMISSED.

The Court should deny the Trustee Motion because, as a threshold matter, the Petitioning

Creditors have improperly invoked the Court’s jurisdiction and filed an Involuntary Petition that should be dismissed. See Mot. to Dismiss. As set forth more fully in the Astros’ Motion to Dismiss, there are three reasons why the Court should dismiss Petitioning Creditors’ action altogether. First, the Petitioning Creditors cannot satisfy the basic requirements under Section 303 — that there be at least three holders of noncontingent, undisputed claims or that the Network is not generally paying its debts as they become due — to commence an involuntary chapter 11 action. Second, the Involuntary Petition is a bad-faith, collusive effort by Comcast to secure a tactical advantage to prevent the Astros from terminating their Media Rights Agreement and to acquire the Astros’ interest in the Network or to pressure the Astros to consent to long- term affiliation agreements that would have a lasting negative economic impact on the Network and the Astros. Third, a successful reorganization of the Network in bankruptcy is impossible because the key contracts at issue are personal services contracts involving fundamental intellectual property rights, which cannot be assumed or assigned without the Astros’ consent.

II.PETITIONING CREDITORS CANNOT DEMONSTRATE BY CLEAR AND CONVINCING EVIDENCE THAT APPOINTMENT OF A TRUSTEE IS WARRANTED.

A.The Strong Presumption Against Appointing Trustees In Chapter 11 Cases Can Only Be Rebutted By Clear And Convincing Evidence.

In a chapter 11 case, a trustee may only be appointed:

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(1)for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or similar cause …; or

(2)if such appointment is in the interests of creditors, any equity security holders, and other interests of the estate ….

11 U.S.C. § 1104(a); see In re Manda Ann Convalescent Home, Inc., No. 11-37950-H3-11, 2012 WL 2994422, at *4 (Bankr. S.D. Tex. July 20, 2012) (denying motion for trustee because there was “insufficient evidence of fraud, dishonesty, incompetence, [and] gross mismanagement,” and it was “not in the best interests of creditors”).

Appointing a trustee in a chapter 11 case is an “extraordinary remedy” and there is a “strong presumption” against it. Official Comm. of Unsecured Creditors of Cybergenics Corp. ex. rel. Cybergenics Corp. v. Chinery, 330 F.3d 548, 577 (3d Cir. 2003) (en banc) (internal quotations & citation omitted). As such, “[i]t is settled that appointment of a trustee should be the exception, rather than the rule.” In re The 1031 Tax Grp., LLC, 374 B.R. 78, 85 (Bankr. S.D.N.Y. 2007) (internal quotations & citation omitted). Petitioning Creditors have the burden of showing cause or the need for a trustee by clear and convincing evidence. See In re Tahkenitch Tree Farm P’ship, 156 B.R. 525, 527 (Bankr. E.D. La. 1993); In re G-I Holdings, Inc., 385 F.3d 313, 317-18 (3d Cir. 2004). “Evidence is clear and convincing when [it] produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established, evidence so clear, direct and weighty and convincing as to enable [the factfinder] to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue.” In re G-I Holdings, Inc., 295 B.R. 502, 507-508 (D.N.J. 2003), aff’d, 385 F.3d 313 (3d Cir. 2004) (internal quotations & citation omitted; alternations in original).

10

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B.Petitioning Creditors Cannot Demonstrate That There Is Cause To Appoint A Trustee Under Section 1104(a)(1).

Section 1104(a)(1) lists circumstances in which a trustee should be appointed for cause: “fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or similar cause.” 11 U.S.C. § 1104(a)(1). There is no contention that the Network’s management engaged in fraud, behaved dishonestly, favored insiders, or engaged in self-dealing. Nor is there any claim that the Network’s management is incompetent or that the Network is being grossly mismanaged. None of the enumerated reasons for appointing a trustee are present here. And no wonder. Comcast is responsible for the day-to-day management of the Network through the Management Services Agreement, and Comcast directors make up half the Board.

Instead, the Petitioning Creditors allege only one basis to appoint a trustee — that there are purported conflicts among the partners that have caused “total gridlock in … the Network’s management.” Am. Trustee Mot. ¶ 37. As set forth below, there is no gridlock in the management of the Network, only the Astros’ assertion of their bargained-for contractual rights in the partnership. The Petitioning Creditors cite a handful of cases to suggest that a trustee should be appointed in this case. But deciding whether to appoint a trustee is “fact intensive and the determination must be made on a case by case basis.” In re Sundale, Ltd., 400 B.R. 890, 900 (Bankr. S.D. Fla. 2009). The Court “must determine whether the totality of the circumstances warrant appointment of a trustee.” Id. That is particularly true in this case, where the allegations of misconduct in the cases cited by the Petitioning Creditors simply are not present. There are no claims of mismanagement or distrust in current management that would justify the appointment of a trustee, only a good faith business dispute about whether the Astros are entitled to exercise

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their bargained-for contractual rights. A trustee should not be used as a pretense to displace

binding corporate governance agreements.

C.Petitioning Creditors Cannot Demonstrate That Appointing A Trustee Would Be In The Best Interests Of The Creditors And Equity Holders Under Section 1104(a)(2).

Similarly, a trustee would not be in the best interests of creditors and equity holders as required under Section 1104(a)(2). There are three stakeholders in the Network — the Astros and the Rockets, which are equity holders, and Comcast, which is both an equity holder and lender. Other than ordinary course accounts payable (which the Astros and Comcast have agreed to backstop), the Network has no unaffiliated third-party creditors.5 Because the interests of unaffiliated creditors are not at risk, there are no outside interests for a trustee to protect from any alleged conflicts or deadlock in the Network’s governance.

The “central purpose” of Comcast’s Involuntary Petition was to prevent the Astros from exercising their contractual right to terminate their Media Rights Agreement with the Network. Am. Trustee Mot. ¶ 6. To protect itself from the potential termination — for which Comcast Lender failed to obtain security at the negotiating table — Comcast now asks the Court to appoint a trustee to facilitate Comcast’s plan of effectively transferring the Astros’ media rights, through the Network, to Comcast Lender. Id. ¶ 7. Appointing a trustee to reorganize the partnership and rewrite partnership rights as Comcast proposes would not serve the interests of all parties, but would merely advance Comcast’s interests over those of its partners.

Comcast claims that a trustee would serve the partners’ interests by resolving a “debilitating deadlock,” id. at 1, in the Network’s management and unlocking the Network’s

5See Sept. 30, 2013 G. Kibbe to Network General Manager (“[T]he Astros Member is prepared to backstop the payments of the prepetition claims of third-party creditors listed on the Company’s accounts payable reports dated as of September 24, 2013 that are not affiliates, subsidiaries, or otherwise related to the Board Members.”); Am. Trustee Mot. ¶ 7 (stating that a Comcast buyout “would likely lead to full payment of all pre- petition creditors’ claims and all reasonably foreseeable administrative expenses”).

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“substantial value that is currently locked up as a result of the dysfunction in [the Network’s] governance structure,” id. ¶ 8. But there is no “debilitating deadlock” in the day-to-day management of the Network. As the Petitioning Creditors freely admitted in their original Trustee Motion, “[p]ursuant to the relevant agreements governing the Network and its General Partner, many significant decisions regarding the management, finances, and operations of the Network require the consent of all three parties” to the partnership. Original Trustee Mot. ¶ 4. That is precisely what the partners bargained for.

What Comcast now disparages as “dysfunction,” “deadlock,” and “gridlock” is nothing more than the Astros’ assertion of their bargained-for voting rights in the partnership. See TravelCenters of Am., LLC v. Brog, No. 3516-CC, 2008 WL 1746987, at *1 (Del. Ch. Apr. 3, 2008). In the valid exercise of their business judgment and in compliance with the terms of the General Partner Agreement, the Astros indicated that they would withhold their consent from inchoate affiliation agreements which would lock the Network into long-term bad deals. Barradas Decl. ¶ 4; Hilco Capital, LP v. Fed. Ins. Co., 978 A.2d 174, 178-79 (Del. 2009) (insurer did not breach covenant of good faith and fair dealing by refusing to consent to settlement reached in action against insureds); Cypress Assocs., LLC v. Sunnyside Cogeneration Assocs. Project, No. 1607-N, 2006 WL 668441, at *10 (Del. Ch. Mar. 8, 2006) (“The implied covenant of good faith and fair dealing does not exist as a license for the judiciary to rewrite contracts ….”). The parties’ extensively negotiated contracts should be respected as a matter of contract and Delaware law. See Related Westpac LLC v. JER Snowmass LLC, No. 5001-VCS, 2010 WL 2929708, at *6 (Del. Ch. July 23, 2010) (refusing to “imply a [reasonableness] condition into the consent right [party] was given as to actions constituting Material Actions that was expressly excluded by the terms of the contract!”); Superior Vision Servs., Inc. v. ReliaStar Life Ins. Co.,

13

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No. 1668-N, 2006 WL 2521426, at *6 (Del. Ch. Aug. 25, 2006) (“A court should not read a reasonableness requirement into a contract entered into by two sophisticated parties.”) (internal quotations & citation omitted).

The Limited Partnership Agreement and General Partner Agreement are governed by the Delaware Limited Partnership Act and Delaware Limited Liability Company Act, respectively. Delaware limited liability companies and limited partnerships are creatures of contract, designed to afford the maximum amount of freedom of contract, private ordering, and flexibility to the parties involved. See Del. Code Ann. tit. 6, § 18-1101(b) (“It is the policy of this chapter to give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements.”); Del. Code Ann. tit. 6, § 17-1101(c) (same, with respect to limited partnership agreements).

Delaware law governing corporations is entirely different than the law governing limited liability companies and limited partnerships. In the context of a Delaware corporation, any act in furtherance of a plan of reorganization or any order of a bankruptcy court may be taken by any officer of a debtor as if taken by unanimous action of the directors and shareholders of the corporation. Del. Code Ann. tit. 8, § 303 (“Any corporation of this State, an order of relief with respect to which has been entered pursuant to the Federal Bankruptcy Code, ... may put into effect and carry out any decrees and orders of the court[.]”). The Delaware Limited Partnership Act and Delaware Limited Liability Company Act, in contrast, do not contain any such provisions and, combined with the policy of giving maximum effect to the principle of freedom of contract, that silence has significant meaning. See Twin Bridges Ltd. P’ship v. Draper, No. 2351-VCP, 2007 WL 2744609, at *19 (Del. Ch. Sept. 14, 2007) (“Because the conceptual underpinnings of the corporation law and Delaware’s [alternative entity] law are different, courts

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should be wary of uncritically importing requirements from the DGCL into the [alternative entity] context.”); see also CML V, LLC v. Bax, 6 A.3d 238, 249 (Del. Ch. 2010) (“there is nothing absurd about different legal principles applying to corporations and LLCs”), aff’d, 28 A.3d 1037 (Del. Super. Ct. 2011).

Comcast, the Rockets, and the Astros could have chosen to allow a simple majority of the directors to approve affiliation agreements and authorize a chapter 11 filing, or even a vote of three out of four. They also could have negotiated a provision allowing for a trustee or other party to override the consent requirement in bankruptcy, but they chose not to. Instead, they specifically elected to have such material actions require unanimous consent and this Court should give maximum effect to that decision. See Limited Partnership Agreement Schedule C.

To be sure, Comcast and the Astros do have an intra-partnership business dispute about whether the Network should enter into certain affiliation agreements. The partners contemplated the possibility that they would not always agree, and they chose to contract for mechanisms to deal with some of those situations but not others. For example, if the Network has not entered into affiliation agreements on the anniversary of the Network’s launch date, then the Rockets and the Astros may enter into certain affiliation agreements without Comcast’s consent. See Key Distributor Side Letter ¶ 1. Notably, the partners chose not to allow Comcast to override the teams’ consent to enter into affiliation agreements. And there is no mechanism in place to force either the Rockets or the Astros to accept long-term media rights transactions that they do not believe are in their best interests.

The Limited Partnership Agreement, the General Partner Agreement, and the Media Rights Agreements establish an intricate set of checks and balances by which Comcast, the Astros, and the Rockets agreed to abide. If the Network’s business can no longer be carried on

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in conformity with those agreements, Delaware law authorizes the partners to dissolve their partnership and wind up the business — not to have a third-party trustee rewrite the partners’ agreements without consent. See Del. Code Ann. tit. 6, § 17-802 (“On application by or for a partner, the Court of Chancery may decree dissolution of a limited partnership whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement.”); see also Del. Code Ann. tit. 6, § 18-802 (same, with respect to limited liability companies); Limited Partnership Agreement § 17.2; General Partner Agreement § 15.2. So long as there is not a significant class of unsecured creditors that remains unpaid, there is no legal or moral imperative preventing partners — if ultimately unable to reach fundamental agreements on the direction of their partnership — from going their separate ways.

Comcast’s allegations of conflicts and deadlock are a smokescreen, designed to hide what is really going on here. Comcast orchestrated a collusive involuntary bankruptcy filing and is attempting to recast the valid exercise of bargained-for contract rights as a deadlock. Comcast seeks the appointment of a trustee to facilitate its plan to acquire the Network’s assets and the Astros’ media rights without the Astros’ consent. Using the bankruptcy process and the specter of a trustee, Comcast seeks to rewrite its loan agreement to provide for security in the Astros’ media rights or an agreement that the Astros would not terminate that agreement. Comcast seeks to prevent the dissipation of one asset — the Network’s rights under the Astros’ Media Rights Agreement — by preventing the Astros from exercising their undisputed contractual right to terminate that agreement. In this case, there is absolutely no justification to appoint a trustee to circumvent Delaware law and the agreements by which sophisticated parties agreed to be bound.

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III.PETITIONING CREDITORS CANNOT DEMONSTRATE THAT APPOINTMENT OF A TRUSTEE WILL FACILITATE THE NETWORK’S REORGANIZATION.

The Trustee Motion should be denied because the appointment of a trustee would serve

no purpose. The Astros’ Media Rights Agreement and the Limited Partnership Agreement prohibit a trustee from doing what the Petitioning Creditors seek to accomplish in this involuntary bankruptcy. Bankruptcy courts have refused to appoint a trustee under Section 1104(a) where, as here, the trustee would serve no legitimate purpose. See In re Swann Land LLC, No. 07-33181, 2007 WL 4146680, at *3 (E.D. Tenn. 2007) (denying application for appointment of trustee where “replacement of the Debtors’ management in favor of a chapter 11 trustee … would not remedy the problem [] that Debtors are not represented by [legal] counsel”);

In re Rutenberg, 158 B.R. 230, 231 (Bankr. M.D. Fla. 1993) (refusing to appoint an examiner under §1104(b) because it would serve no valid purpose); In re Manda Ann Convalescent Home, Inc., 2012 WL 2994422, at *4 (chapter 11 trustee request denied where “trustee would be constrained … and would have no option but to immediately seek conversion [to chapter 7] or dismissal [of the action]”).

Comcast has one of two goals in reorganization: (1) to have the Astros’ Media Rights Agreement assumed and then assigned to Comcast through an acquisition; or (2) to override the Astros’ consent rights and force the Network to enter into affiliation agreements at rates that undervalue the Astros’ media rights.6 A trustee is barred from pursuing such goals for multiple reasons. First, the Astros may immediately terminate their Media Rights Agreement if a trustee

6See Sept. 28, 2013 Original Trustee Mot. ¶ 4 (“[T]he Astros have repeatedly made clear that they would not permit the Network to enter into critical distribution agreements … with distributors for carriage of the Network’s Service at rates and terms less favorable to the Network than those agreed among the partners at the time the parties agreed to create the Service.”); id. ¶ 7 (Comcast Lender, “the Network’s secured lender, believes the Network’s assets have meaningful value, and would be prepared to make a bid to acquire either the Network (under a plan of reorganization) or substantially all of its assets.”).

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is appointed. Second, the Bankruptcy Code prohibits any assignment of the Media Rights Agreement and the Network Operating Agreements because they are personal services contracts, and the Media Rights Agreement is a trademark license. Third, even if those agreements could be assigned, the Network Operating Agreements must be assumed in whole — including the Astros’ consent rights. Thus, even if a trustee assigned those agreements, they would remain subject to the Astros’ consent rights. Finally, neither a trustee nor the Network as debtor in possession can propose a confirmable plan of reorganization because the Network’s existing debt structure does not contain a potential impaired accepting class as required by Section 1129(a)(10) of the Bankruptcy Code.

A.The Astros Can Terminate The Media Rights Agreement Upon Appointment Of A Trustee.

The Astros’ Media Rights Agreement provides the Astros, “at [their] sole election,” an

immediate right to terminate the Agreement if a “trustee is appointed for [the] Network,” or if

the “Network … makes an assignment for the benefit of its creditors,” regardless of whether the

trustee attempts to assign the Media Rights Agreement. Astros’ Media Rights Agreement

§ 12.5(C). The agreement the provides:

For the avoidance of doubt, no assignee of any assignment for the benefit of creditors or a … trustee in bankruptcy … shall have any right to continue this Agreement or to in any way use the rights granted under this Agreement if [the Astros] exercise[] [their] right of termination ….

Id. Although so-called ipso facto provisions are generally unenforceable, the Bankruptcy Code

creates an exception if “applicable law excuses [the non-debtor party] from … rendering

performance to the trustee or to an assignee of such contract.” 11 U.S.C. § 365(e)(2)(A)(i). That

exception applies here because, as explained in the Motion to Dismiss, the Astros’ Media Rights

Agreement is a personal services contract and a trademark license — neither of which can be

assigned under Delaware law. See Mot. to Dismiss at 30-32.

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B.Section 365(c)(1) Prevents A Trustee From Assigning The General Partner Agreement, The Limited Partnership Agreement, And The Astros’ Media Rights Agreement.

Even if the Astros’ Media Rights Agreement did not contain this termination right, the Bankruptcy Code independently bars assignment of both the Media Rights Agreement and the Network Operating Agreements. Section 365(c)(1) prohibits a trustee from assuming or assigning a contract where, as here, the “law excuses [the non-debtor party] from accepting performance from or rendering performance to an entity other than the debtor or the debtor in possession.” See 11 U.S.C. § 365(c)(1)(A). These protections in the Bankruptcy Code “prevent a trustee from forcing a party to … provide performance to[] someone other than the party with whom it contracted in those situations where the identity of the party is central to the obligation itself.” In re Lil’ Things, Inc., 220 B.R. 583, 590 (Bankr. N.D. Tex. 1998) (internal quotations & citation omitted).

Executory contracts, contracts for personal services, and trademark licenses are not assignable to third parties. The Astros’ Media Rights Agreement, the General Partnership Agreement, and the Limited Partnership Agreement are executory contracts, because they contemplate ongoing and substantial performance by all parties, including the operation of a regional sports network and sublicensing of media rights. See N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513, 522 n.6 (1984). Additionally, because they were entered into based upon the parties’ particular skill and expertise, they are also personal services contracts that cannot be assumed or assigned by a bankruptcy trustee as a matter of law. See In re Lil’ Things, Inc., 220 B.R. at 590; In re Harms, 10 B.R. 817, 821-22 (Bankr. D. Colo. 1981) (because a partnership agreement is “a contract based upon personal trust and confidence,” it cannot be assumed or assigned by a bankruptcy trustee). Further, the Astros’ Media Rights Agreement is a non- assignable trademark license. See Astros’ Media Rights Agreement § 5.5(A); In re Travelot Co.,

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286 B.R. 447, 455 (Bankr. S.D. Ga. 2002). At bottom, the Astros’ intellectual property rights and their obligation to perform a personal service — i.e., play baseball — cannot be assigned to a third-party trustee. See generally Mot. to Dismiss at 25-31.

A trustee would be a third party for purposes of the assignment of these agreements. “Section 365(c)(1) states that ‘[t]he trustee may not assume or assign ….’ [and] th[at] prohibition applies on its fact to the ‘trustee.’” In re Footstar, Inc., 323 B.R. 566, 570-71 (Bankr. S.D.N.Y. 2005) (quoting 11 U.S.C. § 365(c)(1) (emphasis in original). “[T]he debtor and the trustee in a Chapter 11 case are entirely different parties.” Id.; see also In re Swann Land LLC, 2007 WL 4146680, at *4 (“When a Chapter 11 trustee is appointed, the trustee and the debtor are not the same party nor do they necessarily share the same interests.”). Comcast cannot force the Astros to assign their intellectual property rights or to perform personal services under these agreements for an entirely different entity than the Network.

C.The Astros’ Consent Rights May Not Be Stripped By A Plan Of Reorganization.

Even if a trustee could assume these agreements (it could not), it is a fundamental principle of bankruptcy law that “[a]n executory contract may not be assumed in part or rejected in part.” 3 Collier on Bankruptcy ¶ 365.03[3] (16th ed. 2013). This complete assumption requirement means that a trustee could not assume the Network’s operating agreements without including the right to approve long-term affiliation agreements, General Partner Agreement §5.10(a) & Schedule C(10), and modify the terms of the Astros’ Media Rights Agreement, id. Schedule C(11). See Limited Partnership Agreement § 6.8 (expressly incorporating consent rights of the General Partner Agreement); In re Rachels Indus., 109 B.R. 797, 803-804 (Bankr. W.D. Tenn. 1990); see also Mot. to Dismiss at 28-30.

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D.There Is No Potential Impaired Accepting Class To Confirm A Plan Of Reorganization.

Nor could a trustee propose a confirmable plan of reorganization because the Network’s existing debt structure does not contain a potential impaired accepting class as required by Section 1129(a)(10) of the Bankruptcy Code. See 11 U.S.C. § 1129(a)(10). To confirm a plan of reorganization, a debtor must satisfy each of the elements of Section 1129. See, e.g., In re Williams, 850 F.2d 250, 253 (5th Cir. 1988). Pursuant to that section, at least one impaired accepting class must vote to accept the proposed plan, and, for purposes of determining acceptance, votes by “insider[s]” are not counted. See 11 U.S.C. § 1129(a)(10). The Network’s capital structure divides its creditors into just three potential classes of claims and interests: (i) holders of secured claims under the Comcast Credit Agreement, consisting of Comcast Lender; (ii) holders of general unsecured claims; and (iii) holders of equity interests, i.e., the Astros, the Rockets, and Comcast. None of these classes would be entitled to vote on a plan of reorganization.

The votes of two of these three classes would not be counted for confirmation purposes because the Astros, the Rockets, Comcast, and Comcast Lender are all “insiders” within the meaning of Section 1129(a)(10). See id. Section 101(31)(C) states that when the debtor is a partnership, an insider includes any “general partner of … the debtor.” 11 U.S.C. § 101(31)(C). Section 101(31)(E) further extends the definition of “insider” to include an “affiliate, or insider of an affiliate as if such affiliate were the debtor.” 11 U.S.C. § 101(31)(E). The Astros, the Rockets, and Comcast control the Network through the General Partner, each are Limited Partners of the Network and serve on the Board, and each are equity owners of the General Partner. As such, the Astros, the Rockets, and Comcast are insiders under Section 101(31)(C).

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Members of the remaining class, the holders of general unsecured claims, would also not be entitled to vote because there is no good faith basis for any proposed plan of reorganization to impair their claims. Not only is the Network able to pay its debts as they come due, but both Comcast and the Astros acknowledge that unsecured creditors will be paid in full in the ordinary course (by Comcast, the Astros, or otherwise),7 and there is no good faith reorganization purpose for delaying any payments to such creditors. Courts have consistently held that creating an impaired class solely for the purpose of gerrymandering votes constitutes a lack of good faith under Section 1129(a)(3). In re Windmill Durango Office, LLC, 481 B.R. 51, 68 (BAP 9th Cir. 2012) (“creation of an impaired class in an attempt to gerrymander a voting class of creditors is indicative of bad faith”) (internal quotations & citation omitted); In re Combustion Eng’g, Inc., 391 F.3d 190, 246 (3d Cir. 2004) (“[T]he good faith requirement [of Section 1129(a)(3)] provides an additional check on a debtor’s intentional impairment of claims.”); In re Dunes Hotel Assocs., 188 B.R. 174, 183 (Bankr. D.S.C. 1995) (solvent debtor could not create impaired accepting class by opting to delay payment to certain creditors).8 Accordingly, there are no general unsecured claims entitled to vote on a proposed plan of reorganization.

7See Am. Trustee Motion ¶ 7; Sept. 30, 2013 Letter G. Kibbe to Network General Manager; Mot. to Dismiss at 16-18.

8Although In re Village at Camp Bowie I, L.P., 710 F.3d 239 (5th Cir. 2013), held that artificial impairment in the form of a three-month delayed payment could constitute impairment where it served a valid reorganization purpose, because the Astros have agreed to backstop all third-party creditors and to ensure they are paid in full in cash on the effective date, the decision is inapposite. There is no legitimate business purpose for delaying payment to unsecured creditors, and unsecured creditors must be deemed unimpaired.

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CONCLUSION

For the foregoing reasons, the Astros respectfully request that the Court deny Petitioning

Creditors’ Motion for Appointment of a Chapter 11 Trustee.

Dated: October 15, 2013

 

 

/s/ Elizabeth M. Locke

Harry A. Perrin

Paul M. Basta, P.C. (pro hac vice)

Duston K. McFaul

Marc Kieselstein, P.C. (pro hac vice)

VINSON & ELKINS LLP

David S. Meyer (pro hac vice)

1001 Fannin Suite 2500

KIRKLAND & ELLIS LLP

Houston, Texas 77002

601 Lexington Avenue

Telephone: (713) 758-2548

New York, New York 10022

Facsimile: (713) 615-5016

Telephone: (212) 446-4800

hperrin@velaw.com

Facsimile: (212) 446-4900

dmcfaul@velaw.com

paul.basta@kirkland.com

 

marc.kieselstein@kirkland.com

 

david.meyer@kirkland.com

 

Jeffrey S. Powell (pro hac vice)

 

Thomas A. Clare, P.C. (pro hac vice)

 

Elizabeth M. Locke (pro hac vice)

 

KIRKLAND & ELLIS LLP

 

655 Fifteenth Street, N.W.

 

Washington, D.C. 20005

 

Telephone: (202) 879-5000

 

Facsimile: (202) 879-5200

 

jeff.powell@kirkland.com

 

thomas.clare@kirkland.com

 

elizabeth.locke@kirkland.com

 

Counsel for Houston Astros, LLC, Astros

 

HRSN GP Holdings LLC and Astros HRSN

 

LP Holdings LLC

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 29 of 32

CERTIFICATE OF SERVICE

I hereby certify that a true and accurate redacted copy of the foregoing Houston Astros’

Opposition to Petitioning Creditors Motion’ For Appointment of a Chapter 11 Trustee was filed

electronically on this 15th day of October 2013. Notice of the redacted filing will be sent to, and

can be accessed by, the following parties via the Court’s electronic filing system, or via U.S.

Mail where noted:

 

Howard M. Shapiro

Timothy Graulich

Craig Goldblatt

Dana M. Seshens

WILMER CUTLER PICKERING HALE

Arthur J. Burke

AND DORR LLP

DAVIS POLK &WARDWELL LLP

1875 Pennsylvania Ave., N.W.

450 Lexington Avenue

Washington, D.C. 20006

New York, NY 10017

Telephone: (202) 663-6000

Telephone: (212) 450-4000

Facsimile: (202) 663-6363

Facsimile: (212) 701-5352

howard.shapiro@wilmerhale.com

timothy.graulich@davispolk.com

craig.goldblatt@wilmerhale.com

dana.seshens@davispolk.com

 

arthur.burke@davispolk.com

Counsel for Petitioning Creditors

Counsel for Petitioning Creditors

George W. Shuster, Jr.

Vincent P. Slusher

Sanket J. Bulsara

DLA PIPER

WILMER CUTLER PICKERING HALE

1717 Main Street

AND DORR LLP

Suite 4600

7 World Trade Center

Dallas, Texas 75201-4629

250 Greenwich Street

Telephone: (214) 743-4500

New York, NY 10007

Facsimile: (972) 813-6267

Telephone: (212) 230-8800

vince.slusher@dlapiper.com

Facsimile: (212) 230-8888

 

george.shuster@wilmerhale.com

 

sanket.bulsara@wilmerhale.com

 

Counsel for Petitioning Creditors

Counsel for Petitioning Creditors

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 30 of 32

Alan S. Gover

Douglas K. Mayer

WHITE & CASE LLP

WACHTELL LIPTON, ROSEN & KATZ

1155 Avenue of the Americas

51 West 52nd Street,

New York, New York 10036-2787

New York, New York 10019

Telephone: (212) 819-8200

Telephone: (212) 403-1000

Facsimile: (212) 354-8113

Facsimile: (212) 403-2000

agover@whitecase.com

DKMayer@wlrk.com

Counsel for Houston Rockets

Counsel for Rocket Ball Ltd.

Roberto J. Kampfner, Esq.

Office of the US Trustee

White & Case LLP

515 Rusk Ave

633 West Fifth Street, Suite 1900

Suite 3516

Los Angeles, CA 90071-2007

Houston, TX 77002

Telephone: (213) 620-7729

Telephone: (713) 718-4650

Facsimile: (213) 452-2329

 

rkampfner@whitecase.com

 

Counsel for Houston Rockets

U.S. Trustee

Michael D. Warner

Christopher J. Panos

COLE, SCHOTZ, MEISEL, FORMAN &

CRAIG AND MACAULEY, PC

LEONARD, P.A.

Federal Reserve Plaza

301 Commerce Street, Suite 1700

600 Atlantic Avenue

Fort Worth, TX 76102

Boston, MA 02210

Telephone: (817) 810-5250

Telephone: (617) 367-9500

Facsimile: (817) 810-5255

Facsimile: (617) 742-1788

mwarner@coleschotz.com

panos@craigmacauley.com

Counsel for Creditor Game Creek Video, LLC

Counsel for Creditor Game Creek Video, LLC

US Mail:

Houston Regional Sports Network, L.P. d/b/a Octane Sports, LP

c/o its Registered Agent CT Corporation System

350 N. St. Paul Street, Suite 2900 Dallas, Texas 75201

Alleged Debtor

US Mail:

Houston Regional Sports Network, L.P. d/b/a Octane Sports, LP

1201 San Jacinto, Suite 200 Houston, Texas 77002

Fax No. (713) 457-9105

Email: legal@comcastsportsnet.com

Alleged Debtor

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 31 of 32

I further certify that a true and accurate unredacted copy of the foregoing Houston

Astros’ Opposition to Petitioning Creditors Motion’ For Appointment of a Chapter 11 Trustee

was hand-delivered to the Court and was served on all parties listed below via electronic mail, or

via U.S. Mail where noted, on this 15th day of October 2013:

Howard M. Shapiro

Timothy Graulich

Craig Goldblatt

Dana M. Seshens

WILMER CUTLER PICKERING HALE

Arthur J. Burke

AND DORR LLP

DAVIS POLK &WARDWELL LLP

1875 Pennsylvania Ave., N.W.

450 Lexington Avenue

Washington, D.C. 20006

New York, NY 10017

Telephone: (202) 663-6000

Telephone: (212) 450-4000

Facsimile: (202) 663-6363

Facsimile: (212) 701-5352

howard.shapiro@wilmerhale.com

timothy.graulich@davispolk.com

craig.goldblatt@wilmerhale.com

dana.seshens@davispolk.com

 

arthur.burke@davispolk.com

Counsel for Petitioning Creditors

Counsel for Petitioning Creditors

George W. Shuster, Jr.

Vincent P. Slusher

Sanket J. Bulsara

DLA PIPER

WILMER CUTLER PICKERING HALE

1717 Main Street

AND DORR LLP

Suite 4600

7 World Trade Center

Dallas, Texas 75201-4629

250 Greenwich Street

Telephone: (214) 743-4500

New York, NY 10007

Facsimile: (972) 813-6267

Telephone: (212) 230-8800

vince.slusher@dlapiper.com

Facsimile: (212) 230-8888

 

george.shuster@wilmerhale.com

 

sanket.bulsara@wilmerhale.com

 

Counsel for Petitioning Creditors

Counsel for Petitioning Creditors

Alan S. Gover

Douglas K. Mayer

WHITE & CASE LLP

WACHTELL LIPTON, ROSEN & KATZ

1155 Avenue of the Americas

51 West 52nd Street,

New York, New York 10036-2787

New York, New York 10019

Telephone: (212) 819-8200

Telephone: (212) 403-1000

Facsimile: (212) 354-8113

Facsimile: (212) 403-2000

agover@whitecase.com

DKMayer@wlrk.com

Counsel for Houston Rockets

Counsel for Rocket Ball Ltd.

Case 13-35998 Document 91 Filed in TXSB on 10/15/13 Page 32 of 32

Roberto J. Kampfner, Esq. White & Case LLP

633 West Fifth Street, Suite 1900 Los Angeles, CA 90071-2007 Telephone: (213) 620-7729 Facsimile: (213) 452-2329 rkampfner@whitecase.com

Counsel for Houston Rockets

via U.S. Mail:

Houston Regional Sports Network, L.P. d/b/a Octane Sports, LP

1201 San Jacinto, Suite 200 Houston, Texas 77002

Fax No. (713) 457-9105

Email: legal@comcastsportsnet.com

Alleged Debtor

via U.S. Mail:

Houston Regional Sports Network, L.P. d/b/a Octane Sports, LP

c/o its Registered Agent CT Corporation System

350 N. St. Paul Street, Suite 2900 Dallas, Texas 75201

Alleged Debtor

/s/ Elizabeth M. Locke

Elizabeth M. Locke. (pro hac vice)