Diamond Sports Group Obtains Court Approval of Chapter 11 Plan

Paul, Weiss obtained court approval for Diamond Sports Group’s plan of reorganization under chapter 11, positioning the company to reduce its outstanding debt from nearly $9 billion to $200 million and exit bankruptcy in the coming weeks. Diamond, which does business as FanDuel Sports Network, is the nation’s largest owner of regional sports networks.

Diamond filed for bankruptcy in March 2023 and subsequently entered into a restructuring support agreement with the company’s creditors that would eliminate the vast majority of its outstanding debt, separate its business from its parent company Sinclair Broadcast Group, and position the company to expand its direct-to-consumer offerings to address changing consumer preferences as consumers move away from traditional cable and satellite offerings. Diamond also settled a lawsuit it commenced against Sinclair for approximately $495 million, which will be used to support the restructuring.

Over the past 18 months, Diamond has strengthened its business by reaching revised multi-year rights agreements with team and league partners, go-forward carriage agreements with major distribution partners, a broad naming rights partnership with FanDuel and a commercial agreement with Amazon. Upon emergence from bankruptcy, the company will be well capitalized with more than $100 million in cash and cash equivalents on its balance sheet. Diamond will operate as a standalone entity, having already completed its operational separation from Sinclair, and will be home to a combined 27 NBA, NHL and MLB teams.

At the confirmation hearing, U.S. Bankruptcy Judge Christopher Lopez of the Southern District of Texas, who approved the plan, described the proceedings as “a model of the way cases, in my opinion, should be run.”

The Paul, Weiss team includes restructuring partners Brian Hermann, Joseph Graham and Lauren Bilzin; litigation partners William Clareman, Gregory Laufer, Randy Luskey and Andre Bouchard and counsel Yotam Barkai, Jonathan Hurwitz, Matthew Stachel and Audrey Paquet; corporate partners Jeffrey Marell, David Huntington, Charles Pesant, Megan Spelman and Kristiina Leskinen and counsel Mary-Ann Awada, Hilary Christian, David Sobel and Jason Tyler; tax partner Brian Krause; executive compensation partner Rebecca Coccaro and counsel Jake Glazeski; intellectual property and entertainment partner Chuck Googe and counsel Brianna van Kan; real estate partner Peter Fisch and counsel Ruobing Chen and Ida Nowaid; and antitrust counsel Todd Hahn.