A Probate Fight, Thunder, & Creditors

The OKC Thunder’s season isn’t over, it’s just moved to another court – Probate. Fresh off their almost historic playoff run – beating the historically good Spurs, taking the historically great Warriors to a seventh game – the team, Oklahoma’s only professional sports team – is embroiled in a probate fight that could have long term consequences far beyond the standings.

In March, a day after being indicted on federal antitrust charges, the oil and gas executive Aubrey McClendon was killed in a fiery car crash in Oklahoma City. McClendon had had a tough couple of years, financially, with the diminution of his oil and fracking businesses, and low oil prices.

The one asset he had that was not affected by the oil economy was his 20% interest in the Oklahoma City Thunder. The team is valued at about $950 million. The estate’s other significant assets are in commodities and, as such, in a constant state of flux. They may be worthless, they may be worth a small fortune tomorrow, no one knows.

This is, of course, not unusual, it can be quite challenging to value many assets in many estates. The probate judge sealed the case and will not allow any details of what the estate’s assets are, a precaution the executor – one of McClendon’s corporate attorneys – requested, the better to protect the value of the assets in a volatile market.

So far, nothing that far out of the ordinary.

The thing that complicates the estate, immensely, is this: McClendon took a large loan from Wilmington Trust and pledged his Thunder ownership as collateral. His death accelerated the loan, it’s due in full. Now.

And that is a problem. His widow wants to take over his ownership. The NBA has to approve any transfer of shares in the team. The bank wants the stock and doesn’t want to wait for the normal probate process to unfold . . .

. . . probably for good reason. The Thunder are in one of the smallest markets of any U.S. based professional sports organization. They just had a great playoff run but their best player, Kevin Durant, is a free agent and will probably be priced well beyond the Thunder’s ability to pay.

The Thunder have been Forbes magazine’s poster child for the travails of small market sports teams in article after article. Rumors of them being lured away to a bigger market have been floating for years. They would be paid a fortune to do so. McClendon was the driving force behind luring the Seattle Sonics to Oklahoma in 2008, it’s hard to believe his wife would want her husband’s legacy to the city to relocate.

They will not be the same team next year; they probably don’t have the resources to sign their other free agents. So, the value of the team has never been higher than it is this morning, hours after taking the team with the most wins in NBA history to a seventh game.

It’s hard to believe the bank wouldn’t want to maximize the value of the Thunder. The aims of everyone with an interest in the estate couldn’t be more diverse. The bank certainly thinks so, they are attempting to become part of the probate process well in advance of the day for filing by creditors. And, remember, the NBA is out there, with final approval over stock ownership via a pre-existing contract.

An unexpected death, business interests of indeterminable value, competing interests, conflicts of interests, contract law, creditors, and so much more are going on here – and will be for months as a pretty nasty probate fight is brewing. We’ll be following this as it goes because despite the dollars involved and the high profile, it is a perfect picture of what we do every day.

If any of this seems familiar, or if you are about to go through a probate fight of your own, please feel free to call a member of our team and schedule a consultation with our office.