Exterior photo of JPMorgan Chase & Co.’s new downtown Nashville branch Thursday, July 9, 2020. Nas Chase Bank Branches 09

Attorneys for the Diamond Sports Group have subpoenaed JPMorgan Chase as part of the company’s bankruptcy process.

Per Sportico, Diamond’s attorneys are seeking information about “the bank’s relationship with Diamond Sports and Sinclair Broadcasting Group.”

Here’s more from the story.

JPMorgan acquired preferred equity in Diamond Sports as part of Sinclair’s debt-heavy financing of its 2019 acquisition of the regional sports networks from Walt Disney Co. The investment bank paid $1.025 billion for the preferred shares. Sinclair bought back many of the units in 2019 and 2020, and then paid JPMorgan $190 million in mid-February to redeem the final batch of shares. This redemption was at a slight discount to face value.

Diamond Sports skipped a payment to debtors three business days after the transaction, triggering a 30-day grace period that ended with Diamond Sports entering Chapter 11 bankruptcy restructuring on March 14.

The preferred shares allowed Sinclair to redeem the equity at will; Sinclair also promised JPMorgan’s preferred equity would be paid back. That means even though the bankruptcy will wipe out all equity in Diamond Sports, including Sinclair’s, JPMorgan was nearly made completely whole on its investment.

Topics of testimony listed in the subpoena include “Any concerns [JPMorgan] has regarding [Diamond Sports’] ability to repurchase JPM’s Preferred Units or pay associated dividends” and “JPM’s request for and procurement of an indemnity from Sinclair with respect to the redemption of JPM’s Preferred Shares or the payment of associated dividends [and] JPM’s relationship with Sinclair, including any fees JPM has or expects to collect on account of its relationship with Sinclair.”

So much of the Diamond bankruptcy process has been focused on the company’s media rights deals with teams, carriers dropping the Bally Sports RSNs, and general struggles amidst the greater RSN landscape. But there are a lot of other, less-reported issues at play here related to the management of the company in recent years, and those issues will likely end up being an important part of the bankruptcy going forward.

[Sportico]

About Joe Lucia

I hate your favorite team. I also sort of hate most of my favorite teams.