The legal drama keeps ramping up for the bankrupt Diamond Sports Group.
Having already made a $1.5 billion fraud claim against corporate parent Sinclair Inc, DSG has now filed a second lawsuit alleging Sinclair didn’t act alone.
DSG has sued JPMorgan Chase in a separate case in U.S. bankruptcy court in Texas, alleging it aided Sinclair in funneling $922 million in dividend payments from DSG to the financial services firm and collected an additional $245 million in fees — all while DSG was swiftly heading toward insolvency.
“[JPMorgan Chase] was aware that DSG was insolvent, unable to pay its debts as they came due, or inadequately capitalized … and thus knew it was being enriched and benefitted at the expense of DSG and its creditors,” DSG said in the newly unsealed complaint.
DSG is seeking recovery of at least the $922 million, plus interest and damages. The core of the dispute stems from preferred equity units in DSG issued to JPMorgan Chase as part of Sinclair’s 2019 purchase of the regional sports network business from the Walt Disney Co.
Formal responses to DSG’s claims have yet to be made public, but Sinclair has already said it’s “effectively subsidizing Diamond’s litigation” against it through a now-contested management services agreement.
DSG, which continues to face mounting legal, financial, and operational pressures, has been granted judicial mediators to help deal with various demands from creditors, leagues, teams, and distributors — while also facing critical decisions about which of its 27 total NBA and NHL team rights it will keep.
