Judge to hear NHL's postponement plea
PHOENIX -- A flood of court documents on Friday cast doubt on whether the Phoenix Coyotes can be sold in Wednesday's scheduled auction.
U.S. Bankruptcy Court Judge Redfield T. Baum set an emergency hearing for Monday to decide on a request by the NHL that sale be postponed until September, allowing bidders more time.
The judge had set Wednesday as the auction for a buyer to keep the team in Glendale. So far, the only local offer is a $148 million bid by a group headed by Jerry Reinsdorf, owner of baseball's Chicago White Sox and the NBA's Chicago Bulls.
Questions about the legitimacy of Reinsdorf's bid were raised in several filings on Friday as the complex case grew ever murkier.
Phoenix Coyotes owner Jerry Moyes opposes any delay. He asked Baum to reject Reinsdorf's offer, charging that it provides no cash to debtors, headed by Moyes, and would leave some creditors empty-handed.
Rejection of the local bid would clear the way to sell the team to a buyer who would relocate it.
"The [Reinsdorf] offer seeks to purchase substantially all of the operations and assets of Coyotes hockey and arena management but provides no money to those debtors' estates to satisfy creditors, including administrative, priority, and general unsecured creditors," Phoenix attorney Thomas Salerno, who represents the debtors, said in a filing.
Moyes, who filed for Chapter 11 bankruptcy in May to the NHL's surprise, opposes the delay for the local auction.
"The current motions are clear recognitions that the only real 'bid' that has been received [the Reinsdorf bid] is woefully deficient on many levels," Moyes said in court documents.
Meanwhile, SOF Investments, the largest secured creditor who is owed some $80 million, says it can't consent to the Reinsdorf bid because their payment hasn't been worked out, although negotiations have begun.
A committee of unsecured creditors also objected, on the grounds that Reinsdorf's offer is "contingent and illusory." The committee contested Reinsdorf's offer to assume up to $148 million in liabilities, putting the figure at about $121.5 million.
"The Glendale offer will provide absolutely no money to the estates and their creditors," attorneys for the committee said in court filings.
Moyes wants to sell the team to Canadian billionaire Jim Balsillie, who has offered $212.5 million to move the team to Hamilton, Ontario.
On Friday, attorneys for Balsillie's PSE Sports and Entertainment told Baum, "PSE is still here and its bid still stands."
Balsillie's filing came two days after the NHL's board of governors unanimously rejected his ownership application while approving Reinsdorf's.
In his first known public comment since the NHL's rejection, the Canadian claimed that NHL commissioner Gary Bettman has a "personal grudge" against Balsillie, who has failed in two previous attempts to buy U.S.-based teams and move them to Canada.
Balsillie's filing said his interview with the NHL board "consisted of a strong and rather hostile interrogation by persons whose minds appear to have been made up before the meeting began.
"It is clear to Mr. Balsillie that commissioner Bettman and a number of the governors have a personal grudge against Mr. Balsillie, and that the root of the problem is Mr. Balsillie making prudent business decisions, in each case within his contract terms, instead of spending vast amounts of money for an unprofitable team with no right to apply for relocation."
The NHL, which has been funding the club, wants the team to stay in Arizona, where it has lost tens of millions since moving from Winnipeg in 1996.
The Reinsdorf group is continuing negotiations with the city of Glendale to rework the Jobing.com Arena lease, a crucial part of their offer.
A potential third bidder, Ice Edge Holdings, asked the court to delay the sale until Sept. 10 to allow it time to finalize its offer. Its 112-page document laid out terms of a purchase but did not specify an offer price.
Earlier this week, an application by Ice Edge was deemed incomplete by the NHL board of governors, but the board encouraged the consortium to continue with the application process.
Also Friday, another judge ruled that most of the documents detailing talks between Glendale officials and bidders for the bankrupt Phoenix Coyotes will remain sealed. Maricopa County Superior Court Judge Edward Burke said only 34 of the 322 pages of documents must be made public.
The Goldwater Institute, a conservative watchdog group, has been pressing in court to open all 322 pages of documents. The group claims taxpayers should know whether Glendale will offer money as a deal-sweetener with a new Coyotes owner to keep the NHL team playing at the city-owned arena.
Glendale says such incentives aren't on the table and the public will be able to review any deal before it goes to the City Council for a vote.
Later in the day, the Goldwater Institute asked to file a "conditional bid objection" with Baum on behalf of eight Glendale taxpayers, arguing that taxpayers have a right to know the details of Glendale's arena lease renegotiations with Reinsdorf's group.
"Because the possible terms are entirely unknown, taxpayers are not in a position to 'object' to the approval of a particular Glendale sale" under court procedures, the Goldwater Institute's filing said. "However, taxpayers have a significant interest in the use of any public funds for a bidder, as they will ultimately be accountable for them."
Copyright 2009 by The Associated Press