Balsillie to be in courtroom
PHOENIX -- The Phoenix Coyotes saga seems to be stumbling toward a conclusion, and the lead character in the twisted drama finally is scheduled to make an appearance.
After almost four months of legal wrangling and nearly 900 court filings, a hearing is scheduled in U.S. Bankruptcy Court on Wednesday to argue most of the sticky issues still facing Judge Redfield T. Baum.
For the first time, Canadian billionaire James Balsillie will be in the courtroom, according to a filing Tuesday by PSE, the company he formed to pursue the Coyotes. Balsillie wants to buy the team and move it to Hamilton, Ontario, over the vehement objection of the NHL, which has made its own bid to purchase the franchise.
"Recognizing that his credibility has been put at issue and the court may have questions not covered in the declarations and deposition testimony," the filing read, "Mr. James Balsillie will be present at the hearing in order to respond to any questions the court may have."
It's not known whether Balsillie's nemesis, NHL commissioner Gary Bettman, will be there.
It could be the last stand for Balsillie, who has doggedly pursued the franchise even though the NHL board of governors voted 26-0 to reject him as an owner. Balsillie wants the judge to override that vote and not only award the team to him, but allow him to move the franchise immediately with a nominal relocation fee.
If the judge rules that Balsillie's bid is valid, the NHL has promised to appeal and seek a stay of the sale. Balsillie hasn't said whether he would take an antitrust case to court if he loses the bankruptcy bid.
Other issues to be argued include whether there is time to move the franchise for the coming season -- the first preseason game is Sept. 15 -- and whether Balsillie can void the Coyotes' lease with the city of Glendale without a significant penalty.
The Coyotes rookie camp begins Sunday, and ice was installed at Jobing.com Arena on Tuesday.
Two bids have been made to buy the team and keep it in Glendale.
The NHL made a surprise offer of $140 million after a group headed by Jerry Reinsdorf pulled out, citing the inability to reach a new lease agreement with the city of Glendale. The league says that if its bid is successful, it intends to sell the team outside the encumbrances of the bankruptcy process. If a buyer to keep the team in Glendale can't be found, the NHL says it will look to relocate the franchise after the coming season.
Ice Edge, a partnership of eight investors from the United States and Canada, said it will bid up to $150 million, but that offer is contingent on reaching a lease agreement with Glendale by the Sept. 10 auction.
Balsillie is offering $212.5 million, but it is difficult to compare that bid with the other two. Balsillie's bid includes $104 million for Coyotes owner Jerry Moyes, who says he loaned the franchise $300 million and is the lead unsecured creditor. The NHL and Ice Edge offers would give Moyes virtually nothing, contending the lost money is equity, not a debt, and therefore he should not be a creditor.
Attorneys for the debtors group that is headed by Moyes filed objections Tuesday arguing that the NHL and Ice Edge bid should be rejected by the judge.
Both bids fail to pay millions of dollars to creditors, the Moyes group contends.
The NHL made its bid in bad faith and could reap the rewards of relocating the team, while the Moyes sale to Balsillie would benefit debtors, the document said. The league bid would provide only $2 million in cash, with the rest deferred compensation, according to Moyes' group.
The Moyes group, which strongly supports selling the team to Balsillie, said the Ice Edge group is full of "loopholes" and "contingencies" that violate terms of the bidding and the bankruptcy code.
The NHL filed documents this week detailing why it believes the league acted fairly in rejecting Balsillie as an owner, based on his conduct in attempts to buy the Pittsburgh Penguins, Nashville Predators and Coyotes.
"There is something sad," the NHL said in a reply filed Tuesday night, "... about Mr. Balsillie's inability to grasp the plain fact that it is his conduct, insensitivity, perceived lack of trustworthiness and unwillingness to accept responsibility of his own actions over several years that has caused the NHL board of governors to wish to not be associated with him in the business of professional hockey."
The NHL went into detail on Balsillie's dealings with each team. That included citing evidence the league says showed secret negotiations between representatives of Balsillie and Moyes in violation of the consent agreement the Coyotes owner had signed with the league in September 2006.
Balsillie's attorneys said in a court document that relocating the franchise to Hamilton "is, irrefutably, the only chance to maximize the value of the debtors' assets and pay off all creditors."
Balsillie also says the NHL created a conflict of interest by entering the bidding.
"The only reason that the NHL will not consider relocation to Hamilton is to protect the concededly unlawful territorial veto rights of the Toronto Maple Leafs," PSE contended.
The NHL has said that the veto clause of its bylaws is no longer used and that a majority vote is all that is necessary for relocation.
In what PSE called a "shocking revelation," Balsillie's people uncovered a letter from the Maple Leafs counsel from November 2006, saying the franchise believes a unanimous vote is necessary to approve a team moving into the territory of another.
Balsillie points to the letter as proof the Maple Leafs would use their veto power, which the Canadian says is illegal, to prevent any team from moving to Hamilton.
"The Maple Leafs reserve all rights to take whatever actions are necessary to protect their exclusive rights to their home territory," the letter reads.
The committee of unsecured creditors filed a document Tuesday night saying it could support the bids of Balsillie and the NHL but opposes the Ice Edge offer.
Copyright 2009 by The Associated Press