May 7, 2009 5:37 PM
Skadden, Squire Sanders on Disputed Phoenix Coyotes Bankruptcy
Posted by Zach Lowe
The Am Law Daily is aware that hockey is fourth in terms of popularity among the big four sports in the U.S., but anyone with an interest in bankruptcy law and team ownership issues should turn their eyes to the case of the National Hockey League's Phoenix Coyotes.
The team's owners filed for bankruptcy on Tuesday and said they had struck an agreement to sell the team for $212.5 million to Jim Balsillie, the Canadian hockey fanatic who owns the company behind the BlackBerry device. Balsillie has long dreamt of returning the Coyotes, who used to play in Winnipeg, to Canada.
One problem: The NHL says the Phoenix owners no longer control the team and lost the rights to file for bankruptcy when they came crawling to the league for more than $30 million in November, according to court records.
The league has retained Skadden, Arps, Slate, Meagher & Flom to fight the bankruptcy and sales plans at a hearing in federal bankruptcy court in Phoenix Thursday, court records show.
Shepard Goldfein, the lead Skadden partner on the matter, could not be reached for comment.
Squire, Sanders & Dempsey is advising Coyotes owner Jerry Moyes, who also owns a Phoenix-based trucking company (Swift Transportation). Lead partner Thomas Salerno did not return messages seeking comment.
The NHL claims Moyes can't move the team without going through league-approved requirements. In its court papers, the league reveals it has been negotiating with a separate ownership group committed to keeping the team in Phoenix, where it is at the beginning of a 30-year lease on the arena it uses in Glendale. (That lease would be voided in a bankruptcy case, theoretically freeing Balsillie up to move the team to Canada.)
That ownership group is headed by Jerry Reinsdorf, the majority owner of the Chicago White Sox and the Chicago Bulls, court records show.
The filings show that hockey hasn't quite worked in Phoenix, despite the presence of Wayne Gretzky as coach and part owner. (Gretzky stands to make $22.5 million if the Balsillie sale goes through, court records show). The team suffered about $73 million in operating losses in the last three years, and owes Moyes more than $100 million in principal and interest on various loans. The team also has a $75 million secured loan facility with two three investment groups and received a $31 million cash advance from the NHL in November, when Moyes told the league he would no longer fund the team's operations.
It was at that moment, the NHL claims, that Moyes ceded control of the team to the league. (The league also gave Moyes access to an open-ended line of credit, through which Moyes has borrowed about $13 million so far).
The Phoenix-based firm of Lewis & Roca is representing the Balsillie entity that would buy the team. Vinson & Elkins and Snell & Wilmer are advising the lenders who provided the $75 million credit facility, court records show.Make a comment