((HT: Arizona Republic/Craig Harris))
Earl Scudder, his financial and legal adviser, said ((Coyotes former owner Jerry)) Moyes had no option but to file for bankruptcy because that was the only way to void the team's lease with Glendale.
"He didn't have a lot of choices," Scudder said. "He had gone through extensive marketing efforts and was unable to get offers for the team that would take care of the creditors." The move shocked Glendale, which contributed $180 million for the $220 million arena that opened in 2003. For the city's hefty investment, the team signed a 30-year agreement with an early-termination penalty of more than $700 million.
City administrators were giving council members an update on hockey negotiations Tuesday in a closed-door session when word of the bankruptcy surfaced. Glendale City Councilman Phil Lieberman said that bankruptcy was the one thing that could trump the penalty.
NHL objects
National Hockey League Commissioner Gary Bettman and his deputy commissioner, Bill Daly, were in Phoenix on Tuesday, the NHL confirmed. The league issued a statement that evening, saying it was "investigating the circumstances surrounding the (bankruptcy) petition, including the propriety of its filing."
The league said that it had "removed Jerry Moyes from all positions of authority to act on behalf of the club" and that the NHL would appear in court. A hearing is set for 1:30 p.m. Thursday in U.S. Bankruptcy Court in Phoenix.
Bettman and Daly could not be reached. Spokesman Frank Brown said the NHL must approve all sales and relocations.
However, attorneys involved in the bankruptcy filing said a bankruptcy judge could overrule the NHL if the court finds the sale is in the best interest of creditors. Scudder added that the NHL may have to fight federal antitrust laws if it refuses to let the Coyotes move.
Scudder said Bettman and Daly told Moyes on Monday that they would be in the city and wanted to meet. Scudder said the NHL executives were meeting with an undisclosed potential buyer and had planned to present Moyes with a proposal.
Moyes, meanwhile, was aggressively working on the bankruptcy petition. Scudder said he called Bettman and Daly about 3:30 p.m., when the filing occurred, notifying them.
Within 45 minutes, the NHL officials were meeting with Moyes at Swift Aviation Group, his jet business at Phoenix Sky Harbor International Airport, where they gave him a document that removed Moyes from his post.
Scudder said the document was dated Tuesday, but he did not know when it was crafted. After a five-minute meeting, the NHL executives left for New York on a Learjet.
Susan Freeman, a bankruptcy attorney for Balsillie, said her client will ask the court to start a bidding auction that would begin in early June and end before June 26, the first day of the NHL draft. A winning bid would have to exceed Balsillie's offer by $5 million.
In bankruptcy, some creditors have secured positions, meaning if money is available, they would have to be paid first.
If the sale is approved, two secured creditors will be paid, with $35 million going to the NHL, which lent the team money in February to stay in business, and $80 million to SOF Investments, an affiliate of computer entrepreneur Michael Dell's MSD Capital.
The rest of the money, or $97.5 million, would be divided among at least 40 unsecured creditors. Moyes has the largest claim, at $103.8 million, according to the bankruptcy filing.
Moyes, who made his fortune running trucking company Swift Transportation, owns nearly 92 percent of the team. He also is giving up his $206.5 million equity stake as part of the bankruptcy.
Glendale, in a statement, said that the bankruptcy filing was an "unfortunate turn of events" and that the city will work to "ensure the public's interest is fully protected."
The city had been under pressure to make financial concessions to the team. Although the city accepted delays since August on some of the team's lease payments, City Manager Ed Beasley had said concessions were not on the table.
FOSG Scott Burnside of the four-letter thinks Balsillie ((pictured, thanks Arizona Republic/CP-Nathan Denette)) is trying strong-arm tactics again...not that he's surprised by that or anything...
"We recall talking to an NHL owner a couple of years ago when Balsillie had been denied in his attempts to secure the Predators, a bid marked by his soliciting down payments on season tickets for a team in Hamilton, Ontario. What was wrong with Balsillie, we asked? After all, he is a passionate hockey guy and is certainly rich and smart, something that hasn't necessarily been the case with all NHL owners past and present.
The owner explained that, with the salary cap in place, owning an NHL team is an attractive bauble for rich people who like to have their toys, whether they're big yachts or race horses or sports teams. This owner figured there would always be demand for teams, which is why potential owners have to act nice. They can't run around like secret squirrels trying to sneak into the club. Which is exactly what Balsillie has consistently done; it is what he has done with this latest bid.
Balsillie and Jerry Moyes, the trucking magnate who continues to lose around $40 million annually on the Coyotes, cooked up this deal on the sly. How's that for loyalty, by the way? Moyes has been getting handouts and advances from the NHL for months to help his cash-strapped team stay afloat, and then he slithers around behind the league's back, quietly declaring his team bankrupt to pave the way, in theory, for Balsillie to buy the Coyotes and move them out of town.
Honorable? Hardly."
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