NHL Would Pay Moyes' Creditors

((HT: GlobeSports/Shoalts))

The NHL dropped a surprise as a U.S. bankruptcy court hearing opened Wednesday morning when one of its lawyers said if the league eventually sells the Phoenix Coyotes to someone who moves the team, it will give all the net profits to the team's creditors.

Greg Milmoe told U.S. Bankruptcy Court Judge Redfield T. Baum the decision was made by NHL commissioner Gary Bettman. The league was approached by the Coyotes' committee of unsecured creditors, Milmoe said, about some concerns with the NHL's $140-million (all currency U.S.) offer. The league's decision came after a brief negotiation with the committee.

Once that news was issued, the hearing turned to the NHL's decision to reject would-be buyer Jim Balsillie ((pictured ready for battle, thanks Charlie Leight/Arizona Republic)) on character grounds. But it became clear Jim Balsillie will probably not find out on Wednesday if his $212.5-million offer to buy the Coyotes and move them to Hamilton would be accepted by the court over the league's objections.

Tom Salerno, a lawyer for Coyotes owner Jerry Moyes, told the court there were five basic arguments to be made on the issue. But by the time the court took a short recess at mid-day, the lawyers were still arguing the character issue, which was the first of the five.

However, the judge eventually reserved decision until an unspecified time.

A new player on the scene was Jeff Kessler, a lawyer from New York who represented Balsillie. Kessler made a forceful argument that the NHL's rejection of Balsillie as an owner on character grounds was a "canard".

Kessler said that argument was dreamed up by a league lawyer as a pretext to avoid an ugly legal showdown with the Toronto Maple Leafs. The Leafs are opposed to Balsillie's plan to move the Coyotes to Hamilton and a letter filed with the court indicated the Leafs believe they have a veto to block the move and are willing to sue the NHL if their wishes are brushed aside.

"What the league is doing to avoid that massive problem with Toronto is set up a pretext," Kessler said.

Balsillie made a concession on the relocation issue after arguments were heard for and against moving the Coyotes for the 2009-10 season.

After the NHL argued a move was impossible on short notice for various logistical reasons, one of Balsillie's lawyers told the court he was willing to keep the Coyotes in suburban Glendale for one more season under certain conditions.

Jeff Kessler said Balsillie would do so if the NHL would pay half of the team's losses, estimated to be between $30-million and $40-million, and if the league agreed not to appeal a court decision in Balsillie's favour.

The offer was almost immediately rejected by the NHL. "He's not a qualified owner," NHL lawyer Shep Goldfein told Judge Baum. Judge Baum urged both sides to negotiate the issue Wednesday night since the hearing will spill into Thursday.

However, Judge Redfield T. Baum, who has shown a reluctance throughout the case to make any precedent-setting decisions, noted there is no previous case that shows a court can overrule sports owners who reject an applicant.

Those involved in the case began arriving at the downtown courthouse about 40 minutes before the hearing started at 9 a.m. Pacific time. Bettman arrived with NHL deputy commissioner Bill Daly and spent a little time chatting with reporters as the league’s phalanx of lawyers went through the security checkpoint near the front door.

A few minutes later, a steady stream of lawyers for the various parties – the NHL, the City of Glendale, Coyotes owner Jerry Moyes and Balsillie. Some of them carried boxes of documents and others wheeled papers in on dollies, promising a long day in court for all concerned.

The star of the day, Balsillie, arrived about 15 minutes before the hearing started. It was his first appearance in court since the bankruptcy case erupted in May and he took a seat on the opposite side of the centre aisle from Bettman and Daly.

12News Brahm Resnik tried to track down Balsillie and NHL Commissioner Gary Bettman as they walked into bankruptcy court...

There was a direct confrontation between Bettman and Balsillie during the first break but it end with a handshake. That occurred in a washroom down the hall from the courtroom when the pair found themselves in there at the same time.

Randi Druzin of Global News has a profile of BlackBerry Balsillie- included is a Kevin Newman block tossing to a reporter in Hamilton and Global anchor Mark Hebscher for news and analysis...

News 12's Brahm Resnik has live updates on his Twitter account...

Carrie Watters and Rebekah Sanders of the Arizona Republic have one important note from Judge Baum:

Baum indicated he might not rule by Sept. 14, the deadline Balsillie set for resolving the issue or withdrawing his bid.

"You all need to discuss how firm that is," Baum told Balsillie's lawyers.

More when we know more...