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Not because we think
Phoenix needs a hockey team. After all, the franchise has lost $36
million since 2006 (perhaps ice loses its luster to people living in
the desert after a while). What makes the June 15 order refreshing is
that Judge Redfield Baum of the U.S. Bankruptcy Court for the District
of Arizona actually relied on case law and creditor rights in making
his decision. In an era where large debtors with a myriad of
creditors holding billions of dollars in claims are rushed through
bankruptcy court at the direction of the U.S. government, with little
concern for bankruptcy law (see Lehman Brothers Holdings Inc., Chrysler
LLC and soon General Motors Corp.) it has become almost surprising when
a judge doesn't rubber stamp a sale motion. This appears to be the first case under the Bankruptcy Code ... where a professional sports team seeks to use the rights contained in the Code to force a sale and relocation of a team," he wrote in his 21-page decision. "The legal issues trigger not only bankruptcy law, but antitrust law and commercial law in the context of a professional sports team, as a Chapter 11 debtor. ... No cases have been found that precisely or even closely fit this scenario. Ultimately, however, he ruled that there was not enough time before a June 29 sale deadline in PSE's asset purchase agreement for unresolved issues to "be fairly presented to the court." Noting that the NHL playoffs were
being held concurrently with the sale request, Baum said that NHL commissioner Gary Bettman "literally left [a] June 9th hearing in
Phoenix in the afternoon so he could be present at a game six of the
finals in Pittsburgh." Because such relocation applications "create
significant issues that mandate careful consideration by all effected
parties," Baum said he was "unconvinced" that he should order the NHL
to decide the necessary relocation applications by June 29. Baum said it was a "paramount concern" of his to ensure all of the Phoenix Coyotes' creditors received a maximum recovery, which they likely would through the sale, but noted that "such an outcome does not lessen the requirements under the [bankruptcy] Code." Compare that decision to
Lehman, which was able to close a sale of its entire North American
brokerage and investment banking assets to Barclays Capital Inc. just
seven days after its Sept. 15 Chapter 11 filing. During a hearing to
approve the sale, attorneys for the U.S. Department of Justice, U.S.
Securities Exchange Commission and the Federal Reserve Bank all
supported the deal, arguing it was necessary for the health of the
financial markets. Though the U.S. Bankruptcy Code requires that a debtor give 20-day notice to all interested parties of a 363(a) sale, Judge James Peck of the Manhattan bankruptcy court said he was willing to forgo constitutional due process because the "fast-track case needs to be addressed in an extraordinary way." Maybe the team -- which has been funding operations with financing from the NHL since August 2008 -- should have applied for government bailout money. The U.S. Treasury, as a creditor, would likely ensure that the sale go through, bankruptcy law be damned. Just ask Chrysler. Or it should've filed in New York, where Lehman, Chrysler and GM did, and the judges are supposed to be so sophisticated. All we know is, it's taken a judge well beyond the glamor of the East Coast to actually follow the bankruptcy law and be respectful of creditor rights, no matter how long it may prolong a sale. - John Blakeley See The Deal's Hockey Dealwatch
CategoriesComments
From: Joe,
Yay, let the lawyers and their weasel ways of twisting the laws, control the world... and not common sense! F bettman.
Posted on:
June 19, 2009 11:47 AM
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An Arizona bankruptcy
judge's decision to block Jim Balsillie from acquiring pro hockey's
Phoenix Coyotes out of bankruptcy for $212.5 million and relocate the
franchise to Hamilton, Ontario, is a victory.
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Hooray for triumph of logic, reason and law! Finally... a refreshing change and a signal that someone still has their sanity.