Post#23 » by WEFFPIM » Thu May 21, 2009 6:14 pm
So, the NHL and the Coyotes went to bankruptcy court yesterday afternoon. Not much of a decision was made about the issues, but here's a summary of what happened that I got from a Coyotes message board:
I’d like to bring you all up to date on the situation after the hearing yesterday. I and a few members of the Coalition Leadership team were present for the proceedings. Though the issue of who actually owns the team and has the authority to sell it and/or put it into Chapter 11 bankruptcy was not decided, we did make some progress…
Team Ownership: The NHL or Jerry Moyes?
One of the main issues in this case is the Proxy agreement that was signed in November 2008 by Jerry Moyes & his wife, along with Jeff Shumway and a League representative. This Proxy agreement stated that the NHL would take control of the club and the voting rights for the Coyotes in return for financial assistance to Mr. Moyes to run the club. The document also states that Moyes/Shumway could not declare bankruptcy or enter into a purchase agreement with a potential buyer without the League's approval.
Instead of ruling on the issue of who is in control of the team at this time, Judge Baum pointed out that selling the team and ensuring that the money owed to the creditors be paid is a more important issue at this time. To that end, he has ordered both sides to identify and meet with a mediator before the next hearing on May 27th. What this means basically, is that regardless of who owns the team and who has control, the team needs to be sold to the bidder who offers the most money without conditions. The issue of whether or not the team can be relocated must also be dealt with so that interested bidders can place their bids and the team can be sold as soon as possible.
The “Relocation Issue”
One of the most debated issues surrounding this case is whether or not the team can be relocated. The League says no and for several reasons:
1) According to the NHL, a team cannot be relocated unless the current owner of the team files an application before January 1st of the year in which they wish to relocate the team. There are several problems with the Moyes/Balsillie situation if this guideline is upheld. First and foremost is the fact that no such application was made by Moyes. Balsillie is the one who wishes to move the team and he is not the owner of the team. You cannot make an application to move a team if you are not the current owner of the team. Also, the application must then be reviewed by the League and presented to the Board of Governors, who must approve. So according to this, even if Balsillie’s offer were to be accepted, there is no way he could move the team to Hamilton for the 2009-2010 season.
2) According to the League Bylaws and Constitution, any buyer wishing to purchase an NHL franchise must first submit an application and go through a rigorous evaluation process then be approved by the Board prior to sale approval. Mr. Balsillie has not completed this process.
The relocation issue MUST be decided before any bids can be placed so that bidders can understand exactly what they are bidding on. Is it a franchise that must stay in Glendale, AZ or is it a franchise that can be relocated? The judge wants to be sure to provide each side with adequate time to submit arguments and documents that support their cases. He will hear the arguments on June 22nd. This will be a very important decision, as it may mean Ballsillie will back out on his offer if there is no option for him to move the team to Southern Ontario.
The Sale of the Team
The final issue that was discussed was how the actual sale of the team would be handled. The Moyes/Balsillie group is pushing for an expedited sale as they wish to move the team immediately and be able to make draft picks and free agency decisions. The NHL on the other hand, would like to take a bit more time to attract and entertain as many potential bidders as possible.
The basic process (which is still up for approval) would consist of the interested parties being required to fill out the ownership application and go through the review process with the League. The parties who are approved for potential ownership will be given to the judge who will handle the actual auction. The potential owners will also be given the opportunity to meet with the city to discuss the issues regarding Jobing.com Arena. The target time for this auction to happen is sometime in July.
So Coyotes fans, we actually are not much farther today than we were prior to the hearing yesterday. One thing I can assure you of however, is that Judge Baum seems to be an intelligent and fair man who is not going to rule in this case without knowing all the facts and looking at everything from every possible angle. This may mean that it takes a little longer to get the answers that we are seeking. However, when you look at the facts it’s hard to see how he would not be able to rule in the League’s favor.
ReddWing wrote:Being a fan of this team is tantamount to being in hell...There is no Christ that is coming to save us. Even if there was, we'd trade him for a 28 year old wing.