In re Dewey Ranch Hockey, LLC
United States Bankruptcy Court for the District of Arizona
414 B.R. 577 (2009)
After the National Hockey League (NHL) approved the change of ownership and relocation of the Winnipeg Jets to Phoenix, Arizona, the newly-named Phoenix Coyotes began losing money each season. The City of Glendale, a suburb of Phoenix, agreed to build a new hockey arena for the team at a cost of $183 million, but the team was required to play all of its home games in the arena or be in breach of the contract which had a liquidated damages clause in favor of Glendale. Moyes, the owner of the Coyotes, sought a buyer for the team. The only interested purchaser was James Balsillie, principal of Canadian company PSE Sports and Entertainment, LLP (PSE). PSE had tried unsuccessfully on two prior occasions to purchase an NHL team. On May 5, 2009, the Coyotes and three related entities filed Chapter 11 bankruptcy filings. At the same time, Moyes entered into an Asset Purchase Agreement (APA) with PSE to buy the Coyotes conditioned on the bankruptcy court approving the team’s relocation to Hamilton, Ontario, Canada, regardless of the Coyotes’ agreement with the City of Glendale. The bankruptcy court declined to immediately approve the sale on Moyes’ motion. Thereafter, the NHL voted unanimously to reject PSE’s application because Balsillie did not have the “character and integrity” required under NHL bylaw to be a team owner. Additionally, the NHL approved an ownership transfer to another entity, the Reinsdorf Group, and made no decision on the transfer to potential bidder, Ice Edge Hockey. Finally, because the Reinsdorf Group and Ice Edge Hockey backed out of the bidding process, the NHL itself submitted a bid for the Coyotes because it was in the best interests of the NHL. That left PSE and the NHL competing for the assets of the Coyotes.
Rule of Law
Holding and Reasoning (Baum, J.)
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