BANKRUPTCY UPDATES

• Minnesota Distillery of Fine Vodkas Files Chapter 7 Bankruptcy (February 10, 2012)
• Court Approves Newspaper Magnate Lee Enterprises’ Bankruptcy Plan (February 07, 2012)
• Suspected Felon Filed for Bankruptcy Shortly Before Untimely Death (February 09, 2012)
• Ireland Overhauls Bankruptcy Laws (February 06, 2012)
• IL State Representative Files for Chapter 13 Bankruptcy (February 08, 2012)

NHL's Phoenix Coyotes Filing for Bankruptcy

The Phoenix Coyotes of the National Hockey League have recently filed for Chapter 11 bankruptcy, meaning that it is seeking government protection as it reorganizes its financials in order to satisfy its creditors. The Phoenix Business Journal reports that as of May 6, however, the status of this filing is very much up in the air, as the NHL itself has asked the court to dismiss said filing.

A number of somewhat contrasting contracts make the situation difficult to follow. According to the bankruptcy papers turned into the court by team owner Jerry Moyes, the Phoenix Coyotes should be arranged to be sold to a Canadian businessman for $213 million. However, as of the filing on Tuesday, May 5, the league took control over the franchise. Wanting to assert its own power over the future of the franchise, the league has asked for a stay of this original request, likely as it considers all available moves.

Hockey may not be the most popular sport in the country, with the NFL and baseball often trumping headlines, but it remains a legitimate moneymaker when established in the right market, and the NHL likely wants to make sure that filing bankruptcy is in the best financial interest of the team and the league.

Furthermore, the NHL is currently in the midst of its playoff season, and any escalation of this news could obviously turn attentions to negative developments that the league does not want to highlight. Even in cities where the team fan base is relatively small, there can be a very loud uprising when the possibility that the team will leave the city arises.

According to the commissioner’s office of the NHL, the Phoenix Coyotes may not even possess the authority to file for bankruptcy in the manner that the team did. The league ostensibly loaned money to Phoenix in February with the understanding that the NHL would take over if finances remained a problem. According to commissioner Gary Bettman, “This is more about the tactic and I think a challenge to league rules than it is about economic conditions of the club, which we believe, with new ownership and with accommodations the city of Glendale is prepared to make, we think can succeed.”

The city of Glendale, Arizona -- where the Coyotes play their home games -- are preparing for a legal battle of their own in order to prevent the economic blow that the departure of a major sports franchise could bring. The Coyotes do have a 30-year lease on Jobing.com Arena, which is owned by the city of Glendale. There is a $750 million penalty for breaking the lease.

The Phoenix Coyotes moved to Glendale from Canada in 1996, where they were known as the Winnipeg Jets. One of hockey’s great stars Wayne Gretzky is currently a part-owner of the team, as well as head of hockey operations and the head coach.

Whether or not this franchise moves again may very well rest in the outcome of this bankruptcy development, with the government likely having to decide whether Coyotes management has the right to sell the team to its prospective Canadian buyer, or whether the NHL is allowed to override this move and take control of any major decisions.

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