Dreger: Four key motions in Coyotes' bankruptcy hearing

Darren Dreger

5/19/2009 9:10:31 PM

The Phoenix Coyotes bankruptcy hearing has adjourned for the time being, and Judge Redfield Baum declared that no ruling will be made yet and he has instead ordered mediation. The court expects the parties to pursue things as quickly as possible.

There were four key motions that were to be addressed on Tuesday.

Number One:  Who controls the Coyotes?
If Judge Baum upholds the proxy the NHL believes Coyotes owner Jerry Moyes signed over to the league in November, this case will be handled swiftly in favor of the National Hockey League. If Baum rules in favour of Moyes, the next question will be: is Moyes entitled to include a relocation clause in the sale? – which, in effect, circumvents league control of franchise movement.

Number Two:  Is the bankruptcy petition admissible?
The NHL says in an effort to get the original bankruptcy petition filed, Coyotes C.F.O. Michael Nealy didn't sign the document which explains what led to Moyes and the Coyotes filing chapter 11 bankruptcy, and therefore the NHL argues it's an inadmissible document and may go so far as to charge the declaration Nealy introduced is fraudulent.  However on Tuesday the Toronto Star revealed that the Coyotes came through with Nealy's signature on the document outlining the team's financial losses in the neighbourhood of $76 million over the past three years.

Sources say the Coyotes came up with signatures on "amended declarations"  based on an allegation, Nealy may not have been willing to sign what was originally drafted for him.

Number Three:  How will the selling of the Coyotes proceed?
Assuming Judge Baum gets through the first two motions today, he will then listen to Jim Balsillie's legal team push for an immediate auction process, allowing for rival bidders to step forward, provided these potential buyers are willing to pay $5 million above the $212.5 million Balsillie has on the table.  The Balsillie camp will ask this auction close no later than June 26.

Number Four:  Is there really a Jerry Reinsdorf offer? 
Balsillie's lawyers want proof and will ask the court to force the National Hockey League to forward all documents that prove the Chicago White Sox owner has legitimate interest in buying the Coyotes.  The NHL says it is prepared to do this if Judge Baum rules in favor of Balsillie's motion for disclosure.

If Moyes, and ultimately, Jim Balsillie receive even a hint of support from this bankruptcy court, the National Hockey League will be quick to appeal, dragging this battle into another round.

However, many league sources believe, worst case scenario, NHL commissioner Gary Bettman's ace is the Board of Governors, which unless the bankruptcy court shocks the system and finds a way to handcuff these men of power, will vote this sale down and not approve Jim Balsillie in to the club.

In that case, it's hard to imagine Jim Balsillie being given another chance.

Attempts to purchase both Pittsburgh and Nashville failed and according to Buffalo sources, his approach to buy the Sabres awhile back was also quickly declined.