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Keywords

willbankruptcychapter 11 bankruptcycompliance
bankruptcy

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In re Dewey Ranch Hockey, LLC, 414 B.R. 577, 62 Collier Bankr.Cas.2d 801, 52 Bankr.Ct.Dec. 55

Facts

The case involves the bankruptcy proceedings of the Phoenix Coyotes, a professional hockey team, which filed for Chapter 11 bankruptcy in May 2009. The NHL had previously rejected a bid from a potential owner due to concerns about his character and integrity. The Coyotes were facing significant financial losses and were seeking a new owner willing to keep the team in Arizona. The bankruptcy court was tasked with evaluating competing bids for the team, including one from the NHL itself, which sought to control the distribution of sale proceeds among creditors.

The Coyotes have not been a particularly successful team on the ice having never won a playoff series since moving to Arizona and have not made the playoffs since moving to a new, state of the art arena in Glendale, Arizona in 2003. More importantly, from the bankruptcy perspective, the Coyotes have lost money every year since moving to Arizona.

Issue

Whether the bankruptcy court could approve the sale of the Coyotes to a bidder rejected by the NHL based on character concerns, and whether the NHL's bid could be accepted given its conditions on the distribution of sale proceeds.

Whether the bankruptcy court could approve the sale of the Coyotes to a bidder rejected by the NHL based on character concerns, and whether the NHL's bid could be accepted given its conditions on the distribution of sale proceeds.

Rule

Analysis

The court found that the NHL's concerns about the character of the rejected bidder were valid and that the proposed sale could not proceed without adequately protecting the league's interests. Furthermore, the NHL's bid was deemed unacceptable as it sought to control the distribution of proceeds in a manner inconsistent with the Bankruptcy Code's goals of equitable distribution among creditors.

Conclusion

The bankruptcy court denied both the NHL's bid and the bid from the rejected bidder, concluding that neither adequately protected the interests of the NHL or complied with the requirements of the Bankruptcy Code.

The court can not approve either bid.

Who won?

The prevailing party in this case was the NHL, as the court upheld its concerns regarding the character of the rejected bidder and denied both bids for the team. The court emphasized the importance of protecting the league's interests and ensuring compliance with the Bankruptcy Code's provisions regarding asset sales and creditor distributions.

The prevailing party in this case was the NHL, as the court upheld its concerns regarding the character of the rejected bidder and denied both bids for the team.

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