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Wednesday, June 17, 2009
NHL wins in Coyotes Bankruptcy Litigation

Zach Lowe of The American Lawyer has the details on the NHL's victory. He interviewed me for his story. Here's an excerpt.

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We couldn't wait four our regular sports law column to write about a federal judge's ruling Monday that Canadian businessman Jim Balsillie can't buy the the Phoenix Coyotes out of bankruptcy court and move the team to Canada without permission from the National Hockey League and other league owners.

But first an instant replay: The Coyotes and the team's owners (repped by Squire, Sanders & Dempsey) filed for bankruptcy last month and announced they had struck an agreement to sell the franchise to Balsillie, owner of the company behind the BlackBerry and a Canadian hockey fanatic who has twice tried to bring a seventh hockey franchise to Canada.

The NHL, repped by Skadden, Arps, Slate, Meagher & Flom (one of two go-to firms for the NHL along with Proskauer Rose), objected to the sale, saying the Coyotes never gave the league a heads-up and were violating league rules that required teams to get permission from other owners to relocate.

So, for the first time, a federal judge had to answer the question: Could a sports team use the asset sale procedures of bankruptcy court to sidestep league rules about franchise relocation?

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A ruling in favor of Balsillie would have "opened the door for team owners and prospective buyers to use the bankruptcy process to circumvent league rules," says Michael McCann an associate professor at Vermont Law School and a frequent contributor to the popular Sports Law Blog.

Judge Baum has ordered that an auction be held in September for bidders to make new offers, as long as they agree to keep it in Glendale, according to court records and this write-up in the New York Times. If that auction fails to produce a suitable bidder, the leagues have proposed that the judge order a second auction so owners wishing to relocate the team could bid.

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To read the rest, click here.


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