Canadian billionaire Jim Balsillie wants the U.S. Bankruptcy Court to allow him to probe the rationale behind the NHL owners' overwhelming rejection of him as a potential owner of the Phoenix Coyotes.
In a court filing Monday, Balsillie also contended that Judge Redfield T. Baum has the authority under bankruptcy law to award the bid to him despite the actions by NHL owners.
The filing by PSE Sports & Entertainment, the company Balsillie formed to pursue the Coyotes, came after the NHL said he was rejected as an owner by a 26-0 vote with three abstentions and one absentee, because he was perceived to be untrustworthy.
The owners said they based their decision on Balsillie's behaviour in previous attempts to buy the Pittsburgh Penguins and Nashville Predators. The NHL has asked the judge to throw out Balsillie's bid based on its rejection of him as an owner.
Balsillie has offered $212.5-million (U.S.) to buy the Coyotes, contingent on moving them to Hamilton. The NHL wants to find an owner to keep the team in Arizona.
Baum has scheduled a hearing on Tuesday to discuss various issues in the case that followed his ruling that the Sept. 10 auction of the team would be expanded to include potential buyers who would relocate the franchise. He specifically mentioned Balsillie's offer.
Balsillie, co-CEO of BlackBerry maker Research In Motion, has the only firm bid for the team. A group headed by Jerry Reinsdorf, owner of baseball's Chicago White Sox and the NBA's Chicago Bulls, has offered $148-million to buy the team and keep it in Arizona, but that offer is contingent on yet-to-be-completed negotiations with creditors and the city of Glendale.
A third group, Ice Edge, has said it was preparing a bid of about $150-million to keep the team in Arizona but has not filed an offer.
The messy, often bitter legal battle is entering its fourth month with the NHL training camp opening looming. The Coyotes, who are being funded by the league during the court fight, are scheduled to play their first pre-season game on Sept. 15 at home against the Los Angeles Kings, five days after the auction.
The NHL filed a motion Monday seeking an expedited hearing on its request to enter into a contract agreement with U.S. Airways for travel by the Coyotes in the coming season.
The league has said there is no way the team can play anywhere but Arizona in the 2009-10 season, but Balsillie has said he wants the move to Hamilton to be immediate.
PSE's filing said the court's rejection of the bid simply because the NHL "subjectively 'perceives' Mr. Balsillie to be untrustworthy ... is not supported by law or the best interests of the estate, let alone mandated by them (the owners)."
PSE says the league "treats this case as a lawsuit by a party demanding to be made a NHL owner, ignoring the reality of a failing business that owes enormous debts and has never operated profitably."
Balsillie's company also notes that he was approved as an owner of the Penguins in 2006 before that deal fell through.
Balsillie had asked for new depositions from NHL commissioner Gary Bettman and deputy commissioner Bill Daly, who already have been questioned. The filing on Monday added Minnesota Wild owner Craig Leipold, Boston Bruins owner Jeremy Jacobs and Maple Leafs Sports and Entertainment president and CEO Richard Peddie to that list.
Leipold and Jacobs filed declarations on Friday that outlined their reasons for rejecting Balsillie's bid to become an owner. Balsillie's lawyers also want to see a series of documents related to the NHL's vote and Reinsdorf's bid.
Hamilton is within the territory of the Toronto Maple Leafs, believed to be the most valuable franchise in the NHL.
PSE contends that under Section 365(f) of the U.S. Bankruptcy Code, the judge has the authority to accept Balsillie's bid regardless of the NHL's position.
PSE also is pushing to have the league forced to act on the potential relocation of the franchise and determine what fee Balsillie would have to pay. The NHL said in its filing on Friday that relocation is moot because Balsillie was rejected as an owner.
More than 600 filings have been made in the case since Coyotes owner Jerry Moyes took the team into bankruptcy on May 5, to the surprise of the NHL. Three more lawyers asked Monday to enter the case on behalf of PSE, joining a huge cast of lawyers already involved.
Moyes is a strong supporter of Balsillie's bid, which would give the Coyotes owner about $100-million of the $300-million he says he has invested. The Reinsdorf offer would give Moyes nothing, contending that the money he lost was equity, not debt.
The judge has not acted on several intriguing aspects of the case, including whether Balsillie could get out of the team's lease with Glendale.