An objection filed by the Internal Revenue Service with the U.S. Bankruptcy Court is not expected to derail the sale of the Dallas Stars to Vancouver businessman Tom Gaglardi.
Sources familiar with the deal said Thursday the objection was filed because the IRS wants to be consistent with its actions in an earlier bankruptcy case involving Major League Baseball's Texas Rangers. Both the Rangers and the Stars were owned by Tom Hicks through his company Hicks Sports Group and both wound up in bankruptcy court with a total debt of $500-million (all currency U.S.).
The IRS filing, according to the Dow Jones Daily Bankruptcy Review, asked the court to reject the sale plan because there is no provision for its rights, which includes full payment on any tax claims. However, the sources said this does not present a problem because little money is involved and it will be worked out by lawyers for the NHL and the Stars' creditors.
One other objection was filed with the court before a Tuesday deadline and it is not expected to be a major problem either. General Electric Capital Corporation holds a $6.8-million (all currency U.S.) loan on the Dr. Pepper Arena, the Stars' practice facility. While that arena is not part of the bankruptcy, Gaglardi's plan calls for some releases in liability on the rink. But GE Capital wants to make a claim on the Stars' insurance company for past water damage and does not want the sale agreement to stop it.
Gaglardi, a Vancouver businessman, could not immediately be reached for comment. NHL deputy commissioner Bill Daly did not respond to a request for comment.
It is expected Gaglardi will soon receive the approval of the NHL board of governors to buy the Stars and this will be presented to the bankruptcy court at a hearing Nov. 23. The court is expected to approve the sale and the senior lenders to Hicks will get about $100-million of the $251-million Hicks Sports Group owes them. Gaglardi will also pay off a $50-million loan taken out by an NHL subsidiary to keep the Stars operating for the last two years.
While the senior lenders are taking a close haircut, the junior lenders will get almost none of the $146.2-million they are owed, according to the Dow Jones Daily Bankruptcy Review. The only provision in the plan for them is $25,000 for their legal fees and $500,000 for their loans. But that money is to come from the payment to the senior lenders and will only be made if the junior lenders agree to the plan.