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NHL loses Arizona Coyotes bankruptcy decision

Phoenix Coyotes owner Jerry Moyes leaves U.S. Federal Bankruptcy Court in Phoenix, Arizona September 23, 2009.

JOSHUA LOTT/REUTERS

The NHL suffered another setback Wednesday in its seemingly never-ending legal battle over the Arizona Coyotes.

U.S. Bankruptcy Court Justice Redfield T. Baum, who originally ruled in favour of the NHL in 2009 to prevent BlackBerry tycoon Jim Balsillie from buying the Coyotes out of bankruptcy and moving them to Hamilton, recommended that the league be denied almost all of its claim of $145-million (all figures U.S.) in damages against former team owner Jerry Moyes. This is the second loss for the NHL in the claim against Moyes. The court ruled against the league in October, 2013, in its bid to be reimbursed for Coyotes operating expenses and for money paid to Wayne Gretzky, once a part-owner and head coach of the team.

Wednesday's recommendation was issued for the U.S. District Court in Phoenix, which asked Justice Baum for his opinion in the NHL's lawsuit against Moyes because of his expertise in the original bankruptcy case. This is not an official court decision but will carry great weight with the presiding judge.

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After failing to find a local buyer for the Coyotes, Moyes put the team into bankruptcy in May, 2009, and tried to force a sale to Balsillie. The NHL, which had been paying the team's bills for the 2008-09 season, bought the team after winning the bankruptcy case, but went after Moyes to recoup the money it had poured into the financially disastrous team.

In the lawsuit against Moyes, the NHL claimed it was owed more than $112-million in operating expenses for the Coyotes, $6.5-million from Gretzky's contract and more than $11.6-million it had paid to unsecured creditors, plus $15-million in legal fees. Gretzky settled with the NHL last year, the first step in ending his estrangement from the league.

Justice Baum recommended that the District Court rule in Moyes's favour except for legal fees and expenses the NHL incurred after Nov. 2, 2009 – the closing date of the sale. That part of the claim, a relatively small amount, will have to go before a jury because the NHL has demanded a jury trial.

NHL deputy commissioner Bill Daly said in an e-mail that "we were not surprised with the decision, and we look forward to exercising our right to appeal all aspects of Judge Baum's rulings." Daly also noted the District Court will hear the remainder of the NHL's claim in a new trial, which indicates the league remains hopeful of getting around Justice Baum's recommendation and salvaging at least part of its $145-million claim.

"This is a very significant court win for Jerry Moyes," said Steve Susman, the head of Susman Godfrey LLP, the law firm that represents Moyes, adding that the decision proves Moyes "acted at all times in the best interests of the franchise."

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