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It was not a knockout blow but it came as quickly as one, seconds after Jim Balsillie's major opponent threatened to quit the match, and it rocked his bid to buy and move the Phoenix Coyotes to Hamilton.

The drama came in mid-afternoon yesterday, just after U.S. Bankruptcy Court Judge Redfield T. Baum said he would call a recess for lawyers to agree on a schedule for motions and filings for a hearing in advance of the Sept. 10 auction sale of the Coyotes. Up to that point, the hearing was droning on, with lawyers representing the NHL, Coyotes owner Jerry Moyes and the City of Glendale arguing over what issues should take priority at the hearing and just who should be subject to examination.

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Then Adam Klein, a lawyer for Chicago White Sox owner Jerry Reinsdorf, was given the floor. Or, rather, the ceiling, as he was participating by telephone and his strident tones came down from a speaker.

Klein told the court Reinsdorf might withdraw his bid because confidential information was made public last week. Reinsdorf and city officials were enraged when a lawyer for Moyes mistakenly revealed in a court filing that Reinsdorf was demanding as much as $23-million (all currency U.S.) a year in subsidies from suburban Glendale as part of a new arena lease.

"My client did not get into this process for the privilege and honour of wasting time and money being deposed [by Moyes' lawyers]and now having information given to the NHL ... being disclosed to other parties," Klein said. "If that is going to continue to occur, I don't know how much longer he is going to be here wasting time and money."

That may have unsettled NHL commissioner Gary Bettman, who came to court yesterday prepared to testify that it would be impossible for the Coyotes to move, as Balsillie wishes, by the start of this season. Even though he played it down afterward, the commissioner was surely lifted by what happened seconds later.

Steven Abramowitz, a lawyer representing the Coyotes largest secured creditor, a company owned by computer tycoon Michael Dell, walked to the podium to deliver the worst shot of the day to Balsillie.

The court was told SOF Investments, Dell's company that is owed more than $80-million, reached an agreement with Reinsdorf on how to handle the Coyotes' debt to the hedge fund. Abramowitz said Reinsdorf agreed "to a substantial pay down and rollover of the remainder of the debt."

If Reinsdorf can now reach an agreement with Glendale on a new arena lease, Abramowitz said, "we will support his bid."

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It was a figurative punch in the gut for Balsillie, whose $212.5-million bid for the team was kept alive last week by Baum after Abramowitz told the court it was the only one, at the time, that paid SOF in full.

But Abramowitz added that SOF reserved its rights to make an acceptable deal with any other bidders and it did so in the last week with Reinsdorf, the Chicago White Sox owner who has offered $148-million for the team and plans to keep it in the Phoenix suburb of Glendale.

Balsillie took another shot after the recess when Baum then agreed with the NHL's request to decide if the BlackBerry billionaire was a qualified bidder and called the Sept. 2 hearing.

The NHL says Balsillie should be barred from the Sept. 10 auction because its governors unanimously rejected him as a potential owner last month.

Even though Baum followed that rejection by ruling last week that Balsillie was still in the bidding, that could change if the NHL manages to persuade the judge that its bylaws and constitution are valid under the U.S. Bankruptcy Code. The lawyers for Balsillie and current Coyotes majority owner Jerry Moyes will argue they are not.

Richard Rodier, Balsillie's chief legal strategist, admitted the day's events, especially the SOF announcement, were a setback but said they are far from out of the game.

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"It's like I said a long time ago, bankruptcy is a funny process," he said. "There are ups, downs and sideways. You can't get too hepped up about the highs and too down about the lows."

But, Rodier admitted, "it's a theoretical possibility" that Balsillie could be knocked out of the bidding on Sept. 2 if the judge sides with the NHL. "But I don't want to speculate on that."

Bettman also stayed on an even keel about the hearing.

"There are a lot of developments and this is just another step on the road," he said, "a road that begins and ends in Glendale."

The comments by Reinsdorf's lawyer were also sparked by the requests from Balsillie's and Moyes's lawyers to examine Reinsdorf again. He was questioned by Moyes's lawyers recently and they want another session with him, which was denied by Baum. They also want all of the documents connected with his bid and that of the other group seeking to keep the team in Glendale, Ice Edge Holdings LLC.

The judge denied those requests firmly, saying he was concerned that turning over so much information on the bidders would discourage any other bidders from coming forward.

"If someone says there is this crazy judge in Arizona who throws [confidential information]all out there, businessmen will say, 'I'll take my chequebook and go elsewhere,' " Baum said.

While Ice Edge, a group of Canadian and U.S. businessmen, has still not filed a formal bid with the court, one of its leaders said yesterday things are going well. Like Reinsdorf's bid, one of the conditions is that a new arena lease is negotiated with Glendale and one of the Ice Edge principals, Daryl Jones, said talks are progressing.

"We feel great about both our financing and negotiations with the City of Glendale," Jones said in an e-mail message.

If there is time, Baum will also decide at the hearing if the arena lease with Glendale, which has 26 years to run, can be broken with a limited financial penalty by a bidder who wishes to relocate the team.

The hearing ended with the lawyers for all sides directed to agree on a schedule by today for discovery examinations, motions and objections in advance of Sept. 2.

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