PHOENIX -- The NHL is planning a showdown in court over the Phoenix Coyotes' filing for Chapter 11 bankruptcy and the proposed sale of the team to BlackBerry co-CEO Jim Balsillie.
League spokesman Frank Brown said attorneys for the NHL would appear Thursday afternoon at the hearing scheduled in U.S. Bankruptcy Court in Phoenix. He would not say what action the league would take, but commissioner Gary Bettman has questioned whether Coyotes owner Jerry Moyes had the authority to file for bankruptcy.
Moyes' attorney, Thomas Salerno, said any challenge by the NHL would have no merit.
"They are mistaken," Salerno told The Associated Press.
Balsillie's offer of $212.5 million to buy the Coyotes, made Tuesday, is contingent on moving the team to southern Ontario in Canada. The Coyotes were the Winnipeg Jets before moving to Phoenix for the 1996-97 season.
Meanwhile, Bettman expressed skepticism of Balsillie's bid, saying he isn't sure the billionaire could gain the approval of league owners.
"I don't know whether or not he could get approved," Bettman said Wednesday during a gathering of commissioners from the four major U.S. pro sports leagues, sponsored by The Wall Street Journal. "That's, as I said, something I don't get a vote on. If in fact it becomes an issue for board consideration, the board of governors of the league will make that decision."
The NHL removed Moyes from all positions of authority with the team after the league was caught by surprise by the bankruptcy filing on Tuesday.
Bettman wants to keep the team in Arizona.
"This is more about the tactic and I think a challenge to league rules than it is about economic condition of the club, which we believe can with new ownership and with the accommodations the city of Glendale is prepared to make, we think can succeed," Bettman said.
The team plays at Jobing.com Arena, a state-of-the-art facility that opened in December 2003 in the west Phoenix suburb of Glendale.
Glendale city manager Ed Beasley told the AP that an offer to buy the team and keep it in Arizona will be made soon.
"I can't elaborate on what entity or group," he said. "I will say we are very confident than offer will be made."
Salerno said Moyes would welcome another bid, but the top offer would get the team.
"Our job is to maximize the value of the asset," Salerno said. "We will sell this team to the highest and best bid."
Moyes has lost more than $200 million in equity and more than $100 million in debt with the Coyotes, Salerno said, although some of the debt will be paid as part of the bankruptcy settlement. Moyes is owner of Phoenix-based Swift Transportation, a trucking company that has suffered in the bad economy.
A series of events Tuesday had Moyes filing for Chapter 11 bankruptcy protection; Balsillie making his offer to buy the Coyotes; and the NHL stripping Moyes of his authority.
The Arizona Republic and TSN of Canada reported that Bettman and deputy commissioner Bill Daly were in Phoenix on Tuesday to work out a deal -- something Moyes was informed of on Monday.
That deal, TSN reported, would put the franchise in the hands of Chicago White Sox owner Jerry Reinsdorf.
Earl Scudder, Moyes' financial adviser, told the Republic that Bettman and Daly had wanted to give Moyes the proposal on Tuesday.
In the meantime, however, Moyes pursued actions that resulted in his filing for bankruptcy, thereby thwarting the league's plans. Bettman and Daly found out about the bankruptcy filing at 3:30 p.m. local time, according to the Republic.
When Moyes, Bettman and Daly finally met, Moyes was notified he was removed from any further business with the Coyotes, and that the league was taking over the team.
Bettman and Daly flew back to New York, and the NHL released a statement Tuesday night saying it was
"investigating the circumstances surrounding the [bankruptcy] petition, including the propriety of its filing."
The bankruptcy filing included the proposed sale of the franchise to Balsillie.
Bettman said Wednesday that the filing occurred "not because creditors were lurking and seeking redress for not being paid, but because there was an offer apparently from Mr. Balsillie to buy the franchise and move it."
"This is not about whether or not we want a franchise in southern Ontario. This is not about whether or not Mr. Balsillie would make a suitable owner that the owners would approve. This is about the league's rules and the enforceability of our rules," Bettman said.
This is Balsillie's third attempt to buy a team and move it to Canada. Previous efforts in Pittsburgh and Nashville fell apart over his insistence that the team be moved.
Balsillie established a Web site, www.makeitseven.ca, to solicit support for the Coyotes' move from Canadian hockey fans.
"We want those Canadian voices who want a seventh NHL team in Canada to be heard throughout the North American NHL market," Balsillie said in a news release.
The Coyotes have struggled, on the ice and especially at the bank, since the franchise moved from Winnipeg in 1996. The team never has made it past the first round of the playoffs since coming to Arizona and has not advanced to the postseason since 2002.
Meanwhile, crowds have dwindled and debts have mounted.
The franchise nearly moved to Portland, Ore., before hockey star Wayne Gretzky stepped in as managing partner in 2001 when developer Steve Ellman and Moyes bought the team for $90 million. Gretzky has coached the team for four seasons, failing to make the playoffs each year. He owns 1.5 percent of the team, according to bankruptcy documents. Gretzky has not been available for comment.
A successful bankruptcy filing could allow the Coyotes to avoid the $750 million penalty for breaking their 30-year lease with Glendale. But Beasley said that when the lease was forged with Moyes and Ellman it was worded with just such a possibility in mind.
"We're comfortable that we have put in the safeguards to get a very strong position out there to keep the team in the city of Glendale," Beasley said.
The bankruptcy filing lists the franchise's 40 top unsecured creditors. Moyes topped the list, claiming $103.8 million. BWD Group LLC, of Jericho, N.Y., an insurance and risk management company, is owed $1.3 million.
The city of Glendale is owed just under $900,000 and the NHL $271,000. Bingham McCutchen LLP, a Boston-based legal firm, is owed $423,000.
One powerful opponent would be the Toronto Maple Leafs, who have seen any proposed move as interfering with their geographical base and Bettman sounded as if the league wouldn't approve a move of the Coyotes right now.
"We generally try to avoid relocating franchises unless you absolutely have to," he said. "We think when a franchise is in trouble, you try and fix the problems. That's what we did in Pittsburgh and Ottawa and Buffalo prior to our work stoppage. That's what we did when the perception was that five out of the six Canadian franchises around the turn of the century were in trouble. We fixed the problems. We don't run out on cities."
Moyes' attorney Salerno, though, challenged the NHL's authority to block the franchise's move.
"Restrictions on movement violate antitrust law," he said.
Information from The Associated Press was used in this report.