A bankruptcy judge has rejected the proposed sale of the team to Canadian billionaire Jim Balsillie, who would have moved the team to Hamilton, Ontario.
Judge Redfield T. Baum issued a 21-page ruling late Monday afternoon, concluding that the June 29 deadline imposed by Balsillie did not allow enough time to resolve the complex case.
"Simply put, the court does not think there is sufficient time (14 days) for all of these issues to be fairly presented to the court given that deadline," the judge wrote.
Baum also wrote: "This court cannot find that antitrust law, as applicable non-bankruptcy law, permits the sale free and clear of the relocation rights of the NHL. Accordingly, the June 22nd auction date and other deadlines related thereto are vacated."
The ruling is a victory for the NHL, which had argued Balsillie was using the U.S. Bankruptcy Court to make an end-run around the league's rules over who owns teams and where they are located.
"We're pleased the Court recognized the validity of League rules and our ability to apply them in a reasonable fashion," NHL Deputy Commissioner Bill Daly said in a statement released Monday night. "We will turn our attention now toward helping to facilitate an orderly sales process that will produce a local buyer who is committed to making the Coyotes' franchise viable and successful in the Phoenix/Glendale area. We are confident that we will be able to find such a buyer for the Coyotes and that the claims of legitimate creditors will be addressed.”
The judge's decision is also a win for the city of Glendale, which had spent $183 million to build an arena for the Coyotes and had contended the franchise could not use bankruptcy to evade its lease.
This is the third time Balsillie - whose company makes the Blackberry - has tried and failed to buy an NHL team. His previous attempts to purchase the Pittsburgh Penguins and Nashville Predators fell through.
Coyotes owner Jerry Moyes took the NHL by surprise when he filed for Chapter 11 bankruptcy on May 5, proposing to sell the team to Balsillie for $212.5 million, contingent on the franchise moving to Hamilton, Ontario.
The NHL said that Commissioner Gary Bettman was in a car on his way to deliver a letter of intent to Moyes from Jerry Reinsdorf to purchase the team and keep it in Glendale. However, any bid to buy the team in Arizona will be far less than the offer Balsillie made.
The NHL says it has had four parties, including Reinsdorf, file preliminary applications to investigate purchasing the team and keeping it in Arizona. However, if no buyer can be found, the league would look to relocate the franchise.
Moyes and Balsillie had contended that the team would never succeed in Arizona and would flourish in hockey-crazy Ontario. But the move raised territorial rights issues because of the proximity of the Toronto Maple Leafs and Buffalo Sabres.
Baum had raised the specter of a fee due to the NHL and the teams if the franchise moved.
Moyes had wanted the court to auction off the team on June 22, but the ruling vacated that hearing. The NHL says it wants to have a new owner for the team by September. The league has said it will fund the team for the coming season, if necessary.