Shhh.. Big Day in Phoenix

Sometimes the big days in a court case are the ones that nobody talks about. Today could well be such a day in the Coyotes case. Today is largely about where the public spotlight will be allowed to shine as the bankruptcy proceeds.

Moyes wants the Reinsdorf bid to be fully disclosed. He wants all the details of the discussions with Glendale and the NHL to be made public. As the Reinsdorf offer is about to be structured there is no money for Moyes. The Reinsdorf bid is largely about restructuring the lease with Glendale and making a deal with the outstanding creditors. Reinsdorf’s position is that neither Moyes nor Gretzky are creditors, but are in fact equity owners of the Coyotes, and as such they have no claim to the proceeds of the sale. The NHL and Glendale want Moyes and Gretzky’s records made public so that the court can determine whether Moyes and Gretzky have any claim as creditors.

The fact that the NHL is willing to accept an offer that does not pay Moyes a penny is the reason that Moyes declared bankruptcy in the first place and is why he is backing the Balsillie bid.

Balsillie and his bid are not dead yet. His bet is that nobody is willing to purchase the Coyotes with the long term intent of keeping them in Glendale. Normally he would not have a chance to make this gamble work since the NHL has been known for making backroom deals and providing future considerations for parties that it wishes to deal with.

Moyes and Balsillie won the first big battle of this case when the court ruled that the bankruptcy petition was valid and took control of the sale. This has prevented the NHL from steamrolling ahead with their plan.

What I find interesting is that the US Trustee has now entered the proceedings and is very interested in finding out what, if any, side deals are in place with the Reinsdorf offer. What sparked their interest was Bettman’s initial comment about there being three other groups interested in purchasing and keeping the team in Phoenix, followed by Daly’s big mistake in stating that the other three bids coalesced around the Reinsdorf bid. This smacks of collusion and immediately got the Trustee involved. The Trustee now wants full disclosure of who the other bidders were, why they decided not to pursue their bid and whether the NHL was involved in promoting one consolidated bid by Reinsdorf. That type of activity compromises the integrity of the bankruptcy process, undermines the concept of an open auction, and hurts the creditors. Sounds like the beginnings of some anti-trust concerns doesn’t it?

If the judge rules that the NHL, Glendale, Reinsdorf, etc. must submit to full disclosure of all matters, I think that the whole Reinsdorf offer may fall apart. I do not believe that Reinsdorf, or any other purchaser, is willing to commit to Glendale long term. I also doubt that a respected businessman like Reinsdorf will be willing to submit to such public scrutiny of his offer.

If this bid falls apart, the Phoenix only auction will likely fall apart as well. The next step in the process that the judge laid out is the September auction for parties wishing to relocate the Coyotes. That is when Balsillie steps back into the fray and that is when other legitimate bidders may pop up as well.

If on the other hand the judge rules that Moyes and Gretzky are not creditors and denies Moyes’ full disclosure motion, then the NHL, Reinsdorf and Glendale may well get to work out a deal and keep the team where it is, for a couple of years.

Let’s see what happens. Today could be a very big day.