The National Hockey League said in court filings this week that the Phoenix Coyotes could have ceased operations during the middle of the 2008-09 season without cash injections from the league, and that team owner Jerry Moyes signed proxies and other documents giving the NHL control of the team in November.
The NHL court filings said the Coyotes’ financial situation was bad enough that the team could have ceased operations during the middle of the season, which would have resulted in forfeited games and a franchise shutdown. That would have sparked lawsuits from vendors, players not being paid, season-ticket holders with invalid tickets, and embarrassment for the league, the NHL said.
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NHL court filings contend Moyes legally signed over majority control of the team in November after receiving loans. The league did not officially remove Moyes as owner and Coyotes CEO until May 5, after he filed Chapter 11 and proposed the sale to Balsillie.
“Upon execution of the November proxies, the NHL commissioner, Gary Bettman, was thereafter completely responsible for, without limitation, the removal and appointment of club executives (including Mr. Moyes), decisions on delegating day-to-day responsibilities to club personnel, loan and financing decisions, any changes to the club’s equity structure, the sale of any club assets, voting and consent rights under the franchise operating agreement and other agreements, and most notably here the voluntary or involuntary bankruptcy, dissolution, liquidation, termination or reorganization of the club and/or any of its subsidiaries,†the NHL filing contends.
“Accordingly, as of Nov. 14, 2008, only the NHL commissioner was authorized to sell the club or seek voluntary bankruptcy on its behalf,†the league argues.