I am not at all a bankruptcy expert, but I have watched the Administration's efforts to evade bankruptcy law in favor of the UAW and at the expense of secured creditors with great interest.
I am wondering now whether something similar might be going on in the Phoenix Coyote's hockey team bankruptcy. The Coyotes are in bankruptcy, and the former owner (there is actually an interesting question as to whether he still is the owner) has solicited an offer of $212.5 million for the team from Jim Balsillie, contingent on Jim moving the team to Canada. This amount would pay off some but not all the creditors and would not leave the stadium authority whole on their lease (though I have limited sympathy there, as I begged and pleaded for our local governments not to subsidize hockey in Arizona).
Now, the league is demanding an extra $100+ million to be paid to the other team owners by Balsillie as a relocation fee for the team as an adjunct to the sale. There is some sense that this is a poison pill to kill the deal, because the league is mad that a) this sale is happening without its involvement and b) they sense the team has not done enough to keep the team in Arizona.
Nevertheless, if Balsillie were to agree to pay the extra $100 million, isn't this a total ripoff of creditors? In effect, he will be paying $312.5 for the team, but structuring the transaction so NHL team owners, rather than Coyote's creditors, get $100 million of the transaction. Am I missing something?
Disclosure: Jim Balsillie and I were section-mates at HBS.