We're still trying to gather all available information after the Dallas Stars filed for bankruptcy this evening in Delaware but in the meantime we wanted to share all of the information that we do know. We're going to be taking a look and trying to make sense of all of the financial information associated with the bankruptcy and the sale and I hope to have that information up first thing in the morning.
In the meantime, good number of facts have become much clearer this afternoon and we have a good idea of what to expect moving forward.
First of all, as we reiterated yesterday, the Dallas Stars filing for bankruptcy is a planned process that is being used to expedite and facilitate the sale of the team. This is not a direct reflection of the current financial status of the team and this will in no way affect the everyday business of the team or the organization. We also want to make this clear once more: there is zero threat of the Dallas Stars being relocated, no matter who might purchase the team.
The Dallas Stars are still operating under the budget and payroll previously approved by the lenders and the NHL and that will not change as the sale moves forward under the watchful eye of the bankruptcy courts.
Much more after the jump...
This prepackaged bankruptcy filing was needed in order to cleanly complete the sale, given the nature of the amount of lenders involved the types of debt associated with Hicks Sports Group and the Dallas Stars. Unlike the Texas Rangers last year, the lenders have pre-approved this package and are in agreement that moving forward through bankruptcy is the best way in completing the sale.
With the Texas Rangers, there was a fight to avoid an auction as the original group that had reached an exclusive negotiating agreement felt they deserved the right to purchase the team; in this case, all parties involved have decided that not will moving to bankruptcy expedite the sale but that a possible auction is also needed.
The Dallas Stars have filed for Chapter 11 bankruptcy today, filing a motion to request a hearing for approval of the auction procedures. As part of this filing, the bankruptcy has been "pre-packaged" meaning that all that is needed is for the courts to approve all agreed-upon procedures as part of that filing. Chapter 11 also allows the debtor to maintain control of the business operations while in bankruptcy, under the jurisdiction of the court. This is what is allowing the Dallas Stars to continue to operate as normal as the sale process is completed through the courts.
The filing allows for a reorganization of financial assets and debts of the company that is filing. What is different in this filing compared to other Chapter 11 reorganizations is that this is a pre-approved plan by the lenders (creditors in this case). The courts are needed to ensure that all procedures and reorganization applies with bankruptcy law. Heading into bankruptcy court with a pre-approved plan will also expedite the process, compared to what happened last summer with the Texas Rangers.
It's expected that the hearing on the auction procedures could come as early as Monday. Once the court approves the auction procedures, there will be a 30-day period for any interested buyers to review the proposed plan by Tom Gaglardi to purchase the team. Any interested parties will need to be approved by the court to bid against Gaglardi, setting in motion an auction hearing for open bidding on the team.
Once there are bidders approved by the courts, the auction will occur approximately 30 days later.
This is where the 60 day window has come from; 30 days for review and approval of any potential bidders and then 30 days before the auction takes place. Similar to the auction for the Texas Rangers, there will be a successful bidder for the team who will then take ownership -- providing approval by the court and the NHL Board of Governors.
I'd expect that any potential bidder in this case would receive prior approval from the NHL to bid on the team and not just from the court, and I suspect that all the names we've heard mentioned prior to this filing have already received cursory approval by the NHL.
Just like with the Rangers, once the auction is complete there will be a few days for the actual transfer to take place before the new owner officially takes over.
The most important part to remember is all of this is that the Dallas Stars are going to be operating just as before, even while under the auspices of the bankruptcy court. As part of this pre-approved plan by the NHL and the lenders, the Dallas Stars have enough financial room to continue to run the organization, the AAC and the operate as before on the ice. The team is still headed to PEI this weekend for the opening of training camp, and all preseason game and regular season games will occur as planned. It was important to ensure, as part of this plan, that the everyday business of the Dallas Stars was not affected.
Right now, all that is known is the Tom Gaglardi's initial bid is being used to set the Chapter 11 filing and eventual sale of the team in motion. It's been speculated since last April that Gaglardi would be the "stalking horse" in this process, that his bid would be used as a starting point for other interested buyers.
As the months have dragged on, however, and Gaglardi entered and extended his "exclusive negotiation window", it's been speculated that other prospective buyers have fallen off. With the St. Louis Blues going up for sale in the past month, reports have stated that some of the interested parties in the Stars sale may have moved on to the Blues.
As far we can tell, however, there are still a number of interested parties in the Dallas Stars who could be looking to be approved by the courts as a bidder.
Doug Miller's (owner of the Allen Americans) name has been in the conversation ever since it was announced that the Dallas Stars were up for sale. While it's been quiet around Miller the past few months, I find it hard to believe that he won't take a good hard look at Tom Gaglardi's bid to see if he'd be able to come up with something better. At one point, it was thought that Miller was the leading candidate to purchase the club.
Mark Cuban's name has come up time and again as someone who would be interested as a part of a group, and likely not a controlling partner in the franchise. Who he'd be willing to work with, however, is not known. Like what happened last summer, there's a good chance that Cuban comes on at the last minute after reviewing the finances of the bid and the sale.
Billy Quinn, Managing Partner of Natural Gas Parnters and based out of Irving, has been mentioned as well as someone who might be interested and who was once in on the initial negotiations on making a bid on the team.
Finally, Chuck Greenberg has been a newcomer to the list of interested businessmen and there is a lot of smoke building around his level of interest in the team. Greenberg was a part of the ownership group that purchased the Texas Rangers last summer and he's made it clear that he believes in the Dallas area as one of the best markets in sports and the Stars as a franchise that is a viable business investment. More importantly, he believes in the power of fan relations and building a winner.
As of right now, Tom Gaglardi is the only official bid for the Stars. There have been reports over the past week that no other bids are expected given the nature of the finances of Gaglardi's bid; something that was planned going into these proceedings. Gaglardi has also made it known that he believes in building a winning franchise and that he's enthusiastic about the potential the Stars have in Dallas -- something you'd expect from a man who has gone through so many months of negotiations.
Once again, we wait. More news will come next week and we should start to learn soon whether any other parties are interested in making a bid on the team. In the meantime, we'll provide you with as much information and updates on the sale as we can.