Dallas Stars Lenders Said to Vote in Favor of Pre-Packaged Bankruptcy Plan
By Steven Church – Sep 14, 2011 12:01 AM ET
The Dallas Stars, the hockey team owned by former billionaire Thomas Hicks, won support from lenders for a plan file bankruptcy and sell the club at an auction, a person familiar with the results said.
Under the proposed bankruptcy plan, investor Tom Gaglardi, chairman and chief executive officer of Sandman Hotels, Inns & Suites, would be the lead bidder for the team, said the person, who declined to be identified because the plan isn’t yet public.
Among lenders who voted, those holding more than two-thirds of the Stars’ bank loans support the proposal, the person said. The team plans to file bankruptcy, most likely in Wilmington, Delaware, within the next few days and seek approval from a judge to hold an auction, said another person involved in the bankruptcy planning.
The Stars would be the fifth professional sports team to file bankruptcy in the last two years. The Los Angeles Dodgers baseball team filed in June, the Texas Rangers baseball team filed last year and the Chicago Cubs baseball team filed in 2009, one year after former owner Tribune Co. went bankrupt.
The Phoenix Coyotes hockey team filed in 2009 and, like the Rangers and the Cubs, was sold under court supervision. The National Hockey League took ownership of the Coyotes and is looking for a buyer willing to keep the team in Arizona.
Hicks, 65, fell off the Forbes list of billionaires in 2010. Hicks’s holding company for the Stars and the Rangers defaulted on $525 million in loans after missing interest payments, Bloomberg data show.
When the Rangers filed bankruptcy, the same group of lenders fought a proposal by the team and Major League Baseball to sell the club without holding an auction to a group led by Chuck Greenberg and Nolan Ryan in a transaction worth about $575 million.
The lenders persuaded U.S. Bankruptcy Judge D. Michael Lynn to require an auction, where the price went up to $593 million. Because of the way the new sale was structured, money recovered for creditors increased by about $100 million more than the team would have received under the original deal.
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