The cash-strapped Buffalo Sabres filed for bankruptcy protection Monday, becoming the second NHL franchise in four days to seek credit relief.
The Ottawa Senators filed for bankruptcy protection on Thursday.
"This filing is another step toward the resolution of Buffalo's issues," NHL commissioner Gary Bettman said in a statement.
"It will enable the Sabres to secure financing that will allow them to continue to operate in the ordinary course, subject to league supervision, while the sale process is completed."
The Sabres, like the Senators, were in need of short-term operating capital. The banckruptcy protection move allows the team to re-organize its debt, securing interim financing which will allow the club to pay staff and players while continuing day-to-day operations.
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The Sabres are currently without an owner and are operated by the league. The NHL took control of the club after the financial downfall of owner John Rigas and his Adelphia Communications Corp., which is also currently under bankruptcy protection.
Court papers released Monday indicated the club owes its top 40 creditors more than $206 million US, including $130 million to its largest creditor, Adelphia.
The $130 million was used by Rigas to help purchase and operate the Sabres.
The court documents also revealed a varied list of creditors, ranging from the City of Buffalo ($750,000 claim for ground rent) and NHL's Pension Society ($29,937), to deferred signing bonuses for players Curtis Brown ($133,000), Jay McKee ($133,000) and Brian Campbell ($25,000).
Former Sabres forward Brad May, now with the Phoenix Coyotes, is also listed as being owed $104,000 in deferred compensation.
The Vancouver Canucks are another creditor of note. The Canucks list a $442,000 claim for an unspecified contract.
Sabres spokesman Mike Gilbert said the team would not immediately comment on the bankruptcy protection filing.
"I don't think this is any surprise to anyone," said Buffalo Mayor Anthony Masiello.
"I think this could be a solution to stabilize the team. It could be a solution that leads to more stabilized ownership and obviously when you reorganize debt, you make the asset better not worse."
The Sabres aren't without suitors looking to buy the financially-troubled team.
On Friday, the NHL granted Buffalo businessman Mark Hamister his second week-long extension to put together a deal to purchase the club.
The league awarded Hamister and majority partner Todd Berman, a New York City financier, conditional approval to buy the Sabres in November, but the bid hinges on Gov. Gerorge Pataki's approval of a $33-million US assistance package.
Hamister has said without the aid, he'll withdraw his plan to buy the cash-strapped club. He is having discussions with Empire State Development Corporation officials, but nothing had reached the governor's desk by Friday afternoon, according to Pataki spokeswoman Suzanne Morris.
Hamister's request for state assistance involves refinancing of a $22.9-million loan on the construction of the Sabres' home rink -- the HSBC Arena -- and $10 million in capital improvements to the six-year-old facility.
He has also sought assistance from county and city governments.
"There's an honest dialogue going on between professional people with good ideas," Hamister said. "It's probably not unlike a sporting event: The only thing that counts is the final result."
Bettman has stated in the past that if Hamister's group is unable to complete the purchase of the Sabres, the team could be in danger or relocating or folding.
Earl Wells, a Hamister spokesman, said he would not comment on the expected bankruptcy filing prior to Monday's announcement.
"For us to have any comment would be inappropriate," said Wells.
with files from Canadian Press