Judge grants Ottawa Senators bankruptcy protection
With financial losses piling up off the ice, the National Hockey League's Ottawa Senators won temporary bankruptcy protection on Thursday.
Owner Rod Bryden said he hopes the team will be able to stay in the city. But he warned that one of the deciding factors will be whether fans buy tickets. If the seats can't be filled now, while the Senators are in or near first place in the league, investors will be scared away.
"This isn't the big bad banks chasing us out of town," Bryden told a news conference. Investors simply want a fair return, and are quite willing to keep the team where it is as long as they can make a profit, he said.
"We need to decide whether or not we are going to have a team in the city and whether we're prepared to pay for it. There is a marvellous opportunity to have this asset here at today's values, soundly funded."
After a decade in Canada's capital city, "there is more than a chance" the Senators will be sold and moved to another location, he said.
"The challenge for Ottawa is, will it benefit from those 10 years of effort and that investment?" Bryden said. "Or, will it build a marvellous asset to watch the Stanley Cup final on television?"
A court-appointed monitor, PriceWaterhouseCoopers, has been told to start searching for potential buyers for the club.
Senators get $13.7 million to pay bills
The bankruptcy request, a long-expected legal manoeuvre, was filed in an Ottawa court Thursday afternoon. After reviewing the papers, a judge agreed to give the Senators protection from creditors until at least Feb. 10. Extensions may be offered.
The team, which asked the court to keep its financial records and restructuring plans confidential, was expected to seek similar protection from creditors in the United States.
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The Senators owe about $160 million Cdn, including $14 million to the NHL, $40 million to the Canadian Imperial Bank of Commerce (CIBC), and $20 million to FleetBoston Financial Corp, based in the United States.
Under the deal, the Senators will get $13.7 million Cdn in short-term financing from CIBC and FleetBoston Financial. The money will be used to pay some overdue bills.
Although racking up victories in the win column this season, the Senators are in a financial mess. They haven't paid rent for months, didn't meet their last player payroll, and have reportedly defaulted on loans.
Bankruptcy protection lets a company keep operating, with its assets protected from creditors for a limited time, while it tries to make arrangements for new financing and a long-term business plan.
Filling for protection under the Companies Creditors' Arrangement Act similar to Chapter 11 in the United States makes it easier for the team to be sold and moved.
Ottawa's Corel Centre, where the team plays, is technically owned by Bryden. But the arena is now effectively controlled by the U.S. company that built it, Covanta Energy Corp., because the company is owed $210 million.