PHOENIX – A U.S. Bankruptcy Court judge is ordering the owner of the Phoenix Coyotes to show why he should not be held in contempt of court.
Judge Redfield T. Baum ordered Jerry Moyes, his wife Vickie and their lawyers on Tuesday to appear at a show-cause hearing on Wednesday morning. The Moyes’ and their lawyers must show why they should not be held in contempt for “willfully violating” the confidentiality order issued by the judge on July 18 in the exchange of information between parties in the team’s bankruptcy case.
Moyes’ filing last Friday included details of negotiations between potential buyer Jerry Reinsdorf and the city of Glendale.
Glendale sought the contempt order on Monday, saying the city was “absolutely outraged” by the release of the information.
“Significant damage to the integrity of the sale process had been done and the whole sale process was compromised,” the city said. “This is not an overstatement or hysterical reaction. It is the very harm that was not supposed to happen.”
According to the city, the Reinsdorf group “expressed its complete disbelief that such confidential material was released by Moyes and threatened to walk away from the bidding process.”
In addition to Moyes and his wife, the show-cause order names the law firm of Jennings, Strouss & Salmon, PLC. The firm represents Moyes as an individual in the complex case. A separate firm not subject to the show-cause order handled the bankruptcy filing on May 5 with Moyes listed as the lead creditor.
Glendale is seeking “that appropriate relief be fashioned immediately to curb and mitigate the chilling effect this disclosure and willful violation” will have on the sale process.
Reinsdorf’s group has offered US$148 million to buy the team and keep it in Glendale, but according to the material in the Moyes filing the deal would include controversial and yet-to-be-approved agreements with the city.
Moyes opposes the Reinsdorf deal, which would give him little or no money. He supports a proposal by Canadian billionaire Jim Balsillie to buy the team for $212.5 million and move it to Hamilton. That deal would give Moyes about $100 million.
The NHL has unanimously rejected Balsillie as an owner.
On Monday, Baum delayed the sale of the team to anyone who would keep the franchise in Arizona until Sept. 10. The sale had been set for Wednesday, but the NHL asked for another month while another potential bidder puts a proposal together.
Baum is considering whether to open the Sept. 10 date to bidders who would move the team.
According to Glendale’s filing, details of the negotiations that should have been made confidential were included in an appendix to Moyes’ document filed on Friday. When city lawyers objected, the appendix was removed from the public record.
“The damage had already been done,” the city said. “The press, public groups and other bidders had a chance to review this confidential information.”
The Arizona Republic saw the appendix before it was removed.
It showed that Reinsdorf has asked for a special taxing district to be created near the arena that would pay the new owners as much as $23 million next year. And if the team was still losing money after five years, Glendale would have to pay Reinsdorf $15 million for each year of losses or allow the team to be sold and moved without penalty, according to the newspaper.
Now, in place of the appendix in court records, is a statement that reads “The attachment originally filed under this docket entry has been removed. The removed attachment contained confidential information and therefore was removed at the request of the attorney.”
The city contended the Moyes filing itself also includes material that should have been made confidential, and that information remains on the public record. Among other things, the filing says Reinsdorf has told the city that he needs $23 million a year in new revenue through a modified lease agreement or the business cannot be successful.