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Erie Otters go into bankruptcy, as Sherry Bassin tries to facilitate sale
The long tale of the scuttled sale of the Erie Otters to Edmonton Oilers owner Daryl Katz continues to uncurl. The Otters have taken the step of filing "a voluntary Chapter 11 petition" while managing partner Sherry Bassin tries to sell the Ontario Hockey League team.
It comes on the eve of Connor McDavid and Co. beginning an OHL conference semifinal against the London Knights. Good timing, right there.
Long story short, between 2011 and '13, the Otters franchise was a kind of Trojan horse for Katz to try to get control of the hockey lease at FirstOntario Centre in Hamilton (which, of course, will now be home to the Hamilton Bulldogs franchise). That didn't happen after the Otters scored a victory in court that bought Bassin time to look for a buyer. Reading between the lines, though, the Oilers, through their subsidiary, don't appear to have gone away. Hence the filing.
From Ed Palattella (@ETNPalattella):
Bassin also said the Otters remain for sale, and that the team will continue to seek buyers and pay all the team's creditors through bankruptcy. The Otters have retained a broker, Game Plan Special Services LLC, of Florida, to market the team.
"This will have absolutely no effect on Otters playoff games, on our staff, on our players, or any of our hockey or business operations," Bassin said. "The Erie Otters Hockey Club has a strong and fundamentally sound underlying business. The team, the Ontario Hockey League and our corporate partners will be fully protected during this process."
"Today's filing provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain normal operations of the hockey club as it fights toward an OHL championship, and smoothly continue the ongoing sale process. All of our efforts are focused on concluding this process in an efficient and successful manner."
The bankruptcy stays any action by the Oilers to force a sale of the team to recover what the Oilers claim were $4.6 million in loans that team made to the Otters in exchange for a deal to buy the Otters from Bassin. The deal collapsed, leading the Oilers to sue in [U.S.] federal court.
A judge in U.S. District Court in Erie dismissed that suit in December, but the Otters today said the Oilers, through a subsidiary, the Ontario Major Junior Hockey Corp., or OMJHC, announced it planned to conduct a "private sale" of the assets of Erie Hockey Club today under the Uniform Commercial Code of Pennsylvania. (Erie Times-News)
It is ugly.
The Otters' cash-flow issues stem from the period prior to McDavid's maturation when they were mired near the bottom of the OHL, finishing dead last in the season 2011-12 BC (Before Connor) and second-last during the wunderkind's rookie season. Attendance was fewer than 3,000 fans per game. It's risen with the extra sizzle that comes with winning.
It's not clear where this will end, but man is it ever nasty. It's certainly poor publicity for the OHL, in the wake of having two franchises sold and moved (Bellevillle/Hamilton, Plymouth/Flint), to have the team that its best drawing card plays for caught up in such ugliness.
The David Shoalts Globe & Mail report on the Katz/Bassin row in January depicted OHL commissioner David Branch viewing it as "a private dispute between Bassin and his lender which did not affect ownership of the team." Not getting involved was probably a wise move at the time, but now it's sort of blown up.
The Erie Times-News reported March 1 that Owen McCormick, an investor in the city's minor-league baskeball team, has been approached about buying the Otters.
(Stick tap: Greg Brady.)
Neate Sager is a writer for Yahoo! Canada Sports. Follow him on Twitter @neatebuzzthenet.
