Interest in Erie Otters’ fate stays high, in and out of court

April 12--When an asset goes up for sale in U.S. Bankruptcy Court, one goal is typically paramount.

The judge wants to make sure the asset sells for as much as possible so that the creditors get paid as much as possible.

That goal is still the overriding factor in the bankruptcy case of the Erie Otters, which started when the Ontario Hockey League franchise filed for Chapter 11 protection Wednesday.

However, based on comments during and after the first hearing in the case, on Friday, whether a buyer keeps the team in Erie is of interest to the owner of the Otters, Sherry Bassin, as well as U.S. Bankruptcy Judge Thomas P. Agresti.

As the current owner, Bassin is selling the team in bankruptcy to meet its debts, including $4.7 million in loans and costs owed to a subsidiary of the NHL'sEdmonton Oilers.

Bassin will decide which bids for the team he and his broker, the Florida-based Game Plan Special Services LLC, submit for Agresti's approval.

Agresti would pick the buyer after holding an auction at which other prospective bidders -- including those not preferred by Bassin -- could make offers in open court.

Bassin said he wants to keep the team in Erie, and that the prospective bidders' intentions for the team would be among his considerations -- under certain circumstances.

If all of the offers for the Otters "are in the competitive range, my preference is for the team to stay in Erie," he said after Friday's hearing at the federal courthouse in Erie.

'Sigh of relief'

More assurances that the Otters could stay in Erie came during the hearing, from the only witness, Robert Caporale, the chairman of Game Plan.

He said he had received one formal offer to date, and expected to get three more soon. Of those four interested parties, he said, all but one "have given us the indication they want to keep the team here."

That remark elicited notable interest from Agresti, who specifically asked Caporale whether any of the bidders -- the offers remain confidential -- want to keep the team in Erie.

After hearing Caporale's response about three of the four bidders' intentions, Agresti said, looking toward the reporters in the gallery, "at least now, a sigh of relief."

He also stressed the transparency of bankruptcy proceedings, in which the fate of "a private asset" -- the Otters -- becomes a public matter under the U.S. Bankruptcy Code.

"We have a community asset as well," Agresti said of the team. He said the openness in court is important so "the community be made aware of what is going on."

Assets and debts

Whether those remarks point to a judicial preference for keeping the Otters in Erie is hard to determine. Under the law, as one veteran bankruptcy lawyer said, a judge in bankruptcy court wants to make sure a debtor satisfies the most debts.

However, said the lawyer, Lawrence Bolla, Agresti could consider the prospective buyers' intentions for the team -- to stay or leave -- if the competing bids for the team are similar in most other respects, including price.

"If it is even or close, it could be considered," said Bolla, who represents a creditor in the case.

The Otters' total debts are about $4.9 million, including the $4.7 million claimed by the Oilers' subsidiary, Ontario Major Junior Hockey Corp., one of Bassin's lawyers, Nicholas Pagliari, said in court. Caporale, the broker, said the Otters are worth $8 million to $10 million, and he said a sale would more than cover the team's debts.

Bassin filed for bankruptcy to get an automatic stay from the Oilers' attempt to force a sale to collect the $4.7 million debt. Such a sale would have taken control of the sale process away from Bassin.

He got the money from the Oilers starting in 2011 to help pay expenses when the Otters were performing poorly. In return for the loans, according to court records, Bassin was to sell the Otters to the Oilers, who were to move the team to Hamilton, Ontario -- a relocation detailed in the agreement Bassin signed with the Oilers' subsidiary, Ontario Major Junior Hockey Corp.

Bassin's sale to the Oilers, which was supposed to occur first in 2013, never happened, leading the Oilers to demand repayment.

Stay or go?

Another OHL team, the Belleville Bulls, have since relocated to Hamilton, eliminating that city as a potential home for the Otters. And Bassin and Caporale said they believe Erie is the best fit for the team, which is enjoying one of its best seasons in years and is in the second round of the OHL playoffs.

Caporale said he expects even more formal offers for the Otters -- Agresti has set no deadline -- and he predicted many of those bidders also will want to keep the team in Erie.

He said the only requirement -- other than ultimate approval from Agresti and the OHL -- is that the new owner assume the Otters' current lease at Erie Insurance Arena, which lasts another four years. A guarantee that the Otters stay in Erie for the long term is not a requirement, Caporale said in an interview.

"I don't think we are going to have that problem," Caporale said of the Otters leaving Erie. "I really don't."

ED PALATTELLA can be reached at 870-1813 or by e-mail. Follow him on Twitter at twitter.com/ETNpalattella.

___

(c)2015 the Erie Times-News (Erie, Pa.)

Visit the Erie Times-News (Erie, Pa.) at www.GoErie.com

Distributed by Tribune Content Agency, LLC