OHL Erie Otters

Erie Hockey Club Implements Voluntary Chapter 11 Reorganization

Published on April 8, 2015 under Ontario Hockey League (OHL)
Erie Otters News Release


Erie Hockey Club Limited, the owner of the Erie Otters hockey team, announced today that it has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Western District of Pennsylvania. Erie Hockey Club expects to continue to conduct business as usual while it devotes continued efforts to complete the process to find new ownership for the Erie Otters hockey team and pay all creditors all amounts owed.

"This will have absolutely no effect on Otters playoff games, on our staff, on our players, or any of our hockey or business operations," said Sherry Bassin, owner and General Manager of Erie Hockey Club. "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."

Erie Hockey Club announced in December 2014 that it had retained Game Plan, LLC, an investment banking firm which specializes in the sale of sports franchises, to market the franchise. Game Plan, which recently concluded the successful sale of the Erie SeaWolves franchise, has stated that it has received several indications of interest from potential buyers which are in the range of the prices which have been reported with respect to other recent sales of Ontario Hockey League franchises. Game Plan expects that the sale process will be successfully concluded following the completion of the 2014-2015 season, and well before the beginning of the 2015-2016 season.

Erie Hockey Club has been in an ongoing legal dispute with its secured lender, Ontario Major Junior Hockey Corporation (OMJHC), an affiliate of the Edmonton Oilers. In November 2014, OMJHC attempted to confess a judgment against Erie Hockey Club in the Federal District Court for the Western District of Pennsylvania and to potentially attempt to execute on the assets of Erie Hockey Club. That action, however, was dismissed by the Federal District Court.

OMJHC subsequently announced that it would conduct a purported "private sale" of the assets of Erie Hockey Club on April 8, 2015 pursuant to its alleged rights as a secured creditor under Article 9 of the Uniform Commercial Code of Pennsylvania. Erie Hockey Club strongly disputes the legality of this threatened action. However, despite repeated requests that the OMJHC refrain from pursuing this course of action, and permit Game Plan to finish the sale process in the ordinary course of business, OMJHC has refused to cancel this purported private sale.

The filing of the Chapter 11 petition automatically stays any actions of OMJHC against the assets of Erie Hockey Club. It is Erie Hockey Club's intention to conclude the sale process in Chapter 11, which will allow the sale to proceed in an orderly manner and without interference by OMJHC, i.e., the Erie Otters franchise will be sold free and clear of any claims by OMJHC. The proceeds of the sale are anticipated to be far in excess of all creditor claims (including those of OMJHC), and it is anticipated that all creditors (other than OMJHC) will be paid in full at the conclusion of the sale process. With respect to OMJHC, it is anticipated that any monies due OMJHC will be escrowed while the claims of OMJHC and Erie Hockey Club against one another are litigated in the Bankruptcy Court.

"We believe that the legal actions threatened by OMJHC are unlawful and potentially damaging to the Otter players, the Ontario Hockey League and the ongoing professional sales process. With this continued threat and its detrimental repercussions hanging over the franchise, we believe that this filing was in the best interests of all parties," Bassin continued. "We are disappointed that after multiple requests and open communication as to the ongoing status of the sale process, OMJHC would not agree to delay what we believe to be are unlawful actions except on terms that were unreasonable and unworkable. By continuing our operations under Chapter 11 protection, the players will be allowed to continue to do what they do best without any confusion from the threatened actions and the sales process will be allowed to continue unencumbered. I am committed that the team will be adequately funded and I am optimistic this process will ultimately ensure that the franchise will be financially and competitively successful."

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