Posted on Sep 12, 2011
Fox Sports reports today that the financial difficulties of the New Jersey Devils hockey team could end up with it being forced into bankruptcy, with them having missed a September 1 loan payment.  The Devils' past-due payment of roughly $100 million is owed to a CIT-led lending group. Devils Arena Entertainment (the team-owned company that operates the arena and guarantees the teams' loans) owes $180 million.  Although they are three-time NHL champions, the article describes them as "attendance-challenged."  This situation is then complicated by two things:

  1. The principal owners, Jeff Vanderbeek and Ray Chambers, who each own 47 percent of the team, are on the way out. Chambers has been trying to sell his non-controlling stake for a year.
  2. Vanderbeek's relationship with the lenders is "as frosty as the rink surface," with a bank group that wants nothing to do with him.  This does not help, with the team technically in default on financing.

The problem is that the Devils owe 15% more in debt than the team is worth (according to Forbes). This makes it even more difficult to sell.  However, if they are declared bankrupt, lenders cannot seize the team and force a sale for at least 180 days.  With the season about to kick off with a game against the NY Rangers on September 21, this could not have come at a much worse time.

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Steven J. Richardson
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