Devils could be in bankruptcy danger
The heavily-indebted New Jersey Devils missed a Sept. 1 loan payment, giving their lenders a breakaway chance to push the three-time NHL champion into bankruptcy, the New York Post reported Monday.
It puts the team on thin ice ahead of the opening of training camp Tuesday, with a source saying, "The Devils are blowing up."
The attendance-challenged team's financial hardships could also affect Newark's four-year-old Prudential Center, the Devils' home arena. Team-owned Devils Arena Entertainment operates the $375 million building and guarantees the Devils' loans and, therefore, is in danger of also going bankrupt.
Two issues were complicating matters. First, principal owner Jeff Vanderbeek and co-owner Ray Chambers, each of whom owns 47 percent of the franchise, are on the way out. Chambers, through his Brick City Hockey unit, has been trying to sell his non-controlling stake in the franchise for a year.
But the efforts of Chambers and Moag & Co., a Baltimore investment bank, have been unsuccessful, despite, a source said, cutting their asking price 20 percent to $200 million. Forbes last year estimated the Devils were worth $218 million, No. 11 in the league, down two percent from 2010. The team is ranked No. 25 in attendance.
Second, Vanderbeek's relationship with the lenders is as frosty as the rink surface at The Rock, as the arena is known. The Devils have told their banks to get lost, the source said.
"You have a bank group that wants nothing to do with Vanderbeek," a source said, adding that the group has been upset with how late they have been with financial information.
Some lenders were already considering selling their stakes to vulture investors, the source said, adding, "This is going to be a very difficult situation."
If the Devils -- who along with the arena operation company owe 15 percent more than the team is worth, according to Forbes -- are declared bankrupt, lenders cannot repossess the team and force a sale for at least 180 days. One source speculated that has already happened.
The Devils' past-due loan payment of roughly $100 million is owed to a CIT-led lending group. Devils Arena Entertainment owes $180 million, the source said.