The Sacramento Bee reported today of a potential new snag in the sale of the NBA’s Kings to a group that would relocate them to Seattle.
The Bee says a bankruptcy trustee who controls 7 percent of the Kings says the team’s limited partners are being denied their legal right to match a Seattle investment group’s purchase offer for the team.
A Seattle group led by Chris Hansen and Microsoft CEO Steve Ballmer announced Monday it had a binding agreement to purchase 65 percent of the Kings, including a 53 percent share held by the controlling owners, the Maloof family.
The other 35 percent is held by four different entities, including a 7 percent share that is in bankruptcy.
The Bee reported that “the assertion by trustee David Flemmer could present a major legal challenge to the Maloof family as it attempts to complete its just-announced sale of the team to a group that intends to move it to Seattle.’’
Flemmer, the Bee reported, is the court-appointed trustee overseeing the 7 percent share of the Kings owned by team limited partner Bob Cook. The Bee reported that Flemmer said Cook and other minority owners have “first right of refusal” to buy the club. He said that right is guaranteed in the partnership agreements governing ownership of the team.
Flemmer said that means the limited partners should be allowed to match the deal agreed to by the Maloofs and Hansen, according to the Bee’s story.
Flemmer plans to assert the limited partners’ rights at a hearing next Thursday in U.S. Bankruptcy Court in Sacramento, according to the Bee.
“Bankruptcy is a tool; this tool can be effective,” Flemmer told the Bee. “We are very, very, very concerned that there’s a deal being cut that’s going to (ignore) that right.”
The Bee reported that a source close to the Maloofs said recently that the family doesn’t believe the limited partners have a right of first refusal.
Flemmer is holding an auction for Cook’s 7 percent share of the team to pay off his creditors. If the limited partners are denied the right to match Hansen’s offer, that diminishes the value of the Cook share, he said, according to the Bee.
Sacramento Mayor Kevin Johnson is attempting to assemble an ownership group that can make what he calls a “competitive’’ counteroffer to the agreement reached by Hansen’s group, which is paying $341 million for a 65 percent share of a team valued at $525 million, the most ever-paid for an NBA team.
It’s uncertain how the latest developments would impact Johnson’s efforts.