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Dallas Stars' Bankruptcy Exit Plan Faces Uphill Battle

Posted By admin || 1-Nov-2011

Dallas Stars' Bankruptcy Exit Plan Faces Uphill Battle

The IRS is amongst a small group of creditors objecting to the Dallas Stars' bankruptcy exit plan. The federal taxing authority is challenging the plan alleging that it infringes upon its rights. The federal tax agency detailed its opposition to the National Hockey League team's Chapter 11 plan of reorganization, arguing that the plan doesn't account for its various rights under bankruptcy law, like payment in full on any tax claims it may file against the team.

While it probably isn't possible for the Dallas Stars to completely avoid paying the IRS in full, it is possible that they could work out the deal with them similar to other creditors. Chapter 11 bankruptcy offers many flexible solutions to paying off tax debt , but they need to address it in their bankruptcy plan.

Change Of Ownership

The proposed Chapter 11 bankruptcy plan would place ownership of the hockey team in the hands of Vancouver businessman Tom Gaglardi, whose bid went unchallenged. The Vancouver businessman has pledged to pay off about $50 million in note debt owed to an NHL affiliate and to take out $100 million in new financing to pay the club's senior lenders, owed $250.9 million as of July 31.

But Gaglardi's bankruptcy offer isn't enough to pay senior lenders in full, leaving many junior lenders with close to nothing to show for their efforts. To get the bankruptcy plan the backing it needs, senior lenders have agreed to cover up to $25,000 of the junior lender's legal fees and share with them $500,000 of their own recovery. But the recovery share is conditioned on junior lenders supporting the Chapter 11 bankruptcy plan.

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