A bankruptcy trustee who controls 7 percent of the Sacramento Kings said the team’s limited partners are being denied their legal right to match a Seattle investment group’s purchase offer for the team.
The assertion by trustee David Flemmer could present a 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 court-appointed trustee overseeing the 7 percent share owned by team limited partner Bob Cook, 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.
That means the limited partners should be allowed to match the deal that the majority owners, the Maloofs, have struck with the group headed by hedge fund manager Chris Hansen, who wants to move the Kings to Seattle.
“It’s going to create a little bit more mess up in Seattle,” Sacramento Mayor Kevin Johnson said. “It’s mucking it up a little bit.”
Flemmer wouldn’t go into details on legal strategy but said he plans to assert the limited partners’ rights at a hearing in U.S. Bankruptcy Court in Sacramento next Thursday.
“Bankruptcy is a tool; this tool can be effective,” Flemmer said. “We are very, very, very concerned that there’s a deal being cut that’s going to (ignore) that right.”
A limited partner taking control of an NBA franchise is not unprecedented. Michael Jordan executed a right of first refusal to buy the Charlotte Bobcats in 2010.
A source close to the Maloofs said recently that the family doesn’t think the limited partners have a right of first refusal. The Maloofs control 65 percent, the limited partners control the rest.
“Whenever bankruptcy court gets involved, it complicates things exponentially,” said Neil deMause of the website FieldofSchemes, which tracks sports arena/stadium issues.
Cook said he asked a Bay Area sports attorney to broker a meeting between Johnson and Larry Ellison, the third-richest man in America and founder and head of the Oracle software company, in hopes of helping Johnson’s effort to find a buyer willing to keep the Kings in Sacramento.The Seattle Times contributed to this report.