The bankruptcy trustee handling the sale of 7 percent of the Sacramento Kings is negotiating with the Maloof family to gain access to crucial documents regarding the Maloofs' pending sale of the team to a group from Seattle.
Donald Fitzgerald, attorney for trustee David Flemmer, said in U.S. Bankruptcy Court today that he hopes to gain access to the details of the Seattle sale under a confidentiality agreement. If the two sides can't work out their differences, Fitzgerald said Flemmer could seek a court order compelling the Maloofs to turn over their records.
Developer Bob Cook's 7 percent stake in the team has become a potential stumbling block for the Maloofs as they try to complete their sale to the Seattle group. Fitzgerald and Flemmer are investigating whether limited partners such as Cook have the "right of first opportunity" or "first right of refusal" to match the Seattle group's offer. They say they need the Seattle documents to pursue their claim.
If they're successful, one of the existing limited partners - or someone buying the Cook share out of bankruptcy - could block the Maloofs' sale. The Maloofs are selling the 65 percent they control.
In court today, U.S. Bankruptcy Judge Christopher Klein approved Flemmer's request to hire a San Francisco lawyer named Christopher Sullivan as "special litigation counsel" in anticipation of a possible lawsuit over the Seattle deal.
The Maloofs and Chris Hansen, leader of the Seattle group, consider the trustee's objections "a non-issue," according to a source familiar with the deal.
Martin Zohn, a lawyer representing the NBA, declined comment when asked by a reporter if the league agrees with Flemmer and Fitzgerald's position.
He told the judge that the NBA's Board of Governors is likely to rule on the Seattle purchase at its regular meeting in New York April 19.
The Cook share is supposed to be auctioned off April 9. The judge denied a request by one of Cook's creditors to delay the auction by a month.
In court, Fitzgerald revealed that the Kings issued a "capital call" to all investors last June. Cook's share would come to around $700,000 - implying that the team was seeking $10 million from all owners, including the Maloofs.
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