SACRAMENTO, Calif. — A bankruptcy trustee who controls 7 percent of the Sacramento 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.
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 court-appointed trustee overseeing the 7 percent share of the Kings 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.
Flemmer wouldn't go into details on legal strategy but said he plans to assert the limited partners' rights at a hearing next Thursday in U.S. Bankruptcy Court in Sacramento.
"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 Maloof family spokesman had no immediate comment today.
A source close to the Maloofs said recently that the family doesn't believe the limited partners have a right of first refusal. The Maloofs control 65 percent, the limiteds control the rest.
It wasn't immediately clear how the bankruptcy proceedings would affect Mayor Kevin Johnson's strategy to keep the Kings in town. Johnson is recruiting wealthy investors to make a counter-offer that they would present directly to the NBA. The league has the right to reject any sale or relocation proposal.
Earlier, Flemmer said both Hansen and Ron Burkle, one of the bidders being recruited by Johnson, have expressed interest in the 7 percent stake.
Hansen's group is buying the Maloofs' holdings in a deal that values the whole team at $525 million, a source said. That implies Hansen is paying $340 million for the Maloof share.
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.
A spokesman for Hansen was unavailable for comment.
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