Sunday, December 30, 2012

Bankruptcy case to decide future of Elmira Jackals, Arena


Jason Whong

7:54 PM, Dec 28, 2012

A cloud of legal and financial issues in 2012 cast a cloud over First Arena, which was built to be a commerce hub for Elmira’s downtown. 

A bankruptcy hearing scheduled for next month could shed light on the facility’s future and whether First Arena can hold onto its full-time tenant, the ECHL’s Elmira Jackals.

A U.S. Bankruptcy Court judge is expected to decide in January whether First Arena owner Southern Tier Economic Development Inc. validly terminated its operating agreement with Elmira Downtown Arena LLC earlier this year.

Judge Paul Warren’s decision will determine what rights the Michigan company has to manage the arena now and in the future, and by extension, what rights the Jackals may have, since they lease the facility from Elmira Downtown Arena, which filed for Chapter 11 bankruptcy in August.

The ECHL may be forced to plan its 2013-14 season without the Jackals, according to documents filed in U.S. Bankruptcy Court by attorneys for Elmira Downtown Arena.

Kim Hillary, an Elmira Downtown Arena attorney, mentioned the risk of the Jackals being decertified by the league in her request to the court to schedule a vote for Elmira Downtown Arena’s reorganization plan.

The ECHL has told Elmira Downtown Arena it needs assurance that the company will operate the arena and the Jackals will continue to play there so the league can schedule the 2013-14 season, Hillary wrote.

Elmira Downtown Arena and the Jackals are both owned by Michigan businessman Mostafa Afr as separate entities.

The past year saw many developments for First Arena.

Problems began when Elmira Downtown Arena missed a Jan. 17 deadline to pay delinquent taxes, triggering a foreclosure action in court.

Chemung County Executive Tom Santulli refused to take possession of the arena, citing a liability risk to the county. In March, the county legislature took no action on Southern Tier Economic Development’s bid to repurchase the property, leaving the ownership of the arena “frozen in time.”

Investigations by this newspaper revealed that Elmira Downtown Arena or the Elmira Jackals had financial disputes in court going back to 2002, that the Harlem Globetrotters hadn’t been paid a month after performing and that the arena management company did not have workers’ compensation insurance for various periods.

This newspaper’s investigations also showed the fire alarm system had serious problems, including that it sometimes wouldn’t activate, forcing the city to require firefighters to be on site for a “fire watch” for some events in March.

In July, Santulli announced that local businessman Tom Freeman was the new arena owner, but Freeman’s attempt, through his company Elm Arena LLC, to take possession of the property was automatically stalled when Elmira Downtown Arena filed for bankruptcy.

There was some uncertainty over whether the Jackals would play in the arena for the 2012-13 season, but that was resolved in late September when Elmira Downtown Arena and Elm Arena negotiated a deal to save the season.

There’s now uncertainty about the Jackals’ 2013-14 season in Elmira because of how long it is taking for Elmira Downtown Arena’s bankruptcy proceedings to make their way through court.

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