The team was over $120 million in debt when he took over as owner.
PITTSBURGH (AP) -- The Pittsburgh Penguins, who have struggled with poor performance and declining attendance in recent seasons, are hoping to rebound under the National Hockey League's new salary cap and even dreaming of a Stanley Cup.
But the team is already crafting another unlikely success story: a Chapter 11 bankruptcy in which all creditors will receive 100 percent of what they're owed.
"Pennies on the dollar is what I'm used to," said attorney Joel Walker, who along with Duane Morris and Phil Uher, represents some 200 unsecured creditors. Unsecured creditors, who don't have a lien to secure money they're owed by a bankrupt business, are paid after banks and other secured creditors and generally receive a fraction of what they're owed.
The team filed for Chapter 11 bankruptcy protection in 1998, after running up $120 million in debt under former owners Howard Baldwin and Roger Marino. At first, it appeared that the only course would be to find a new owner who would, more than likely, move the team out of Pittsburgh.
"There were times when I sat in Joel's office and I just wondered whether they were going to end up in Portland," Uher said. "It was depressing. There were some dark days."
Until, that is, Mario Lemieux -- who had come back from Hodgkins disease in the early 1990s to continue his playing career before retiring in 1997 -- made another in his string of remarkable comebacks.
Rounded up investors
Lemieux rounded up a group of investors to buy the team and keep it in Pittsburgh. A key to the deal was restructuring some $32.5 million in deferred salary he was still owed. Under the deal, Lemieux forgave $7.5 million of the debt, transferred $20 million of it into his equity stake in the team, and retained a claim to $5 million in salary to be paid later.
Lemieux came out of retirement in December 2000, and the team has made good on its promise to pay its creditors under his leadership in the front office.
Although the NHL canceled last season due to a work stoppage, the team is positioned to come back from a league-worst attendance mark of 11,877-fans-per-game in 2003-04, thanks to the salary cap that's enabled the team to sign several top free agents, and winning the draft lottery for the rights to phenom-in-waiting Sidney Crosby.
"We've been making payments steadily whether there was a work stoppage or not or whether we made money or not," team president Ken Sawyer said of the creditors. "That's just the way we do business. There's absolutely a sense of pride."
Paid back creditors
The Penguins have paid all of their secured creditors and more than 200 unsecured creditors. The only remaining bankruptcy debt is interest owed to four former players for salaries that were delayed -- and that will be paid by next fall -- and a few creditors whose debts were lost in a paperwork shuffle.
Branded Solutions, a company that made some of the team's banners hanging in Mellon Arena, says it is still owed $2,553. President Dan Weisberg said he'll contact the team about payment from an $80,000 fund established to satisfy any stragglers.
But most have already been paid, like Ron Fees, who owns Photo Plaque Productions, which was owed $2,675 related to a golf outing the team sponsors.
"I wasn't sure if I'd ever get any money out of it," Fees said. "But it still would never have changed my opinion of Mario. He's a great guy."