Newest Chapter in Kings’ Saga Is 11 : Hockey: Bankruptcy paves way for sale. Deal involves Buss, Lakers and possible new arena for both teams.

The long-awaited sale of the beleaguered Los Angeles Kings neared completion Wednesday with the help of a drastic action, the filing of a voluntary petition under Chapter 11 of the bankruptcy code.

Few things have run smoothly in the lengthy effort of Denver billionaire Philip F. Anschutz and real-estate mogul Edward P. Roski Jr. to purchase the cash-starved team from Jeffrey Sudikoff and Joseph Cohen.

Now, after more than two years of financial chaos--punctuated by the December guilty plea to four felony counts by former owner Bruce McNall--the Kings needed what is being described as a partial prepackaged bankruptcy. This move helped the parties reach a definitive sale agreement for $114 million, including a binding agreement with Laker and Forum owner Jerry Buss that could move the teams into a new arena yet to be built.

Court papers filed on Wednesday state that the Kings have total assets of about $84 million and total liabilities of about $106 million as of June 30. Documents also reveal that Cohen will continue to be paid his annual salary of $550,000 on a month-to-month basis.

There is an approval hearing scheduled on Oct. 5 in U.S. Bankruptcy Court in Los Angeles before Judge Lisa Hill Fenning. And the sale needs approval from the NHL’s Board of Governors. If everything runs smoothly, Anschutz and Roski will be the fifth owners of the Kings and third in less than two years.

Additionally, Anschutz and Roski have the option to purchase a minority interest in the Lakers, according to Bob Sanderman of Majestic/Anschutz Venture (MAV). Of course, where the two teams will eventually play and when remains cloudy. Sanderman said it will take at least four years for a new state-of-the-art sports arena to be built and that Inglewood is a “strong contender.”

Anschutz and Roski had been working on the complicated transaction since late 1994. What had seemed to be a driving force was the desire to build a new arena in downtown Los Angeles near Dodger Stadium, on land near Chinatown owned by Southern Pacific Railroad Corp., of which Anschutz owns 31%.

Since then, the railroad has entered merger talks with Union Pacific and the investment group is not necessarily committed to that site, Sanderman said. “We have the luxury of looking at other sites,” he said.

Meanwhile, still yet to be negotiated is a settlement with R. Todd Neilson, Bruce McNall’s bankruptcy trustee, who controls 28% of the Kings. “We’re having negotiations on the terms of our settlement, and I’m not going to comment further on the status,” said Neilson’s lawyer, Leonard Gumport.

NHL officials earlier had viewed bankruptcy as a last-resort option and were attempting to establish a sale framework outside Chapter 11. But almost everyone involved recognized the necessity of running the Kings through a cleansing process of bankruptcy, protecting the potential purchasers from unseen potential future liabilities.

“We understand the bankruptcy filing will have no effect on the club’s operations,” said NHL general counsel Jeffrey Pash in a statement. “The new owners have assured the league that they will assume in full all player contracts and the other hockey-related liabilities of the club will be satisfied. The bankruptcy filing has been made to ensure the club can proceed without any clouds on its title.”

The Kings are the first modern-day major sports franchise in Los Angeles to file for bankruptcy and are believed to be the first major professional sports team involved in Chapter 11 proceedings since the revision of the bankruptcy code in 1978.

Twenty years ago, the Pittsburgh Penguins filed for bankruptcy after the IRS had seized the team, filing a lien against it for about $532,000 in unpaid federal withholding taxes. This spurred Equibank, which called in loans worth about $5 million.

In 1993, the Baltimore Orioles were sold for $173 million at a bankruptcy auction after owner Eli Jacobs personally filed for bankruptcy protection under Chapter 11 in 1989.