The on-going saga of the business of hockey rinks in Austin continued this week. You can read up on previous happenings here and here.
This past weekend, Chaparral Ice, the owner of the rink at Northcross and previous occupant of the ice facilities at The Crossover, began removing equipment from The Crossover facility, including items such as benches, trash cans and the scoreboards, pursuant to an agreement in court.
Additionally, Chaparral Ice sent an email blast to their customers on Tuesday evening. According to the email, Chaparral has entered Chapter 11 bankruptcy protection following their departure from The Crossover.
At this point, the key conflict between the two entities is the property used to run a fully-operational ice rink. This includes the more movable elements like rental skates and the scoreboards but also less movable items, such as the chillers, condensers, and boards. The court agreement that was reached pending further litigation allows Chaparral to remove the more 'mobile' items in the claim while The Crossover is retaining those that are more fixed (e.g. chillers, condensers) in order to continue running the ice surface.
This past weekend, the handover of some of these items, specifically the ice resurfacer, caused The Crossover to be unable to host regularly scheduled events.
At the core of the conflict is the disagreement over who possesses the property inside a facility when the commercial leasee departs due to non-payment. As residential property owners, we may be familiar with residential repossession, which allows debt holders to sell a debtor's items to pay off their debts. These rules are not the same in commercial real estate, and that is what is at issue.
Chaparral Ice claims that The Crossover's continued use of what they deem to be the property of Chaparral after they vacated the facility is not legal. To use a simple example, if Chaparral Ice paid for and installed the scoreboards at The Crossover, the issue here is who owns the scoreboard: the property owner or the renter.
One particularly relevant case in this regard is a 2002 case concerning San Angelo's Central Hockey League team and their rental agreement with the San Angelo Coliseum. The ruling in that case found that the 'leasehold improvements permanently affixed to the realty' and other trade fixtures, the things the renter added to run the business, were the possessions of the renter (that is, the debtor). In that case, as in this one, trade fixtures include ice-making facilities, as well as dasher boards and glass.
Chaparral's statement noted, "We offered The Crossover’s landlord to buy the equipment or rent it, but they did not engage in that discussion. Instead, The Crossover’s landlord pursued litigation claiming ownership of the property."
In their own statement, The Crossover notes that they and the bank made four different lease amendments since the facility opened in order to attempt to keep Chaparral as a tenant. When the lease was finally terminated in February of this year, Chaparral owed The Crossover more than $790,000.
The two parties presented their cases in court and, according to The Crossover, their plan was selected. The Crossover "firmly disagrees" with Chaparral's position and claims "complete compliance with the court's rulings." They continued, "The Crossover has expressly been permitted by the court to remain in possession of [all of the additions, improvements, and fixtures, including the mechanical systems that maintain the ice rinks] and to continue to operate and serve the community."
Neither party seems to dispute that the court's orders are currently being carried out as ordered. Litigation such as this can take many months to unwind.
Both facilities continue to operate. Stay tuned as this is certainly not the last battle in this unfortunately-public spat within the relatively small Austin hockey community.