A lawsuit filed on Thursday in Oakland County (Mich.) circuit court accuses Carolina Hurricanes owner Peter Karmanos Jr. of breaching the terms of a 2013 contract with a limited partnership formed by Karmanos and three of his sons. The lawsuit seeks immediate payment of more than $105 million in principal and interest.
The suit was first reported by WDIV-TV in Detroit.
According to the lawsuit, from 2000-2013 Karmanos obtained "tens of millions of dollars in loans and advances from various banks and the NHL (...) to be used to support the Hurricanes." The lawsuit states that Karmanos pledged assets of the partnership as collateral to guarantee the loans.
The suit states that Karmanos made two loans from the partnership, in April 2009 and June 2013, totaling over $170 million. It goes on to say that Karmanos signed promissory notes promising payback of the loans, but the suit claims that Karmanos has not made any repayments on the June 2013 loan. Peter Karmanos III, Karmanos' son and the co-trustee of the limited partnership, sent his father a letter in April demanding payment on the notes within 30 days, or the entire amount of the note would be due immediately. The suit claims that Karmanos did not make a payment after receipt of the letter.
The suit states that Karmanos "transferred and/or caused to be transferred funds" from the partnership, but makes no claim on the destination of the money from the loans or from direct transfers from the partnership. Additionally, nowhere does the suit state that money from the partnership was used to directly fund the Hurricanes.
The partnership was formed in 1996 as a holding for Karmanos and his sons, Peter III, Nick and Jason, to hold shares of Compuware stock and function as a vehicle for Karmanos to transfer assets to his sons. Peter Karmanos Jr. holds 34% of the partnership, and each of his sons holds just under 22%.
Jason Karmanos served in multiple capacities with the Hurricanes from 1998-2013, including a lengthy stint as assistant general manager. He is now the vice president of hockey operations for the Pittsburgh Penguins. No reference is made in the lawsuit to Jason Karmanos' roles in hockey operations for either club.
Canes Country has contacted the Hurricanes seeking comment and will update as more information is released.