On the ice, the Ottawa Senators are big winners. They're the NHL's top team with 56 points in 40 games.

But on the balance sheet, the Senators are big losers, and have been for years. Now the money has finally run out.

The cash-strapped Senators are expected to file for bankruptcy protection as soon as Wednesday, according to reports from TSN and the Ottawa Sun.

Contacted late Tuesday, the team denied the reports. Senators' spokesman Phil Legault refused to comment.

But in an interview with CTV, Howard Bloom of sportsbusinessnews.com said he had corroborated the story. Bloom said he had spoken with a team source who confirmed the decision to file for bankruptcy.

"From what I was told, (team owner) Rod Bryden had no choice," said Bloom. "If he had forced the issue any more next week, one of his creditors was going to force him into bankruptcy. What this gives Rod Bryden is a small window of opportunity to go ahead and put together some kind of plan where he can buy the team."

On thin financial ice

Bankruptcy protection could provide Bryden with the short-term financing he needs to continue day-to-day operations. The Senators were unable to pay their players on January 1.

However, it could also lead to the sale of the team and its home arena, the Corel Centre in suburban Kanata. If sold, the Senators could move away from Ottawa.

Sources told TSN an official announcement is expected within the next 24 hours and would be the first step in a financial restructuring of the team.

The Sun said the team would file in New York state for Chapter 11 bankruptcy protection and in Ottawa under the Companies' Creditors Arrangement Act (CCAA), which provides protection from insolvency.

"We've all ben expecting a CCAA filing ever since the refinancing collapsed last week," said Paul Waldie, business reporter for The Globe and Mail. "This isn't really a surprise, but it sure puts the future of the team in doubt."

The Sun also reported that the National Hockey League (NHL) would provide a short-term cash infusion to see the Senators through the next nine months.

The team's total debt, including money owed on the construction of the Corel Centre, is thought to be in excess of $376 million.

Last week a complicated deal intended to raise $186 million for the Senators fell through because of reluctance on the part of two banks, Canada's CIBC and FleetBoston Financial Corp.

The banks are already owed $40 million and $20 million respectively by the team and balked at further refinancing.

Banks have been under increasing pressure to clean up their loan portfolios after a year in which Canada's biggest banks took writedowns on bad loans to the telecom and energy sectors.

CIBC's total corporate and government loans at the end of 2002 amounted to about $42 billion.

The Senators already owe $14 million to the NHL.

Filing for protection under the CCAA gives a company protection from its creditors for a 30-day period. That period can be extended by a judge if progress is made towards restructuring.

However, the act also allows outside interests to put in offers on all or part of a troubled company. A judge will rule whether a sale is in the company's and creditor's interests.

Court-ordered bankruptcy protection does not allow a company to abandon union contracts, such as those the Senators have with the NHL Players' Association.

By seeking bankruptcy protection, the team would be better able to attract loans, since banks that loan money following protection would be first in line for repayment once a sale is completed. Existing creditors would have no guarantee of repayment if the team files for bankruptcy.

Ottawa, whose team payroll is a modest $30 million, beat the big-budget New York Rangers on Monday, their 25th victory in 40 games. The win moved Ottawa into top spot in the NHL.

But crippling debts stemming from a $50 million franchise fee and $225 arena construction tab have limited the Senators' ability to make money since entering the National Hockey League in 1990.

The weak Canadian dollar has also made business difficult for the Senators, who pay player salaries in U.S. dollars but generate revenue in Canadian currency.

The Senators have also seen season ticket sales and sponsorships dwindle following the collapse of Ottawa's high-tech sector.

The Senators are not the only NHL team suffering financial woes. The Buffalo Sabres are also in danger of bankruptcy. Former Sabres owner John Rigas, the founder of cable TV company Adelphia Communications, was arrested last July for securities fraud.

The Pittsburgh Penguins are the only franchise in the four major North American professional sports leagues to file for bankruptcy protection in the last 29 years. They did it in 1974 and 1998, with the second filing leading to Mario Lemieux taking over the club he still plays for.

Manley in hot water for phone call

Meanwhile, Federal Finance Minister John Manley's efforts on behalf of the Senators have landed him in hot water.

The Globe and Mail reported last Friday that Manley had telephoned CIBC executive John Hunkin on behalf of team owner Rod Bryden, a Liberal supporter. Manley, who oversees Canadian banking and bank mergers, has been accused of conflict of interest for his unsuccessful attempts to rescue the deal.

On Tuesday, Alliance MP John Reynolds, the Opposition house leader, asked Federal Ethics Counsellor Howard Wilson to investigate Manley.

In a press conference Tuesday, Manley, an Ottawa MP, said he was acting in the interest of his community and his constituents.

With a report from The Canadian Press