According to the Cult of Hockey (which referenced a Sovetski Sport article), the IIHF denied Jiri Hudler a transfer card. Since the transfer card is what allows players to play in IIHF-sanctioned games, the lack of a card supposedly prevents Hudler from playing in the KHL as it is an IIHF-sanctioned league. If he has to return to the NHL, it would completely screw over the Wings when it comes to the salary cap.
The IIHF's stance is baffling to Alexander Medvedev, chief of the KHL, because both the Detroit Red Wings, Hudler's NHL team, and the Czech federation have given permission to Hudler to play for Dynamo, according to Medvedev.
An unconfirmed report (via The Production Line) suggests that the KHL doesn't care and will allow Hudler to play anyways. I never thought I'd say this, but let's hope that's the case or GM Ken Holland is going to have a tough couple of weeks trying to get under the cap before the deadline. The same person gives the reason why the IIHF denied Hudler a transfer card:
KHL officials: "IIHF did not give transfer card to Hudler. Their explanation was Hudler has a contract with Detroit, which is laughable."
So if Hudler does play for Dynamo Moscow against the wishes of the IIHF, he would likely lose his rights to represent his country in the Olympics. Is Hudler willing to do that for a big paycheck? We know it won't bother the KHL, but what about Happy Huds?
If that isn't the case, there is an appeal process as Babcock's Death Stare notes:
The only thorn I see in that plan is, as the article states, both the Red Wings and the Czech hockey federation gave Hudler the okay to play in the KHL. In fact, he’s already played in several exhibition games. To me, that would make it seem like an appeal might be pretty successful since you have the backing of most of the parties involved. However, the NHL did put up a stink about it and they might be able to flex some muscle on the IIHF. And I’m sure if Detroit had the choice between having Hudler at the contract he was awarded in arbitration and giving those minutes to Jason Williams, well, then sorry Williams, but you’re on the 4th line again. Detroit could complicate the arbitration process, I would think.
As Matt at On the Wings asks, what took the IIHF so long to rule on this?
I am out of town this weekend and my internet access is not consistent to say the least. I'll try to update this post as more news comes out, but if it's a bit delayed that's why.