Bankruptcy News & Information

Bankrupt Lee Enterprises Seeks OK for Reverse Stock Split

2012-02-08T10:30:00.000-08:00

Newspaper publisher Lee Enterprises Inc., which emerged from a pre-packaged Chapter 11 bankruptcy process last week, is seeking shareholder approval for a reverse stock split that would combine as many as five shares into one. Through the bankruptcy process, Lee was able to restructure of about $1 billion in debt. Lee filed for bankruptcy on December 12. The publisher said the reverse split — and subsequent stock price increase — could make the company's shares attractive to a wider range of investors. Experts say such a split would push the price of Lee's stock well above the $1 minimum required of companies listed on the New York Stock Exchange. Earlier this week, Lee's stock closed at $1.10. The company outlined the proposal in a proxy statement filed Monday. Lee is seeking the authority to combine "not less than two and not more than five shares" into one. Votes will be counted shortly after Lee's annual shareholders meeting on March 2, giving shareholders about six weeks to vote on the proposal. If shareholders approve, Lee's board of directors will have until June 30 to decide whether to do a reverse split.Lee Enterprises is the publisher of the St. Louis Post-Dispatch and nearly 50 other newspapers.

Dodgers Ask Bankruptcy Court to Disallow Brian Stow's Damage Claims

2012-02-07T14:58:00.000-08:00

The Los Angeles Dodgers has asked a federal bankruptcy judge in Delaware to disallow all claims for damages against the team by the family of Bryan Stow, who was nearly beaten to death in the stadium's parking lots on March 31, 2011.Stow was beaten after attending the season's opening game last spring and remained in a coma for months. Two L.A. residents, Louis Sanchez and Marvin Norwood, were arrested in July and charged with assault and mayhem. Both have pleaded not guilty and are awaiting trial. Stow sued the Dodgers in May, alleging negligence and poor security arrangements at the ballpark. His lawyers estimated his medical care for the brain injuries and other long-term effects from the beating will cost $50 million. But attorneys for the team and current owner, Frank McCourt, are claiming that none of the entities in the club's corporate structure have any liability for the March 31 assault. Their motion comes as McCourt, who is working to sell the Dodgers, has disclosed that the team has amassed $573 million in debt. The team also asked that references in Stow's lawsuit to McCourt's wealth and lifestyle be deleted as irrelevant. Among the allegations in Stow's lawsuit is that the McCourt's burden during a bitter bitter divorce from his wife, Jamie, led the team to cut back on security staff. Stow attorney Tom Girardi, called the motion by the team to have Stow's claims dropped "despicable."

Equifax Releases Bankruptcy Statistics

2012-02-06T10:21:00.000-08:00

According to Equifax Commercial Information Solutions analysis, bankruptcy petition rates have nearly returned to pre-recession index levels. Citing their own analysis of Chapter 7, 11 and 13 filings, the Atlanta-based financial services company reports that commercial petitions for bankruptcy decreased 44% since their peak in Q2 2009 through Q4 2011; while consumer petitions peaked a year later in Q2 2010 and declined 26% through the end of 2011.While both consumer and commercial petitions for bankruptcy declined steadily from the second quarter of 2011 through year end, commercial bankruptcy filings still remained lower declining 28%. Consumer bankruptcy filings have declined 22% since Q2 2011.Dr. Reza Barazesh, senior vice president, Equifax Commercial Information Solutions said, "Our latest analysis of bankruptcy rates appears to show some signs of stabilization. The downward trend in the number of bankruptcies is an indication of the improvement in economic conditions."Barazesh added, "The belt tightening in the commercial, small business sector resulted in a decline in business failures and speaks to the improving health of today's small business market."Equifax conducted the analyses as part of its comparative study on bankruptcy petitions quarter over quarter. The company classifies a small business as a commercial entity of fewer than 100 employees.

United Retail Group Files for Bankruptcy

2012-02-03T11:06:00.000-08:00

United Retail Group Inc, the operator of plus-size Avenue women's apparel stores, has filed for chapter 11 bankruptcy protection in U.S. bankruptcy court in Manhattan. In its filing, the company reported assets of $117.2 million and liabilities of $67.3 million. The company said it has arranged $40 million of financing from Wells Fargo & Co to keep operating while in bankruptcy.United Retail said it has begun closing 14 of its 433 stores, and has also identified 100 "chronically under-performing" stores it hopes to either close, or successfully renegotiate its leases. In addition, the Rochelle Park, New Jersey-based company said it plans to sell itself to private equity firm Versa Capital Management LLC subject to higher bids in the Chapter 11 process. Versa has agreed to buy the company’s inventory, an Ohio distribution facility, and leases for at least 300 stores.In a court filing, United Retail Chief Executive Dawn Robertson said "Avenue's current cash needs are significant and liquidity continues to be strained." The filing noted that Avenue was purchase din 2007 for $199 million by Redcats USA Inc, a unit of Paris-based retail conglomerate PPR SA. It said Avenue is "not core" to that company’s business of selling plus-size apparel online. The filing noted that sales fell 4 percent last year to $300.6 million, and losses quadrupled to $28.1 million as measured by EBITDA.

New Chief Judge Named for the U.S. Bankruptcy Court for the Southern District of New York

2012-02-02T10:52:00.000-08:00

The U.S. Bankruptcy Court for the Southern District of New York, has named Judge Ceceila Morris to replace the retiring Arthur Gonzalez. Morris comes to the Southern District, which includes Manhattan, comes to her new position from Poughkeepsie, NY. The announced was made Wednesday by the board of judges in the Southern District.

In a notice to the Bar, Southern District Chief Judge Loretta Preska said “Cecelia Morris is the consummate bankruptcy jurist. She has a keen technical expertise and is a fantastic problem-solver. The Board of Judges is very confident that she’ll lead the Southern District Bankruptcy Court with skill and grace.”
According to the statement, Judge Morris received her Juris Doctor from John Marshall Law School and attended West Texas State University. She has served on the bench of the Bankruptcy Court since July 1, 2000, and served as the Bankruptcy Court’s Clerk of Court, prior to that appointment. Judge Morris has also been an Assistant District Attorney in Griffin, Georgia; clerked at the U.S. Bankruptcy Court for the Middle District of Georgia; and practiced law in a private law firm.

Most recently, Morris was assigned to oversee the bankruptcy of power company Dynergy Holdings LLC, which filed for Chapter 11 protection in November. Her other bankruptcy cases include Saint Vincent's Catholic Medical Centers of New York, Delta Air Lines Inc, Northwest Airlines Corp and Adelphia Communications Corp.

Morris made headlines in 2011 when she rejected the motion of a U.S. trustee's motion to dismiss a joint bankruptcy filing by a same-sex couple in New York who had married in Vermont. In that case Morris wrote that case law made it clear " . . . that the debtors, as a legally married couple, would qualify to file a joint petition if not for the existence of the Defense of Marriage Act," a federal law that prohibits recognition of same-sex marriages.

Lee Enterprises Emerges From Bankruptcy

2012-01-31T17:28:00.000-08:00

Davenport-based Lee Enterprises, which publishes 48 daily newspapers primarily throughout the Midwest, has announced that its pre-packaged bankruptcy court refinancing plan was approved Monday by Chief U.S. Bankruptcy Judge Kevin Gross of the U.S. District Bankruptcy Court in Delaware.

The action allows the newspaper publisher to extend maturities on key pieces of debt to December 2015 and April 2017 in exchange for paying higher interest rates. Absent the plan, the debts would have matured in April. Lee is faced with paying those rates at a time when newspaper advertising is experiencing record lows.

Under the new terms, Lee's first lien debt includes a term loanof $689.5 million and a $40 million revolving credit line thatmature in December 2015. A second lien debt includes a $175 millionterm loan that matures in April 2017.

The plan will also result in the issuance of 6.7 million shares of Lee common stock to creditors. The new common stock will result in a 13 percent dilution of its shares.

Lee filed for Chapter 11 bankruptcy protection on Dec. 12, after failing to get 100 percent agreement among creditors for the very refinancing plan that wasjust approved.

That refinancing plan also involves $1 billion in debt that remains from the company’s 2005 purchase the St. Louis Post Dispatch and 13 other newspapers from Pulitzer Inc. for $1.46 billion.

Lee shares climbed back above $1 last week - after a low of 53 cents on Dec. 2, as it became increasingly apparent that the pre-packaged bankruptcy was on track for a projected Jan. 31 completion.

Rochester Company Establishes Kodak Bankruptcy Hotline

2012-01-30T09:00:00.000-08:00

Brighton Securities, a financial services firm in Rochester, NY has announced the establishment of information resources in the wake of the chapter 11 bankruptcy filing of Kodak.

George Conboy, president of Brighton Securities and expert on local, national, economic and business analysis said, "Kodak is a company in our backyard. Of the thousands of people impacted, there are nearly 25,000 Kodak retirees in the Greater Rochester area alone. People need to know what this means for them and our firm is answering the call. Brighton Securities is holding Community Resource Meetings for Kodak employees and retirees, helping to provide clear information at a time when rumor, half-truth, and urban legend have circulated throughout the community."

Brighton Securities lists the top five things you need to know about Kodak now:

1. SIP is seeing a major change. Effective February 1, 2012, the Fixed Income Fund (formerly Fund D) will change to a pure fixed-income fund. The difference with the new fund is that it will no longer carry the insurance "wrapper" designed to keep the value stable. With this material change, it may be time for participants to review all of their options for their SIP balance.
KRIP (Kodak Retirement Income Plan) will now be subject to a PBGC (Pension Benefit Guarantee Corporation) audit as a routine consequence of the bankruptcy filing. This will likely take 2-3 months, and employees who terminate during that time will not have access to a lump-sum settlement option, though monthly pension payments would still be available and are secure. After the audit is complete the plan may be able to resume lump-sum settlements if the PBGC determines that the plan is adequately funded.
Uncertainty about some aspects of retiree health insurance has cleared a bit. Some retirees pay their health insurance share to Kodak in advance. We had advised that retirees pay month-to-month to avoid ending up as an unsecured creditor. That concern has passed, and there should be no problem paying a few months ahead for those people who want the convenience of not writing a small check every month.
Employees will keep their jobs and benefits – for now. Kodak will try to sell businesses (consumer is high on the list) but even if sold a lot of jobs will remain.
Bankruptcy means reorganization for Kodak – not liquidation. The company will try to sell its patents and some business units with a plan to slim down and emerge a smaller and more profitable company. Estimated time in bankruptcy: about 18 months.

New Study Says Blacks Face Bias in Bankruptcy

2012-01-26T10:48:00.000-08:00

A new study of racial differences in bankruptcy filings to be published in The Journal of Empirical Legal Studies later this year suggests that blacks are about twice as likely as whites to resolve their debts in Chapter 13 filings, a more costly form of consumer bankruptcy.The suggested findings come from a survey that was conducted as part of a larger research undertaking by bankruptcy expert and law professor Robert M. Lawless and Dov Cohen, a psychology professor, both with the University of Illinois; and Jean Braucher, a law professor at the University of Arizona.The evidence suggested that bankruptcy lawyers were much more likely to steer black debtors into a Chapter 13 than white filers even when they had identical financial situations. The lawyers, the survey found, were also more likely to view blacks as having “good values” when they expressed a preference for Chapter 13. The disparity persisted even when the findings were adjusted for income, home ownership, assets and education. Most debtors file under Chapter 7 of the bankruptcy code, which typically allows for erasing most debts in a matter of months. Chapter 7 generally has a higher success rate and is less expensive than Chapter 13, which requires debtors to dedicate their disposable income to paying back their debts for several years.While the evidence did not find obvious discrimination in the bankruptcy process, it did suggest biases were partly at play, whether conscious or unconscious.The New York Times quotes Neil Ellington, executive vice president of Consumer Education Services, a credit counseling agency in Raleigh, N.C. as saying, “Unfortunately I’m not surprised with these results. The same underlying issues that created the problem in mortgage lending, with minorities paying higher interest rates than their white counterparts having the same loan qualifications, are present in all financial fields.”The two-part study used data from actual bankruptcy cases from the Consumer Bankruptcy Project, surveying 2,400 households nationwide who filed for bankruptcy in 2007 and an attorney survey based on fictitious couples seeking bankruptcy protection. When the couple was named “Reggie and Latisha,” who attended an African Methodist Episcopal Church — as opposed to a white couple, “Todd and Allison,” who were members of a United Methodist Church — the lawyers were more likely to recommend a Chapter 13, even though the two couples’ financial circumstances were identical.The Times also quoted Henry E. Hildebrand III, who has served as a Chapter 13 trustee in Tennessee for 30 years. Hildebrand said, “We should focus not on picking apart the conclusions, but use this study as an indication that we should be attempting to fix what has become a complex, expensive, unproductive system.”

Ireland Cuts Time to Discharge Bankruptcy

2012-01-25T15:03:00.001-08:00

Under current bankruptcy law in Ireland, it can take up to 12 years to be automatically discharged from bankruptcy. Because it takes only one year in the UK, debtors have been choosing to file there instead, a practice known as “bankruptcy tourism.” But now, prompted by requirements under the terms of its Eu/IMF bailout, Ireland’s government has proposed sweeping charges to help its citizens deal with overwhelming debt.Reuters news service is reporting that Ireland’s government is planning to reduce the time it takes to be discharged from bankruptcy to three years from 12 and is further proposing a new non-judicial route for struggling mortgage holders to discharge their debt. Finance Minister Michael Noonan recently spoke to journalist saying, "We can't allow such a large proportion of our people, and particularly our young people, to continue in some kind of half-life limbo land, where they are struggling with repayments indefinitely. The non-judicial route will significantly encourage the banks to deal voluntarily with persons in difficulty."According to IMF data, Ireland has the highest level in the industrialized world, with household debt constituting 129 percent of the country’s 2011 GDP. In addition, more than one in 10 Irish home loans are not being fully repaid and the central bank predicts more borrowers will fall behind due to ongoing high levels of unemployment and a continuing decline in housing prices.

Foreclosure and How to Avoid It

2012-01-25T10:53:00.000-08:00

Few and far between are those who can afford to purchase ahouse in full. Most people make a down-payment and then take out a loan from amortgage lender, and in some cases a lien holder, to make payments on the housewith interest. When financial struggles hit, many people get behind in theirpayments and are at risk for their home being foreclosed on. In 2010, 30% ofproperties throughout the country declined in value. In 2011, the foreclosurerate in Houston was 1.89%, high, but still the sixth lowest in the nation.

Because the mortgage lender requires security interest fromthe borrower, when the borrower defaults on the loan and can no longer makepayments, the lender will try to repossess the property. This can be a scary time for a home-owner,leaving them with no idea what the next step is. There are foreclosureprevention plans available, and contacting your lender can sometimes help infinding out if there is a payment plan right for you. However, lenders makemoney off of your foreclosure, which sometimes leads to a less-than-helpfulsolution to your problem.

One option when facing foreclosure is modifying orrefinancing your home loan for lower payments, depending upon if you qualify.If your home has significantly decreased in value, if you are unemployed, or ifyou wish to move to a more affordable home, there are options out there thatmay be for you. In the worst possible scenario, the lender can completeforeclosure and sell their borrower’s house and use the money to pay off therest of the mortgage and legal expenses that may have incurred.

It is possible to avoid foreclosure, but you must be carefulwhen considering solutions. It may be difficult to know if a solution is ascam, and sometimes you may not fully understand your options. Hiring anattorney can be a viable option when facing the reality of foreclosure. AHouston bankruptcy attorney from the Malaise Law Firm may be able to help you.Their team is aptly experienced in bankruptcy law and can provide the legalhelp you need. If you or someone you know needs help, contact a Houston foreclosure lawyer from their firm today.

Judge Rejects Appeal in Madoff-Related Mets Case

2012-01-23T09:56:00.000-08:00

U.S. District Judge Jed Rakoff has ruled that Irving Picard, the Madoff trustee who is suing the owners of the New York Mets, may not appeal last summer's ruling that slashed the majority of his $1 billion claim.

The case is a significant aspect of the trustee’s quest to recover billions of dollars lost in Bernie Madoff’s Ponzi scheme, which has turned out to be the biggest investment fraud in history. Madoff pleaded guilty to orchestrating the scheme and is currently serving a 150-year prison sentence.

Picard has accused Mets owners Fred Wilpon and Saul Katz, who invested with Bernard Madoff for decades, of having ignored warning signs that the financier was running a Ponzi scheme. Wilpon and Katz said they were not aware of Madoff's wrongdoing and were also victims of the fraud.

Picard originally sought $300 million in profit and $700 million in principal for the benefit of defrauded investors. However Judge Rakoff reduced the amount he could seek to only approximately $386 million. In seeking an appeal, Picard argued that reduction would adversely impact on hundreds of other lawsuits seeking to recover money for victims of the fraud. But in his decision last week to deny the appeal, Judge Rakoff wrote that to grant Picard’s motion "would be to materially delay, rather than materially advance, the ultimate termination of the litigation."

The ruling sets the stage for a March trial unless the two sides are able to reach a settlement.

Restaurant Operator Buffets Once Again in Bankruptcy

2012-01-21T09:55:00.000-08:00

Restaurant operator Buffets Inc filed for a pre-arranged bankruptcy last week in U.S. Bankruptcy Court, District of Delaware. The company cited an "unsustainable debt burden" and told Reuters News Service it is also burdened by a weak economy and an inability to close a desired number of restaurants due to lease restrictions.

This is the second time the company has filed for bankruptcy. Buffets, which is controlled by Credit Suisse and a group of lenders, filed for its first bankruptcy in 2008, and emerged from it a year later.

According to Buffets' spokesman Nathan Riggs, the first bankruptcy reduced the company’s debt from $940 million to $240 million. The current filing, a so-called pre-packaged bankruptcy, calls for eliminating nearly all of the company’s $245 million outstanding debt, through an agreement with senior lenders to recapitalize the company.

Buffets, which operates 494 restaurants under brands like HomeTown Buffet, Ryan's and Fire Mountain, said it will receive a $50 million bankruptcy loan, known as debtor-in-possession or DIP finance, to fund operations while in court protection. The restaurant operator also said it will close 81 under-performing restaurants.

Buffets has said it expects to emerge from bankruptcy within six months. Upon completion of the current reorganization, the company's existing lenders will emerge with 100 percent of Buffets new common stock.

Bloomberg BNA Launches Bankruptcy Law Resource Center(TM)

2012-01-20T09:54:00.001-08:00

Bloomberg BNA, a leading source of legal, regulatory, and business information for professionals, has announced the launch of the Bankruptcy Law Resource Center, described as a cutting-edge online platform that brings together a wide range of bankruptcy law content into a single, user-friendly interface that speeds research time and increases productivity.

The site will offer full-text decisions of significant commercial and consumer bankruptcy law cases as well as the U.S. Bankruptcy Code and related statutes, the Federal Rules of Bankruptcy Procedure, and other key documents. The site will also include news items from BNA's Bankruptcy Law Reporter(TM), as well as attorney-developed practice tools and instructive Bloomberg BNA Portfolios are also featured. The site also features a robust search feature for ultimate user productivity.

"Time -- or the lack of it -- is obviously a key concern for attorneys forced to contend with demanding workloads and rigid schedules," said Edwin Jackson, Director of Publishing for Bloomberg BNA's Legal & Business Publishing Group. "This is what makes the Bankruptcy Law Resource Center such a benefit for today's practitioners. The service helps to alleviate the time constraints they face in the most direct way possible -- by granting access to everything they need in one place. Whether it's case law, court rules, federal statutes, legal news, or author commentary and practice tips, the Resource Center includes it all for one set annual price."

Some Highly Unusual Foreclosures in 2011

2012-01-18T14:41:00.000-08:00

Since the foreclosure crisis and housing collapse, many people have lost their homes and have been forced into bankruptcy and as with any situation involving upset and turmoil, absurd mistakes happen that defy all logic.

According to a recent report by the Center for Responsible Lending, as of February of last year, lenders had foreclosed on 2.7 million homes as a result of the 42.2 million mortgages individual borrowers took out between the years 2004 and 2008. Due to the large amount of foreclosures, most were routine, but others resulted in some highly unusual situations, each one unique in its own right.

A few examples: One couple in Florida was threatened with foreclosure for making their payment too early. Another man who owned a home in Texas that was destroyed years ago in Hurricane Ike received a notice that the home was facing foreclosure. A Bank of America in Massachusetts threatened to foreclose on a home if they didn’t receive the outstanding mortgage payment of $ 0.00.

It is thought that these outrageous situations give hint that there may be a pattern of wrongdoing behind them on the part of the lenders. According to a Business Week report, Martha Coakly, Massachusetts Attorney General, just recently announced a lawsuit against five of the largest mortgage lenders alleging they used fraudulent paper work while foreclosing on many hundreds and possibly thousands of Massachusetts homes. Those named in the lawsuits included: Wells Fargo, Bank of America, JP Morgan Chase, Ally Financial Inc. and Citibank.

The situation with foreclosure fraud extends out to numerous states and Fannie Mae, Freddie Mac and other private lenders are also facing allegations of involvement with improper foreclosures across the nation. According to a KLAS report, in Las Vegas, a prominent foreclosure attorney recently estimated that 9 out of 10 foreclosures in the city and adjacent suburbs may have had fraudulent paperwork involved.

Bankruptcy Fraud Gets Golf Course Developer 18 Months in Jail

2012-01-18T09:22:00.000-08:00

A press release issued by the FBI announced the sentencing of a Cincinnati golf court developer for bankruptcy fraud and money laundering.

Real estate developer Michael R. Macke, 61, of Cincinnati was ordered to pay $471,462.70 in restitution to the bankruptcy trustee for fraud contained in his $35 million bankruptcy filing. Macke was also sentenced to sentenced to six months in prison followed by 12 months of home incarceration.

According to court documents, Macke’s 20-year career was spent developing and managing golf courses and developing housing on golf courses. In 2007, Macke engaged in a scheme to defraud his creditors and the bankruptcy court by transferring the money to purchase Elks Run Golf Course in Batavia, the ownership of which was then transferred into a trust he established for the benefit of his wife. Macke made these transfers in contemplation of bankruptcy, and failed to disclose the transfers or the trust when he subsequently filed for bankruptcy.

Macke pleaded guilty to one count each of bankruptcy fraud and money laundering. in September in U.S. District Court in Cincinatti. At sentencing yesterday, he acknowledged transferring and concealing $471,462.70 for the purchase of Elks Run Golf Course, with the intent to defraud his creditors; he further acknowledged laundering a $75,000 check representing proceeds from an insurance policy as part of the fraudulently transferred funds.

Alleged Monk Files for Bankruptcy in Two States

2012-01-17T15:21:00.001-08:00

Ryan St. Anne Scott, an alleged monk living in Iowa with a small group of followers in Buchanan County, filed for bankruptcy in early December in central Illinois. Scott listed assets of less than $50,000 against liabilities of up to $500,000. Documents now show Scott also initiated personal Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Iowa. There he filed as Ryan Patrick Scott. Records show his real name is Randell Stocks.

Scott blamed the Illinois filing on the failure of a religious venture in Galesburg called the Holy Rosary Abbey. He also acknowledged receiving credit counseling in that apparently included a budget analysis but no debt repayment plan. Based on his filings in Iowa and in Illinois, Scott estimates no funds will be available for his unsecured creditors.

Scott owes $232,000 in unsecured claims to medical providers, specialists and hospitals and the Antioch Group of Peoria, which describes itself as a Christian mental health counseling service. His largest claim is $161,000 owed to Sheila Anderson, a former follower who filed a civil judgment to retrieve money she lent him to allegedly pay the Holy Rosary Abbey's bills.

Scott and the Holy Rosary Abbey are seeking a discharge of debts, meaning, if successful, creditors would never be able to get their money.

Teamsters Comment on Bankrupt Hostess Brands Inc.

2012-01-16T10:14:00.000-08:00

The Teamsters Union has commented on the Chapter 11 Bankruptcy filing of Hostess Brands Inc., pledging their support in a press release. More than 7,500 of Hostess Brands’ nationwide fleet of delivery drivers and merchandisers are Teamsters.

The Teamsters National Bargaining Committee said it has been working with Hostess management for months to identify a consensual resolution that would address the company's many problems. The characterized the Jan. 11 Chapter 11 filing as “another sad development in the company's difficult history since its initial bankruptcy filing in late 2004.” At the same time, the union claims that Hostess emerged from that bankruptcy in 2009 “largely due to the sacrifices made by Teamster members and other unionized employees, including members of the Bakery, Confectionery and Tobacco Workers Union.”

Dennis Raymond, Director of the Teamsters Bakery and Laundry Conference was quoted saying, "Our members have already given at the well, and this time it will take sacrifices among all parties – management, lenders, equity holders and employees – to restructure Hostess into a viable enterprise that is well-positioned for future growth," Raymond said. "We were hoping that could have been done prior to a bankruptcy filing, but unfortunately that did not occur. We remain committed to finding a solution, if possible, over the next few months during the bankruptcy process."

Plum TV Schedules Chapter 11 Bankruptcy Auction

2012-01-15T13:13:00.000-08:00

The United States Bankruptcy Court for the Southern District of New York has scheduled a hearing to consider auction procedures for January 30, 2012, for the sale of the Assets of Plum TV, Inc. The company is the owner of the Plum Network of local cable TV channels serving upscale and resort markets around the country. If the Court-supervised auction procedures are approved at the January 30 hearing, the Company anticipates the assets auction will be held on March 1, 2012.

Plum TV, which was founded on Nantucket to serve affluent communities and vacation destinations, filed for Chapter 11 bankruptcy on Jan. 3. In its petition, the company said it had assets of $8.6 million and liabilities of $19 million as of Dec. 16. It also said it has 12 remaining employees after laying off 70 people in September.

The filing was a so-called ‘pre-packaged’ bankruptcy in which Plum has agreed to sell itself to PMG Media, an investor group. According to court records, PMG would pay a ‘stalking horse’ bid of $1 million in cash and assume $14 million of Plum’s debt. In last week’s hearing, the Bankruptcy Court also approved a $250,000 interim loan from PMG to fund ongoing operations.

U.S. Trustee’s Office Appoints Dynegy Bankruptcy Examiner

2012-01-14T19:15:00.000-08:00

The U.S. Trustee's office has appointed an examiner for the bankruptcy of Dynegy Holdings LLC.

In a filing last week with the U.S. bankruptcy court in Manhattan, the office appointed Susheel Kirpalani, chairman of the bankruptcy and restructuring group at Quinn Emanuel Urquhart & Sullivan as examiner. U.S. Bankruptcy Judge Cecelia Morris in Poughkeepsie, New York, who oversees the bankruptcy, said an examiner would have power to issue subpoenas and conduct an "unfettered investigation" into Dynegy Holdings' conduct.

The bankruptcy court appoints examiners to investigate allegations such as dishonesty, fraud, incompetence and mismanagement. Kirpalani will investigate transactions that took place two months before the bankruptcy filing, when Dynegy Holdings prepared for their filing by moving assets related to coal-powered plants to its parent, which did not file for bankruptcy.

Dynegy Holdings, the holding company for power producer Dynegy Inc, filed for Chapter 11 bankruptcy protection last Nov. 7 hoping to restructure more than $4 billion of debt. The bankruptcy has created controversy due to its unusual plan that would create losses for bondholders, yet protect shareholders such as the Seneca Capital hedge fund and billionaire financier Carl Icahn.

Statistics for 2011: Personal Bankruptcies Down by 12%

2012-01-12T22:00:00.000-08:00

In a recent report from Fitch Ratings, personal bankruptcy filings declined by 12% this past year to 1.35 million from the previous year. Charge offs relating to credit cards fell significantly and these are directly affected by bankruptcy filings declining 37% as compared to 2010. Fitch stated the lower personal bankruptcies had a less profound, but still important effect on auto ABS (asset backed securities.) Fitch also stated that it plans to announce its bankruptcy forecast for the New Year within the next upcoming weeks.

Ben Fox Rubin of Dow Jones reported that the results assisted in driving the rapid and improved performance in consumer asset backed securities sectors which involve student loans, automobile and credit card loans. He stated last month (December) that our country’s ABS ratings based upon consumer debt maintained a positive position as the transactions showed a positive rating since 2007.

The sluggish economic recovery has raised concerns due to factors like the soft housing market, high unemployment, weakened consumer confidence and anxiety about European debt but according to Fitch, consumer ABS ratings have withstood the stress and battles numerous times over the past two decades. Many have high hopes that things will get better in terms of economic recovery in the United States and with 2012 now upon us, the upcoming forecast from Fitch should prove to be an interesting one.

MF Global Trustee Says No More Money Transfers

2012-01-12T14:44:00.000-08:00

James Giddens, the trustee in charge of liquidating the collapsed brokerage of MF Global Holdings Ltd, had some unwelcome news for customers yesterday.

Thus far, the team has paid out approximately $3.8 billion, representing some 72 percent of the money held in customer accounts when the firm shut down. However at a meeting in New York, reported on by Thompson Reuters news service, more than 250 customers heard that Giddens and his team are “not in a position to do another bulk transfer.” James Kobak, an attorney trustee Giddens said, "That situation might change as we get through the claims process. It would also depend on our ability to recover additional assets."

The trustee also addressed the possibility of recovering money from the parent company, MF Global Holdings. He said that not only do he and his legal team prefer not to litigate with the parent, the parent company may also try to assert claims against the brokerage. Giddens explained, “They have precious few assets, and few employees. They have said they think they may be able to get a distribution as a stockholder from the brokerage. We think the evidence is certainly to the contrary."

David Rosen, an energy broker at the New York Mercantile Exchange who organized fellow MF Global customers on the NYMEX trading floor exchange in the early days of the bankruptcy said "The customers need to be made 100 percent whole - there's a national interest here. I think the trustee has done a good job so far; they've been responsive to us. But we need to make it so this can't ever happen again."

Hostess Files Second Bankruptcy in Three Years

2012-01-11T09:30:00.000-08:00

Twinkies and Wonder Bread maker Hostess Brands Inc. filed for Chapter 11 bankruptcy protection yesterday in U.S. Bankruptcy Court, Southern District of New York after failing to reach an agreement with workers on pension and health benefits.

This is the second time the privately held company filed for bankruptcy in less than three years. The company first filed for bankruptcy protection in 2004 in Missouri. It exited from bankruptcy in February 2009 under the control of private equity firm Ripplewood Holdings and other lenders.

The company listed total assets of $981.6 million against liabilities of $1.43 billion as of Dec. 10, 2011. $860 million of that amount represents the company debt. The company claims it needs to withdraw from multi-employer pension plans, address legacy health and welfare costs and secure new capital to modernize its production and distribution operations in order to successfully reorganize. Hostess said it had unsuccessfully pursued alternates to bankruptcy including attempts to sell or otherwise market its businesses with such companies like Smuckers, Kraft, Blackrock, KKR.

Hostess' declining financial performance, crippling legacy costs associated with its pension plans and massive debt levels led the company to Chapter 11 bankruptcy, court papers showed on Wednesday.

The company said it has secured $75 million in debtor-in-possession financing from existing lenders led by Silver Point Capital LP. It expects to continue business as usual throughout the bankruptcy process.

Student Loans to Exceed $ 1 Trillion Dollars

2012-01-09T16:31:00.000-08:00

According to a recent online report posted in October of last year, the amount of outstanding student loans has now exceeded $100 billion for the first time this past year and according to the Federal Reserve Bank of New York, the total is expected to exceed $ 1 trillion dollars this year.

Those who are seeking higher education (new students seeking a college education and workers who are seeking retraining) in hopes of landing decent paying jobs are borrowing twice the amount of money as compared to ten years ago and the total outstanding debt has doubled within the past five years. The student loans trend is the opposite of what is happening in the credit card and home loan arena. Instead of a reduction as to what is owed, the amount of debt with student loans is on the rise.

Student loan debt however is different from mortgages and credit cards and is exempt from bankruptcy. Broad collection powers granted by Congress have given lenders more opportunity to collect from student loans and has made these loans less able to be bailed out from defaults.

Student loans could have a negative impact on the future of the economy in that borrowers could very well delay spending money on things like homes, cars and other large expenditures as they will be working instead to pay off the non-dischargeable student loans. Within the past two years the number of defaults has risen 2.1% with the largest number of defaults coming from the increase in for-profit, online schools like the University of Phoenix where 88% of their revenue comes from student loans granted by the federal government.

Friendly’s Exits Bankruptcy

2012-01-09T08:05:00.000-08:00

Friendly Ice Cream Corp announced today it has completed its Chapter 11 restructuring. The bankruptcy exit occurred just three months after the restaurant filed for reorganization, and less than one month after U.S. bankruptcy court Judge Kevin Gross approved chain operator’s request to sell itself to a private equity firm Sun Capital Partners Inc. in exchange for debt forgiveness.

Prior to its October 2011 Chapter 11 bankruptcy filing, creditor/owner Sun Capital offered to to re-acquire the company by erasing its $75 million loan to the company in lieu of cash. Unsecured creditors challenged Sun’s right to make the so-called "credit bid," arguing that the loan should be treated as equity. Friendly’s then held a bankruptcy auction however no other potential buyers stepped up with competing bids and the auction was canceled on Dec. 21.

Meanwhile, Sun continued working with unsecured creditors, ultimately arriving at a compromise. The investment company agreed to make a $2.5 million cash payment, acquire Friendly’s assets, forgive certain debts and cover the professional fees and expenses related to the bankruptcy and close 64 under-performing stores.

The restaurant company, which had approximately about 490 owned and operated restaurants at the time of its October reorganization filing, has since announced it will close an additional 37 restaurants where it was unable to negotiate favorable leases.

Plum TV Files Pre-Packaged Chapter 11 Bankruptcy

2012-01-07T09:06:00.000-08:00

Plum TV, Inc., owner of the Plum Network of local cable TV channels serving upscale and resort markets around the country, has announced the filing of Chapter 11 bankruptcy protection for itself and its subsidiaries in the United States Bankruptcy Court for the Southern District of New York.

The filing is a so-called pre-packaged bankruptcy in that it includes an asset purchase agreement with an investor group led by Terry Mackin, president of Greenwich, CT-based ForesightLab, and Bill Apfelbaum, chairman of New York City-based Media Ventures Group. Plum TV intends to submit the agreement as a "stalking horse" bid for the court-supervised auction of its assets under Section 363 of the U.S. Bankruptcy Code.

Terms of the asset purchase agreement with the investor group call for the sale of virtually all company assets, subject to certain conditions, along with a loan to Plum TV of $1 million of debtor-in-possession financing.

In a press release, Tom Scott, Plum TV founder and chairman said, "While a filing is a difficult choice, after a tough time for the company, it is the right choice. As longtime, visionary senior media executives, Terry and Bill have excellent track records and we believe the Plum TV brand will be well positioned when it emerges from the proposed asset sale." Scott added, "We want to reassure our audiences and advertisers that Plum TV remains in business and will continue to provide our daily programming throughout this process.

Kodak Developing Bankruptcy Filing

2012-01-06T18:53:00.000-08:00

According to the Wall Street Journal, Eastman Kodak, an icon in the world of photography, is preparing a potential Chapter 11 bankruptcy filing.

Kodak is attempting to raise capital through sale of its digital patents, but it is also reportedly deep involved with a Chapter 11 backup plan. Citing unidentified sources, the Journal is reporting Kodak is in talks with potential lenders to secure about $1 billion in debtor-in possession financing to sustain itself through bankruptcy proceedings.

Kodak drew down a credit line last September, prompting speculation regarding a possible bankruptcy filing. That fire was fueled with the company hired restructuring firm FTI and confirmed its relationship with a bankruptcy law firm.

In November, Kodak issued announcements it might not survive 2012 absent $500 million in new debt or the successful sale of its patents. Kodak invented the digital camera in 1975 but lost ground when it failed to capitalize on that innovation. News of the potential filing prompted a 20 percent drop in shares, decreasing the likelihood a sale will occur in time to save the company.

On Tuesday, Kodak said its stock could be removed from the New York Stock Exchange if the company cannot boost its share price over the next six months. The Journal says the Chapter 11 filing could come as soon as January or early February.

Lee Enterprises Seeks Court Approval of Funding Plan

2012-01-06T08:54:00.000-08:00

Lee Enterprises Inc., publisher of the St. Louis Post-Dispatch, the Arizona Daily Star and other newspapers, filed for Chapter 11 protection last month after it failed to obtain refinancing. This week it has asked a bankruptcy court in Wilmington, Del. to sign off on funding of a $175 million loan for its Chapter 11 exit plan.

According to court documents, Lee has established a reorganization plan that calls for its five leading lenders to convert a portion of their existing loans into new debt and equity. Those lenders, so-called backstop lenders, are Goldman Sachs Lending Partners LLC, Monarch Master Funding Ltd., Mutual Quest Fund, Blackwell Partners LLC and Mudrick Distressed Opportunity Fund Global LP. In addition, the backstop lenders would ensure funding of the $175 million loan by covering any lenders who opt not to covert.

Records also reveal that Lee's Chapter 11 plan calls for a portion of an $855 million loan to be converted into second-lien debt and extends the maturity of $127.5 million worth of secured notes attached to the company's Pulitzer Inc. unit.

The plan, which has already been voted on by creditors, is set for a Jan. 23 confirmation hearing.

Bankruptcy Judge Approves Friendly’s Sale to Sun Capital

2012-01-04T08:44:00.000-08:00

U.S. bankruptcy court Judge Kevin Gross has approved the request of bankrupt restaurant chain operator Friendly Ice Cream Corp to sell itself to a private equity firm Sun Capital Partners Inc. in exchange for debt forgiveness.

Sun Capital owned Friendly prior to its October 2011 Chapter 11 bankruptcy filing and had earlier offered to erase its $75 million loan to Friendly to re-acquire the company in lieu of cash. Unsecured creditors Sun’s right to make a so-called "credit bid," arguing that the loan should be treated as equity.

Friendly then held a bankruptcy auction to sell itself to other potential buyers. No competing bids were submitted and the auction was canceled on Dec. 21.

Meanwhile, Sun worked with unsecured creditors, arriving at a compromise of a $2.5 million cash payment. That payment was part of the approved deal. In addition, Judge Gross ruled that Sun can acquire the company's assets, but must forgive debts and cover professional fees and expenses. The company has estimated total costs incurred thus far and funds needed to complete its Chapter 11 filing at $11.5 million.

The Friendly restructuring plan also calls for the restaurant chain to keep 424 stores open for business and close 63 of its lower-performing restaurants.

Judge Orders Bankruptcy Examiner in Dynegy Case

2012-01-03T12:42:00.000-08:00

Following up on a ruling made at a Dec. 16 hearing, U.S. Bankruptcy Judge Cecelia Morris in Poughkeepsie, New York, has signed an order directing the appointment of an examiner for the bankruptcy of Dynegy Holdings LLC.

In the order, Judge Morris also strengthened the hand of the examiner, writing, "The examiner shall conduct an unfettered investigation" into Dynegy Holdings' conduct, and assess whether it "is capable of confirming a Chapter 11 plan." The order notes that the examiner will have the power to issue subpoenas, and examine whether any transactions predating Dynegy’s bankruptcy constituted "fraudulent conveyances.”

In addition, the order directs the bankrupt Dynegy companies and their officers to make complete disclosure to the examiner, saying they are not to withhold anything – even documents under the attorney-client or work product privileges - on a claim of privilege.

Five Dynegy subsidiaries filed for Chapter 11 bankruptcy protection in November and included a reorganization plan in the filing. The plan is based on restructuring that occurred earlier in 2011, moves that creditors contend were fraught with fraudulent transfers. The restructuring is generally viewed as unusual because it would cause losses for bondholders, yet protect shareholders such as the Seneca Capital hedge fund and billionaire financier Carl Icahn. Typically, bankruptcies protect bondholders and subject shareholders to losses.

The motion for an examiner was made by U.S. Bank NA, as indenture trustee, and supported by the unsecured creditors' committee. Dynegy unsuccessfully opposed, saying an investigation was "designed to waste time and money."

America’s Largest Chapter 11 Bankruptcies in History

2012-01-02T15:58:00.000-08:00

According to a Wall Street Journal report from November of this past year, a list was published of the 10 biggest Chapter 11 bankruptcy filings in U.S. history. The list of bankruptcies are represented by a narrow number of industries namely finance, auto making and energy. The bankruptcies were ranked by the value of each company’s assets prior to its filing. The filings came about for a number of reasons including criminality on the part of CEO’s, unexpected disastrous circumstances or overly ambitious expansion. Some of these companies who filed for Chapter 11 are recovering, others are gone for good.

The companies on the list include:
• PG&E (Pacific Gas & Electric) $36.15 billion in assets (2001);
• Thornburg Mortgage $36.5 billion in assets (May 2009);
• Chrysler $ 39.3 billion in assets (April 2009);
• MF Global $ 41 billion (Oct 31, 2011);
• Conseco $61.4 billion (2002);
• Enron $65.5 billion (2001);
• CIT Group $ 80.4 billion (Nov 2009);
• GM $ 91 billion (June 2009);
• World Com $ 103.9 billion (July 2002);
• Washington Mutual $ 327.9 billion (Sept 2008); and
• Lehman Brothers $ 691 billion (Sept 2008)

This list has now reached 11 in number due to the addition of MF Global in the latter part of last year. American Airlines had $24.7 billion dollars in assets when it filed bankruptcy but did not quite reach the top 11 list.

Trustee Requests Dismissal of Total Sleep Bankruptcy

2012-01-01T07:38:00.001-08:00

Lisa Lambert, the trustee assigned to the Chapter 7 bankruptcy case of Total Sleep Holdings Inc. has requested that the bankruptcy be dismissed.

Total Sleep, an Irving, Texas. company that diagnosed and marketed treatment for sleep disorders, sought bankruptcy protection in U.S. Bankruptcy Court in Dallas on Dec. 9 along with and five related businesses: Total Sleep Diagnostics Inc., Total Sleep Services Inc., Sleep Management Services Inc., Trusted Life Care Inc. and Sleep Cures LLC.

The company listed assets of $100,000 to $500,000 against debts of $100 million to $500 million. The company owes some $20 million to General Electric Capital Corp. and $12 million to hedge fund MGC about $12 million. Filings show that over the past twelve months, Total Sleep retained two different firms to market the company for sale, but the highest offer received was $2 million.

According to court documents, the company's bills and taxes remain unpaid, employees haven't been paid, W-2s haven't been prepared and patients' medical records have not been maintained. Total Sleep Holdings closed its Irving headquarters permanently on Dec. 8, affecting 64 employees. The company also operated more than 50 centers in eight states.

In her filing, trustee Lambert wrote, "The case serves no bankruptcy purpose. The corporate debtors cannot receive a discharge. Creditors’ claims — even priority claims — cannot be satisfied. The Trustee cannot administer the cases. The cases should be dismissed."

Spain’s Mediaproduccion Exits Voluntary Bankruptcy; Considers Lawsuit

2011-12-31T10:37:00.000-08:00

Mediaproduccion SL, the content subsidiary of Spain's MEDIAPRO multimedia communications group, has announced it has emerged from voluntary bankruptcy protection. The company has produced such well known films as Woody Allen's "Midnight in Paris" and Roman Polanski's "Carnage."

In a press release, Mediaproduccion said it was able to “halt bankruptcy protection proceedings in which the company has been since June 2010” and resume business operations.

The company said the development was based on the bankruptcy court’s rejection of all objections filed by the PRISA Group – formerly known as Sogecable - , which includes Audiovisual Sport, Distribuidora de Televisión Digital and PRISA TV. PRISA group manages and acquires audio-visual rights, and distributes and produces both television channels and cinematographic exhibitions.

In June, 2010 then-Sogecable announced it’s Audiovisual Sport would not comply with its contractual payment obligations relating to soccer broadcast rights. MEDIAPRO subsequently made the decision to put Mediaproduccion into bankruptcy in order to protect itself legally.

The Barcelona court’s rejection of PRISA TV’s positions include a settlement deal between MEDIAPRO and most of its largest creditors, primarily banks. The plan calls for all of MEDIAPRO’s liabilities to be settled within 35 months.

MEDIAPRO says it is exploring a lawsuit against PRISA because their position of non-compliance forced the voluntary bankruptcy initiation and because “delaying tactics carried out by [PRISA] throughout the entire process, and which were systematically rejected both by the courts as well as the bankruptcy administration.

Judge Allows Ahern Rentals to Borrow against Bankruptcy Loan

2011-12-29T15:12:00.000-08:00

Judge Bruce Beesley of U.S. Bankruptcy Court in Reno, Nev., has approved the request of large equipment renter Ahern Rentals Inc. to borrow $20 million from its $350 million bankruptcy loan. The bankruptcy loan was provided by a group of the company's existing lenders, including Bank of America Corp. Ahern says it intends to use the proceeds to pay off some of its debt.

Revenues for the family-owned company have grown to $329.8 million year-to-date, over $284.2 million in 2009, the year of their last annual earnings report filed with the Securities and Exchange Commission. However the company filed for Chapter 11 protection last week after missing two interest payments in the past year - totaling $22 million - to its second-lien noteholders.

In court documents and statements, Ahern said it had worked outside bankruptcy court over the past twelve months to restructure its debt. It achieved support from the majority of its creditors for a one-year extension on the maturity date of a $350 million revolving loan. But three revolving lenders refused their support, forcing Ahern into bankruptcy when the loan matured earlier this month.

Ahern, which was founded in 1953 by John P. Ahern, grew under his son Don to become the seventh-largest equipment rental company in the nation. It rents out heavy construction equipment including fork lifts, boom lifts and backhoes as well as merchandise like compressors and generators.

Artificial Insemination Business Files for Bankruptcy

2011-12-28T16:39:00.000-08:00

The firm “Genetic Connection”, a company involved in the artificial insemination of cows has become an additional victim of the current economic downturn and is filing for bankruptcy. According to a report from the Dayton Daily News, RC Agri-Genetics LLC (Aka the Genetic Connection), makes a majority of its money through collecting semen from adult bulls and distributing it to farmers and companies desiring to create offspring from selected cows, but the recession has taken its toll on the industry.

The company filed for Chapter 11 bankruptcy protection in Dayton Ohio bankruptcy court this week and reported that over the past two years, it has lost thousands of dollars. They will attempt to create a debt reorganization plan which requires that it be accepted by a majority of its creditors as well as the judge presiding over the bankruptcy.

The artificial insemination business is a complex one and RC Agri-Genetics has creditors that include: trucking firms, propane vendors, communications businesses and even an Assistant U.S. Attorney. The artificial insemination business for livestock is common, especially for pigs and cattle. The process allows breeders to more economically raise herds with preferred and specific animal traits.

Economic recessions harm many industries and the breeding industry is not immune. There has been a temporary dip in the demand for cattle as people are buying less meat. Cattle breeding is a long term investment and the repercussions of the recession may have had a delayed effect in the case of the artificial insemination business. It is not known at this point in time as to whether the company will continue doing business during the bankruptcy filing though this is not an uncommon practice for businesses that are going through the process.

Indiana State University Trustee Files for Bankruptcy Liquidation

2011-12-28T10:19:00.000-08:00

Randall K. Minas, a financial adviser who sits on the Indiana State University board of trustees and who made a $1.3 million donation to the university in 2009, has filed for Chapter 7 bankruptcy liquidation. The filing, which was made in U.S. Bankruptcy Court in South Bend, Ill., lists assets from $1 million to $10 million against debts from $10 million to $50 million.

The filings also names as debtors the IRS, the Indiana Department of Revenue, Indiana State University and number of debtors in Lake county, Indiana, including several attorneys.

According to an online report in the Times of Northwest Indiana, Minas is also named in a pending lawsuit in Lake Superior Court regarding ownership of a 60-acre subdivision known as Doubletree Lake Estates. In June of this year, Fifth Third Bank filed a foreclosure against Minas, Kenneth Matney and Anthony Meyer, former partners in the Doubletree project. The bank is seeking damages in excess of $13 million for the partnership’s failure to pay amounts due on certain properties within Doubletree.

Media company nwi.com reports that Minas had been seeking a settlement with his former partners after they had a falling out. They had been scheduled for a bench trial on Tuesday to resolve what were described as “bitterly fought differences” however that hearing was stayed by Minas's bankruptcy action.

Involuntary Bankruptcy Petition Filed against Chattanooga Developer

2011-12-27T08:09:00.000-08:00

William and Rebecca Worley, along with Bill Worley Construction Co., have filed an involuntary bankruptcy petition against Maryville developer Mike Ross. The petition, which was filed last week in U.S. Bankruptcy Court in Chattanooga, cites a judgment of more than $5 million owed to the couple and a judgment of more than $610,000 owed to the company.

Ross is already dealing with three consent judgments that were handed down in three cases regarding money allegedly owed by the developer.

Some two years ago, First Bank filed suit against Ross and a his limited liability company in connection with an alleged 2007 loan guaranteed by Ross that was originally worth nearly $4.5 million. In that case, a Knox County chancellor approved a move that was sought by both parties, ordering a judgment of nearly $4 million to a substitute plaintiff.

In another consent judgment, Athena of S.C. LLC received a pair of judgments against Ross and two entities totaling more than $7.7 million. In those cases, a judge again ordered consent judgments were sought by both the plaintiff and defendants deeds when he assigned trust securing notes payable to SunTrust Bank to Athena.

In addition, in November, a Marion County jury ordered Ross and his development firm, Rarity Communities, to pay a judgment of nearly $5.8 million in connection with the failure to build promised amenities at a development along Nickajack Lake.

Bankruptcy Judge Orders Liquidation for Rapper Young Buck

2011-12-26T15:11:00.001-08:00

Judge George C. Paine II of the U.S. Bankruptcy Court in Nashville, Tenn. has converted the Chapter 11 reorganization of Rapper Young Buck to a Chapter 7 liquidation. Young Buck’s real name is David Darnell Brown.

The order came at the request of trustee Jeanne Burton who concluded in October that Brown did not have the resources to reorganize. Burton’s recommendation was made after she spent months helping Young Buck craft a viable bankruptcy-exit plan.

A key component of the restructuring plan created by trustee Burton was a modification of Buck’s recording agreement with 50 Cent’s G-Unit Records and a distribution agreement he had with Universal Music Group. The plan depended on the ability of buck to make those changes, because it proposed to use that restructured revenue to pay off Young Buck’s creditors. But when presented with the option, both G-Unit and Curtis Jackson (aka 50 Cent) rejected the plan and said they weren’t willing to modify the agreements.

To date, Buck’s creditors have submitted 22 claims totaling $11.5 million, including $10 million G-Unit Records says Buck owes them over a contract dispute. Platinum artist Buck was said to be close to a new contract with Cash Money Records, but that deal has reportedly fallen through. Trustee Burton has previously said she plans to sell the trademarked "Young Buck" name along with other physical assets.

A creditors meeting has been set for Jan. 30 in Nashville.

Quiznos Announces Debt Plan; Possible Bankruptcy Filing

2011-12-25T09:19:00.000-08:00

Sandwich chain Quiznos has announced a new plan that will eliminate nearly one-third of its debt and provide $75 million for continued operations. The plan has reportedly gained the approval of a majority of Quizmos creditors. Even so, the Denver-based chain warns it will file for bankruptcy protection if it is unable to achieve two additional goals: negotiate restructuring deals with all of its creditors and receive significant concessions from constituencies including former executives, landlords and former area developers.
News organizations quoting "those familiar with the plan” are reporting that the plan will reduce Quiznos's roughly $875 million in debt by about $281 million. The same sources are saying that if Quiznos doesn’t gain its restructuring objectives before the end of the year, it plans to force creditors to go along with it in a prepackaged Chapter 11 bankruptcy.

The plan reportedly calls for investment firm Avenue Capital, one of the company’s major creditor, to invest $150 million of new equity capital into the chain. The investment would consist of equity and the conversion of debt to equity, and would make Avenue Capital majority owner of the company.

Quiznos CEO Greg MacDonald said the company expects to continue operating as usual and to honor all its vendor obligations while it pursues the out-of-court restructuring process.

Quiznos warned lenders over the summer that sales weren’t meeting projections and that default was a possibility. Since then, the chain hired professionals to explore possible restructuring plans.

Former Idaho Commercial Broker’s Debts Judged “Clear Embezzlement”

2011-12-24T16:17:00.000-08:00

U.S. Bankruptcy Judge Terry L. Myers ruled last week that Jerry Gunstream, a former commercial property broker, must still pay his debt to owners of an Idaho strip mall, even though he previously discharged Gunstream's debts in a Chapter 7 bankruptcy proceeding.

According to the Ohio Statesman, Gunstream owes $125,000 he collected in rents while employed as the property manager of the Holly Plaza strip mall in Nampa Idaho, but failed to forward to the owners. Gunstream characterized his actions as "unauthorized borrowing" that he intended to repay, but Myers disagreed, saying Gunstream’s actions were willful and malicious, as such they were “clearly embezzlement.”

Gunstream Chapter 7 bankruptcy was filed in November 2010, and listed assets of just over $3,000 against debts of $2.1 million. The website characterizes him as formerly “one of the Valley’s most prominent commercial real estate brokers,” but says Gunstream shut down his business in 2009 amid numerous allegations of theft.

Idaho State Police completed a criminal investigation into Gunstream’s activities this summer, and have forwarded their case to the Ada County prosecutor’s office. No charges have yet been filed. Airport Partners has a pending civil suit against Gunstream in 3rd District Court. Several other lawsuits against Gunstream were either dismissed or closed due to of inactivity.

Explosives Detection Company Files for Chapter 7 Liquidation

2011-12-23T09:56:00.000-08:00

Raptor Detection Inc., a Maryland company that developed products to detect tiny amounts of dangerous substances, has filed for voluntary Chapter 7 bankruptcy liquidation in U.S. Bankruptcy Court in Baltimore. Judge Nancy V. Alquist has been assigned to the case.

Attorney Joseph R. Laumann filed the petition listing zero assets against liabilities totaling $89.5 million. A Meeting of Crditors has been scheduled for January 23, 2012, and Lori S. Simpson has been assigned as Interim Trustee.

The petition listed from 200 to 999 creditors highlighted by a claim of $16.5 million by former CEO Jonathan P. Gluckman, a shareholder. Other shareholder claims include Alexander Consulting Group of Villa Park, Calif. with a claim of $1.7 million; Cede of New York with a claim of $8.65 million; and Pell Communications of Reisterstown with a claim of $490,000.

According to its website, Raptor helps protect the United States “by enhancing and supporting law enforcement and counter-terrorism missions. Their products include wipes, sprays, films and pens that detect explosive substances and explosives detection kits for first responders, military and security personnel. Subsidiary Columbia BioSystems, also in bankruptcy, worked with the University of Maryland, Johns Hopkins University and other organizations to develop products to detect hospital-acquired pathogens.

Bankruptcy Judge Allows MF Global to Use Cash on Hand

2011-12-22T11:56:00.001-08:00

A federal judge on Wednesday approved a request by MF Global to continue using about $21.3 million of its cash on hand, which will allow the bankrupt brokerage firm to continue operating under Chapter 11. Federal judge Martin Glenn of the Federal Bankruptcy Court in Manhattan, has ruled that MF Global is allowed to continue using its some $21.3 million cash on hand to continue operations while in Chapter 11. Judge Glenn further stipulated that the firm’s estate must publicly disclose its weekly budgets using the cash with the bankruptcy court.

Judge Glenn’s order came despite objections from customer creditors who believe MF improperly included their funds in its operating cash. James W. Giddens, the trustee who is liquidating trading operations of MF Global, estimates that the firm is missing at least $1.2 billion in customer money, but attorneys for both Freeh and Giddens have said in court filings they don’t believe the $21.3 million includes customer funds.

James Koutoulas, a lawyer for the customer group, disagreed, and asked the judge for either a $10 million cap on MF Global’s use of the money, or the opportunity to conduct an inquiry saying, “If the money’s spent, there’s no way to unspend it.”

Judge Glenn overruled the objection, saying that the customer group had not proved its case. However he did task Freeh with beginning a limited investigation into whether customer cash was improperly commingled. Freeh is tasked with submitting his preliminary report on the matter within 60 days.

SAAB Files for Bankruptcy

2011-12-19T15:26:00.000-08:00

After many months of struggling to stay alive, the Swedish automaker Saab has filed for bankruptcy. The company’s assets have been turned over to a Swedish court-appointed receiver by its owners. Saab’s previous owner, General Motors (GM), rejected a recently proposed offer under which Saab would have been sold to a group of Chinese investors including the carmaker Zhejiang Youngman Lotus Automobile. GM’s cooperation would have been required as they still supply parts, engineering and design for Saab’s products. As China is one of General Motors biggest markets, they were concerned that their technology could wind up in the competition vehicles; GM still has an ownership stake in Saab and has not commented on the board’s decision to file for bankruptcy.

The board came to the conclusion that without any additional funding, the company will not be solvent and filing was the best option and was in the best interests of its creditors. Saab spokesman Eric Geers stated that Saab could be purchased out of receivership (either in whole or in part) but any potential buyers would need to negotiate with the defense and aerospace company “Saab Group, a separate company that still owns the rights to the Saab name and trademark , as well as with General Motors.

As part of its bankruptcy reorganization , GM sold Saab to Swedish Automotive in early 2010 but Saab continued to struggle while under the new ownership and Swedish Automotive says it does not expect receive any value from its ownership . Saab has had difficulties in paying employee salaries as well as suppliers which put a block on its further production and as a result, it was forced to file for bankruptcy protection. This year’s sales bottomed out at slightly over 5,300 (by end of November) as compared to the year 2000 in which almost 39,500 were sold to U.S. buyers.

Creditors Seek Dismissal of Jefferson County Bankruptcy

2011-12-17T08:18:00.000-08:00

Creditors of Jefferson County, Alabama, have filed a petition for dismissal in U.S. Bankruptcy Court for the Northern District of Alabama claiming the county has no legal grounds to be in municipal bankruptcy proceedings.

Jefferson County filed for bankruptcy protection on Nov. 9 due to what it characterized as unsustainable debt related to corruption-plagued financing for a new sewer system. The petition for dismissal was filed last Friday by Bank of New York Mellon Corp, (BNY) as the indenture trustee for the holders of county sewer warrants.

BNY asked U.S. Bankruptcy Judge Thomas Bennet to dismiss the bankruptcy case, arguing that Jefferson County does not meet the requirements for Chapter 9 relief under federal bankruptcy law.

The petition claims that the county must be authorized under Alabama state law to file for federal bankruptcy protection, and it fails to meet those eligibility requirements. It argues that under Alabama law, only municipalities that have outstanding bonds can file a Chapter 9 petition, and that Jefferson County has no outstanding bonds, only warrants. Thus, the filing says, "In light of the County's lack of funding or refunding bonds and the resulting failure of specific authorization to file its chapter 9 petition, the County's chapter 9 petition must be dismissed.”

Bankruptcy Update: Allcare Dental Management

2011-12-16T09:15:00.000-08:00

Representatives for Allcare Dental Management, a New York-based dental chain that filed for bankruptcy last month, appeared at a bankruptcy meeting Monday in Buffalo, NY to report the company has sold the majority of its equipment to pay creditors. The only remaining equipment is stored in a Greensburg, Pa., office where the landlord has denied access to the building.

The dental association filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Western District of New York in Buffalo. Their bankruptcy filing listed zero assets against $3.6 million in liabilities, with HSBC Bank the largest creditor, owed $1.7 million on a secured loan. Allcare also listed a $1.3 million judgment against the business from a lawsuit for unpaid services by Velocity Network Inc. of Erie, Pa., an Internet services company. Other creditors include a number of former landlords.

Allcare is also dealing with a number of lawsuits by patients and investigations by attorneys general in New Hampshire, Indiana and elsewhere. The lawsuits stem from the company’s unanticipated closings last year of more than three dozen offices in New York, Illinois, Iowa, Massachusetts, Michigan, New Hampshire, North Dakota, Nebraska, Ohio, Pennsylvania, Tennessee, West Virginia and Wisconsin.

Lawsuits filed by patients claim they prepaid for services they never received.
Allcare executives have acknowledged the advanced payments, but said it couldn’t inform patients at the time of the closing because its phone and computer service had been shut down. A notice to the New Hampshire Board of Dental Examiners at the time said "the entire company has run out of money, thus rendering it unable to open for business as usual effective Monday."

Bankrupt Historic Orange County Bar and Restaurant Closes

2011-12-15T09:29:00.000-08:00

Tia Juana's Long Bar & Grill, a popular bar and restaurant located in a historic Orange County California railroad area, has closed in the wake of its October 28 filing for Chapter 7 bankruptcy liquidation. The trustee handling the bankruptcy filing submitted a motion on Dec. 9 to abandon the bankruptcy estate's interest in any remaining assets.

In its Chapter 7 bankruptcy filing, Tia Juana's listed $17,228 in assets against $495,328.33 in liabilities. At the time the restaurant listed assets including $2,000 worth of tables and chairs and a 2009 Nissan Altima worth $12,580 that was financed by Wells Fargo Bank. The filing also included a declaration that it had $2,648 in a business checking account and no cash on hand. As part of its liabilities, the restaurant listed two pending lawsuits filed last summer that, together, seek nearly $420,000 in damages.

Restaurant owner and President, Bradford "Paco" Miller, listed employment income of $540,000 in 2009 and $600,000 in 2010. He stated in the liquidation filing year to date 2011 income of $90,000. Miller told the OCRegister that he opened a second Tia Juana's in Maui 2½ years ago, but closed it last May due to lackluster business. He also said he declined to renew a lease this year on Clubhouse Café, another Maui restaurant he owned, which he described as having “a successful run.” Miller says he plans to stay in the restaurant business.

Following Denials, Senators Get Tough with MF Global Executives

2011-12-14T11:28:00.000-08:00

With the completion of prepared opening statements by MF Global executives, including former Sen. Jon Corzine, Senate committee members plan to “get tough” in their demands to discover what happened to $1.2 billion in customer money that disappeared when MF Global collapsed into bankruptcy.

Former CEO Corzine, who resigned following the Oct. 31 bankruptcy filing, said in prepared remarks to the House and Senate Agriculture Committees "I simply do not know where the money is." Corzine said that is because although he had overall responsibility for the firm, he did not get involved in the actual movement of money.

CFO Henri Steenkamp also said he doesn’t know where the money went because, "Direct involvement with operational matters such as bank accounts or fund transfers has never been part of my duties.”

Company president and current CEO Bradley Abelow said "At this time ... I do not know the answers to those questions." Abelow said he needs access to MF Global documents – currently under the control of a trustee – to explain what happened to the money.

Lawmakers have previously heard from farmers, ranchers and small business owners in their states who are missing money that was deposited with the firm. Acknowledging the frustration, Senate Agriculture Committee Chairman Debbie Stabenow said the situation "raises very troubling questions" because the rules about keeping customer money separate from company funds are "straightforward."

Chicago Housing market Good For Cash Buyers, Bad For Others Who Can't Get Loans

2011-12-13T17:30:00.000-08:00

According to Jack Persin, President and managing broker of Ryan Hill Realty in Naperville, housing inventory is at its lowest point in four years due to home sales that are rising. Home sales have increased by 20% over last year and home values are improving as well.

Tom Krettler, a broker associate with RE/MAX unlimited Northwest, also a specialist in bank-owned foreclosures, feels the same.
He doesn’t anticipate any more price decreases and says that if a home is priced right and is in decent condition, it will sell. Even homes that are not in good condition will sell if they are priced right. Current buyers need good credit or cash right now to buy and they can afford to be choosy. The buyers who have cash are getting some very good deals. If a person is able, it is an excellent time to buy. One can purchase a two-bedroom condo in the Northwest suburbs, turn it into a rental and earn income on it as an investment.

Many banks right now however won’t loan money on condos because of problems connected to homeowner association foreclosures and delinquencies leaving the bargains open to the cash buyers. Credit has been on a roller coaster ride and where it was once too easy to obtain, it’s now the opposite, too hard to obtain.
According to Krettler, at present, the situation is that one can buy a property and have the payments (including mortgage, interest and property taxes as well as principal ) be less than it would cost to pay rent for a property which was comparable.

Krettler says banks are now starting to show more willingness to work with distressed homeowners when they need loan modifications or short sales so they can avoid foreclosure procedures which is a good sign.

Republican Hopeful Targeted in Petters-Related Clawback Suit

2011-12-12T06:38:00.000-08:00

The liquidating trustee for a bankruptcy case related to Tom Petters’ $3.65 billion Ponzi scheme has sued U.S. Congresswoman and presidential hopeful Michele Bachmann in an attempt to recover $27,600 in campaign contributions.

Barry Mukamal—the liquidating trustee for bankrupt Florida-based hedge funds Palm Beach Funds—has filed a “clawback” lawsuit in U.S. Bankruptcy Court in the Southern District of Florida in relation to the $3.65 billion Ponzi scheme of jailed Minnesota native Tom Petters. Included in the filing are more than $27,000 in campaign contribution funds that were allegedly transferred to republican presidential candidate hopeful Michele Bachmann and her political committees, Bachmann for Congress and Bachmann Minnesota Victory Committee.

According to the clawback lawsuit, the money was transferred to Bachman and her political committees by Frank Vennes, Jr., who was charged in April with securities fraud related to the marketing of a hedge fund’s investments in Petters Company, Inc. (PCI). Additional charges against Vennes were subsequently added in a superseding indictment.

The clawback lawsuit claims the Ponzi scheme rendered all Palm Beach Funds’ investments with Petters “worthless.” It further says the money was provided to Bachmann and her associated political committees during the period in which Vennes and his related entities were “committing these tortious acts and receiving transfers from the Palm Beach Funds.”

Judge Says MF Global Trustee Must Prove 'Disinterestedness'

2011-12-11T11:37:00.000-08:00

James Giddens, the trustee tasked with winding down the businesses of bankrupt brokerage MF Global, has been accused by some customers of having a conflict of interest due to his former work for JPMorgan Chase & Co, which is a key lender to MF Global and is allowing the company to fund its bankruptcy using cash securing a loan.

Giddens was appointed as the trustee in the liquidation of MF Global Inc. by the Honorable Paul A. Engelmayer, United States District Court for the Southern District of New York pursuant to the Securities Investor Protection Act ("SIPA").

Bankruptcy Judge Martin Glenn had previously ordered Giddens to describe the relationship with JP Morgan Chase. In response, Giddens' law firm, Hughes Hubbard & Reed, disclosed it worked for JPMorgan in 2009 and 2010 and noted that revenue from the work was less than one-tenth of 1 percent of the firm's total annual revenue.

But in a hearing on the matter last Friday, Judge Glenn said he needs further disclosures to make a determination on a potential conflict of interest. Glenn noted, Previous court filings do not "clearly disclose whether JPM is a current client of" Hughes Hubbard. He added, "The status of an entity as a current client (as opposed to a former client) can make an important difference in evaluating conflicts and disinterestedness."

Former MF Global Head Defends Actions in Congressional Hearing

2011-12-10T09:36:00.000-08:00

Jon S. Corzine appeared before the House Agriculture Committee last week on the power of a subpoena from the committee, where he was questioned regarding his tenure as CEO of MF Global and it subsequent bankruptcy filing. Corzine has also been asked to appear before the Senate Agriculture Committee and the oversight arm of the House Financial Services Committee; those meetings are scheduled for next week.

Corzine, who ran the company for the 18 months prior to its Chapter 11 bankruptcy filing, a Democratic Senator from New Jersey in 2001, was formerly the head of Goldman Sachs, a U.S. senator from New Jersey and the governor of that state. MF Global filed for bankruptcy on October 30, after two key events: the firm could no longer shoulder losses on its holdings of debt issued by Italy, Spain and other troubled European nations, and it was discovered that $1 billion in customer funds could not be located. That troubling discovery came as the company attempted a last-minute sale rather than a bankruptcy filing.

Throughout his appearance, Corzine acknowledged and defended his decision to invest heavily in European sovereign debt, but he denied all knowledge of the whereabouts of the missing funds, although he did offer theories of where it could be.

Regarding the debt Corzine said, “At the time that MF Global entered into the transactions, I believed that its investments in short-term European debt securities were prudent.” He said the MF Global board approved the risk limits of the trades on a country-by-country basis, and that “it took appropriate steps” to reduce that risk where it deemed necessary.

Regarding the missing money, Corzine said he was ‘stunned” to hear it was missing and surmised it may have been caused by an “extraordinary number of transactions during MF Global’s last few days.” He called that time period “chaotic” and said it was “extremely difficult” to “reconstruct” all the actions that were taken. Corzine, who has not been accused of wrongdoing, also said, “I never intended to break any rules. I know I had no intention to ever authorize the transfer of segregated moneys. I know what my intentions were.”

Newspaper Company Lee Enterprises Inc. To File Prepackaged Bankruptcy

2011-12-09T09:35:00.000-08:00

On the heels of failing to renegotiate its debt, newspaper publisher Lee Enterprises Inc. has announced that it will file a prepackaged Chapter 11 bankruptcy before the end of 2011.

Lee, which owns print and digital newspapers in 52 markets, released a press release in which company chairman and chief executive officer Mary Junck said, This is welcome news for all who have a stake in Lee. We have achieved agreements with an overwhelming majority of our creditors on reasonable terms that preserve stockholders’ interests in the company with only 13% dilution.”

Referring to a September announcement that that the company was considering a Chapter 11 bankruptcy filing Lee said, As we previously noted as a possibility, implementation will require a favorable, voluntary, prepackaged Chapter 11 process to bind the remaining minority of non-consenting lenders to the terms. While such a filing falls under bankruptcy laws, it differs significantly from most such filings because it preserves interests of our current stockholders and all other parties. In our case, the process will simply provide a favorable legal framework for implementing the pre-negotiated refinancing on an expedited basis while business continues as usual with no impact on employees, vendors and customers.”

Carl Schmidt, vice president, chief financial officer and treasurer, said the company and its majority-owned subsidiaries expect to initiate the voluntary pre-packaged Chapter 11 filing on or about December 12, 2011. He noted that Lee’s interests in Tucson, AZ, and Madison, WI, are not included in the filing.

Lehman Trustee Seeks OK for $18.3 Billion Payback Fund

2011-12-08T19:56:00.000-08:00

In a filing last Thursday with U.S. Bankruptcy Court in Manhattan, trustee James W. Giddens asked the court to approve a series of procedures that will establish an $18.3 billion fund from which he will pay back customers of the bankrupt Lehman Brothers Holdings Inc.

Giddens is winding down Lehman's broker-dealer business under the authority of the Securities Investor Protection Corp., which governs the liquidation of failed brokerage firms. He is also the trustee in charge of unwinding MF Global Holdings Ltd.'s brokerage.

Giddens’ plan calls for the fund to begin paying customers back in early 2012, and in the filing he further explained that most of the $23.7 billion it expects to be available to those customers is "now in hand." In addition, the filing factors how the trustee plans to allocate the more than $3 billion it was awarded in a lawsuit earlier this year against Barclays Group PLC. Meanwhile, Barclays is appealing that decision.

According to the trustee's office, "The proposed allocation order is a milestone in the administration of the estate and consistent with the Trustee's principal duty to return property to public customers while at the same time treating all interests fairly and maximizing the estate for all creditors."

A hearing on the allocation is set for Jan. 25, 2012.

Swedish Carmaker Saab's Bankruptcy Protection Threatened

2011-12-08T15:56:00.000-08:00

According to a recent Reuters report, Saab faces a new threat when a court appointed administrator stated that the protection it is receiving from bankruptcy should be removed for its failure to secure Chinese investments. Saab currently has court protection from creditors as well as possible bankruptcy claims.

Saab has been in a downhill slump since last year when a financial crunch forced it to cease production. Swedish Automobile, its owner, has created a number of solutions in attempts to save the carmaker, but General Motors, its former owner, which still sells the Saab technology, disapproved a new offer with the Chinese Investors Zhejiang Youngman Lotus Auto and Pang Da Automobile Trade Company.

Guy Lofalk, court administrator stated that since the funding has not been received and the agreed upon schedule has not been kept and the Saab companies don’t have the ability to pay upcoming liabilities, he asked that the court end the creditor protection process. He also referred to the position of General Motors being unwilling to approve the proposed deals. Saab’s main factory in Trollhatten, Sweden, has been shut down for months due to unpaid bills including salaries that were due to be paid on November 25th.

West Sweden’s Vanersborg District Court stated that Saab and its creditors have until December 15th to submit their response to the court administrator’s request and that it would make a decision on the matter the following day. If the protection is ended from creditors, this would open the door for Saab’s bankruptcy. Swedish Automobile stated last Wednesday that it hopes it will receive the funding needed for the debt reorganization to continue.

GM made it clear that it would be difficult for them to support a sale of Saab that could hurt their competitive position in China as well as other important markets and without GM’s production contract and technology licenses, Saab would not be able to continue on as it is today.

Perkins & Marie Callender’s Exit Bankruptcy

2011-12-05T09:12:00.000-08:00

In June of this year, Perkins, Marie Callender's Inc. and eleven of its subsidiaries and affiliates filed for a so-called “pre-packaged” Chapter 11 bankruptcy protection. Their petition included a plan to restructure debt that would give control of the company to Wayzata Investment Partners LLC. The company said the bankruptcy was necessary to improve its balance sheet and operational performance.

The United States Bankruptcy Court for the District of Delaware approved the Company's plan of reorganization (the "Plan") on October 31, 2011, and this week the company has announced it has successfully completed its financial restructuring and has emerged from Chapter 11 bankruptcy.

Joseph F. Trungale, the chief executive officer of the Company confirmed Wayzata Investment Partners LLC ("Wayzata") as the company’s majority stockholders. He said, "Our financial restructuring has significantly improved the Company's balance sheet, eliminating over $200 million in debt, and optimized its operational structure. We are now better positioned than ever before to continue as a leading force in the family-dining and casual-dining restaurant industry and to continue to provide our customers with a first rate dining experience."

Trungale also said, “I would also thank our previous board and all of our vendors, suppliers, customers and employees for enabling us to complete our restructuring process on a timely basis and emerge as a stronger Company."

Developer’s Bankruptcy Challenged by Bank of the West

2011-12-04T08:31:00.000-08:00

Iowa Developer David Walters filed for Chapter 7 bankruptcy liquidation last week in the U.S. Bankruptcy Court for the Southern District of Iowa in Des Moines. The petition did not include his spouse, Jody Walters. In the filing, Walters listed assets of less than $500,000 against liabilities of up to $50 million. Walters, 63, identified nearly 50 creditors, including 11 banks.

Walters hasn’t yet filed a detailed schedule of assets and debts, but did indicate that he intends for his Pleasant Hill to be exempt from bankruptcy proceedings. That prompted an immediate response from Bank of West, which claimed the bankruptcy was timed to prevent a likely foreclosure related to a separate lawsuit. Walters and Bank of the West have been battling in court since 2007 over several loans defaulted on by Walter’s companies.

Bank of the West attorney Jonathan Kramer argued that “Debtors’ filing of this case was with the intent to disrupt” their separate court action be allowed to proceed. He claimed the Walters had abandoned the family’s $600,000 home and moved to West Des Moines. Kramer also cited an earlier court ruling in which a bankruptcy judge rejected the efforts of Jody Walters to exempt her interest in the home by filing for personal bankruptcy.

In response, Walters’ lawyer, Jerrold Wanek, said the decision on Jody Walters’ claim is on appeal before the 8th U.S. Circuit Court of Appeals. About the home’s alleged abandonment he said, “Due to continued harassment by Bank of the West, David Walters has temporarily exited the property solely for the purpose of protecting his children from harassment by process servers.” He said that the family now intends to return to the home “since the petition in bankruptcy is now filed and presumably since the process servers will stop harassing the Walters family.”

Developer’s Bankruptcy Largest in Iowa

2011-12-03T07:30:00.000-08:00

In one of the largest filings in Iowa history, Jon Garnaas, founder of Ladco Development Inc., has declared personal bankruptcy. Garnaas started the development and property management company in 1998 and grew it into an investor and builder of a variety of projects throughout the state including medical facilities, high profile mixed use developments and the upscale Village of Ponderosa in West Des Moines.

According to court records, Garnaas and his wife, Faith, filed for Chapter 7 liquidation under of the federal bankruptcy code. The couple’s 117-page filing listed $1.1 million in assets against $457.6 million in liabilities.

The major assets owned by the couple are their Clive, listed as worth $808,600. However the filing notes the home has second, third and fourth mortgages as well as liens against it totaling $9 million of debt from four lenders. Their second property is a condominium at Brown Camp Lofts in downtown Des Moines, listed as worth $112,500, but with debts against it of $150,000.
The couple’s unsecured debts total $448 million owed to such creditors as Merchants Bonding Co. in Des Moines, Great Western Bank in Clive, First Commercial Bank in Minneapolis and Valley Bank in Clive.

The bankruptcy filing will temporarily halt a number of foreclosure lawsuits filed against Garnaas and Ladco-affiliated partnerships. Steven Wandro, attorney for the Garnaases, said “Jon and Faith have struggled for the last year and a half to do everything they could to make things right with their creditors and partners. Quite frankly, events have just overtaken them. The drying up of the credit markets, as well as the cratering of the real estate market, has taken a horrible toll on the projects and on John and Faith.”

American Airlines Pension Challenge

2011-12-02T09:29:00.000-08:00

This week American Airlines filed for Chapter 11 bankruptcy protection. It was the last major domestic airline to do so, a fact it cited in its filing. American said it was unable to compete with other airlines, which had restructured through bankruptcy and entered in mergers following exits from bankruptcy. In addition to debt restructuring, those airlines, including United, Delta Air Lines Inc and US Airways Group Inc, also used their bankruptcies to abandon their pension plans.

Although American has not yet officially indicated whether it will do so, the Pension Benefit Guaranty Corp has estimated that the carrier’s four pension plans are under-funded by $10 billion. The pensions affect some 130,000 employees and retirees and collectively have about $8.3 billion in assets. The PBGC estimates employees and retirees could lose $1 billion in pension benefits if it has to take over the plans.

The company line thus far is that their Chapter 11 reorganization "does not necessarily mean that" a company will terminate its four plans. However spokesman Tim Smith has also said, "American's pension and retiree medical plans are very expensive. The company spends more on them than our competitors. These costs and many other factors are considerations when deciding to continue these benefits."

Employees have already been notified that future retirees can no longer get a lump sum distribution due to the under-funding. However a number of employees – including more than 300 pilots – retired earlier this fall in anticipation of the bankruptcy filing, and they could still receive their lump-sum pension distributions.

American Airlines Files For Bankruptcy

2011-12-01T16:21:00.001-08:00

American Airlines and its parent AMR Corp filed for Chapter 11 bankruptcy protection on Tuesday in a Manhattan bankruptcy court. The company listed assets of $24.7 billion against liabilities of $29.5 billion and said it has $4.1 billion in cash.

American Airlines is the third-largest U.S. carrier behind United Continental Holdings Inc.'s United Airlines and Delta Air Lines Inc. both of those carriers cut costs through Chapter 11 bankruptcy and subsequently rebuilt strength through mergers. Incoming AMR chief executive Tom Horton told reporters, “It became increasingly clear that the cost gap between us and our competitors was untenable.”

Although all carriers face high fuel prices and decreased travel demand, American, formerly the largest carrier, continued to struggled with higher labor costs compared to its streamlined, post-bankruptcy competition. now-retired CEO Robert Crandall told Reuters News Agency that American won significant union concessions in 2003, but said, "That deal wasn't good enough. The other airlines that went bankrupt cut their costs much deeper than American.”

David Bates, president of the Allied Pilots Association, released a statement about the bankruptcy saying, "While today's news was not entirely unexpected, it is nevertheless disappointing that we find ourselves working for an airline that has lost its way." Negotiations with pilots and unionized flight attendants stalled recently over wages, benefits and work rules, setting the stage for the bankruptcy decision. The decision was further predicted through the retirements of a number of pilots earlier this year, most of whom hoped to preserve pensions that could be terminated as part of a restructuring.

Madoff Trustee Reaches Settlement With IRS

2011-11-28T08:10:00.000-08:00

Irving Picard, the trustee who is liquidating bankrupt Bernard L. Madoff Investment Securities LLC, has reached an agreement with the Internal Revenue Service to recover $326 million paid to the agency purportedly on behalf of Madoff's foreign account holders. In a court filing, the trustee said no record exists of Madoff's firm having purchased or sold any securities for the benefit of foreign account holders.

In the course of his investigation, Picard identified payments of approximately $330 million supposedly made on behalf of 145 foreign account holders. His filing noted the IRS erroneously refunded about $4.2 million to two of the foreign account holders.

Picard wrote, "I believe that the payments made to the IRS falsely identified the funds as income tax withholding in order to give the investment advisory arm of Bernard L. Madoff Investment Securities LLC (BLMIS) an air of legitimacy and to avoid inquiries."

The settlement, which must still be approved by the court, will be distributed to Madoff customers with valid claims. Picard will reserve about $103 million of the settlement payment to meet any judgments against the IRS or the trustee. That reserve amount is schedule for release for distribution two years and 60 days after the settlement is approved by the court.

Mortgage Insurer PMI Group Files for Chapter 11 Bankruptcy Protection

2011-11-27T10:17:00.000-08:00

Mortgage insurer PMI Group Inc filed for Chapter 11 bankruptcy protection on Wednesday of last week, after its main operating unit was seized by the Arizona Department of Insurance. Regulators took control of PMI's main unit, PMI Mortgage Insurance Co, on Oct. 20, two months after ordering it to stop writing new policies because the company did not have enough capital. Arizona Superior court judge Richard Gama rejected the company’s request to overturn the seizure, and it filed for bankruptcy one day later.

The company’s bankruptcy petition identified in excess of $225 million of assets against debts of $736 million as of Aug. 4. The company’s debts include $685 million of senior unsecured notes and $51.5 million of junior subordinated unsecured notes, all of which are now due and payable. The petition confirms that the filing blocks note holders from enforcing their remedies.

According to experts, PMI's bankruptcy is reflective of losses sustained by mortgage insurers caused by the weakened economy and the housing downturn which left the industry facing overwhelming claims on unpaid home loans.

In the filing, PMI Chief Executive L. Stephen Smith echoed those sentiments writing, "Continued high unemployment in the United States and the slow economic recovery (as compared to previous recoveries) in U.S. residential mortgage and housing markets are reflected in PMI's recent elevated loss ratios."

PSEG Seeks Dismissal of Dynegy Bankruptcy

2011-11-26T11:14:00.000-08:00

Public Service Enterprise Group Inc, the owner of two power plants leased to Dynegy Holdings LLC, filed a motion last week seeking the dismissal of the power company's bankruptcy dismissed. PSEG claims parent company Dynegy Inc put its subsidiary into bankruptcy this month as part of a scheme to break its leases and enrich its own shareholders, and argue that the process is fraudulently benefitting investors such as billionaire Carl Icahn.

Dynegy’s bankruptcy has been unusual from the outset, in that it protects parent company shareholders at the expense of bondholders. More typically in Chapter 11 reorganizations, it is company shareholders who lose their investment.

Experts have traced financial maneuverings in the company back to early 2011, when investors Icahn and Seneca Capital Advisors LLC took control of the Dynegy board and began shuffling assets within the corporate family in efforts to manage the debts and lease obligations of its subsidiary.

PSEG's court filing argues that the recent asset transfer amounts to a constructive fraud and accuses Icahn and Seneca of "fraudulently stripped value" from Dynegy Holdings for their own benefit. PSEG wants the bankruptcy court in Poughkeepsie, New York, to dismiss the Dynegy Holdings case claiming it was filed in bad faith and further claims that not granting the dismissal “would turn the bankruptcy code on its head."

MF Global Trustee Doubles Shortfall Estimates; Company Seeks Separate Trustee

2011-11-25T13:55:00.000-08:00

Earlier this week James Giddens, the trustee liquidating MF Global Holdings Ltd., announced the shortfall of commodity customer funds at may be around $1.2 billion, more than double the $600 million amount initially identified by regulators. The announcement was the first public statement on the shortfall topic released by Giddens.

MF Global Holdings Ltd. listed assets of $41 billion in its Oct. 31 Chapter 11 petition. In Monday's filing, Giddens said he currently has about $1.6 billion of the brokerage's funds under his control earmarked for paying back customers, but noted his plans to pay back 60 percent of customer funds by early December would nearly exhaust that amount.

The news came less than a week after U.S. Bankruptcy Judge Martin Glenn approved a payout of $520 million in cash to customers whose accounts have been frozen since the futures brokerage unit of MF Global Holdings filed for bankruptcy. Regulators continue to investigate what happened to the money including whether MF Global may have violated industry rules by improperly mixing customer funds with its own money.

Within hours of the statement’s release, the bankrupt MF Global parent filed court papers seeking the appointment of a separate trustee to take over the company's assets. Such an action is rare in bankruptcy court, typically occurring only in cases where company executives have been accused of wrongdoing.

The company was joined in the petition for a separate asset trustee by key lender JPMorgan Chase & Co, which pledged $8 million of its collateral to keep MF Global afloat during bankruptcy. According to the filing, Chase will increase bankruptcy funding to $26 million if the second trustee is appointed.

Judge Approves Dallas Stars’ Bankruptcy Plan

2011-11-23T14:05:00.000-08:00

U.S. Bankruptcy Judge Peter Walsh has approved the bankruptcy reorganization plan of the Dallas Stars hockey team. The approval clears the way for the team to be sold to Vancouver businessman Tom Gaglardi. The reported sales price is $265 million.

The team filed for Chapter 11 protection from creditors on Sept. 15 while under the ownership of Hicks Sports Group, which was led by private equity executive Tom Hicks. Lenders took control in 2009 after Hicks defaulted on $525 million of debt; the default also led Hicks to lose his other major sports holding, the Texas Rangers baseball team.

At the time of filing, then-President Tony Tavares announced in a release that the filing was “a significant step toward completing the transition in ownership.” He also announced that the team’s lenders had approved a prepackaged bankruptcy plan, under which Vancouver businessman Tom Gaglardi, who has submitted an offer to buy the team, would be the lead bidder for the Stars.

Gaglardi, who owns hotels and restaurants throughout Canada, as well as the Kamloops Blazers of the Western Hockey League, was the only bidder at the subsequent court-supervised auction. The sale has been approved by National Hockey League, and according to Jim Rossiter, a partner at Baker & McKenzie which represents him, Gagliardi has scheduled the formal announcement of his ownership for next Monday.

2011-11-21T09:57:00.000-08:00

Judge Approves $520 Million Payout To MF Global Customers

MF Global filed for Chapter 11 bankruptcy protection on Oct. 31, after customers and counterparties fled the futures brokerage upon discovering it had made a $6.3 billion bet on European sovereign debt. Upon filing, some $869 million was frozen across commodity cash-only customer accounts. Another $600 million remains unaccounted for.

At a hearing on Thursday in Manhattan, U.S. Bankruptcy Judge Martin Glenn approved a payout of $520 million in cash to customers whose accounts have been frozen since the bankruptcy of the futures brokerage unit of MF Global Holdings. According to trustee James Giddens, the payout represents 60 percent of the frozen funds. He has not yet discovered the status of some $600 million of customer funds that have been unaccounted for since MF Global's Chapter 11 filing, or whether MF Global might have improperly mixed customer funds with its own.

Giddens says he expects the payouts to begin by Nov. 21, and will be shared amongst some 22,000 customers. Some of the recipients are faulting the trustee for not distributing more cash while other customers have filed complaints they are not eligible to join in the payout. Giddens responded that nothing in the law "requires that all customers receive similar rates of distributions at the same time.”

Sbarro's Bankruptcy Plan Wins Court Approval

2011-11-19T08:56:00.000-08:00

Sbarro Inc., the private-equity-owned pizza chain based in Melville, New York, filed for bankruptcy in April, with a goal of cutting debt and restructuring its balance sheet. This week a bankruptcy court has approved its reorganization plan, clearing the way for an emergency from bankruptcy protection later this month.

The company had filed its amended reorganization plan last month, under which its lenders had agreed to provide about $35 million of new capital and reduce its total debt. In a statement, Chief Executive Officer Nicholas McGrane said, "When we emerge from bankruptcy, our debts will have been reduced by approximately 70 percent. Our business is performing solidly as we head into our busiest period of the year."

Founded in 1956 as a Italian grocery store in Brooklyn, Sbarro evolved into an Italian restaurant chain, with its first mall location in 1967. Today, the company has 1,045 locations in 42 countries. It was acquired by MidOcean Partners, a private equity firm, in 2007 with current and senior management retaining a stake. MidOcean, whose executive board includes a former New York governor, George E. Pataki, owns a number of other consumer brands, including the gym chain L.A. Fitness International and the apparel maker totes Isotoner.

General Maritime Files For Chapter 11 Bankruptcy

2011-11-18T07:54:00.000-08:00

On the heels of a slump in freight rates, oil tanker company General Maritime Corp. filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Manhattan. Substantially all of the Company's subsidiaries – with the exception of those in Portugal, Russia and Singapore as well as certain inactive subsidiaries – have also commenced Chapter 11 cases. The company warned of a possible filing in its Sept. 30 regulatory filing, noting that freight rates for oil carriers have fallen to their lowest levels in at least 14 years.

In its petition, the New York-based company listed assets of $1.71 billion against debt of $1.41 billion. It also announced that Lender Oaktree Capital Management LP agreed to make a $175 million equity investment and that it will receive as much as $100 million in new debtor-in-possession financing to help the company through reorganization from a group led by Nordea Bank Finland Plc.

In a press release, the company announced the agreement will substantially reduce its funded indebtedness and enhance its liquidity profile. It also confirmed that operations are expected to continue without interruption.

Jeffrey D. Pribor, Chief Financial Officer, said, " Having reviewed the options available, we determined that implementing these agreements with our key lenders through court-supervised proceedings will facilitate our financial restructuring and that this is the best course of action for General Maritime. This restructuring process will allow us to continue to support our customers, suppliers and employees while we work to enhance the Company's position as a leading provider of international seaborne oil transportation services."

Lynn Tilton Buys Hussey Copper in Bankruptcy Sale

2011-11-17T11:06:00.000-08:00

Lynn Tilton, a private equity investor known as a self-made billionaire who owns more companies than any other woman in the United States, has purchased Hussey Copper Ltd. for about $107.8 million through a bankruptcy auction. According to sale adviser Scott Victor of SSG Capital, Tilton's Patriarch Partners outbid four others in Monday's nine-hour auction.

Hussey Copper Ltd., a Pennsylvania-based manufacturer of copper products, along with five of its affiliates filed for Chapter 11 bankruptcy protection on September 27 in U.S. Bankruptcy Court in Wilmington, Delaware. The company initially listed more than $100 million in both assets and debt.

According to court documents Hussey said it had $38 million in first-lien debt owed to units of Wells Fargo & Co , Bank of America Corp and PNC Financial Services Group Inc. It also owes $2.4 million to second-lien lender Schneider Electric SA and about $29 million in unsecured trade debts to various suppliers, papers filed with Delaware's bankruptcy court. The $107 million sale amount will go to paying back creditors.

Tilton, who calls herself the "turnaround queen," often purchases troubled and bankrupt companies and attempts to help them recover and their employees retain their jobs. Collectively, Hussey and is affiliates have over 500 full-time employees.

Republican Calls for Increased Regulations

2011-11-16T14:23:00.000-08:00

Scott D. O’Malia, a Republican member of the Commodity Futures Trading Commission, has issued a statement calling for new regulations in the wake of the bankruptcy of MF Global, which included the disappearance of $600 million in customer funds.

O’Malia said, “The inability of MF Global customers as a whole to access their funds has affected trading in futures markets, and has shaken public confidence in our customer protection regime. To renew public confidence in segregation and to assure the public that MF Global is an isolated incident, the commission should immediately take action.” O’Malia said prompt regulatory action was required because MF Global customers still cannot access much of their money.

Last week, the commission ordered an audit of every American futures trading firm to verify that customer money was protected. O’Malia wants the agency to go further, by creating a “random spot check” to ensure the safety of customer funds. He suggests a program of sanctions that will go into effect if a firm fails to prove its customer cash is safe.

O’Malia also called for a review of commission rules regarding minimum capital levels for brokerage firms that belong to futures clearinghouses. Notably, MF Global lobbied the agency earlier this year to lower the required amount of capital a firm had to hold to become a so-called clearing member.

MF Global Sued by Fired Employees

2011-11-14T08:08:00.000-08:00

MF Global Holdings Ltd, which filed for Chapter 11 protection two weeks ago, is being sued by former employees who claim they were not given proper notice. The lawsuit was filed in U.S. Bankruptcy Court in Manhattan on Monday, five days before the futures brokerage fired all 1,066 workers at its broker-dealer unit. The lawsuit said workers did not receive 60 days notice, as required under federal and New York state labor law. The broker-dealer unit is not named as a defendant.

The lawsuit, which seeks class-action status, requests payment of unpaid wages and bonuses, commissions and other benefits as MF Global works through the bankruptcy process. Named plaintiffs are Pierre-Yvan Desparois, a former vice president in credit risk management at MF Global's New York office, and Todd Thielmann, a former floor broker in its Chicago office.

MF Global is also facing subpoenas filed by James Giddens, the court-appointed trustee liquidating the MF Global Inc broker-dealer unit. Giddons is locating some $600 million he says is missing from customer accounts. The subpoena calls for examination of employees of the parent company, but did not publicly naming them.

The $600 million shortfall is also being investigated by the Securities & Exchange Commission and the Commodity Futures Trading Commission.

Kodak and Investor Group Hire Separate Restructuring Pros

2011-11-13T12:37:00.000-08:00

The Eastman Kodak company has undergone a public struggle of late in the face of the collapse of its film business. The company has consistently denied that it intends to file for bankruptcy. At the same time, it has retained the services of two well-known restructuring professionals.

Kodak has hired Jones Day, one of the world’s largest law firms, whose Business Restructuring & Reorganization team has consistently been ranked among the top global restructuring practices. Kodak has also brought on board the global business advisory firm FTI Consulting, a well known restructuring firm.

Several weeks ago, Leveraged Commentary & Data, a Standard & Poor's publication, reported that a key Kodak investor group is reportedly concerned with the way Kodak will handle its restructuring, particularly in light of its imminent cash problems. Their worries stem from Kodak’s actions earlier this year, when it drew down on its revolving credit facility, and on the company’s Nov. 3 announcement that it may need to issue new debt or complete a multibillion-dollar patent sale to survive the coming year. Investors are said to be concerned that new debt issued by Kodak would be given priority over the debt they currently hold.

According to sources, those investors believe the better plan is for the company to sell its assets, and they are said to be seeking a way to influence Kodak’s restructuring decisions. Weeks ago the group reportedly hired the law firm Akin Gump Strauss Hauer & Feld, known for its sophisticated financial restructuring practice. Most recently, the group is also said to have hired as a financial advisory team the Blackstone Group.

Bankruptcy Clerk of Court is Army Reserve's Highest Ranking African-American Woman

2011-11-12T10:59:00.000-08:00

To commemorate Veterans Day 2011, USCourts.gov has place their spotlight on Marcia Anderson, the first African-American woman to attain the rank of Major General in the Army Reserve. Ms. Anderson has served as the bankruptcy clerk of court for the Western District of Wisconsin since 1998.

Anderson, also the first African-American woman to earn a second star in the Army Reserve, earned a law degree from Rutgers Law School, worked briefly in the corporate world, and then in 1985, joined the federal Judiciary as operations manager in the Second Circuit clerk's office. Shortly after, she became the circuit's supervisory staff attorney and from there, moved to work with the Second Circuit's Bankruptcy Appellate Panel, until 1998 when the bankruptcy clerk of court position opened in the Western District of Wisconsin.

The Army Reserve beckoned Anderson when she was a liberal arts major at Creighton University, in Omaha Nebraska looking for a science credit. "I really wanted to take an astronomy course, but it didn't happen. As I was cruising around the gym looking for a class, I saw this big sign, Reserve Officer Training Corp, Military Science. Hmmm, science. And there were posters of people jumping out of airplanes, walking through the woods, and rappelling. I said, sign me up. That's how I got into ROTC."

Anderson became the first African American woman in the Army Reserve Training Divisions to command a unit of Drill Sergeants. She championed automated leave tracking in the Army's Human Resources division because she had seen it work in the federal courts. And she oversaw the revamping of the entire Human Resources Command website.

In her new post as Deputy Chief Army Reserve, she will focus on simplifying the many legal and process barriers that make it difficult for soldiers to move seamlessly between full- or part-time roles throughout their military careers, depending on personal availability, employer capability and military requirements. And she'll continue her duties as bankruptcy clerk of court.

"In our court, we tend to think, 'what would I do if I were a customer? Is this information on the website useful for me?' The Army was still thinking people were going to pick up the phone and call them. I say you have to push out information, especially in these times when we're trying to be very lean. They had to start thinking about how to put themselves in that foxhole with that soldier in Afghanistan who has limited access to the Internet and who doesn't want to click 15 times to find the information."

Dynegy Filing Considered “Upside Down” Bankruptcy

2011-11-11T11:58:00.000-08:00

On Monday, Dynegy Holdings LLC and four of its subsidiaries filed a voluntary petition for Chapter 11 bankruptcy relief in the U.S. Bankruptcy Court for the Southern District of New York. Parent Dynegy Inc. is a Houston power company that serves utilities in the Midwest, Northeast and the West. Dynegy says its other subsidiaries are not seeking relief and will continue normal operations. Court documents indicate the filings were prompted by mounting losses at the plants. The subsidiaries are looking to exit their leases and turn the plants over to their owners.

Together, the strategy behind these subsidiary filings constitute a so-called ‘upside down” bankruptcy strategy, which was explained by Market Watch as follows: “Rather than tackle a financial restructuring in a way that protects bondholders, the Houston-based merchant power company is shaving bondholders while sparing shareholders.”

Upon its initial announcement, the plan received shareholder approval in the form of stock performance. Company shares, which were trading around $3.20, fell on initial reports of the bankruptcy, then rebounded to over $4 and as the details were announced.

But experts are sounding warning calls. Bankruptcy law prohibits shifting assets in a way that leaves no money to pay back creditors. Bondholder litigation is already rising over the company’s transfer of coal and natural gas assets earlier this year to entities outside of the unit. The issues are likely to coalesce in bankruptcy court where it will closely examine whether fraudulent conveyance occurred.

Southern Montana Electric Lists Assets, Debts

2011-11-09T09:06:00.000-08:00

Southern Montana Electric Generation and Transmission Cooperative, which filed for Chapter 11 bankruptcy reorganization Oct. 21, has filed a summary listing of its secured and unsecured creditors in bankruptcy court in Billings, Montana. The cooperative listed $110 million in assets against nearly $132 million in liabilities.

SME is a wholesale power cooperative that buys power from other companies and supplies electricity to its members including the city of Great Falls, and co-ops including Beartooth in Red Lodge, Mid-Yellowstone in Hysham, Tongue River in Ashland, and Fergus in Lewistown. The company has also recently completed Phase One of building its own a natural gas-fired power plant generating station in Highwood, near Great Falls. It filed for bankruptcy after a contested request to member cooperatives to increase to $300 million its borrowing authority regarding the Highwood project.

The cooperative’s secured debt includes $75 million owed to Prudential Capital Group of Dallas, which lent SME money to build the Highwood station, and a $10 million mortgage claim to Modern Woodman of America, in Rock Island, Ill. It listed approximately 39 unsecured claims, most associated with construction or services related to the Highwood plant. PPL Energy Plus also seeks $7.5 million from SME, a claim the cooperative disputes. Additionally, all SME members are listed as unsecured creditors relating to deposits on wholesale power bills, their investments in Highwood and other claims. As well, all members except Yellowstone Valley, are listed as co-debtors for pledging collateral or guaranteeing letters of credit.

Terry Holzer, manager of Yellowstone Valley Electric Cooperative of Huntley, called the cooperative’s debt level "massive" and said, "The question will remain in bankruptcy court whether this entity can remain a viable entity or be dissolved."

Local Insight Media Holdings, Inc. to Emerge from Bankruptcy

2011-11-07T08:21:00.000-08:00

The United States Bankruptcy Court for the District of Delaware has entered an order confirming the Plan of Reorganization for Yellow Pages publisher Local Insight Media Holdings, Inc. The plan calls for the company to emerge from bankruptcy with a new credit facility and total debt reduced by more than 90 percent. The Company's senior secured debt will be exchanged for equity in the reorganized company. Based on the plan’s confirmation, the company expects to emerge from bankruptcy on or about November 18, 2011.

Local Insight Media Holdings Inc., based on Colorado, and certain of its affiliates filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code on November 17, 2010. The Company's legal advisor is Kirkland & Ellis LLP and its investment banker is Lazard Freres & Co LLC. Alvarez & Marsal has served as the Company's restructuring adviser.

In a press release, Scott Brubaker, LIM’s Interim President, CEO and Chief Restructuring Officer said, "The Court's confirmation of our plan paves the way for our emergence from Chapter 11 as a leaner company, better positioned to meet our advertisers' needs for local search solutions. We are grateful for our employees' and clients' support throughout the restructuring process and look forward to emerging as a stronger, more streamlined company."

Through its subsidiary The Berry Company LLC, Local Insight Media Holdings, Inc. describes itself as a leading provider of local search solutions serving approximately 200,000 advertising clients in 41 states. The company publishes approximately 750 print Yellow Pages directories on behalf of approximately 115 telco and other customers. The Berry Company also provides clients with online listings and video advertising, provides small and medium-sized businesses with website development and search engine marketing services, and is a Google™ Qualified Company.

Latest Madoff Lawsuit Seeks Recovery of $1 Billion

2011-11-06T09:19:00.000-08:00

Irving Picard, the bankruptcy trustee seeking restitution for victims of the Bernie Madoff Ponzi scheme, filed a lawsuit against BNP Paribas SA Thursday with the U.S. Bankruptcy Court in Manhattan. He is seeking to recover nearly $1 billion sent to the French bank by a "feeder fund" for Madoff.

In the complaint, Picard identified the feeder fund as Cayman Islands-based Harley International (Cayman) Ltd, and accused it of transferring nearly $975.5 million in 2008 to BNP Paribas Arbitrage SNC, a unit of BNP Paribas. Picard asked the court for assistance, saying he has been unable to recover the funds, even though he won a $1.07 billion default judgment against Harley last November.

Picard claims federal bankruptcy law and New York state law governing debtors and creditors entitle him to recover the $975.5 million from BNP Paribas. BNP disagrees and has told the news service Reuters it will vigorously defend itself against the complaint.

The BNP Paribas lawsuit is among the largest of the roughly 1,050 lawsuits filed on behalf of former customers of Bernard L. Madoff Investment Securities LLC. Thus far, trustee Picard says he had recovered $8.7 billion but notes that the majority of that amount has not yet been distributed due to ongoing lawsuits.

Executive Severance Deals Examined in MF Global Bankruptcy

2011-11-05T15:18:00.000-07:00

According to a July proxy filing by MF GLobal Holdings Ltd, the company’s Chief Executive Jon Corzine and Chief Operating Officer Bradley Abelow would each be entitled to $9 million in severance if terminated without cause, and the company's retail operations chief Randy MacDonald would receive $8.9 million. But with the company’s bankruptcy last Monday, legal experts say it is unlikely any of the three will receive full payment.

The assessment is based on Section 503 of the federal bankruptcy code which bars all severance payments to insiders unless two provisions are met. The first provision says any such payments must be generally available to all full-time workers. The second says payments cannot exceed 10 times the average amounts awarded to non-management workers in the same calendar year.

Reuters news service interviewed Robert Miller, a professor at Villanova University School of Law who said, "My guess is, they aren't going to get much." They also spoke to Charles Elson of the University of Delaware's Lerner College of Business & Economics who said, "Nothing is sacrosanct in bankruptcy and I'd rule nothing out. When you file for bankruptcy, you really go into the twilight zone. It's hard to say with certainty what comes out of it."

Final decisions will fall to Bankruptcy Judge Martin Glenn, who will preside over MF Global's case.

Filene’s Basement: 3rd and Final Bankruptcy

2011-11-02T09:38:00.001-07:00

Discount clothing retailer Syms Corp and its Filene’s Basement chain have filed for Chapter 11 bankruptcy and the company says it expects both chains to complete going-out-of-business sales by the end of January. The company listed the book value of its assets as of September at $236 million against liabilities of $94 million. In an unusual Chapter 11 result, the company says it expects shareholders will receive some amount of recovery.

In a court filing Gary Binkoski, the interim chief financial officer of Syms, said the bankruptcy was necessary because suppliers began to tighten credit terms and the company could have run out of money as soon as this month.

Chief Executive Marcy Syms, who owns or controls a majority of Syms stock, said in a statement, "This has been a challenging time for Syms and Filenes Basement. We have been faced with increased competition from large department stores that now offer the same brands as our stores at similar discounts."

Syms was founded in 1958 by the late Sy Syms, who pitched his cut-price suits in television ads proclaiming "an educated consumer is our best customer." Syms bought Filene's Basement which began in 1909 in Boston, out of bankruptcy in 2009. Filene’s had earlier filed for Chapter 11 in 1999.

Judge Rejects Tribune Co. Bankruptcy Exit Plans

2011-11-01T09:45:00.000-07:00

Delaware's chief bankruptcy judge, Kevin Carey has rejected the bankruptcy plans submitted by Tribune Co. and a competing plan from the company’s noteholders. In a 126-page opinion Carey wrote, "Neither the (company plan) nor the noteholder plan is confirmable. I am uncertain, at this point, what steps the debtors or other parties may take as a consequence of this decision."

Tribune filed for bankruptcy in 2008, one year after financier Sam Zell led a $13 billion leveraged buyout of the company. The two plans essential differences centered around how they would treat legal claims relating to the buyout.

The company and a group of lenders, led by JPMorgan Chase & Co and hedge funds, proposed a settlement payment of around $500 million to noteholders. Noteholders, led by Aurelius Capital Management LP, rejected that ideas, wanting instead to sue those responsible for the buyout.

Carey said Tribune’s settlement was reasonable and should be approved and acknowledged creditor support for the company-backed plan. But he said he was bound by bankruptcy law that essentially allowed the conflicting supporters to veto each other’s plans, thus making both plans un-confirmable.

Carey set a status hearing for November 22 and issued a warning that if a viable exit strategy was not presented, he would appoint a trustee to replace Tribune's management and find a way to end the bankruptcy.

Beacon Power Files for Chapter 11 Bankruptcy Protection

2011-10-31T10:03:00.000-07:00

Beacon Power Corp of Tyngsboro, Massachusetts filed for Chapter 11 bankruptcy protection on Sunday. Their filing, made in federal bankruptcy court in Delaware, indicated the company has $72 million in assets against $47 million in debts. Court documents also show that the company is operating at a loss with revenues too low to support operations.

Beacon, an energy storage company, was spun off from SatCon Technology Corp in 1997 and went public in 2000. It developed new technology to help solar and wind power be used by power grids. Beacon’s approach called for their energy storage plant to rapidly absorb electricity from New York's power grid when demand drops, and inject energy back into the grid when demand increases.

In 2010 Beacon Power received a $43 million loan guarantee from a U.S. Department of Energy program. The company drew down $39 million of that loan to help fund construction of a $69 million, 20-megawatt flywheel energy storage plant in Stephentown, New York.

Beacon blamed the bankruptcy partially its inability to secure additional investments due to the financing terms mandated by the Department of Energy. But DOE spokesman Damien LaVera said the loan guarantee included "many protections for the taxpayer," most notably in this case that the government loan is the first debt the company must pay through its bankruptcy reorganization. LaVera also said not only the department is not directly exposed to Beacon's liabilities, it has the operating plant as collateral, as well as cash reserves held by the business.

Bankruptcy Filing Fees to Increase

2011-10-28T10:44:00.000-07:00

Effective November 1, 2011, a number of bankruptcy filing fees will increase. The fee changes were approved by the Judicial Conference of the United States on September 13, 2011.

Filing fees, typically paid to the bankruptcy court at the time of case filing, may be paid in installments with court approval, and can be waived in extreme circumstances.

The new bankruptcy filing fees, listed below, include a $7 increase of the “administrative fee” portion for each chapter.

Chapter 7 - $306
Chapter 11 - $ 1,046
Chapter 12 - $246
Chapter 13 - $281
Chapter 15 - $1,046

Other filing fee increases are listed below.

Adversary Proceeding - from $250 to $293
Amended Bankruptcy Schedules - from $26 to $30
Audio Recording - from $26 to $30
Certification - from $9 to $11
Document Filing/Indexing – from $39 to $46
Exemplification – from $18 to $21
Lift/Stay – from $150 to $176
Notice of Appeal - from $250 to $293
Record Retrieval – from $45 to $53
Returned Check - from $45 to $53

Filing fees are only one of four different fees that must be paid during the bankruptcy process. The other fees, listed below, were not affected by November first increase.

Attorney fees – vary based on the chapter and case complexity.
Credit counseling fee – typically less than $50.
Personal financial management fee – typically less than $50.

Note: The credit counseling and personal financial management requirements are part of the widespread changes to the Bankruptcy Code made by Congress in 2005.

Study Finds Personal Bankruptcy Levels Would Be Lower Under 1970′s Debt Rules

2011-10-27T10:09:00.000-07:00

A new study conducted by University of Iowa Sociology professor Kevin Leicht has found that up to one-quarter of the personal bankruptcies filed since 2007 wouldn’t have occured had the credit limits of three decades ago remained in place. His study is incorporated into his new book titled, “Broke: How Debt Bankrupts the Middle Class.”

Recalling limits in place during the 1970s, Leicht says that said a person couldn’t get a mortgage greater than 30% of proven income, or a car loan that required monthly payments of more than 10 percent of his/her income. His study found that if those credit regulations were still in effect, many of the Americans who have filed for bankruptcy wouldn’t have accumulated as much debt, because it would have been illegal for banks and credit card companies to loan that much money to an individual. He said, “If you looked at these people that were near bankruptcy and attempted to figure out how many of them probably wouldn’t have been able to borrow that much money to end up in bankruptcy in the ’70s, the number is pretty stark.”

Leicht explains what happened over the past two decades is that banks immediately sold home and car loans on the open market, which disconnected them from the borrowers’ ability to pay off the loan. “We need to return to some system where people should be loaned money on the basis of their ability to pay it back,” Leicht says.

None of this is to say that individual’s can’t establish personal borrowing limits. But according to Leight, “People were used to a system where a bank would tell you when you couldn’t afford a loan and it wasn’t in your best interest to take it. And we eventually moved to a system where a bank wasn’t about to tell you that, so you have to figure it out yourself.”

Update: Latest Filings in Dodgers Bankruptcy

2011-10-26T09:42:00.000-07:00

On Monday, a number of filings were made by several parties in the high-profile bankruptcy case of the Los Angeles Dodgers.

Major League Baseball, led by Commissioner Bud Selig, who has repeatedly alleged mismanagement by owner Frank McCourt, has for the first time put a number to his claim, identifying in yesterday’s filing $189.16 million as the amount of money that has allegedly been “looted” from the team by McCourt. The filing read, "The Dodgers are in bankruptcy because McCourt has taken almost $190 million out of the club and has completely alienated the Dodgers' fan base.” The league claimed McCourt funneled $73 million in parking revenue through Blue Land Co., a non-team related entity; used $61.16 million in team revenue to pay off personal debts; and took $55 million from team revenue for personal distributions.
The league has also claimed inadequate stadium security on McCourt's watch, specifically citing the aftermath of the Bryan Stow, a Giants fan who suffered a severe traumatic brain injury after being beaten just outside of the stadium.
The Dodgers claim Selig approved the business structures referenced in their complaint, and charge Selig with bad faith in declaring he would reject any television contract proposed by McCourt. They characterize claims of diverting funds for personal use including McCourt’s divorce as “simply make believe.”
The team also attacked Selig’s use of the Stow beating as evidence of alleged security problems. "He set about fabricating the public misimpression that security at Dodger Stadium was somehow inadequate," the Dodgers' filing read. "This is, by far, the most unforgivable action taken by the commissioner during this entire saga, and has caused enormous and irreparable harm to the Dodgers, Mr. McCourt and the game of baseball."
In addition, the Dodgers have asked Gross to extend their exclusive window to propose a restructuring plan until April 25, citing the refusal of MLB and Fox to work cooperatively with McCourt.
The creditors' committee and Fox Sports have each asked the court to deny the Dodgers' bid to auction television rights, the key to McCourt's strategy to emerge from bankruptcy as the team's owner.
The United States trustee appointed to the case has agreed to appoint two fans to the creditors' committee to represent the interests of season-ticket holders.

Madoff Update: Law Firm Gets $44.7 Million; Investors Get $312 Million

2011-10-25T11:39:00.000-07:00

In an order made public last Friday, U.S. Bankruptcy Judge Burton Lifland has awarded Madoff Bankruptcy Trustee Irving Picard $599,301, and his law firm Baker & Hostetler $44.7 million for their work in the four months ended May 31. The actual payments of $539,371 and $40.25 million respectively reflect a 10 percent discount.

The most recently approved payment bring total fees awarded to the law firm and trustee to $225.1 million since Madoff's arrest in December 2008, and the total payout to $202.6 million. Lifland has awarded an additional $4.9 million to cover expenses.

Picard says he has recovered about $8.7 billion from more than 1,050 lawsuits he has filed on behalf of Madoff's victims, most of them against former Madoff customers he believes took out more money from the firm than they put in. A majority of that sum is tied up in litigation, and a court ruling in one of the largest cases, against the New York Mets, could reduce potential future recoveries by as much as $6.2 billion. In addition, Madoff's son Andrew is appealing a court decision allowing Picard's $199 million lawsuit against him and other family members to go forward.

Earlier this month, Picard announced his first payout to victims in the amount of $312 million.

Naples Bay Resort Developer Faces Bankruptcy

2011-10-24T08:57:00.000-07:00

Last week Wednesday, creditors of Basil Street Partners – which developed the Naples Bay Resort - filed an involuntary petition for Chapter 7 bankruptcy in federal court in Fort Myers. On Thursday, the parties held a three-hour emergency hearing on the bankruptcy petition trying to find a compromise. At this time, there has not yet been a ruling on whether the bankruptcy will proceed.

One of the creditors of the project is developer Jack Antaramian, a partner in Basil Street Partners. Antaramian's attorney, Daniel DeMarco, argued the bankruptcy filing was necessary for new financing to keep the resort open and told the court that Texas-based investor, EFO Financial Group, was willing to loan nearly $3.8 million to help fund operations and other expenses. He said conditions of the officer included having bankruptcy protections in place. DeMarco said, "We have to start some place and we have to move expeditiously."

By providing financing in bankruptcy, EFO would be first in line – ahead of other creditors - to get paid back. In addition, the financing would be arranged by a trustee working for the bankruptcy court, rather than by the court-appointed receiver, who is currently searching for new operating financing.
Ultimately U.S. District Court Judge Jeffery Hopkins agreed to have a trustee appointed through the bankruptcy court, but with limited powers. The receiver, Gerard McHale, a forensic accountant based in Fort Myers, will continue to operate the resort.

Johns Manville Owner Uses Bankruptcy Protection to Restart Business

2011-10-21T11:31:00.000-07:00

In the last three months, Kevin Edward Moyer, owner of a former Johns Manville manufacturing plant in northern Virginia, has filed for Chapter 11 and Chapter 13 bankruptcy in U.S. Bankruptcy Court.

Denver-based Johns Manville, which made commercial roofing systems, insulation and accessories, shut down in 2007 after 30 years of production at the site, just north of Edinburg. Moyer and Edinburg Investments bought the plant for $2.5 million two years later. Moyer planned to move his business, Valley Wood Products Inc. to the Johns Manville factory, but those plans were halted when an investor dropped out.

Moyer’s Chapter 11 bankruptcy filing, made on behalf of Edinburgh Inc. on August 31, put a halt to a scheduled bankruptcy auction at the plant.

Moyer then filed a Chapter 13 plan on Sept. 29. A Chapter 13 – also referred to as a wage earner's plan - allows individuals with a regular income to propose an installment plan to repay some or all of their debts over three to five years. Moyer’s Chapter 13 filing listed $12.1 million in assets against $6.1 million in secured debt and about $90,000 in unsecured debt. It proposed paying creditors $1,675 a month for five years for the unsecured debt.

A. Carter "Chip" Magee Jr., Moyer’s attorney in the Chapter 11 case, told local reporters that Moyer filed the second bankruptcy petition to protect three home that had deeds of trust on them – his own, his mother's and his brother's. Magee also said that Global Energy Partners, has signed an investment agreement that gives them 80 percent of the company, with the remainder belonging to Moyer, who will run it. According to Moyers, Valley Wood Products could be open and in production within a year.

Mob Experience At Tropicana Files For Bankruptcy

2011-10-20T18:40:00.001-07:00

The Las Vegas Mob Experience, a museum and interactive exhibit built around some of the biggest names in the mobster world of Las Vegas, had filed for voluntary Chapter 11 bankruptcy protection. The so-called pre-packaged bankruptcy referenced a debtor-in-possession financing deal to sell itself to an existing investor, John Vipulis and his company, JVLV Holdings LLC, for about $2 million.

Vipulus has already agreed to loan The Experience up to $375,000 to fund operations throughout the bankruptcy process. If the bankruptcy court approves of the plan, his company anticipates putting up $4 million to buy The Experience and cover future operational experiences.

According to court records, The Experience listed assets of less than $500,000 against liabilities greater than $10 million. The Experience’s equipment, props and inventory are valued at between $250,000 to $500,000 however ownership of many of its mob artifacts is disputed. Key creditors include M.J. Dean Construction Inc., general contractor for The Experience, owed $4.6 million; Strategic Funding Source, owed $4 million; GC-Global Capital Corp., owed $2.7 million; and Vipulis’s company JVLV Holdings, owed $2.25 million.

The bankruptcy is seen as a way to forestall at least 12 lawsuits recently filed against the company by contractors and others. In addition, The Experience faces infighting amongst investors – including heirs of the mobsters whose artifacts are presented as part of the exhibit – and back rent it owes to its landlord, the Tropicana on the Las Vegas Strip.

Home of Former Anglo Irish CEO’s Sells for $3.9 Million

2011-10-19T16:41:00.000-07:00

Kathleen Dwyer, the trustee in the bankruptcy case of David K. Drumm, former Chief Executive Officer of Anglo Irish Bank Corp., has announced the sale of Drumm’s waterfront Cape Cod home for $3.9 million. The sale was authorized in an order dated Oct. 4 by U.S. Bankruptcy Judge Frank Bailey in Boston. The purchaser has been identified as the Three Sisters Trust or its designee.

According to documents obtained from the Barnstable County Registry of Deeds, the Chatham, Massachusetts home was bought for $4.6 million in March 2008. By December 2008 Drumm resigned his position and within weeks, the bank was taken over by the government.

Sale proceeds will go toward nearly $14.2 million owed to creditors. Drumm’s Chapter 7 bankruptcy filing in October 2010, listed assets of $13.9 million.

Court filings reveal that an additional $150,000 will be received for the sale of unspecified personal property in the home, increasing the total transaction to more than $4 million. Proceeds from the personal-property sale will be split between creditor and Drumm’s wife, Lorraine Drumm, who shares an interest in the house and is not included in bankruptcy.

Anglo Irish Bank, now named Irish Bank Resolution Corp., is suing Drumm in Dublin and in the U.S. in connection with money he allegedly borrowed from the bank. Drumm has denied all wrongdoing.

Indicted Financier Has No Personal Funds to Repay Defrauded Investors

2011-10-17T16:01:00.000-07:00

In February 2010 a bankruptcy court judge placed Fair Finance Co. into involuntary bankruptcy--a move that gave a federal trustee control over its remaining assets. Fair Finance has been accused of defrauding its mom-and-pop Ohio-based investors more than $200 million through a classic Ponzi scheme.

According to the trustee assigned to the case, company CEO Tim Durham, along with co-owner James Cochran and CFO Rick Snow, was indicted on felony charges arising from alleged fraudulent and deceptive business practices to hide from investors and regulators Fair's true financial condition and their misuse of the company's funds.

A 23-page grand jury indictment returned this spring alleges Durham and business partner James F. Cochran worked with former Fair Finance Chief Financial Officer Rick D. Snow to devise and execute a scheme to defraud Fair’s investors. Authorities say that after Durham bought Fair in 2002, he made a series of loans to himself, to his businesses and to associates who later defaulted thus, stripping the company of its ability to repay investors. It’s believed that Durham was already bankruptcy when he made the Fair purchase.

Durham pleaded not guilty to one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud. On that same day, the three defendants were also sued for securities fraud by the Securities and Exchange Commission.

Last week Durham’s attorney filed a 20-page financial statement that confirmed what attorneys overseeing the bankruptcy liquidation Fair Finance Co. had long believed: Durham lacks the personal wealth to pay back even a small portion of money owed to the 5,200 Ohio residents who purchased more than $200 million in unsecured notes from Fair. The notes slid into default after the company shut down in November 2009 following an FBI raid.

Trustee for Rapper Young Buck’s Requests Chapter 7 Liquidation

2011-10-16T10:11:00.000-07:00

In court papers filed last week, Jeanne Burton, trustee in the bankruptcy case of rapper Young Buck, says her client will be unable to reorganize under Chapter 11 bankruptcy and requested the case be changed to Chapter 7 liquidation.

Burton told the court, “At this time, because no agreement has been reached with G-Unit and Curtis Jackson regarding either assumption or rejection for the recording agreement and/or the publishing agreement, the first amended plan cannot be confirmed. The trustee believes and therefore asserts that there is no reasonable likelihood of reorganization at this point.” Burton was referring to a reorganization plan submitted in June on behalf of Young Buck, whose real name is David Darnell Brown.

The plan was largely based on revisions to the contracts between Brown and G-Unit Records, owned by Jackson, whose rap name is 50 Cent. In its original form, the contract assigned as Brown’s business and personal managers, executives with G-Unit. One of the executives was subsequently fired from G-Unit, but Brown kept him on as a manager, which was, as described in the filing, “a decision perceived as disrespectful, contentious, and mutinous to Curtis Jackson.” The trustee told the court that G-Unit and Curtis Jackson (aka 50 Cent) have opposed the plan, and Burton said both G-Unit and Universal aren’t willing to modify the agreements.

Burton’s request remains subject to bankruptcy-court approval.

Virginia Foreclosure Auction Scheduled

2011-10-15T10:14:00.000-07:00

More than 200 acres of undeveloped Powhatan real estate will be auctioned off Monday, after finally being released from the bankruptcy proceedings of DuVal Development. Powhatan County records show land was most recently assessed at $1.4 million.

The parcel of land was foreclosed on by Central Virginia Bank, but its sale was halted by the October 2010 Chapter 7 bankruptcy liquidation filing of DeVal, which had planned to use the land for a subdivision called Upper Meadows. Central Virginia Bank had loaned $1.12 million to DuVal. Owner Bill DuVal also filed for bankruptcy last year. Due to DuVal’s personal bankruptcy, CVB had to petition the federal court for permission to foreclose on the 200 acres.

Roy Terry, an attorney with DurretteCrump who is handling both bankruptcies, said several other parcels of DuVal’s land have been foreclosed on and that the liquidation process is ongoing. “The trustee has assets that he’s interested in liquidating,” Terry said.

DuVal’s personal bankruptcy liquidation, which was filed last November, revealed extensive real estate holdings tied to several speculative developments. The filing listed more than $11 million in debts, the majority of which were tied to real estate developments borrowed from banks throughout Powhatan. DuVal personally guaranteed more than $2 million in loans on a 100-acre marina and townhouse project along the James River in Chesterfield called Riverwalk on the James. According to bankruptcy records, those loans were made by that project from Union First Market Bank and Village Bank who have since taken ownership of the land.

Philadelphia Orchestra Pension Fund Says It Will Litigate

2011-10-14T16:12:00.000-07:00

The Philadelphia Orchestra filed for Chapter 11 bankruptcy protection in April listing both assets and debts of less than $50 million. The filing stated its intent was to structure new union contract with musicians, gain relief from pension obligations and secure a new lease with the Kimmel Center where it performs. Most recently the orchestra announced a it had successfully negotiated a new collective bargaining agreement with the musicians’ union. One aspect of the agreement allows termination of participation in the existing multi-employer pension plan.

The pension plan responded in a statement yesterday saying at this point, there is “no alternative to litigation.” The plan claims orchestra has “distorted aspects of its financial” condition. It also said it is conducting an investigation into the endowment fund and whether it can be used to pay creditors’ claims. The plan claims it has already received information from one donor indicating the orchestra “mischaracterized” a $2 million gift.

The pension plan has previously stated it would become the creditor with the largest unsecured claim if the orchestra’s participation in the pension plan was to terminate. This week’s statement said the pension plan’s claims for withdrawal liability will be as much as $35 million.

Solyndra Requests Restructuring Officer over Trustee

2011-10-12T13:58:00.000-07:00

Solyndra LLC, the California-based solar company financed in part with a $535 million loan guaranteed by the U.S. government, halted operations in late August. The company filed for Chapter 11 reorganization on Sept. 6, and two days later was raided by the Federal Bureau of Investigation. In its filing, Solyndra claimed assets of $859 million against debts of $749 million as of Jan. 1, including secured debt of $783.8 million. The filing also noted that 2010 revenues of $142 million resulted in a net loss of $329 million.

In September, a bankruptcy judge authorized Solyndra to auction the business on Oct. 27. Bids were to be due Oct. 25, with a hearing to approve the sale on Nov. 2. In yesterday's court filing, the committee said it is negotiating with the company for a “brief extension of the sale timelines.”

Meanwhile, the U.S. Trustee’s office has requested the court to appointed a Chapter 11 trustee. Their filing was prompted by the actions of Solyndra’s former CEO, Brian Harrison and Chief Financial Officer Wilbur G. Stover Jr., who each refused to answer questions posed by a congressional committee, instead invoking their Fifth Amendment rights against self-incrimination.

Solyndra's creditors' committee filed their opposition to appointing of a trustee, who would supplant management, arguing that a trustee would “not benefit the sale process” and in fact would have a “likely negative impact.” Solyndra’s opportunity to oppose the U.S. Trustee’s request had a deadline of this week. The bankrupt solar-panel maker didn’t file on that issue; instead the company sought authorization to hire R. Todd Neilson as chief restructuring officer. In court papers Solyndra said that Neilson would “effectively replace the debtor's CEO, Brian Harrison, who left the company as scheduled on Oct. 7.”

A hearing on the appointment of a trustee is set for Oct. 17.

Personal Bankruptcy Decline: Beware the Headlines

2011-10-10T08:20:00.000-07:00

According to the latest statistics from the American Bankruptcy Institute, personal bankruptcy filings have dropped by 10% compared to a year ago. It would be great if this decline could truly be celebrated as progress, but the numbers just don't seem to line up with the difficulties still running rampant in the marketplace.

So what’s the disconnect? David Leibowitz, co-chair of the Consumer Bankruptcy Committee of the ABI, explains it this way. "People file bankruptcy because of financial distress. They are afraid of losing their houses, getting their wages garnished or losing their personal property. If the personal property is exempt, as is often the case for people who have little in the way of assets, if they no longer own their own home as is more and more frequently the case, if the home has no equity, which is very often the case, or if they are unemployed, then people who owe money for credit cards, medical bills and the like are said to be judgment-proof. There's no need for them to file bankruptcy."

So bankruptcy, for years a financial “rock bottom” for struggling individuals, has now become a step above rock bottom, and it’s a step Americans can no longer afford to take. Citizens are broke, jobless, no longer proud homeowners, drowning in bills and debt, with little hope for change in the future. Now that view of the numbers, sadly, seems more congruent with reality.

Friendly's Ice Cream Restaurants Files for Bankruptcy

2011-10-07T12:06:00.000-07:00

Friendly Ice Cream Corp. filed for Chapter 11 bankruptcy protection this week with the U.S. Bankruptcy Court in Wilmington, Del., joined by four of its affiliates. The company reported both assets and debts in the range of $100 million to $500 million. The filing cited the economic downturn and its resultant drop in customer sales along with the rising cost of corn, butter and other ingredients.

Friendly’s, which employs roughly 10,000 people and operates more than 400 restaurants known for hamburgers and sundaes, filed notice it intends to hold a bankruptcy auction with an affiliate of Sun Capital affiliate as the lead or "stalking horse" bidder. The Boca Raton, Fla.-based buyout firm acquired Friendly's in 2007 and is also a Friendly's creditor. Court documents show that the affiliate has also provided more than $71 million of debtor-in-possession financing to stay afloat during bankruptcy proceedings. The financing and proposed sale are subject to court approval.

According to the filing, Sun Capital is offering cash to pay off the full amount Friendly's owes under a senior secured credit facility, listed at $21.5 million in principal. The buy-out firm is also offering to forgive a portion of Friendly’s $267.7 million of subordinated secured promissory note debt as well as what it will be owed under the proposed bankruptcy loan. Under Friendly's proposed auction rules, rival bidders must offer at least $122.6 million in cash in order to challenge Sun Capital at auction. The restaurant chain is seeking a Nov. 24 bid deadline ahead of a Dec. 1 auction, although this timeline is subject to court approval.

California Developer Makes Three Chapter 11 Bankruptcy

2011-10-06T14:05:00.000-07:00

Healdsburg, Cal. developer Lukhbir Gill and his wife, Christina, have filed for personal bankruptcy listing assets of nearly $2.8 million against debts of $25.8 million. This developer also filed for bankruptcy protection for his company, B&G Group Inc., listing assets between $1 million and $10 million against debts of at least $12.9 million. A second business managed by Gill, Fast Lane Central Valley LLC, has also filed bankruptcy. That company listed $3.5 million in assets against nearly $8 million in debts.

All three cases were filed in U.S. Bankruptcy Court in Santa Rosa under Chapter 11, which allows borrowers to restructure their debts and remain in business. The personal bankruptcy was filed on July 18; Fast Lane Central Valley LLC filed the following week, and B&G Group followed suit on Sept. 20. Some lenders appear as creditors in all three cases.

Like many other developers throughout the country, Gill cited the historic downturn in real estate; also as is the case with other developers, he personally guaranteed loans for projects that have now faltered. According to his personal bankruptcy filing, the five largest unsecured creditors are Rabobank, owed $4.3 million; Five Star Bank, $4 million; Sonoma Mortgage and Investment, the lender controlled by Carinalli before his 2009 bankruptcy, $3.2 million; Wells Fargo, $2.8 million; and Sterling Savings, $2.5 million.

Gill is known for developing housing projects, hotels, office buildings and gas stations throughout Sonoma County.

Homeowners Force Pelican Pools into Bankruptcy

2011-10-05T12:58:00.000-07:00

Pelican Pools, headed by Roswell “Butch” Eaton, has been forced into bankruptcy by four St. Augustine homeowners who paid for swimming pools that were never built.

Attorneys Paul Cappiello of St. Augustine and Brett Mearkle of Jacksonville filed a petition to force the corporate bankruptcy of Pelican Pools on Aug. 23 on behalf of plaintiffs Mike Weiber, Victor Castro, Michael Monda and Harley Stone. Cappiello said Eaton had 20 days to respond; he did not do so, therefore the company was placed into bankruptcy. Cappiello explained Eaton will now be forced to account for and liquidate corporate assets and use the money to pay creditors. Pelican has asked for an extension to file a list of its assets and liabilities.

The total cost to pool owners is estimated in the hundreds of thousands of dollars for work that was paid for but not completed. In addition, they had to pay other providers to complete their pools. Subcontractors also went unpaid, and many have placed liens against Pelican.

Attorney Cappiello said, “The members of the community took a stand and forced [Eaton’s] business into corporate bankruptcy. He was trying to sell off assets and everyone was just left there holding the bag. They wanted to have some avenue to get some relief.” Cappiello added that others could still come forward and file a claim. He said, “All the people who have suffered are going to be able to make a claim” in the corporate bankruptcy.

Eaton and his wife Anne have made a voluntary filing for Chapter 7 personal bankruptcy.

Indiana Jeweler Asks Court Permission for Sale to Exit Bankruptcy

2011-10-04T16:08:00.000-07:00

Hofmeister’s Personal Jewelers Inc., one of Indianapolis' best-known jewelry stores, filed for Chapter 11 reorganization in April, listing assets of nearly $3.8 million against liabilities of $5.4 million. Although the jeweler did not file for liquidation, it is now asking the court for permission to spur sales by using Chapter 7 terminology in its advertising.

Eric Redman, Hofmeister’s lawyer, says writing ad copy that includes words like “bankruptcy,” “Chapter 11,” “reorganization” and “inventory reduction” is one of the techniques the company wants to employ to improve sales results. They have also asked for permission to hire Pittsburgh-based LFS Consultants to assist with the sale. The filing says LFS specializes in helping jewelry retailers move or liquidate stores. LFS will direct the sale by conducting an advertising campaign and providing experienced personnel to assist and oversee the sale. In addition, they’ll bring additional inventory into the store which they say will generate more short-term cash to benefit Hofmeister’s and its creditors. Hofmeister’s plans to pay LFS a sales commission of 4.5 percent, declining to 2.5 percent on items priced at $20,000 and above.

In addition, Hofmeister’s is asking the court for waivers so they can hold the sale without obtaining various state and local licenses and without observing state and local waiting periods. The filing reads: “The requested waiver is narrowly tailored to facilitate the successful consummation of the sale pursuant to the terms of the agreement. Debtor does not seek a general waiver of all state and local requirements, but only those that apply specifically to liquidation sales.”

Pending court approval, Hofmeister’s will hold the sale on Nov. 2 and continue until Feb. 14 with a goal of selling as much merchandise as possible from the Christmas shopping season through Valentine’s Day. Of the timing Redman said, “It just makes sense, and this is of course the time of the year to do it. It’s by far the largest sales season.”

Indianapolis Developer Files for Personal Bankruptcy

2011-10-03T08:34:00.000-07:00

Indiana home-builder Paul Estridge Jr. filed for Chapter 7 liquidation Thursday in U.S. Bankruptcy Court in Indianapolis. Estridge listed assets of $1 million to $10 million against debts of $50 million to $100 million, and named more than 50 creditors.

According to court records, Estridge’s debts primarily consists of guarantees he made to his home-building company, The Estridge Group. Estridge discussed his personal bankruptcy with area reporters saying, "This is the result of the economic conditions we are having today. We knew going into it that this is where it could all end up. It's very disappointing."

The Estridge Group, started in 1967, was based in Carmel, Indiana, one of the most affluent communities in the Midwest. It became a leader in the region, but by March of this year, Estridge was forced to close the company after running out of cash. At that time Estridge cited the economy, which has been particularly devastating to home builders, and his own “ethical” decision-making. He said, “I continued making interest payments on all the land we owned at a level of $400,000 a month for three or four years. That depleted all of our capital. I should have just given the land back to the bank. As I look back, there’s the tactical versus the moral and the ethical.”

Estridge’s personal bankruptcy assets include homes in Carmel and in Florida. Both have been surrendered to bankruptcy court as assets that will become available to creditors. However Estridge, 54, said he hopes he can buy back his Carmel home from the bankruptcy trustee. He said, "This is called starting over. It's embarrassing, but I tell people, 'I've been knocked down. I have not been knocked out.' "

Estridge’s words are backed up by actions; in April, he was hired to head local operations for David Weekley Homes, a Houston-based regional home builder that moved into the Indianapolis market in June.

Bankruptcy Judge Approves Sale of Borders’ IP Assets

2011-09-30T10:32:00.000-07:00

A bankruptcy judge in New York has approved the sale of Borders’ intellectual property to Barnes & Noble’s for $13.9 million.

Hilco Streambank, an intellectual property valuation and disposition company, announced in a press release two weeks ago sales at auction of $15,775,000 for the IP assets of Borders, Inc. Those assets included a global portfolio of trademarks, the Borders, Waldenbooks and Brentano’s trade names, Internet domain names, and the Borders.com e-commerce website.

Barnes & Noble Inc. purchased the majority of the trademarks, websites and other intellectual property of the former bookseller for $13.9 million. But the bankruptcy court initially withheld purchase approval due to privacy concerns regarding one of the most significant assets on the list; the transfer of Borders’ valuable customer list consisting of some 48 million former customers.

Within four days, the parties returned to court with a new safety proposal which the court approved. As described in court filings, the transfer will not include credit card or payment information. In addition, the former Borders customers will received personalized emails and prominent public notices that their personal information will be transferred to Barnes & Noble and that they have 15 days to disallow the transfer. The public notices will be placed on the websites Borders.com and BN.com and in a full-page USA Today ad. Barnes & Noble is allowed to include promotional offers in the email notifications.

Female Bankruptcies Reach All-Time High in UK

2011-09-29T12:31:00.000-07:00

According to RSM Tenon, the UK’s 7th largest accountancy and professional services firm, women now account for 48 per cent of personal insolvencies in the UK – the highest proportion since RSM Tenon began recording the figures in 2007, and believed to be the highest ever. Compared to 2002 when women constituted just 32 percent of bankruptcies, studies also found that female filers now outnumber male filers in the youngest age groups (18-25 and 26-35) and the trend is set to continue in the future.

Mark Sands, Head of Personal Insolvency at RSM Tenon, cited both spending and higher rates of job loss than men during the current recession. He said, “People blame female money troubles on almost everything from a culture of consumption to alleged ‘bankruptcy role models’ such as Kerry Katona. However, the picture is more complicated than that.

“On the one hand, spending habits and attitudes to debt have changed over the past generation at the same time that women have achieved ever greater levels of financial independence. As women become more and more independent, lenders see them as a more and more lucrative market. So, although it’s not the whole story, there’s an element of truth that the offer of buying handbags with pricey store cards is sending more and more women bust.

“On the other hand, the recent rise in the proportion of female insolvencies began in the second quarter of 2009 and the figures have climbed steadily ever since. So, arguably the UK’s recent financial crisis has hit women’s pockets harder than men’s.

“Certainly, in the early part of the recession, more women than men were made redundant, and some studies have claimed that government spending cuts instituted during the recovery period have a disproportionate effect on single parents – nine out of ten of whom are female. Also, more women than men work part-time, and in a downturn, part-time and shift workers are more likely to be cut.

“So, across the board, women are caught in a pincer movement which leaves them more vulnerable, either to sending themselves into insolvency by financial mismanagement, or to being forced into insolvency by poverty.”