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February 26, 2018
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NYIC and IFA Host Factoring Lunch on March 6th, 2018

The New York Institute of Credit (NYIC) and International Factoring Association (IFA) are hosting a joint factoring event on March 6th, 2018. Event Details March 6, 2018 1:30pm - 5:30pm Arno Ristorante, 141 West 38th Street, NYC Session #1: Factoring Updates From Top Executives Moderator, Harvey Gross, Executive Director, New York Institute of Credit Lou Barone, Managing Director, CIT Commercial Services Bob Grbic, President & CEO, White Oak Commercial Finance, LLC Kevin Gillespie, Executive Vice...

July 24, 2017
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Dealing With Distress for Fun & Profit – Installment #17 – Overview (of DIP Financing and Cash Collateral Motions)

By: Michael Brandess and Luke Smith     A written tour of business bankruptcy and its alternatives. Editors’ Note:  we started this series (click here to start reading from the beginning) with a broad overview of business bankruptcy and its alternatives.  Our last few installments have focused on explaining how a creditor can, when its customer files bankruptcy, collect as much as possible on what it is owed (read about How To Protect Your Claim and about...

June 12, 2017
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An Introduction to Bankruptcy Claims Trading: Part 2

Timothy C. Bennett Seyfarth Shaw LLP 620 Eighth Avenue New York, New York 10018 212-218-3386 Tbennett@seyfarth.com   Documenting a Claims Trade   In our previous article, we discussed the claims trading marketplace, focusing on its characteristics, the motivations for its participants, some basics of documentation, key business and legal structuring considerations, as well as risks borne by sellers and purchasers in these types of transactions.  In this article, we will take a closer look at the...

May 22, 2017
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Dealing With Distress for Fun & Profit – Installment #16 – Super and Residual Priorities

by Michael Brandess and Luke Smith[1]   This series was started (click here to start reading from the beginning) with a broad overview of business bankruptcy, but our last few installments have focused on: unsecured creditors (click here), the priority scheme in bankruptcy (click here for the 30,000-foot view or you can find more specific treatments here, here and here), and protecting/collecting your claim (click here). In this installment, we draw on our discussion of the priority scheme, with a special...

May 15, 2017
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Beneath the Surface: Finding Truth in Income Statements

By Jeffrey Fishel, CPA, CFE and Michael Schwarzmann


An income statement, one component of a set of financial statements, provides a snapshot of a company’s profitability over a specific period of time by deriving net income from sales. While an income statement may help its user obtain a general sense of whether the company was profitable or not, it should not be relied on as the sole basis for determining the value of the company. It is especially important that users of financial...

April 24, 2017
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90 Second Lesson: When To Request Relief From the Automatic Stay

By the Editorial staff of Commercial Bankruptcy Investor

Editors’ Note:  This is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.    QUESTION: How do I know if I should request relief from a debtor’s automatic stay? ANSWER: At the outset of a bankruptcy case, a secured creditor, a party to litigation in another court, or any other party potentially entitled to stay relief must decide whether...

April 10, 2017
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90 Second Lesson: First Step When Purchasing a Distressed Business

By the Editorial staff of Commercial Bankruptcy Investor


Editors’ Note:  This is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.    QUESTION: What is the first integral decision a potential purchaser of a distressed business must make? ANSWER: Assuming that the seller has not already decided on the mechanism for the sale, the first choice confronting the potential purchaser of a distressed business is how the...

April 3, 2017
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90 Second Lesson: Personal Liability for Unpaid Taxes in Insolvency Cases

By the Editorial staff of Commercial Bankruptcy Investor


Editors’ Note:  This is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.    QUESTION: Who can be liable for a chapter 11 debtor’s unpaid taxes? ANSWER: One or more persons, including a fiduciary, may be subject to personal liability for a debtor’s unpaid federal, state and/or local tax liability. As David Alger explains in greater detail here, personal liability...

March 27, 2017
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An Introduction to Bankruptcy Claims Trading

Timothy C. Bennett
Seyfarth Shaw LLP
620 Eighth Avenue
New York, New York 10018
212-218-3386
Tbennett@seyfarth.com


Upon the filing of a bankruptcy petition by a debtor in a U.S. chapter 11 proceeding, any attempts to collect debt by a creditor are halted.  As a result, creditors face the daunting prospects of either waiting out the debtor’s bankruptcy case - not knowing when, how much, or even if they will ultimately recover on their claims - or engaging in what could be a drawn out and expensive dispute with the debtors to...

March 20, 2017
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90 Second Lesson: Application of Federal Income Tax Laws in Insolvency Cases

By the Editorial staff of Commercial Bankruptcy Investor

Editors’ Note:  This is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.    QUESTION: Are insolvent or bankruptcy debtors exempt from federal income tax laws? ANSWER: In general, neither the Internal Revenue Code nor the Bankruptcy Code exempts an insolvent or bankrupt debtor from the application of federal income tax laws. The Bankruptcy Code contains a number of...

February 13, 2017
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Update on CFIUS National Security Review and the Section 363 Sale: Draper Athena as Stalking Horse for Assets of ATopTech, Inc.

Christopher M. Cahill
Lowis & Gellen, LLP
Chicago, Illinois
312 628 7193
ccahill@lowis-gellen.com


A transaction in which a foreign company gains control of US assets can be hammered to sleep by the President acting upon the recommendation of the Committee on Foreign Investment in the United States (“CFIUS”).  The delay of CFIUS review and its potential draconian consequence affect the viability of foreign purchaser participation in asset sales by companies in chapter 11.  We look at one case in which the debtor and foreign stalking horse bidder are...

February 1, 2017
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90-Second Investing Lesson: GP, LP and Sponsor

By the Editorial staff of Commercial Bankruptcy Investor


[Editor’s Note: this article originally appeared on Accredited Investor Markets (AIMkts) ]   DISTRESSED ASSET INVESTORS should always be aware of the alternatives available to them, and also remain abreast of potential competitors, such as private equity. Private equity firms are serious players in the distressed debt space. With that in mind, here is a brief, 90-second overview of the private equity structure.     Private equity funds have several moving parts. This quick guide will...

January 30, 2017
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Corporate Restructuring 2017: Why Some Attorneys See Rising Rates, but Most Don't

Jonathan Friedland Tricia Schwallier [1] Sugar Felsenthal Grais & Hammer LLP 30 North LaSalle Street, Suite 3000 Chicago, Illinois

The economy, stupid. [2] - James Carville THE CORPORATE RESTRUCTURING profession has become, much like the broader economy, increasingly a world of few “haves” and many “have nots.” This is not by accident, and it is not going away. Those who see and accept the industry for what it is—and pivot accordingly—will continue to be winners. Those who possess a limited repertoire of moves and simply hope for economic downturns will continue to fight for...

January 9, 2017
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PLATINUM PARTNERS: A PONZI SCHEME HIDING IN PLAIN SIGHT

Christopher M. Cahill
Lowis &; Gellen LLP
200 West Adams Street, Suite 1900
Chicago, Illinois 60606
(312) 628-7193
ccahill@lowis-gellen.com


No One Questioned This Hedge Fund's Madoff-Like Returns, by Zeke Faux and published in Bloomberg.com (Jan. 4, 2017), discusses the possibly $1 billion fraud alleged to have been engineered by Platinum Partners entities under the direction of Mark Nordlicht and others.  From this article we take away two principal points: Any sense that the SEC regulatory regime has wised up and will prevent another Madoff may be misplaced; and When told that a company’s auditors...

December 12, 2016
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Life Partners Holdings –A Tower of Schemes Comes Crashing Down (Part 1)

  • Brad Daniel
  • BMC Group
  • New York, NY
  • (212) 310-5910
  • bdaniel@bmcgroup.com

If you are already familiar with the Life Partners Holdings debacle, you may think that the term “Life Partners” should stand for Brian Pardo and his partners in crime who ran that notorious company serving life sentences (instead of just paying massive fines and having some of their assets seized). Such criminals' loss of liberty may have satisfied justice in a way, but the investors in this Ponzi-like scheme really need to get their money back, or...

November 28, 2016
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Fourth Circuit Approves Recharacterization of Secured Debt Into Equity

The Editorial Staff of Commercial Bankruptcy Investor


A Brief Summary of PEM Entities​: Unsecured Creditors Pulled Down a Secured Creditor In its recent unpublished opinion PEM  Entities, LLC v. Province Grande Old Liberty, LLC, 2016 WL 4254917, (4th Cir. Aug. 12, 2016), the Fourth Circuit Court of Appeals affirmed the bankruptcy court’s award of summary judgment to certain unsecured creditors (the “Plaintiffs”) who had sued a putative holder of a very large secured debt --who would rank ahead of the Plaintiffs’ unsecured claims...

November 21, 2016
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Ponzi Scheme Lender May Be On The Hook, After All!

Michael Brandess
Tricia Schwallier
Sugar Felsenthal Grais & Hammer
Chicago, Illinois
mbrandess@sfgh.com
tschwallier@sfgh.com


The Skinny The Sixth Circuit recently revived a trustee’s $17 million avoidance and claw-back suit against a lender, finding that the lender’s existing security interests could have been extinguished via novation.  Impact:  secured lenders entering into amended and restated loan documents should adopt definitive and irrefutable language demonstrating that the parties do NOT intend for the new agreement to novate the original agreement. On August 23, 2016, the U.S. Court of Appeals for the Sixth...

November 7, 2016
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Limiting Credit Bidding “For Cause” After In re Aeropostale

Lucas S. Smith
Student
University of Tennessee College of Law
lucas.s.smith@gmail.com


Section 363(k) of the Bankruptcy Code (the “Code”) allows a secured creditor to bid at a section 363 sale and use the amount of their claim to offset the purchase price at the sale, called “credit bidding.”[2]   A court may limit this right “for cause.”[3]  The “for cause” standard is not defined in the Code and disagreement exists as to what constitutes “for cause.” Traditional bases for limiting credit bidding include challenges related to the...

September 19, 2016
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Litigation Funder Monetizes Portion of Fraudulent Transfer Judgment in Cutting-Edge Transaction

Christopher B. Wick
Hahn Loeser & Parks, LLP
200 Public Square Suite 2800
Cleveland, OH 44114
(216) 274-2489
cwick@hahnlaw.com

http://www.hahnlaw.com/


Gerchen Keller purchases a portion of the interest in proceeds of $213 million fraudulent conveyance judgment in innovative public sale. An interesting transaction took place on September 8, 2016. The chapter 7 bankruptcy trustee for Magnesium Corporation of America (“MagCorp”) sold a $50 million share of a $213 million judgment it has against fraudulent conveyance transferee, Renco Group Inc. and former MagCorp owner, Ira Rennert. The buyer, Gerchen Keller Capital LLC paid $26.2 million transaction...

August 29, 2016
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The Myth of the Newspaper Notice as Being Commercially Reasonable

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • ccahill@lowis-gellen.com
  • (312) 628-7193
  • www.lowis-gellen.com
  • Jonathan P. Friedland
  • Sugar Felsenthal Grais & Hammer LLP
  • 30 North LaSalle Street, Suite 3000
  • Chicago, Illinois
  • jfriedland@sugarfgh.com
  • 312-704-2770
  • www.sugarfgh.com

Editor’s Note:  the August edition of The Bankruptcy Strategist and the September edition of the Equipment Leasing Newsletter, each ran a substantially similar article by the authors.  We are pleased to run this version here. You represent a secured lender.  You are to assist your client in its exercise of rights under UCC §9-610 to sell its collateral after it has foreclosed. Or maybe you represent a chapter 11 debtor and are selling its assets under...

April 27, 2016
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Personal Property Appraisals 101

By: Michael Kletecka Are you a lender who needs an appraisal of personal property (machinery, equipment, and inventory) in connection with making a loan? Are you a company that needs one in connection with a capital raise or some other purpose? Regardless of the reason the need may arise, there are some baseline concepts that you should understand before hiring an appraisal firm. This article discusses some of them. Three Key Definitions- FL v. OL...

April 25, 2016
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90 Second Lesson: What is the Difference Between Recharacterization and Equitable Subordination?

From the Editorial Staff of DailyDAC.com


Editors’ Note:  This is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.    QUESTION:  Jeff P. from Los Angeles emailed asking us to explain the interplay between recharacterization and equitable subordination? ANSWER:  While recharacterization and equitable subordination are often mentioned in the same breath, the underlying purposes of these doctrines—and the analysis conducted by courts in evaluating claims...

April 11, 2016
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90 Second Lesson: Credit Bidding in Plan Sales

From the Editorial Staff of DailyDAC.com


Editors’ Note:  This is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.    QUESTION:  A private equity investor wrote in recently asking us to address credit bidding in the aftermath of Radlax. ANSWER:  Thanks to the 2012 decision by the U.S. Supreme Court in RadLax, secured creditors can again rest easy in knowing that they have the right...

December 27, 2015
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Chapter11Dockets.com's Special Report on Creditor Recoveries in Chapter 11 Bankruptcies of Mining Companies

Breaking News Alerts from Chapter11Dockets.com


We recently completed a study of recoveries by general unsecured creditors in bankruptcy cases filed by large mining companies since January 1, 2004 and some of the key findings of our study are summarized in the charts below. The data regarding creditor recoveries was generated from an analysis of estimates provided by debtors in disclosure statements. In collecting the data for this study, only the last-filed disclosure statement was used for cases in which multiple...

November 23, 2015
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Analyzing Claims Trading Activity in Large Corporate Chapter 11 Bankruptcy Cases: January 2014 - October 2015

Breaking News Alerts from Chapter11Dockets.com


The following charts reflect our analysis of over 11,000 notices of claim transfers filed in large Chapter 11 bankruptcy cases nationwide from January 1, 2014 to October 31, 2015. The court filings were aggregated from a review of court dockets across more than 2,000 cases. A list of the cases covered by our analysis can be found here: https://www.chapter11dockets.com/about/cases. Because claim transfers in the Lehman Brothers bankruptcy continue to comprise approximately half of all claims trading activity over this...

November 17, 2015
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Verso Corporation Reports Third Quarter 2015 Results, Warns of Bankruptcy Risk

Breaking News Alerts from Chapter11Dockets.com


Verso Corporation (OTCQB: VRSZ) announced its financial results for the third quarter of 2015 yesterday.  Among the topline highlights were: Net sales of $782 million in the third quarter of 2015 compared to $350 million in the third quarter of 2014 Operating income before special items of $23 million in the third quarter of 2015 compared to $16 million in the third quarter of 2014 Adjusted EBITDA of $84 million in the third quarter of...

October 5, 2015
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2015 NAFER CONFERENCE – Good, Better, BEST YET!

A special announcement from the National Association of Federal Equity Receivers


Don’t miss the educational opportunity of the year for the Federal Equity Receiver and his or her support group (including counsel, accountants and support staff).  The fourth annual conference of the National Association of Federal Equity Receivers kicks off next Thursday, October 15 with a welcome reception and goes through Saturday, October 17 at noon.  This year’s event will be held in beautiful San Diego, California at the historic US Grant Hotel and is sponsored...

September 29, 2015
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Another Taxi Bankruptcy: Farb, Inc. in Massachusetts - Is This the Uber Effect?

Breaking News Alerts from Chapter11Dockets.com


Following on the heels of a bankruptcy filing by one of the most prolific owners of New York City taxi medallions (more on that filing from the New York Times here), an owner of a Boston taxi medallion has also filed for bankruptcy protection today.  Boston-area company Farb, Inc. listed assets of $100,000-500,000 and liabilities of $500,000-$1 million in court filings.  Most of that is the asserted value of taxi medallion #429, which Farb claims...

September 22, 2015
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The "A&P" Bankruptcy Filing Saga—Anomaly or Canary in a Coal Mine?

  • Brad Daniel
  • BMC Group
  • New York, NY
  • (212) 310-5910
  • bdaniel@bmcgroup.com

A few months ago, on July 20, 2015, the Great Atlantic & Pacific Tea Company, more commonly known as “A&P,” made history by filing what we in the restructuring industry like to call “Chapter 22”—that is, a Chapter 11 restructuring bankruptcy part deux. A chapter 22 in and of itself is not that unique, but the new "A&P" bankruptcy filing came less than 5 years after its previous chapter 11 filing from the end of 2010....

September 10, 2015
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Pause Button Put on Energy Future Holdings' Plan Arguments

From the Editorial Staff of Commercial Bankruptcy Investor


A recent court ruling in the Energy Future Holdings Corp. bankruptcy case (Energy Future Holdings Corp. et al., case no. 1:14-bk-10979, District of Delaware) will limit the scope of an upcoming hearing related to the companies’ plan of reorganization. Prohibiting any challenges based on whether the plan is fair or workable, the hearing on September 17, 2015 will focus only on the question of whether the debtors employed sound business judgment in striking deals with...

September 10, 2015
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Automated Retail Kiosk Company NewZoom, Inc. (d/b/a ZoomSystems) Files for Bankruptcy Protection

Breaking News Alerts from Chapter11Dockets.com


On Thursday, September 10, 2015, NewZoom, Inc. (d/b/a ZoomSystems) filed for protection under Chapter 11 of the United States Bankruptcy Code. The bankruptcy petition was filed in the United States Bankruptcy Court located in San Francisco (Northern District of California) and was assigned Case Number 15-31141. Judge Hannah Blumenstiel (N.D. Cal.) is presiding over the bankruptcy case. Contact information for the debtor and its counsel are listed as: NewZoom, Inc. 22 Fourth Street 16th Floor San...

August 21, 2015
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Caesars Second Priority Noteholders File Complaint Related to Second RSA

Breaking News Alerts from Chapter11Dockets.com

Authored by Patrick Lyons


On August 10, 2015, the Official Committee of Second Priority Noteholders brought legal action against Caesars Entertainment Corporation (CEC, the parent company) in an adversary proceeding in the Caesars bankruptcy case.  In their argument, the Noteholder Committee seeks declaratory and injunctive relief regarding CEC’s alleged unlawful effort to purchase votes from holders of Second Priority Notes pursuant to the Restructuring Support and Forbearance Agreement (Second RSA). In the Noteholder Committee’s First Count, they argue that...

August 17, 2015
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U.S. Department of Labor Reins In Independent Contractor Misclassification

From the Editorial Staff of Commercial Bankruptcy Investor


On July 15, 2015, David Weil, Administrator for the United States Department of Labor, Wage and Hour Division, issued an "Administrator's Interpretation" regarding independent contractor misclassification—essentially firing a warning shot at the armada of rising independent-contractor-model  businesses navigating the current markets. These companies may be legally required to treat some or all of their contractors as employees, and are thus subject to various minimum wage, overtime compensation, unemployment insurance, worker’s compensation, and other regulatory laws. Indeed,...

August 14, 2015
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Sonoma Winery Files for Chapter 11 Bankruptcy Protection

Breaking News Alerts from Chapter11Dockets.com

Authored by Patrick Lyons


On August 12, 2015, a Sonoma-based winery, Esterlina Vineyards & Winery LLC, filed for Chapter 11 bankruptcy in the Northern District of California.  It also does business under the name Everett Ridge Winery and Vineyard according to court filings.  The estimated assets of the company range from $10 million to $50 million while the estimated liabilities range from $1 million to $10 million.  The company has retained Provencher & Flatt LLP as counsel, a Santa...

August 7, 2015
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Radioshack Files Amended Plan of Liquidation

Breaking News Alerts from Chapter11Dockets.com

Authored by Patrick Lyons


On Thursday, August 6th, Radioshack Filed an Amended Plan of Liquidation.  Some key changes are listed below: Estimated Amount of Class 1 Priority Claims changed from $3-6 million to $2-10 million, estimated at 100% recovery. Estimated Amount of Class 2 Secured Claims changed from $60-70 million to $0-3 million, estimated at 100% recovery. Estimated Amount of Class 3 SCP Secured Claims was labeled $70 million, estimated at 80-90% recovery. Estimated Amount of Class 4 IRS...

August 7, 2015
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Delaware District Court Addresses Dischargability in WCI Communities Appeal

Breaking News Alerts from Chapter11Dockets.com

Authored by Patrick Lyons


On August 4, 2008, WCI Communities, Inc. and more than a hundred subsidiaries, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.  Prior to this, the debtor’s business involved the construction of homes and operation of residential communities.  The Court had set February 2, 2009 as the bar date for filing claims and confirmed the Debtor’s Plan on August 26, 2009. Prior to filing bankruptcy, the Debtor had developed...

August 4, 2015
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Patriot Coal Seeks Approval of Backstop Commitment Agreements & Rights Offering Procedures

Breaking News Alerts from Chapter11Dockets.com


Patriot Coal Corporation - which finds itself operating under bankruptcy court protection for the second time in less than four years - sought court authorization to enter into certain Backstop Commitment Agreements and approval of procedures for the implementation of rights offerings contemplated by the Plan of Reorganization that Patriot Coal has proposed. More details from the motion: On July 13, 2015, the Debtors filed the Plan [Docket No. 499] and the Disclosure Statement [Docket No....

July 16, 2015
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Sabine Oil & Gas Corporation Files Complaint Against Wilmington Trust

Breaking News Alerts from Chapter11Dockets.com

Authored by Patrick Lyons


Sabine Oil & Gas Corporation claims a fraudulent transfer to have occurred as part of a December 2014 business combination between Sabine Oil & Gas LLC, Forest Oil, and other related business entities.  At the time of the deal, Forest Oil was insolvent from a balance-sheet standpoint.  At the time of the business combination, Forest Oil’s unencumbered assets were pledged to secure debt that Sabine Oil & Gas LLC had previously incurred that was currently...

July 13, 2015
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“Don’t Pass Me By”—The Jevic Case and Bypassing the Absolute Priority Rule

From the Editorial Staff of Commercial Bankruptcy Litigation


It’s an all-too-familiar situation: a debtor files for chapter 11 bankruptcy and an asset sale takes place, but there is not enough money at the end of the day to fund a plan confirmation process, or adequately pay off all creditors who come first in line according to the bankruptcy code. That “line” is defined by the bankruptcy code in its “absolute priority rule,” which essentially states that administrative claims come first (primarily, fees and...

July 10, 2015
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Family Christian, U.S. Trustee Objects to Conditional Approval of Disclosure Statement

Breaking News Alerts from Chapter11Dockets.com

Authored by Patrick Lyons


On February 11, 2015 Family Christian filed a petition for relief under Chapter 11 of the Bankruptcy Code that was granted by the court on February 19.  As of July 2, 2015, Family Christian has filed  (a) a motion requesting conditional approval of the disclosure statement and other relief, (b)  a motion requesting permission to borrow under Section 364 (DN 953), and (c) a plan and disclosure statement (DN 955 and 956). The United States...

July 9, 2015
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RREAF O&G PORTFOLIO #2 LLC Seeks Authority to Use Cash Collateral

Breaking News Alerts from Chapter11Dockets.com

Authored by Patrick Lyons


RREAF O&G and affiliated debtor entities (the “debtors”) own eight hotel properties located in Midland, Texas and several other locations in the region.  The debtors’ hotel properties are located in areas with high concentrations of oil and natural gas activity.  Thus, their businesses target the oil and gas labor market because many individuals in this work force do not live in the area and require hotel accommodations.  The debtors are engaged in several respective loan...

June 30, 2015
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Anatomy of an Airline Bankruptcy: Aloha Airlines

Breaking News Alerts from Chapter11Dockets.com


When Aloha Airlines, Inc. filed for bankruptcy in 2008, it was the airline's second bankruptcy filing in less than five years.  While Aloha initially filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code, the case was quickly converted to Chapter 7 at the airline's request.  Seven years later, the bankruptcy is concluded and we can see how the case played out: The Trustee generated gross receipts of almost $58 million during the bankruptcy case. Of...

June 29, 2015
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Chrysler Bankruptcy - How Did Creditors Fare?

Breaking News Alerts from Chapter11Dockets.com


This month, the Old Carco Liquidation Trust filed its motion for entry of a final decree in the historic Chapter 11 bankruptcy cases of Chrysler LLC and its affiliates.  Once granted, the final decree will mark the official end of Chrysler's approximate six year journey through bankruptcy court.  As part of the final decree motion, the Liquidation Trust filed a detailed final report of the bankruptcy cases, a copy of which can be accessed here....

June 9, 2015
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U.S. Trustee Objects to RadioShack's Proposed Plan Confirmation Schedule

Breaking News Alerts from Chapter11Dockets.com


On Friday evening, RadioShack Corp. requested that the Delaware bankruptcy court schedule a combined hearing on approval of its disclosure statement and confirmation of a plan of liquidation, in addition to setting procedures for the solicitation of votes on such a plan of liquidation.  RadioShack also filed a motion asking the court to shorten the notice period.  This was all sought despite RadioShack having filed neither a proposed disclosure statement nor a proposed plan of...

June 8, 2015
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Karmaloop Sale Approved Despite Committee Objection

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


A collection of Karmaloop's creditors filed an objection in bankruptcy court to its proposed auction on Thursday, May14th. The objection was made as the Karmaloop auction was approaching, in which the company’s assets would be sold. This Official Committee of Unsecured Creditors felt that the sale, as proposed, would have allowed Karmaloop’s secured creditors to take the estate property and essentially leave other creditors with nothing. If the objection had been successful, Karmaloop would have been required to spread around the auction...

June 3, 2015
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Binder & Binder Cash Flow Beats Budget

Breaking News Alerts from Chapter11Dockets.com

This week, bankrupt social security disability advocacy firm Binder & Binder disclosed its cash flow during its first ten weeks operating under bankruptcy protection.  In the disclosure, a copy of which is embedded below, the actual cash flows are compared to the amounts budgeted in Binder & Binder's debtor-in-possession financing agreements.  Among the key insights provided: Cash inflows were 1.4% below the expected amounts The inflow deficiencies were more than offset by operating cash outflows being...

June 2, 2015
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Salus Capital Seeks Conversion to Chapter 7 of RadioShack Bankruptcy

Breaking News Alerts from Chapter11Dockets.com


Salus Capital Partners, LLC - a pre-bankruptcy lender to RadioShack - asked the Delaware bankruptcy court today to convert the company's bankruptcy cases from Chapter 11 proceedings to Chapter 7.  In support, Salus asserts that RadioShack is "likely administratively insolvent": Since commencing these chapter 11 cases, the Debtors have sold, or are in the process of selling, substantially all of their assets. Once that sale process is completed, the Debtors have nothing further to achieve in chapter 11....

June 1, 2015
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Plan Administrator Files Final Accounting of Former Retailer Mervyn’s Bankruptcy

Breaking News Alerts from Chapter11Dockets.com


Mary Alice Stopyra of Wilmington Trust, National Association, in her role as the plan administrator under the First Amended Joint Plan of Liquidation of Mervyn’s Holdings, LLC; Mervyn’s LLC; and Mervyn’s Brands, LLC has filed a final accounting of the bankruptcy cases.  Prior to liquidating during the chapter 11 bankruptcy cases, Mervyn’s was a mid-level department store chain.  At one point, the chain had nearly 200 stores. According to the report, secured and priority claims against the Mervyn's companies were paid...

May 29, 2015
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Auction for Frederick’s of Hollywood Assets Cancelled After No Bids Received

Breaking News Alerts from Chapter11Dockets.com


Frederick’s of Hollywood, which filed for bankruptcy last month after closing all of its stores, has announced that it was unsuccessful in generating additional bids to acquire its assets.  The deadline for parties to submit bids was May 25, 2015 at 5:00 p.m. (Eastern Daylight Time).  Because no competing bids were received, the auction that had been scheduled for May 28, 2015 at 10:00 a.m. (Eastern Daylight Time) has been cancelled.  Instead, Frederick's of Hollywood will seek...

May 28, 2015
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Appointment of Official Committee of Equity Holders in Xinergy Bankruptcy Denied

Breaking News Alerts from Chapter11Dockets.com


This morning, the Honorable Paul M. Black, Judge of the United States Bankruptcy Court for the Western District of Virginia, denied a motion of a large shareholder of Xinergy Ltd. for appointment of an official committee of equity security holders.  An order setting forth the court's ruling has not yet been entered. In the shareholder's motion, he argued thusly: The primary issue before the Court with this Motion is whether Xinergy’s shareholders as a group are adequately represented in...

May 28, 2015
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Creditors' Committee Appointed in Golden County Foods Bankruptcy

Breaking News Alerts from Chapter11Dockets.com


The Acting United States Trustee for Region 3 has announced the appointment of the Official Committee of Unsecured Creditors in the bankruptcy cases of Golden County Foods, Inc.; GCF Franchisee, Inc.; and GCF Holdings, II, Inc.  The companies filed for bankruptcy on May 15, 2015 in Delaware.  Headquartered in Plover, Wisconsin, the companies describe themselves as "a leading contract manufacturer, and innovative developer of product solutions for the frozen appetizer and snack category as well as being the world’s...

May 27, 2015
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Family Christian Reports Results of Auction for Sale of All its Assets

Breaking News Alerts from Chapter11Dockets.com


Family Christian, the large chain of retail stores focusing on religious products, announced the results of the auction for the sale of substantially all of its assets.  The auction, which is part of a sale process being undertaken pursuant to section 363 of the Bankruptcy Code and under supervision of the United States Bankruptcy Court for the Western District of Michigan, commenced on May 21, 2015 but did not conclude until May 27, 2015. According...

May 25, 2015
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IMRIS Inc. Makes Memorial Day Bankruptcy Filing

Breaking News Alerts from Chapter11Dockets.com


While most investors were enjoying the Memorial Day holiday, medical technology company IMRIS Inc. and its affiliates were filing for bankruptcy protection in Delaware.  The companies, which trade on the Toronto Stock Exchange under the symbol “IM” and on the NASDAQ Global Markets Exchange under “IMRS,” described the troubles leading to Monday's bankruptcy filings: As with many medical device companies, IMRIS has had numerous hurdles to achieving financial success, which are often not necessarily linked to the enormous...

May 19, 2015
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American Eagle Energy Plans Asset Sale After Bankruptcy Filing

Breaking News Alerts from Chapter11Dockets.com


American Eagle Energy Corporation (NYSE: AMZGQ), which filed for chapter 11 bankruptcy protection in Denver on May 8, 2015, is now seeking approval for procedures to sell substantially all of its assets.  According to the motion filed with the bankruptcy court, the asset sale is supported by an ad hoc group of holders of the 11.0% Senior Secured Notes due 2019 issued by American Eagle Energy Corp. and guaranteed by its affiliate AMZG, Inc., which also filed for bankruptcy...

May 14, 2015
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Bankruptcy Judge Thomas Agresti Rejects Joint Administration in Erie Hockey Cases

Breaking News Alerts from Chapter11Dockets.com


In a brief order expressing a surprising view of the commonplace entry of joint administration orders in chapter 11 bankruptcy cases, a Pennsylvania bankruptcy court judge rejected entry of such an order in a recent case.  For those unfamiliar, Bankruptcy Rule 1015 provides that if two or more petitions are pending in the same court involving a debtor and an affiliate "the court may order a joint administration of the estates." In the order, bankruptcy judge Thomas...

May 13, 2015
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Final Report Filed in Betsey Johnson Bankruptcy Cases

Breaking News Alerts from Chapter11Dockets.com


A final report was filed with the bankruptcy court in the Betsey Johnson LLC bankruptcy cases.  The company, which operated the 63-store Betsey Johnson retail chain, filed for bankruptcy protection over three years ago.  According to the final report, professional fees totaled over $3 million over that time period.  Priority claims and some secured claims were paid in full.  Other secured claims received a payment equal to slightly less than 50% of the amount of...

May 12, 2015
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Fresh Produce Holdings Reports on Results of Bankruptcy Asset Sale Auction

Breaking News Alerts from Chapter11Dockets.com


Fresh Produce Holdings, which operates the Fresh Produce Clothes chain of retail stores, has disclosed the results of an auction that it held to sell all or a portion of its assets.  The company filed for bankruptcy protection in early April 2015 and obtained bankruptcy court approval to undertake a process to sell its assets earlier this month.  According to the auction report filed with the bankruptcy court, the winning bidder at the auction was...

May 11, 2015
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American Eagle Energy Corp. (NYSE MKT: AMZG) Files For Chapter 11 Bankruptcy Protection

Breaking News Alerts from Chapter11Dockets.com


Late on Friday, American Eagle Energy Corp. (NYSE MKT: AMZG) and its affiliate AMZG Inc. filed voluntary chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the District of Colorado.  In its petition, American Eagle Energy listed assets of $211.8 million against liabilities of $215.2 million.  The date for which such data was measured was not listed on the petition.  Friday's filings were bare-bones filings - meaning that the filings did not include typical...

May 8, 2015
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Oil and Gas Restructurings Explained by the Experts – The May 7 Akin Gump Panel Event

From the Editorial Staff of Commercial Bankruptcy Investor


If you were looking to get up to speed on the unique aspects of restructurings for Exploration & Production companies in the oil and gas sector, you missed a great event last night with Akin Gump’s “Exploration & Production of an Oil & Gas Restructuring” in New York. Moderated by New York restructuring partner Ira Dizengoff, with a panel roster comprised of their heaviest hitters for oil and gas company representation, and some special guests,...

May 5, 2015
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Shale and Petroleum – The Big Picture (Part 3)

  • Brad Daniel
  • BMC Group
  • New York, NY
  • (212) 310-5910
  • bdaniel@bmcgroup.com

If you have not done so already, you’ll want to read Part 1 and Part 2 of this series first, before delving into this final Part 3. So, now that we know that this “shale revolution” has at least been a short-term game changer, it's time to get into some more specifics of how unconventional oil sources should impact our long-term perspective. On that point, let’s first turn to Mathilde Mathieu, Oliver Sartor, and Thomas Spencer, research analysts at the think...

May 4, 2015
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Revel AC Files Revised Proposed Plan of Liquidation and Disclosure Statement

Breaking News Alerts from Chapter11Dockets.com


Sunday night, the company behind the failed Revel hotel/casino development in Atlantic City filed a revised proposal for its plan of liquidation and accompanying disclosure statement.  Among the changes included in Sunday's edition of the proposed disclosure statement are estimated amounts for the various classes of claims against Revel AC.  Revel estimates that there will be $43 million of allowed general unsecured claims which would result in an estimated recovery to unsecured creditors of only 3.7%....

April 30, 2015
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Judge’s Ruling Protects GM Against Certain Ignition Switch Lawsuits

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


A federal bankruptcy judge ruled recently that GM's 2009 bankruptcy protects the New GM from potentially billions of dollars in claims related to faulty ignition switches. The main point of contention in the case were some 140 lawsuits from plaintiffs, primarily from the families of 84 people whose deaths have been linked to the faulty ignition switches that occurred prior to the bankruptcy. You’ll recall that the GM entity that existed prior to the bankruptcy...

April 30, 2015
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Endeavour Operating Corp. Abandons Proposed Plan of Reorganization, Seeks Sale

Breaking News Alerts from Chapter11Dockets.com


Endeavour Operating Corp., which filed for bankruptcy protection last October with a pre-negotiated plan to restructure pursuant to a Plan of Reorganization, revealed in bankruptcy court filings that it is abandoning that pre-negotiated plan and will now seek a bankruptcy court asset sale.  In the motion seeking approval of sale procedures, the company explained its situation: On October 10, 2014, prior to filing the Debtors’ chapter 11 cases, the Debtors entered into an agreement (the “Restructuring...

April 29, 2015
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SIGA Technologies Asks Court to Disband Creditors' Committee

Breaking News Alerts from Chapter11Dockets.com


SIGA Technologies, Inc. (OTCMKTS:SIGAQ) today asked the Southern District of New York bankruptcy court to disband the Official Committee of Unsecured Creditors appointed in its Chapter 11 bankruptcy case.  SIGA Technologies filed for bankruptcy on September 16, 2014 and the United States Trustee appointed a three-member Creditors' Committee on October 7.  The Committee originally was comprised of PharmAthene, Albemarle, and Catalent Pharma Solutions, LLC. On October 13, 2014, Catalent withdrew from the Committee.   The motion (a copy of...

April 28, 2015
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Shale and Petroleum – The Big Picture (Part 2)

  • Brad Daniel
  • BMC Group
  • New York, NY
  • (212) 310-5910
  • bdaniel@bmcgroup.com

If you have not yet read Part 1 of this series, you’ll want to go back and do so before tackling this Part 2. And if you’ve read Part 1, you’ll recall that we took an in-depth look at why conventional oil production follows a bell curve (known as “Hubbert’s Curve”), and where on that curve we find ourselves today—which happens to be, either at or very near the peak. Continuing with our A. Whitney...

April 22, 2015
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Shale and Petroleum – The Big Picture (Part 1)

  • Brad Daniel
  • BMC Group
  • New York, NY
  • (212) 310-5910
  • bdaniel@bmcgroup.com

Back in the mid-to-late ‘80s, when Dennis Miller had a massive mullet (and his stand-up performances were much more likely to be attended by you and your friends than your distant aunt and uncle who worked on the ’72 Nixon campaign), his “Weekend Update” features on Saturday Night Live were often enriched by little segments featuring writer and comedian A. Whitney Brown, who, with just the right amounts of sarcasm, compassion, wit, and insight, would give...

April 21, 2015
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RECOMMENDED READING: Distressed Investor Opportunity In Oil Patch Master Limited Partnerships

From the Editorial Staff of Commercial Bankruptcy Investor


U.S. tax law encourages energy companies focused on exploration and production of oil, gas, and minerals to form as master limited partnerships.  That raises certain tax issues for investors in troubled debt of troubled energy companies. A group of lawyers from Kaye Scholer discuss related issues at length in a white paper entitled, "The Price of Oil & the Potential for Master Limited Partnership Restructuring and Insolvencies," which was published on the firm's website, and which we...

April 17, 2015
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The Rumors of Kanye West Buying Karmaloop Have Been Greatly Exaggerated

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


There has been a lot of hot air blown in the past couple of weeks regarding Kanye West and Dame Dash being interested in buying the troubled e-commerce retailer Karmaloop. The two made a series of Instagram posts where they described with some bluster how they were purchasing the company. "We just about to do some new shit, you know, stick together culturally -- take over the world and create a whole new industry and...

April 17, 2015
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The Oil & Gas Psychic Hotline

From the Editorial Staff of Commercial Bankruptcy Investor


Psychic hotlines were all the rage in the late 80s and early 90s. Cable television channels were littered with their advertisements. One wonders if the so-called “psychics” answering all those pay-by-the-minute phone calls could foretell their own futures—that revenues from people willing to incur exorbitant phone bill charges by the minute (without even getting any sexual satisfaction) compared to costs (primarily advertising fees) would just not match up very well one day. Many of them...

April 16, 2015
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More on Salon –Applying a Valuation

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


 Now, we return to our case study of Salon Media Group with an eye towards developing a thesis and applying valuation methodologies discussed in an earlier article in this series here. There are, as I mentioned in my previous article on Salon, large issues of concern with the current stock offering. Given that insiders have been supporting the company through loans and preferred stock[1] that carries massive liquidation preferences,[2], why should an individual have the confidence...

April 9, 2015
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Neither a Borrower Nor A Lender Be . . . In an Oil Market After a Sharp Plunge in Prices

From the Editorial Staff of Commercial Bankruptcy Investor


Anyone who has even casually glanced at the financial news in recent months is already well aware of the big story today—global oil prices have fallen dramatically. At their lowest levels in six years, and at 50% cheaper than the average over the last 4 years, this is a huge story, and one that is bound to end badly for certain companies in the oil and gas sector.  But aside from waiting to see who...

April 7, 2015
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Not Necessarily Free and Clear IV: RECOMMENDED READING on Antitrust Exposure of Purchaser of Assets From 363 Sale by Direct Competitor

From the Editorial Staff of Commercial Bankruptcy Investor


Buying the assets of a competitor out of a section 363 bankruptcy sale?  This site has explained here and here how section 363(f) of the Bankruptcy Code empowers a court to order that assets sold under section 363(b) of the Code are, in the hands of the purchaser, “free and clear” of any “interests” in the property that may have existed while it was in the hands of the debtor (or to have inured at any time prior...

April 6, 2015
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Introduction to Distressed Analysis –Developing Your Thesis and Valuation Methods

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


Ok, time for a more in depth look at making a thesis and a valuation. From the outset, I want to underscore a point raised in my previous article here, that most investors will want to enter the distressed investing space by relying on the expertise of various funds that focus on these types of investments. Thus, I'll first address here the constraints that an individual investor faces, and how one who is determined to make his or her own picks can...

March 26, 2015
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Lehman Brothers Files Notice of Seventh Distribution to Creditors

Breaking News Alerts from Chapter11Dockets.com


Lehman Brothers Holdings Inc. and its affiliates filed a notice with the Southern District of New York bankruptcy court today.  In that notice (a copy of which is available here), Lehman Brothers disclosed the percentage recovery that will be distributed to holders of allowed claims (other than secured, administrative, priority or convenience claims) in the upcoming seventh distribution, as well as the cumulative percentage recovery.  Those disclosures are made separately for claims against each Debtor in each Class under...

March 24, 2015
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How to Analyze a Distressed Company (an Introduction) – Salon Media Group

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


In my last article, I described some of the ways in which individuals can invest in the distressed space. I also described why I think that for the average person it's generally a much better idea to not try to make individual investments, but rather put money into a fund that has a good track record, or in an index. These funds are run by professionals who have more experience and greater resources at their...

March 24, 2015
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Convertible Bonds of Beleaguered NQ Mobile, Inc. Continue Decline

Breaking News Alerts from Chapter11Dockets.com


NQ Mobile, Inc. - a Beijing, China headquartered company which describes itself as "a leading global provider of consumer and enterprise mobile Internet services" - has been beset by a number of difficulties over the last year and a half.  The company's toughest period began in October 2013 when noted short-seller Carson Block and his firm Muddy Waters Research released a highly-critical report on the company. While the company's stock briefly recovered to something near...

March 18, 2015
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Is Distressed Investing for “the Little Guy”?

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


Given the focus of this site on distressed debt and equities, I'd like to highlight some points for those considering allocating some of their portfolio to distressed securities. The question I’ll address today is: should self-managed individual investors consider making their own picks in distressed securities? And if so, what is the best way to approach the space? Modern studies tend to attribute at least 40% of a portfolio’s overall success to its diversification in...

March 18, 2015
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Salus Capital Seeks to Limit Credit Bidding Rights in RadioShack's Bankruptcy

Breaking News Alerts from Chapter11Dockets.com


As we reported yesterday on sister site Commercial Bankruptcy Litigation, one of RadioShack's lenders (Salus Capital Partners) filed an adversary complaint against other of RadioShack's lenders.  Today, the other shoe dropped as Salus filed a motion in RadioShack's Chapter 11 bankruptcy cases asking the bankruptcy court to limit those lenders' right to credit bid their claims in sales of RadioShack's assets.  In the motion, Salus, acting as the agent for lenders referred to as the...

March 16, 2015
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In Surprising Move, Family Christian Withdraws Bankruptcy Sale Motion

Breaking News Alerts from Chapter11Dockets.com


Family Christian, LLC - the bankrupt retail chain specializing in faith-based products - filed a notice withdrawing its motion for approval of a process to sell substantially all of its assets this afternoon.  The move was surprising insofar as Family Christian's strategy for its bankruptcy filing was outwardly built around quickly completing an asset sale pursuant to section 363 of the Bankruptcy Code.  The asset sale had hit a few apparent speed bumps last week with approximately...

March 11, 2015
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Doral Financial Corporation Files for Bankruptcy Protection

Breaking News Alerts from Chapter11Dockets.com


Doral Financial Corporation filed for Chapter 11 bankruptcy protection on Wednesday in the Southern District of New York bankruptcy court.  The filing comes less than two weeks after the Office of the Commissioner of Financial Institutions of Puerto Rico (the OCIF) appointed the Federal Deposit Insurance Corporation (the FDIC) as receiver of Doral Bank, a state non-member bank chartered by the OCIF. Prior to the appointment of the FDIC as receiver, Doral Financial Corporation owned 100% of...

March 10, 2015
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What is Distressed Investing?

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


Distressed investing has been a distinct style of investing for a couple of decades now. Many of us probably feel we understand the general gist of it--purchase bonds of a company that are trading at 50 cents on the dollar, or equity shares that are priced below their long-term value, and if you've done your homework right and the company turns around, the price rebounds and you make a killing. But what are the techniques...

March 9, 2015
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ResCap Liquidating Trust Files Annual Report

Breaking News Alerts from Chapter11Dockets.com


The ResCap Liquidating Trust filed an annual report for calendar year 2014 with the United States Bankruptcy Court for the Southern District of New York today.  The ResCap Liquidating Trust is the successor in interest to Residential Capital, LLC and its affiliates that filed for bankruptcy in 2012.  Residential Capital remains one of the largest financial firms to ever file for bankruptcy in the United States. Among the highlights of the annual report (a copy of which...

March 9, 2015
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RECOMMENDED READING: The Investor’s End Game in Chapter 11

From the Editorial Staff of Commercial Bankruptcy Investor


In "Restructurings and Distressed Investing,"[1] James Inness and John Houghton of Latham & Watkins explain that an investor’s return depends upon the debtor making appropriate operational, financial and corporate alterations – of course – but also upon the investor conserving its power to effect such changes (usually in concert with other constituents) according to a realistic time horizon conceived at the outset of the case. Even as substantial operational changes are executed, an investor must attend...

March 5, 2015
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SEC Discloses Investigation of Xhibit Corp. in Objection to SkyMall Bankruptcy Sale

Breaking News Alerts from Chapter11Dockets.com


In an objection to the bankruptcy court sale of certain (but strangely somewhat undefined) assets of SkyMall, the U.S. Securities and Exchange Commission made a public acknowledgement of a heretofore non-public investigation of SkyMall's publicly-traded parent company. In the objection, a copy of which is available here, the SEC discloses that it "has issued an investigative subpoena to Xhibit Corp. requiring it to produce documents and records of Xhibit and its affiliates and subsidiaries (including...

March 4, 2015
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Sabine Oil & Gas Corp. Fully Draws Revolving Credit Facility, Gets Notice of Default and Acceleration on Notes

Breaking News Alerts from Chapter11Dockets.com


According to a recent filing with the Securities & Exchange Commission, Sabine Oil & Gas Corporation has had two major developments with regard to its debt: 1.  The company fully drew down its revolving credit facility: On February 25, 2015, we borrowed approximately $356 million under our Second Amended and Restated Credit Agreement, dated as of December 16, 2014, by and among us, Wells Fargo Bank, National Association, as administrative agent, and the lenders and...

March 3, 2015
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Caesars Entertainment Operating Company Files Proposed Plan of Reorganization

Breaking News Alerts from Chapter11Dockets.com


After the close of business on Monday evening, Caesars Entertainment Operating Company, Inc. and its affiliates that have bankruptcy cases pending in the Northern District of Illinois filed a proposed Plan of Reorganization.  The companies also filed a proposed Disclosure Statement to accompany the proposed Plan.  Copies of both documents are available below. Debtors’ Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code Disclosure Statement for the Debtors’ Joint Plan of Reorganization Pursuant to...

March 2, 2015
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The Dolan Company Files Final Report

Breaking News Alerts from Chapter11Dockets.com


The Dolan Company filed its final report with the Delaware bankruptcy court today.  The final report (a copy of which is available by clicking here) discloses the outcomes for various parties-in-interest in the company's Chapter 11 bankruptcy cases.  As a result of the terms of the prepackaged plan of reorganization that was confirmed by Bankruptcy Judge Brendan Linehan Shannon, outcomes for creditors were much better than is common in bankruptcy cases.  All creditors, other than...

February 26, 2015
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Cram Downs and Artificial Impairments – Can a Debtor Rewrite its Own Credit Terms in a Bankruptcy?

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


It is a principle of credit lending that creditors should charge less in interest if they take on less risk, but can charge more interest (and thus make more profit) if they take on a greater risk. The “secured,” more “senior” creditors of a company (those whose debt is collateralized by some specific property that the company holds, or who would otherwise be first in line to be made whole in a liquidation) are thus...

February 19, 2015
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Caesars Asks Bankruptcy Court to Disband Second Priority Noteholder Committee

Breaking News Alerts from Chapter11Dockets.com


Caesars Entertainment Operating Company, Inc. has asked Bankruptcy Judge A. Benjamin Goldgar to disband the Official Committee of Second Priority Noteholders which was appointed in its bankruptcy cases by the United States Trustee.  Alternatively, Caesars is asking for the Noteholder Committee to either be reconstituted with the Official Committee of Unsecured Creditors or for the court to limit the Noteholder Committee's scope, fees, and expenses. According to Caesars in the court filing: There is no doubt that the second lien...

February 17, 2015
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Quicksilver Resources Inc. (OTCQB: KWKA) Skips Interest Payment, Retains Advisors

Breaking News Alerts from Chapter11Dockets.com


In a filing with the Securities and Exchange Commission today, Quicksilver Resources Inc. (OTCQB: KWKA) disclosed that it "decided not to make the approximately $13.6 million interest payment due February 17, 2015 on its 9.125% senior notes due 2019."  In the same filing, the company also disclosed that it has "retained Houlihan Lokey Capital, Inc., Deloitte Transactions and Business Analytics LLP, and other advisors to collectively assist with the evaluation of the company’s options to address...

February 17, 2015
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Creditors' Committee Filing Suggests That It Won't Let RadioShack Go Gently Into That Good Night

Breaking News Alerts from Chapter11Dockets.com


In a strategic move that is rarely seen so quickly after appointment, RadioShack's Official Committee of Unsecured Creditors filed a motion today seeking authorization to issue subpoenas for the production of documents from, and for depositions of, the certain key parties to the company's current situation.  The Creditors' Committee was appointed in the bankruptcy cases just last Friday and, other than ministerial filings, this motion is the first pleading that the Committee has filed in the case. The topics and parties...

February 17, 2015
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Mega RV—Lender Compromise Provides Funds to Creditors

Adam Stein-Sapir
Portfolio Manager, Pioneer Funding Group, LLC


A recent settlement agreement in the Mega RV Corp. (“Mega” or the “Debtor”) bankruptcy highlights the interplay between an overzealous lender and a repentant business owner who came together to cooperate and provide a windfall recovery to unsecured creditors. Mega RV was founded in 2000 by Mike McMahon as McMahon’s RV.  The Debtor was in the business of selling and servicing new and used RVs throughout Southern California.  During 2011 and 2012, the Debtor was...

February 12, 2015
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Another Retailer Files for Bankruptcy & It is Family Christian, the Country's Largest Christian Retail Chain

Breaking News Alerts from Chapter11Dockets.com


On Wednesday, another national retailer joined the long list of its competitors filing for Chapter 11 bankruptcy protection.  The latest retailer to find itself before a bankruptcy judge is Family Christian, LLC.  Family Christian operates a chain of 266 stores located in 36 states.  The company and its affiliates employ 3,100 people and generated 2014 gross revenues of $216 million.  According to court filings, Family Christian is "one of the largest retail sellers of Christian...

February 11, 2015
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Not Necessarily Free and Clear III: Imposing Debtor’s Unemployment Insurance Ratings Onto Purchaser?

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


On April 30, 2009, Chrysler and 25 of its direct and indirect subsidiaries (collectively, “Old Chrysler”) commenced bankruptcy cases that became jointly administered.[i] Scarcely a month later, Old Chrysler sold its assets through a sale under section 363 of the Bankruptcy Code to a newly-formed entity that went on to do business as Chrysler (“New Chrysler”). As discussed in a previous article, a section 363 sale allows a purchaser to take the assets free and...

February 10, 2015
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Atlantic City's Revel Hotel & Casino Sale Falls Apart for the Second Time

Breaking News Alerts from Chapter11Dockets.com


A new chapter in the long novel of the struggles of the Revel Hotel & Casino in Atlantic City, New Jersey began this morning.  In a court filing (copy available here), the bankrupt hotelier asked the New Jersey bankruptcy court for authority to terminate its agreement to sell its assets to Glenn Straub's Polo North Country Club, Inc. and keep Polo North's $10 million deposit.  Prior to the Polo North deal, Revel had an agreement to...

February 10, 2015
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Liquidation Trust Created in TOUSA, Inc. Bankruptcy Files Annual Report

Breaking News Alerts from Chapter11Dockets.com


The Liquidation Trust which was created pursuant to the Amended Joint Plan of Liquidation of TOUSA, Inc. and Its Affiliated Debtors and Debtors in Possession Under Chapter 11 of the Bankruptcy Code filed its annual report for the year ended December 21, 2014 with the Southern District of Florida bankruptcy court yesterday.  TOUSA was one of the largest homebuilders to file for bankruptcy protection in the wake of the financial crisis.  When it filed for Chapter 11...

February 10, 2015
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What Does RadioShack's Bankruptcy Mean for Creditors & Shareholders?

Breaking News Alerts from Chapter11Dockets.com


One of the fundamental questions - perhaps the most fundamental question - for creditors and shareholders following a company's bankruptcy filing is "what does this mean for me?"  RadioShack Corporation and a number of affiliates filed for bankruptcy protection last week with plans to sell some of their operations and liquidate the rest.  It is, at present, challenging to put an exact dollar figure on either portion of that plan in terms of the amount...

February 5, 2015
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Highlights from iGlobal Forum’s 6th Global Distressed Debt Investing Summit

From the Editorial Staff of Commercial Bankruptcy Investor


iGlobal’s annual Global Distressed Debt Investing Summit, held yesterday, lived up to its reputation as a venue to hear the latest thought leadership about distressed debt investing. The day opened with a keynote by Perry Mandarino (PWC) and then moved right into Mandarino’s interview of Bruce Richards (Marathon Asset Management). One takeaway: Richards predicted that while bankruptcy filings in the United States will remain fairly low in terms of the number of companies filing, the...

February 5, 2015
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Caesars Asks Court for Permission to Assume Restructuring Support Agreement

Breaking News Alerts from Chapter11Dockets.com


In a move that is certain to be controversial and highly contested, Caesars Entertainment Operating Company filed a motion shortly before midnight on Wednesday seeking authority to assume its Third Amended & Restated Restructuring Support and Forbearance Agreement.  The motion, filed with the United States Bankruptcy Court for the Northern District of Illinois in Chicago, argues that assumption of the agreement is appropriate thusly: The RSA is the blueprint for a comprehensive restructuring plan that will...

February 5, 2015
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A Bankruptcy Success Story Continues: W.R. Grace Announces Plan to Split into Two Companies, Stock Up 12%

Breaking News Alerts from Chapter11Dockets.com


W. R. Grace & Co. (NYSE: GRA) saw its stock rise over 12% today after announcing plans to separate into two independent, publicly traded companies.  It is the latest positive development in one of the most successful turnarounds in recent memory.  W. R. Grace emerged from Chapter 11 bankruptcy protection early last year after spending nearly 13 years operating under bankruptcy court supervision. Unlike most public companies, which see their common stock cancelled in the course...

February 2, 2015
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Non-Debtor Caesars Companies Respond to Creditors' Demand for Bankruptcy Court Appointment of an Examiner

Breaking News Alerts from Chapter11Dockets.com


While many were busy watching the Super Bowl, two of the non-bankrupt affiliates (used in the colloquial sense of the term) of Caesars Entertainment Operating Company, Inc. and the other Caesars entities that have filed bankruptcy petitions filed court pleadings offering their views on the appointment of an examiner by the bankruptcy court in Chicago.  As a reminder, the request for the appointment of an examiner was initially made to the Delaware bankruptcy court by...

February 2, 2015
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Caesars Venue Battle Update: Delaware Court Issues 23-Page Written Opinion

Breaking News Alerts from Chapter11Dockets.com


In an update to last week's decision by Judge Gross in Delaware that the Caesars bankruptcy cases should proceed in Chicago (our post from last week is available here), Judge Gross today issued a 23-page written opinion.  The written opinion sets forth in detail his analysis of the venue issues before him and the basis for his ruling.  You can access a free copy of the opinion by clicking here.

February 2, 2015
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Breaking: RadioShack Receives ANOTHER Default Notice from Lender Salus Capital Partners, at Risk of Triggering Cross-Default Provisions of Other Debt Obligations

Breaking News Alerts from Chapter11Dockets.com


This afternoon, RadioShack Corp. (RSH) filed a Current Report on Form 8-K with the U.S. Securities and Exchange Commission.  You can find a copy of that document here.  In the Current Report, RadioShack disclosed that it has received a second notice of default from Salus Capital Partners, LLC, as agent for the lenders under the Credit Agreement, dated as of December 10, 2013, between RadioShack and the lenders: As previously disclosed on Form 8-K filed on December 2, 2014,...

January 28, 2015
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Delaware Court Rules That Caesars Bankruptcy Cases Should Proceed in Illinois

Breaking News Alerts from Chapter11Dockets.com


In an eagerly anticipated decision, U.S. Bankruptcy Judge Kevin Gross ruled today that the Northern District of Illinois, and not his home turf of Delaware, was the appropriate venue for the Chapter 11 bankruptcy cases of Caesars Entertainment Operating Company, Inc. and its affiliates.  Therefore, in a two-page ruling, he first ordered that the voluntary Chapter 11 bankruptcy cases filed by the Caesars companies should proceed in Illinois and lifted the stay of those cases...

January 28, 2015
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RADIO SHACK BANKRUPTCY WATCH VIII: Stiffing Landlords, Husbanding Cash, and Separating Sheep From Goats

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

Radio Shack is set to file a chapter 11 bankruptcy case in early February, 2015, i.e., next week. Radio Shack rents its 4,300 stores in North America, and it has been reported that the company has “delayed” January rental payments on some stores, and that it is talking with Sprint about the latter’s acquisition of store leases. Focusing on these facts alone, we can discuss a likely Radio Shack strategy to: (a) finally get around...

January 23, 2015
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Not Necessarily Free and Clear II: Successor Liability in General Motors

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


The scene is Detroit, and the time is early 2009. General Motors is in a pickle. Years of multi-billion dollar losses and mounting pension obligations have taken their toll on GM, and it is looking in to filing a chapter 11 bankruptcy as a means of becoming solvent once again. By June, the U.S. Government will approve bankruptcy proceedings (In re General Motors, 407 B.R. 463, 503-04), and the creation of a completely new entity,...

January 23, 2015
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Caesars Hit with Complaint by Ad Hoc Group of First Lien Bank Lenders

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Within the last ten minutes, an adversary complaint has been filed with the Delaware bankruptcy court by a group calling themselves the Ad Hoc Committee of First Lien Bank Lenders.  The complaint alleges that it is filed "against debtor Caesars Entertainment Operating Company, Inc. and its non-debtor parent, Caesars Entertainment Corporation, to enjoin and remedy their improper attempts to buy votes from First Lien Bank Lenders in favor of a yet-to-be-filed plan of reorganization." A copy of the complaint...

January 22, 2015
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SkyMall Orders Up a Bankruptcy Filing

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In the latest of a growing line of bankruptcy filings by companies behind well-known brands, the companies behind the SkyMall catalogs that you find on almost every domestic airline filed for Chapter 11 bankruptcy protection today in the United States Bankruptcy Court for the District of Arizona.  The related companies filing for bankruptcy protection are: SkyMall, LLC f/k/a SkyMall, Inc. Xhibit Corp. f/k/a NB Manufacturing, Inc. Xhibit Interactive, LLC f/k/a Xhibit, LLC FlyReply Corp. SHC...

January 21, 2015
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RECOMMENDED READING: Gordon Brothers' Oil & Gas Industry Watch Critical Update

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Gordon Brothers Energy Partners recently released a publication titled Oil & Gas Industry Watch Critical Update.  If you are interested in the distressed situations many companies in this industry are increasingly facing, the publication may be worthwhile.  Among the topics covered are: The Battle with Breakeven Production Changes Impact on Asset Values Forecasting Supply and Demand

January 21, 2015
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Court Filing Highlights Battle Over Contingent Value Rights Issued Pursuant to Chapter 11 Plan of Reorganization

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A court filing this afternoon put on display a battle that is occurring currently arising out of a 2009 Chapter 11 bankruptcy filing that was ostensibly resolved by a Plan of Reorganization that was confirmed by the Rhode Island bankruptcy court and went effective in November 2010.  The bankruptcy case out of which today's court filings arise is that of UTGR, Inc. - one of the largest, if not the largest, company ever to file for...

January 20, 2015
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Versa Capital Management Submits Competing Offer to Be Plan Sponsor & DIP Lender for The Wet Seal, Inc.

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In a Monday bankruptcy court filing, Versa Capital Management, LLC disclosed that it has submitted an offer to both (1) provide debtor-in-possession financing to and (2) sponsor a plan of reorganization for The Wet Seal, Inc.  A copy of the January 19, 2015 letter from Versa Capital Management's Chairman & CEO Gregory L. Segall to Wet Seal's Board of Directors and President/CEO can be viewed by clicking here.  The objection to which the letter was attached...

January 15, 2015
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Caesars Entertainment Operating Company Files Voluntary Bankruptcy in Chicago as Expected

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In response to the involuntary bankruptcy petition filed against it earlier this week, Caesars Entertainment Operating Company, Inc. said that it was planning to file for bankruptcy protection voluntarily in the Northern District of Illinois on Thursday, January 15th.  Caesars kept its word and didn't waste much time in doing so.  Its voluntary bankruptcy filings in the Chicago court began shortly after midnight - the first bankruptcy petition was filed by an affiliated company (Southern Illinois...

January 15, 2015
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Breaking: The Wet Seal, Inc. Files for Bankruptcy Protection with Plan Sponsorship Agreement

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On Thursday evening, The Wet Seal, Inc. (NASDAQ: WTSL) and certain affiliates voluntarily filed for Chapter 11 bankruptcy protection in Wilmington, Delaware.  The filing is not unexpected given the company's recent decision to close more than half of its stores and accompanying warnings that a bankruptcy filing may be in the offing. [caption id="" align="aligncenter" width="817"] Owning Wet Seal Equity Has Been a Bumpy Ride in the Wrong Direction[/caption] Wet Seal, prior to the bankruptcy...

January 13, 2015
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LightSquared Files Summary of its Proposed Second Lien Exit Facility

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This evening, LightSquared Inc. filed a a summary of (i) the proposed differences in treatment of the Tranche A Second Lien Exit Term Loans to be received under the Plan by the Prepetition LP Lenders other than SPSO (the “Tranche A Loans”) and the Tranche B Second Lien Exit Term Loans to be received under the Plan on the Effective Date by SPSO (the “SPSO Loans”) and (ii) the senior lien and/or pari passu lien debt basket,...

January 13, 2015
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Wilmington Savings Fund Society Files Papers Supporting Appointment of Examiner for Caesars Entertainment Operating Company, Inc.

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As readers are almost certainly aware, yesterday morning an involuntary bankruptcy petition was filed against Caesars Entertainment Operating Company, Inc. in Delaware by Appaloosa Investment Limited Partnership I, OCM Opportunities Fund VI, L.P. and Special Value Expansion Fund, LLC.  In connection with that filing, the petitioning creditors also filed a motion asking the bankruptcy court to appoint an examiner with access to and authority to disclose privileged materials.  Today, their motion got additional support, as the examiner motion...

January 8, 2015
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Alsip Acquisition Seeks Bankruptcy Court Authority to Reject Collective Bargaining Agreements

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Just after midnight this evening, Alsip Acquisition, LLC and APCA, LLC asked the Delaware bankruptcy court for authority to reject collective bargaining agreements with (1) the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and its affiliated Local 1085, and (2) the International Union of Operating Engineers and its affiliated Local 399.  The relief is sought pursuant to section 1113 of the Bankruptcy Code and is sought to be effective as of...

January 6, 2015
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Newland International Properties Corp. - Developer of Panama City's Trump Ocean Club International Hotel & Tower - Misses Principal Payment on Bond Debt

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Newland International Properties Corp., the developer of the $295 million Trump Ocean Club International Hotel & Tower in Panama City, Panama, disclosed that it failed to make a $23,422,154.00 principal payment on its 9.5% bonds due July 2017 when due yesterday.  Newland did, however, make a $9,447,553.85 interest payment on the same bonds yesterday.  In the announcement of the bond payments, Newland also reported that it entered into a November 26, 2014 Cooperation Agreement with registered holders of 66.32%...

January 5, 2015
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Registered Investment Adviser NSB Advisors LLC Files for Chapter 11 Bankruptcy Protection in New York

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The Southern District of New York's second Chapter 11 bankruptcy filing of 2015 was made today by NSB Advisors LLC of Fishkill, New York.  The registered investment adviser founded in 2009 by William F. Nicklin claims in court filings that it once had "over 700 client accounts and assets under management in excess of $1.2 billion."  However, by the beginning of 2015, its clientele had decreased dramatically - "currently, the Debtor has approximately 410 accounts, 355 of which...

January 2, 2015
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RADIO SHACK BANKRUPTCY WATCH VII: RECOMMENDED READING On the Role of Credit Default Swaps in this Serial Drama

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

In the most recent installment of this Serial, we reported that the International Swaps and Derivatives Association ruled that the early December declaration of a Radio Shack default issued by a junior lending group (led by Salus Capital Partners LLC) did not constitute a “credit event” that would trigger the obligation of credit default swaps parties to pay counterparties under  those contracts. We also noted that there are outstanding some $25.7 billion in swaps contracts...

December 18, 2014
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Ad Hoc Committee of Aereo Creditors Files 2019 Statement

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Very recently, a group of creditors of bankrupt Aereo, Inc. referring to themselves as an ad hoc committee of unsecured creditors filed a verified statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure.  The ad hoc committee is represented by Robert T. Kugler and Edwin H. Caldie of law firm Stinson Leonard Street LLP and Edward E. Neiger and Marianna Udem of law firm ASK LLP.  According to the filing, the members of the ad hoc committee...

December 18, 2014
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RADIO SHACK BANKRUPTCY WATCH VI: Cut me, Mick!

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

Last week, we speculated that Salus Capital Partners LLC declared a default under its junior loan facility because it wants to acquire the senior secured facility, taken over in October by investor Standard General and others, at a steep discount. According to Fitch Solutions, Inc., in a liquidation held today, the $585 million senior secured ABL facility would be in the money, the $250 million junior secured term loan (held by Salus) would still be...

December 17, 2014
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Preparing for Potential Liquidation, Deb Stores Seeks Approval of Lease & Contract Rejection Procedures

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Deb Stores Holding LLC today sought approval from the Delaware bankruptcy court for approval of procedures governing the rejection of executory contracts and unexpired leases.  The procedures are likely to be necessary unless a buyer interested in acquiring the retailer's assets to operate on a going-concern basis steps up and submits a bid in the very near future.  Deb Stores filed for bankruptcy protection on December 4th and quickly sought approval of bidding procedures to...

December 16, 2014
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Optim Energy Again Amends DIP Financing Milestones

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Optim Energy, LLC today disclosed in a bankruptcy court filing that it has again entered into a consent and amendment agreement with the parties to its Senior Secured Debtor in Possession Credit, Security, and Guaranty Agreement, dated as of February 12, 2014, to extend a certain milestone provided therein.  This follows multiple previous consents and amendments to extend certain milestones provided in Schedule 12.1 to the DIP Credit Agreement. Pursuant to the most recent consent and amendment...

December 15, 2014
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LightSquared Inc. Files Monthly Operating Report for November

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LightSquared Inc., the troubled satellite communications company which has been operating in bankruptcy since May 2012, filed its required Monthly Operating Report for the month of November 2014 this afternoon with the United States Bankruptcy Court for the Southern District of New York.  The company reported that its cash balance grew by nearly 50% during the month, although the increase was primarily the result of additional borrowings under its debtor-in-possession (DIP) financing facility. LightSquared also...

December 15, 2014
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RadioShack 6.75% Bonds Due 2019 Trading in Low Teens, Yielding Over 80%

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According to FINRA's TRACE system, RadioShack's 6.75% bonds due 2019 have traded as low as 12.375 cents on the dollar today.  At those prices, the bonds would yield over 82% assuming that RadioShack did not default before maturity.  That final caveat, of course, is looking increasingly unlikely, despite the International Swaps and Derivatives Association's determination last week that a "credit event" had not yet occurred to trigger payment on credit default swaps related to RadioShack's debt....

December 11, 2014
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Three-Member Creditors' Committee Appointed in Endeavour Operating Corporation Bankruptcy

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This morning, the United States Trustee for Region 3 announced the appointment of a three-member Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy cases of Endeavour Operating Corporation and its affiliates.  This represents a change of course - on October 27, 2014, the US Trustee announced that a Creditors' Committee had not been appointed. The members of the Creditors' Committee are: Open Flow Gas Supply Corp. SM Energy Company SJ Exploration Endeavour is an oil...

December 11, 2014
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Effective Date for LDK Solar Systems Plan of Reorganization Occurs

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LDK Solar Systems, Inc., LDK Solar USA, Inc. and LDK Solar Tech USA, Inc. announced today in a bankruptcy court filing that the Effective Date occurred yesterday (December 10, 2014) for their Joint Prepackaged Plan of Reorganization.  On November 21, 2014, the Honorable Peter J. Walsh, United States Bankruptcy Judge for the District of Dealware, entered the order confirming the Joint Prepackaged Plan. Applications for final allowance of compensation or reimbursement of expenses incurred by any Professional, and all other requests...

December 10, 2014
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Revel AC Makes it Official & Seeks Approval to Terminate Asset Purchase Agreement with Brookfield

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Through a highly-contested bankruptcy court-supervised asset sale process, Revel AC, Inc. reached agreement with Brookfield US Holdings LLC to sell substantially all of its assets.  Those assets comprise the Revel hotel and casino complex in Atlantic City, New Jersey - a sleek 47-story, 710-foot high tower (the tallest building in the city) with 6.2 million square feet including a 130,000 square foot casino located on approximately 20 acres with 820 feet of boardwalk frontage.  The sale, which was approved by...

December 10, 2014
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Fitch Provides Estimate of Recoveries for Caesars Entertainment Operating Company Creditors in Event of Bankruptcy

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In a release this afternoon, Fitch Ratings provided the following estimates of recoveries for creditors of Caesars Entertainment Operating Company (CEOC) in the event that the company makes a bankruptcy filing, as is widely expected: Term loans: 100% First-lien notes: 80% "More junior" debt: less than 10% The release explains the methodology used in arriving at its estimates, stating that its recovery analysis incorporates "a weighted 9.6x EV/EBITDA multiple, $844 million run-rate EBITDA, $975 million of excess...

December 10, 2014
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New York City Opera Seeks Approval of Sale Procedures, Identifies Stalking Horse Purchaser

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Late this afternoon, New York City Opera, Inc. filed a motion with the Bankruptcy Court for the Southern District of New York seeking approval of bid procedures governing the sale of certain of its assets pursuant to Section 363 of the Bankruptcy Code, as well as approval of bid protections for its stalking horse bidder for the assets.  A copy of the motion is available by clicking here; the following is a summary of some of...

December 9, 2014
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Energy Future Holdings Files Monthly Operating Report for October 2014

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On Monday, Energy Future Holdings Corp. filed its Monthly Operating Report for October with the Delaware Bankruptcy Court.  The Monthly Operating Report, which companies operating under Chapter 11 bankruptcy protection are required to file, provides detailed financial information regarding the companies' performance during the monthly period and since the filing of their bankruptcy petitions.  Among the details included are: Consolidated Statement of Cash Flows Bank Reconciliations Schedules of Disbursements Schedule of Professional Fees & Expenses...

December 9, 2014
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Liquidation Trustee Files Final Report in Nutritional Sourcing Corporation Bankruptcy Cases

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This afternoon, JLL Consultants, Inc., in its role as liquidation trustee appointed pursuant to the First Amended Joint Plan of Liquidation of Nutritional Sourcing Corporation, Pueblo International, LLC, and FLBN, LLC, filed its Final Report summarizing the outcomes for creditors and other parties in the companies' bankruptcy cases.  The chart below provides the recoveries for creditors holding claims in the different classes set forth in the confirmed Plan of Liquidation. [caption id="attachment_4415" align="aligncenter" width="297"] Nutritional Sourcing Creditor Payouts...

December 8, 2014
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Bankruptcy Court Confirms Plan of Liquidation for Capital Trust Holdings, Inc. (f/k/a First Mariner Bancorp)

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Within the past 15 minutes, Bankruptcy Judge David Rice entered an order officially confirming the Second Amended Chapter 11 Plan of Liquidation, dated December 4, 2014 [Dkt No. 390] for Capital Trust Holdings, Inc. (f/k/a First Mariner Bancorp). A copy of his confirmation order, which attaches a copy of the Second Amended Chapter 11 Plan of Liquidation, can be downloaded by clicking here.

December 8, 2014
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Connacher's Woes: Over-Levered and at the Mercy of Global Economic Forces

Jon Petersen
Distressed Debt/Equities Research Team
jpetersen@dailydac.com


Shifts in both commodities and credit markets are causing pain for Connacher Oil and Gas, and have led to a “going concern warning"[i] being included in their Q3 results. Connacher is seen as likely to run into difficulties making interest payments, and as a result its stock price is down some 85% from its 2 year highs in April, when WTI crude prices were trading closer to $95. The Alberta based company operates two projects...

December 8, 2014
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Longview Power Enters Into Fifth Amendment to DIP Credit Agreement

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This evening, Longview Power, LLC filed Amendment No. 5 to its Senior Secured Superpriority Debtor-in-Possession Credit Agreement with the Delaware Bankruptcy Court.  Despite being filed with the court today, the Amendment is dated as of November 24, 2014.  A copy of the Amendment is available for download for free by clicking here. Among the amendments to the Credit Agreement which are being made pursuant to today's filing are amendments of affirmative covenants to which Longview...

December 7, 2014
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Sunday Not-So-Funday: Teen Retailer dELiA*s, Inc. Files for Bankruptcy

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As the company had presaged in a Friday press release, retailer dELiA*s, Inc. (ticker symbol: DLIA) voluntarily filed for chapter 11 bankruptcy protection on Sunday night in New York.  The company reported that it had assets and liabilities of $74 million and $50.5 million at book value.  While those numbers might initially give investors a glimmer of hope, court filings quickly dashed that hope by stating that the company believes that "the best estimated value of the...

December 5, 2014
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RADIO SHACK BANKRUPTCY WATCH V: O War, thou son of Hell!

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

When we last left Radio Shack, we imagined its new Chief Revitalization Officer as Henry V giving a St. Crispin’s Day speech to rouse beleaguered troops toward an improbable turnaround victory.  That scenario was premised upon Radio Shack’s largest shareholder, Standard General LP, having doubled down on its investment by replacing GE Capital as leader of a $585 million facility (which included all senior secured loans, plus a $140 million line of credit), having put...

December 4, 2014
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Details of Deb Stores Holding's Proposed Debtor-in-Possession Financing Facility

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On Thursday, Deb Stores Holding, LLC and a number of affiliates voluntarily filed for chapter 11 bankruptcy protection in Delaware.  The filings represented the companies' second bankruptcy filing in less than four years - their predecessor companies previously filed for chapter 11 protection in June 2011. According to court filings, the companies, which are headquartered in Philadelphia, Pennsylvania, are a mall-based retailer in the juniors "fast-fashion" specialty sector that operates under the name "DEB" and offers moderately...

December 2, 2014
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And the Winner of the Auction for Gaspari Nutrition's Assets is...

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Yesterday, Gaspari Nutrition, Inc. held an auction for the sale of its assets pursuant to procedures approved by the United States Bankruptcy Court for the District of New Jersey in late October.  The auction drew participation from four bidders and, this afternoon, Gaspari announced the results of the auction: Allegro Nutrition LLC was the winner bidder with a bid of $10,100,000 HPH Health, LLC was designated as the back-up bidder with a bid of $10,000,000 Hi-Tech Nutraceuticals, LLC was...

December 1, 2014
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Connacher Oil and Gas Retains BMO Capital Markets in Process to Devise Strategy to Address Liquidity Issues, Capital Structure

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On December 1, Connacher Oil & Gas Limited (CLL – TSX) announced that its Board of Directors has "initiated a process to devise and implement a strategy to address Connacher’s liquidity and capital structure."  The company also announced that it has engaged BMO Capital Markets as its financial advisor to assist in the process.  Finally, Connacher stated that it "does not intend to make any further announcements in respect of this matter unless and until its Board of Directors has approved...

November 28, 2014
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Tactical Intermediate Holdings, Inc.'s Plan of Liquidation Goes Effective

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On November 28, 2014, Tactical Intermediate Holdings, Inc. announced that the Effective Date under the Plan of Liquidation occurred and the transactions contemplated by the Plan were effectuated.  U.S. Bankruptcy Judge Kevin Gross entered an order confirming the Plan of Liquidation for Tactical Intermediate Holdings and its affiliates on November 13, 2014. According to the notice filed with the Delaware bankruptcy court today: All requests for payment of an Administrative Claim incurred on or after September 15, 2014 must be...

November 25, 2014
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PBGC Challenges Reichhold, Inc.'s Proposed Bankruptcy Sale Procedures

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Just minutes ago, the Pension Benefit Guaranty Corporation filed an objection to the bidding procedures proposed by Reichhold, Inc. to govern the sale of all or substantially all of its assets pursuant to Section 363 of the Bankruptcy Code.  A copy of the objection can be downloaded by clicking here. On November 12th, Reichhold filed a motion asking the bankruptcy court to set procedures for the sale of substantially all of its assets to Reichhold Acquisitions...

November 24, 2014
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Interfaith Medical Center, Inc. Liquidating Trust Files Dozens of Adversary Complaints Seeking to Recover Allegedly Avoidable Transfers

Breaking News Alerts from Chapter11Dockets.com


On Monday, the Interfaith Medical Center, Inc. Liquidating Trust, through Liquidating Trustee Charles M. Berk and his counsel Halperin Battaglia Raicht, LLP, began filing numerous adversary complaints with the United States Bankruptcy Court for the Eastern District of New York.  Each complaint seeks to recover certain transfers that were allegedly made by "one or more of the predecessors in interest" to the Liquidating Trustee and which are allegedly avoidable pursuant to certain sections of the Bankruptcy...

November 24, 2014
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NII Holdings, Inc. Files Plan Support Agreement Entered into with Certain Noteholders, Creditors' Committee

Breaking News Alerts from Chapter11Dockets.com


This afternoon, NII Holdings, Inc. filed an executed Plan Support Agreement (dated as of today, November 24, 2014) entered into amongst the following parties: (i) NII Holdings, Inc., NII Capital Corp., NII Funding Corp., NII Aviation, Inc., Nextel International (Services), Ltd., NII Global Holdings, Inc., NII International Holdings S.à r.l., NII International Services S.à r.l., NII International Telecom S.C.A. (“Luxco”), NII Mercosur, LLC, McCaw International (Brazil), LLC, Airfone Holdings, LLC, and Nextel International (Uruguay), LLC; (ii) entities managed by...

November 21, 2014
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Aereo Files for Bankruptcy Protection After Supreme Court Loss

Breaking News Alerts from Chapter11Dockets.com


Aereo, Inc. - the heavily-financed startup that was aiming to disrupt the television broadcasting industry until a recent setback dished out by the U.S. Supreme Court - voluntarily filed for chapter 11 bankruptcy protection on Thursday night in the United States Bankruptcy Court for the Southern District of New York.  The company, which is represented by William Baldiga and R. Benjamin Chapman of Brown Rudnick LLP, claimed assets of approximately $20.5 million and undisputed liabilities (primarily trade debt) of approximately $4.2 million...

November 19, 2014
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Exide Technologies Says Financial Projections Underlying Plan of Reorganization Filed Two Days Ago May No Longer Be Valid After Customer Loss

Breaking News Alerts from Chapter11Dockets.com


As was reported here yesterday, on Monday Exide Technologies filed a proposed Plan of Reorganization which, if confirmed by the Bankruptcy Court, would wipe out its existing equity.  On Tuesday, an ad hoc Committee of Equity Security Holders filed a “supplemental filing in support of the appointment of an official equity committee” which challenged Exide's valuation and argued that there is “a distributable value for equity security holders ranging between $440 million and $740 million.” Earlier today,...

November 19, 2014
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Judge Gross Sets Dec. 4 Hearing for Trump Entertainment Resorts to Show Cause Why Bankruptcy Case Shouldn't Be Converted to Chapter 7

Breaking News Alerts from Chapter11Dockets.com


This afternoon, Bankruptcy Judge Kevin Gross entered an Order to Show Cause and set a December 4, 2014 hearing for Trump Entertainment Resorts to demonstrate that its chapter 11 bankruptcy cases shouldn't be converted to chapter 7 liquidations.  The text of the order states the following: The Debtors are facing continuing loss to and/ or diminution of their estates and, although repeatedly promised, are continuing to operate without debtor-in-possession financing without which there is no...

November 18, 2014
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Ad Hoc Committee of Exide Technologies Equity Security Holders Files Valuation Analysis in Support of Appointment of Official Equity Committee the Day After Exide Files Proposed Plan of Reorganization Providing No Recovery for Equity Holders

Breaking News Alerts from Chapter11Dockets.com


Yesterday, Exide Technologies filed a proposed Plan of Reorganization, which is supported by a group of creditors who are parties to a Plan Support Agreement.  That Plan of Reorganization (a copy of which can be accessed by clicking here) provides that existing interests in Exide will be deemed automatically cancelled, released, and extinguished on the effective date of the Plan, if confirmed by the Bankruptcy Court. Update: Exide Technologies Says Financial Projections Underlying Plan of Reorganization Filed Two...

November 17, 2014
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DynaVox Inc. Files Amended Proposed Plan of Liquidation and Disclosure Statement

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On Monday, DynaVox Inc. and its affiliates filed their proposed First Amended Joint Plan of Liquidation with the Bankruptcy Court in Delaware.  DynaVox, which previously had its common stock trade on the NASDAQ following an April 2010 IPO, previously created communication and special education solutions to the speech language pathologist community, including augmentative and assistive communication (AAC) products.  The company's stock once traded for over $18 per share shortly after the initial public offering, but...

November 17, 2014
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Brown Rudnick LLP Files Amended Bankruptcy Rule 2019 Statement in Endeavour International Corporation Chapter 11 Cases

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On November 17th, Brown Rudnick LLP filed an amended verified statement pursuant to Bankruptcy Rule 2019 in the bankruptcy cases of Endeavour International Corporation and its affiliates.  The statement amends a verified statement filed on November 3, 2014.  Brown Rudnick represents Wilmington Savings Fund Society, FSB and an ad hoc consortium of unaffiliated holders of Endeavour's 6.5% Convertible Senior Notes due 2017 and 5.5% Convertible Senior Notes due 2016. The holdings of Brown Rudnick's clients as of...

November 17, 2014
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Endeavour Operating Corporation Files Proposed Plan of Reorganization & Disclosure Statement

Breaking News Alerts from Chapter11Dockets.com


Within the last ten minutes, Endeavour Operating Corporation filed a proposed Plan of Reorganization and accompanying Disclosure Statement with the Delaware Bankruptcy Court.  You can access a copy of the proposed Plan of Reorganization by clicking here and a copy of the proposed Disclosure Statement by clicking here. The proposed Plan of Reorganization follows Endeavour's entry into a Restructuring Support Agreement with certain prepetition creditors, including certain of the March 2018 Noteholders, certain of the June 2018 Noteholders, certain of...

November 14, 2014
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Creditors' Committee in Revel AC Bankruptcy Challenges Final Approval of Debtor-in-Possession Financing

Breaking News Alerts from Chapter11Dockets.com


On Friday afternoon, the Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Revel AC, Inc. and its affiliates filed a strongly-worded objection in which the Committee asks the New Jersey bankruptcy court to deny final approval of Revel's proposed debtor-in-possession (or DIP) financing facility.  In the objection, a copy of which can be viewed by clicking here, the Committee asserts that the DIP financing, if approved, "will eliminate the only sources...

October 30, 2014
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RADIO SHACK BANKRUPTCY WATCH IV: Enter Chief Revitalization Officer

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

As discussed here, here, and here, Radio Shack has progressed in a few months from a basket case months away from Code Blue to . . . a refinanced basket case under the control of certain aggressive and smart major shareholders who have doubled down on their prior investments.  At the least, with the new cash the lapsing of the company into Code Blue condition has been pushed back in time.  Having asserted their intention...

October 10, 2014
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RADIO SHACK BANKRUPTCY WATCH III: Shareholders Refinance the Company (or Else Bankruptcy!) – A Mere Delay in the Inevitable?

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

Large shareholders of Radio Shack have worked a financial restructuring deal that includes their contribution of $120 million into the company in exchange for preferred shares that can be converted into common shares, and a later rights offering which, with the other steps could result in these shareholders holding up to 80% of Radio Shack common stock plus control of the company’s board of directors.  The company gains liquidity through the holiday shopping season, breathing...

September 25, 2014
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RADIO SHACK BANKRUPTCY WATCH II: From Crystal Palace to Near Shore of Chapter 11

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

In 2001, about when Radio Shack spent more than $20 million to acquire the land (and public housing complex to tear down) upon which it built a fancy headquarters in Fort Worth, an AlixPartners managing director told the editor-in-chief of this site (not referring to Radio Shack) that the building of a “crystal palace” was a strong sign of a to-be-failing company.  Such a move betrays a lack of respect for cash flow.  By the...

September 17, 2014
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RADIO SHACK BANKRUPTCY WATCH I: The Broad Brush

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

Radio Shack was a hot commodity in the 1980s: localized, convenient storefronts, respected electronic merchandise in a solid niche.  In Treehouse of Horror II (1991), after Frankensteinian efforts succeeded in resuscitating Homer, Mr. Burns could gloat: ““Look, Smithers, a twitch!  It’s moving, it’s alive!  Oh, that fellow at Radio Shack said I was mad!  Well, who’s mad now?!”  In 2014, Radio Shack needs the zapping. The emergence of internet commerce and consumer comfort with transacting...

September 11, 2014
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Foreign Buyers of US Assets in Section 363 Sale: National Security Regulatory Review

Christopher M. Cahill
Lowis & Gellen LLP
Chicago, Illinois
312 628 7193
ccahill@lowis-gellen.com


Foreign entities are not barred by the Bankruptcy Code from purchasing assets in section 363 sales in bankruptcy cases.  Usually, the debtor’s estate and creditors welcome anyone who may bid up the sale price and raise the return to the estate and creditors from the auction sale.  For the foreign purchaser, buying assets out of a bankruptcy sale under section 363(c) promises, among other things, a rapid process, assets at a good price, and the...

August 14, 2014
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RECOMMENDED READING: Where Bankruptcy Cases Can Proceed is Shaped by the Type of Reorganization and New Technologies for Case Management

From the Editorial Staff of Commercial Bankruptcy Investor


Why do large and complex bankruptcy cases get filed mainly in Delaware and New York City?  For a valuable perspective on that question, the Editorial Staff of Commercial Bankruptcy Investor recommends Christopher A. Ward, “Venue: Energy Future’s Take on the Controversial Topic,” which is published on the Morris Anderson website.  Ward reviews a recent decision by the U.S. Bankruptcy Court of the District of Delaware which rejected an attempt by an indenture trustee for certain noteholders...

July 30, 2014
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Section 363 Sale: Free and Clear of Claims That Are Backed By Strong Public Policies (Including Protecting Union Pensions)

The Editorial Staff of Commercial Bankruptcy investor


Bankruptcy sales of assets under section 363(f) can bring more cash into the estate in part because the purchaser takes the assets “free and clear” of the liabilities of the debtor-seller.  The recent Ormet[i] case illustrates that the “free and clear” quality of assets in the hands of the purchaser after a section 363 sale trump even claims against the seller that are supported by very strong Congressional policies. Ormet Corporation and related companies produced...

July 15, 2014
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RECOMMENDED READING: How Fisker and Free Lance Star-Publishing Did Not Alter Credit-Bidding

From the Editorial Staff of Commercial Bankruptcy Investor


The Editorial Staff of Commercial Bankruptcy Investor recently reviewed the seemingly earth-shaking Fisker and Free Lance Star-Publishing orders limiting credit bidding rights. The Editorial Staff concluded that much of the angst is misplaced and that credit bidders should try to be the least bit cool in credit bidding, in particular to avoid inequitable behavior in pressuring for quick sales to them in bankruptcy and to avoid credit bidding with problematic lien coverage of the property...

July 7, 2014
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Try to Be the Least Bit Cool: Credit-Bidding After Fisker and Free Lance Star-Publishing

From the Editorial Staff of Commercial Bankruptcy Investor


Holders of secured debt now have two cases to make them nervous as to whether they got all they paid for with respect to their right to credit bid at a sale of the collateral in a section 363 sale in bankruptcy.  It may appear that both courts chopped back credit bidding rights solely to encourage cash bids.  It turns out that verbiage used in the two orders is more alarming than the actual bases...

June 10, 2014
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RECOMMENDED READING: PACA Claims in Bankruptcy

From the Editorial Staff of Commercial Bankruptcy Investor


Certain suppliers of agricultural goods get paid ahead of secured party, both inside bankruptcy and outside bankruptcy. The suppliers benefit from a federal statutory trust imposed to protect them from nonpayment. The goods involved are “fresh fruit and fresh vegetables of every kind and character” – and regulations set the limits on what qualifies. Suppliers must meet some procedural requirements. For a great primer on this subject, see: Sean M. Monahan & Dallas N. Cruz, “PACA...

June 4, 2014
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Not Necessarily Free and Clear I: Purchasing Real Property in a Section 363 Sale

From the Editorial Staff of Commercial Bankruptcy Investor


Lou is considering purchasing commercial real property from a company in bankruptcy. Lou is skeptical that, as he has heard, a section 363(b) sale “cleans” the assets of all liens, claims, and encumbrances. Lou’s skepticism is well-founded. The Golf Course Case. Golf course land was sold via a section 363 sale, and the sale was authorized by the bankruptcy court in a sale order that provided that the sale was “free and clear of all...

May 28, 2014
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KUNEY’S CORNER Cramming Down a Chapter 11 Plan by Giving Secured Creditor Substitute Collateral

  • George W. Kuney
  • University of Tennessee College of Law
  • Knoxville, Tennessee
  • (865) 974-2500
  • gkuney@utk.edu

Can a chapter 11 debtor confirm a plan that gives a hostile secured creditor a lien on an orange as a substitute, in essence, for the secured creditor’s lien on an apple that the debtor wants to keep and use?[i]  Yes, if the value of the new lien meets the test of “indubitable equivalence” with the value of the original lien.  Assume that the land-rich but cash-poor chapter 11 Debtor has one secured creditor, the...

May 7, 2014
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Meridian Sunrise Village: Highlighting Some Risks for Loan-to-Own

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

You are a PE Fund manager.  Your Fund employs loan-to-own strategies to effect take-overs of target companies.  You are accustomed to exerting powerful leverage in chapter 11 cases, particularly when you buy enough claims to confirm a plan, or else to block confirmation of a plan by other parties. For a plan to be approved consensually, each class of claims or interests must approve it.  Approval by a class of claims requires a “yes” vote...

March 25, 2014
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90 Second Lesson: Secured Creditors and Toll Charges

From the Editorial Staff of Commercial Bankruptcy Investor


Editors’ Note:  this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to cc@dailydac.com and we will try to answer it.    QUESTION:  An investment banker recently wrote in, saying this:  “I am currently helping a troubled company sell itself.  The proposed buyer wants to buy its assets through a 363 sale in Chapter 11 and is offering to pay the full amount the bank...

March 4, 2014
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90 Second Lesson: To Stalk or Not to Stalk?

From the Editorial Staff of Commercial Bankruptcy Investor


Editors’ Note:  this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to cc@dailydac.com and we will try to answer it.  QUESTION:  Jamie S. emailed recently, asking “[c]an you please sum up the pros and cons of serving as the “stalking horse” in a bankruptcy sale? ANSWER:  Yes, Jamie, we can.  A stalking horse bidder plays an important role in many bankruptcy acquisitions, and one...

February 19, 2014
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Bid Now or Forever Hold Your Peace: Challenging the Results of a Section 363 Sale in Bankruptcy (In re New Energy Corp.)

  • Jonathan T. Brand
  • Lakelaw
  • Chicago, Illinois
  • (312) 360-1505
  • jbrand@lakelaw.com
  • www.lakelaw.com

You would like to purchase wind turbines in a lease-to-own scenario, that is, you would like to take possession of certain items and pay for the purchase or ownership over time or in a lump-sum at some point in the future.  You prefer this mode to an outright cash purchase because of your other cash needs.  Opportunity strikes! Wind Turbine, LLC has filed chapter 11 and intends to settle up with its secured creditors by...

February 6, 2014
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The Fisker Case: My Credit Bid is Capped at the Amount I Paid for the Debt?

  • Jonathan T. Brand
  • Lakelaw
  • Chicago, Illinois
  • (312) 360-1505
  • jbrand@lakelaw.com

One way to purchase assets (including the assets of a business as a going concern) is to prevail at a foreclosure sale or a § 363 bankruptcy auction with a credit bid.  The first step is to acquire the senior secured debt on the assets at a steep discount.  The next step is to outbid cash bidders with a credit bid up to the face value of the debt.  Last year, the US Supreme Court...

January 23, 2014
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How Unsecured Creditors Push Ahead of Lenders Who in Fact Invested, Part III – Equitable Subordination vs. Recharacterization

 

  • Lawrence V. Gelber
  • James T. Bentley
  • Schulte Roth & Zabel LLP
  • New York, New York
  • (212) 756-2000
  • lawrence.gelber@srz.com
  • james.bentley@srz.com

In part one of our series on recharacterization, we discussed the elements of judicial recharacterization of loans as equity interests.[i]  In part two of the series, we considered how debtors can "claw back" putative "loans" that they may have repaid years earlier because the “loans” were in fact equity investments and their repayment was invalid.[ii]  In this finale of the series, we contrast recharacterization with equitable subordination, which is another means by which some creditors...

January 6, 2014
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Update To “Tempted to Sell Your Bankruptcy Claim?”

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 628-7193
  • ccahill@lowis-gellen.com

A prior article published on this site[i] by the author of this Update presented a scenario wherein a company sold goods or services and received, instead of payment, a notice that its counterparty had filed for chapter 7 or chapter 11 bankruptcy protection. The company sold its “claim” against the “debtor” (in bankruptcy parlance), but was later bedeviled by a preference lawsuit in the bankruptcy case and by efforts by the claims purchaser to claw...

October 28, 2013
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How Unsecured Creditors Push Ahead of Lenders Who in Fact Invested, Part II - Clawback of "Loan Repayments"

 

  • Lawrence V. Gelber
  • James T. Bentley
  • Schulte Roth & Zabel LLP
  • New York, New York
  • (212) 756-2000
  • lawrence.gelber@srz.com
  • james.bentley@srz.com

In our last article[i], we discussed the judicial recharacterization of loans as equity interests.  As we described, a court will recharacterize a lender's debt claim as equity if it determines the "loan" actually was intended to be, and was treated by the parties as, an equity investment.  Recharacterization is a powerful tool for creditors and trustees because, under the Bankruptcy Code's priority scheme, debt claims (and all general unsecured claims) must be repaid in full...

October 3, 2013
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How Unsecured Creditors Push Ahead of Lenders Who in Fact Invested, Part I – What is Recharacterization?

 

  • Lawrence V. Gelber
  • James T. Bentley
  • Schulte Roth & Zabel LLP
  • New York, New York
  • (212) 756-5000
  • lawrence.gelber@srz.com
  • james.bentley@srz.com

When I see a bird that walks like a duck and swims like a duck and quacks like a duck, I call that bird a duck. -James Whitcomb Riley In bankruptcy, a debt claim has a higher priority than an equity interest (or share) in the debtor company, and should be (and ordinarily is) paid in full before equityholders receive any distribution from the debtor.  Better, then, to acquire or hold a debt claim --...

August 15, 2013
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Bankruptcy Claims as a Cash Investment

 

  • Lawrence V. Gelber
  • Erik Schneider
  • Schulte Roth & Zabel LLP
  • New York, New York
  • (212) 756-2000
  • lawrence.gelber@srz.com
  • erik.schneider@srz.com

Investing in bankruptcy claims (i.e., claims of creditors against bankruptcy debtors) can be very profitable or can result in a significant, or even total, loss.  Bankruptcy claims are classified in chapter 11 plans of reorganization according to their relative rights against the debtor.  The recovery of a given class of claims will depend on the aggregate value of the debtor’s assets remaining after distributions have been made to more senior classes in accordance with the...

July 2, 2013
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File Early and Often: Filing and Amending Claims in a Bankruptcy Case

  • Michael D. Schwarzmann
  • David Gottlieb
  • Crowe Horwath LLP
  • Los Angeles, California
  • (818) 501-5200
  • michael.schwarzmann@crowehorwath.com
  • david.gottlieb@crowehorwath.com

Bankruptcy claims do more than simply determine the amount of money a creditor is owed or can receive as a distribution. Claims also can generate clout, and clout enables a creditor to sit on a creditor committee, have more leverage in negotiations, and claim a higher-priority right to payment – that is, to skip ahead in the bankruptcy claims’ distribution line. In Chapter 11 cases, the creditors with the largest claims against the debtor are...

June 9, 2013
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Buying Operating Assets from an Insolvent Seller: a Practical Guide to Assessing Legal Risk

  • Jonathan Friedland
  • Sugar Felsenthal Grais & Hammer, LLP
  • Chicago, Illinois
  • (312) 704-2770
  • jfriedland@sugarfgh.com

 “One man's rubbish is another man's treasure.” -William & Robert Chambers Journal of popular literature, science and arts (1879)  "A little learning is a dangerous thing" -Alexander Pope, An Essay on Criticism (1709)  Buying a business from a financially distressed seller can present a fantastic opportunity to buy low.  Before doing so, however, any buyer must take into account a host of considerations.  These include, but aren’t limited to, operational, competitive, integration, and legal issues....

May 29, 2013
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Location Location Location - Where to File Bankruptcy

  • Lawrence V. Gelber
  • Erik Schneider
  • Schulte Roth & Zabel LLP
  • New York, New York
  • (212) 756-2000
  • Lawrence.gelber@srz.com
  • Erik.schneider@srz.com
 

Why file a bankruptcy case here instead of there? An entity, and moreso a group of entities, may be legally permitted to file for bankruptcy in any one of a number of judicial districts – also referred to as venues. A prospective debtor should carefully consider where to file its bankruptcy petition. Courts in different venues do not uniformly interpret all provisions of the Bankruptcy Code and its procedural rules. Different legal standards exist most...

May 24, 2013
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Assessing Potential Return -- When the PBGC Files a [Huge] Claim in a Bankruptcy Case

  • Mina Amir-Mokri
  • Barnes & Thornburg LLP
  • Chicago, Illinois
  • (312) 214-4804
  • Mina.Amir-Mokri@btlaw.com

What should interested parties in a bankruptcy case monitor when the Pension Benefit Guaranty Corporation (PBGC) files a claim in the case as an unsecured creditor? When a company that has filed a petition in bankruptcy sponsors the type of pension plan insured by the PBGC, it is more likely than not that the pension plan is not adequately funded to provide all required benefits upon termination of the plan. As a result, the PBGC...

May 24, 2013
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Tempted to Sell Your Bankruptcy Claim?

  • Christopher M. Cahill
  • Lowis & Gellen LLP
  • Chicago, Illinois
  • (312) 364-2500
  • ccahill@lowis-gellen.com

You sold services and received, instead of payment, a notice that your counterparty has filed for chapter 7 or chapter 11 bankruptcy protection. You understand that you have a “claim” against the “debtor,” in bankruptcy parlance. A claims purchaser offers to purchase your claim from you for cash. You accept. You metaphorically light a cigar for cash collected and troubles avoided. Sixteen months or so later, the debtor (or its successor under a chapter 11...

April 24, 2013
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Dear Debtor: I Thought I Was Your Priority?

  • Patrick C. Maxcy
  • Dentons
  • Chicago, Illinois
  • (312) 876-2810
  • patrick.maxcy@Dentons.com

If you are a vendor, service provider or other unsecured creditor to a chapter 11 debtor, you cannot be blamed for feeling like a duped lover after learning about the bankruptcy of your once devoted business companion. Despite the promises that "I’ll stand by you if you stand by me," all those outstanding invoices won’t be paid after all. If it helps soothe the pain (and of course it won’t), it's not just you. The...



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