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December 31,
2009
Icahn, Beal File Rival
Reorganization Plan for Trump Entertainment
Carl Icahn and Beal Bank have unveiled the
reorganization plan they hope will prove to be the winning restructuring
deal for thrice-bankrupt Trump Entertainment Resorts Inc. (TER), the
Deal’s Daily Pipeline reported
yesterday. Two weeks after the billionaire's Icahn Partners LP and
certain affiliates acquired 51 percent of the first-lien debt owed by
TER to Beal Bank, Icahn and the institution on Dec. 29 filed their
reorganization plan for the Atlantic City casino empire with the U.S.
Bankruptcy Court for the District of New Jersey in Camden. Under the
proposal, an Icahn affiliate would provide TER with a short-term $45
million debtor-in-possession loan upon plan confirmation 'so that [TER]
can be stabilized.' That DIP loan would then be converted into equity
should the plan take effect, unless a successful rights offering is
carried out.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005371394'>Read
more. (Subscription required.)
Commentary: Now Stabilized,
the U.S. Financial System Must Reform Itself
While big banks recovered their footing this year
thanks to immense government assistance, it is now time for the industry
itself to guard against another meltdown, according to an editorial in
today’s Washington Post. Contrary to
many a dire forecast in the first quarter of 2009, Bank of America,
Citigroup and the rest pulled through in 2009. By year's end, in fact,
Treasury Secretary Timothy F. Geithner's plan for a 'public-private
partnership' to dispose of the banks' toxic assets has proved mostly
unnecessary because private investors stepped up without it. Geithner
recently testified to Congress that the 19 largest U.S. banks have
raised more than $110 billion in common equity and other regulatory
capital since he announced the results of a government 'stress test' in
May. Indiscriminate government backing undermines the market discipline,
without which financial institutions cannot efficiently allocate
capital. It can breed excessive risk-taking and endless bailouts. Yet to
the extent the banks have survived this year at lower-than-expected
cost, it is in large part because the market concluded that the
government would stand behind them, pretty much no matter what. This
might be defensible as an emergency policy, according to the editorial,
but it is no substitute for permanent industry reforms.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/12/30/AR2009123002523_pf.html'>Read
more.
Chrysler Dealerships
Continue to Fight Closings
As many of the 789 dealers terminated during
Chrysler's bankruptcy restructuring have cried foul, industry experts
and even a former executive question whether the company blundered by
dropping so many dealers and giving them just over three weeks to wind
down operations, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Chrysler had been trying to consolidate its
dealerships for years by encouraging mergers and acquisitions of
neighboring franchises. But 'instead of letting natural order take its
course, they tried to get it through in 30 days,' said Jim Press, who
served as Chrysler's president and vice chairman. Chrysler has stood by
its reduction plan even in light of recent federal legislation that
allows rejected dealers to pursue third-party arbitration, with the
possibility of being reinstated. Days before Christmas, Chrysler Chief
Executive Sergio Marchionne said that reinstating dealerships could
'cause havoc within Chrysler,' adding that the company may challenge
Congress's decision in court.
href='http://online.wsj.com/article/SB10001424052748704152804574628293363885148.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
Rules Clarifying Cost of
Mortgages Effective Tomorrow
Federal rules take effect tomorrow that require
mortgage lenders and brokers to give consumers better estimates of the
barrage of costs they incur when taking out home loans, the
face='Times New Roman'>Wall
Street Journal reported today. The new rules
mandate a standard three-page Good Faith Estimate that urges consumers
to shop around for the best loan and helps them compare lenders'
offerings. The rules, announced by the Department of Housing and Urban
Development in November 2008, are an update of the Real Estate
Settlement Procedures Act, a 1974 law known as RESPA. Under the new
rules, lenders and mortgage brokers will be required to give consumers
the estimate forms within three days of receiving a loan application.
Lenders aren't allowed to increase the origination fee from the
estimate. Some other charges not included in the origination fee, such
as title services and recording charges, can increase by as much as a
combined 10 percent from the estimate. Estimates for other charges, such
as homeowner's insurance and other services provided by third parties
selected by the borrower, aren't subject to such limits.
href='http://online.wsj.com/article/SB126222090787511123.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
$30 Million at Bankruptcy Sale
A 44-million-gallon ethanol plant in south-central
Nebraska attracted more than $30 million in a bankruptcy auction, the
Associated Press reported yesterday. Court documents say Nebraska Corn
Processing LLC bought the Mid-America Agri Products plant. While the
sale still needs approval by a bankruptcy judge, no objections to the
sale were filed by the sale deadline. Mid-America Agri Products filed
for chapter 11 protection last summer, several months after closing the
plant near Cambridge, Neb. The company cited unfavorable economic
conditions in the ethanol industry. It listed $80 million in assets, $66
href='http://www.nytimes.com/aponline/2009/12/30/business/AP-US-Ethanol-Auction-Nebraska.html?_r=1&pagewanted=print'>Read
more.
Struggling Trucking Company
Completes Debt Swap Deal
YRC Worldwide Inc., one of the nation's largest
trucking companies, said that it has successfully completed a debt
exchange with its bondholders, helping to avert a bankruptcy filing, the
Associated Press reported today. The Overland Park, Kan.-based company
said that $470 million of its outstanding debt was tendered by holders,
which it will exchange with 37 million common shares and about 4.3
million convertible shares. The company had warned earlier this month
that it needed access to a $106 million standby credit line and
permission from its lenders to delay a $19 million payment in order to
avoid bankruptcy.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/12/31/AR2009123100771.html'>Read
more.
Chicken Restaurant Chain
Files for Chapter 11
Brown's Chicken & Pasta Inc. filed for chapter 11
protection on Tuesday, nearly two months after a DuPage County (Ill.)
judge ordered the company to pay more than $800,000 to a former vice
president and minority shareholder who'd filed a wrongful termination
lawsuit, the Associated Press reported yesterday. In its bankrutcy
petition, the Elmhurst, Ill.-based company said that while it had assets
between $100,000 and $500,000, it also had 50 to 99 creditors and
liabilities of as much as $10 million. The filing is the latest in a
series of setbacks for Brown's. Once boasting as many as 150 stores,
Brown's has seen that number dwindle to about three dozen since seven
employees at one of its restaurants in Palatine, Ill., were
murdered in 1993. The story was front-page news around the country
for days and in the Chicago area for months. It also continued to make
headlines for years, with stories about the hunt for suspects, the
arrest of two men years later and their convictions on murder charges,
the first years ago and the second two months ago.
href='http://www.chicagotribune.com/news/chi-ap-il-brownschicken-ba,0,5520366,print.story'>Read
more.
Ocean Casino Cruises Files
for Chapter 7
Ocean Casino Cruises, Inc., a Florida cruise line with
more than a million passengers since 2001, has filed for chapter 7, the
United Press International reported yesterday. Court papers say that the
company has assets worth between $1 million and $10 million and debts of
between $500 million and $100 million. The filing said that creditors
were unlikely to receive any funds, but an ad hoc group of 20 creditors
said the bankruptcy filing 'appears intended to benefit Fortress
(Investment Group),' which is the main creditor involved with the
company.
href='http://www.upi.com/Business_News/2009/12/30/Ocean-Casino-Cruises-files-for-Chapter-7/UPI-31851262200339/'>Read
more.
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