March 2, 2010
Bankruptcy Judge Burton Lifland sided with trustee Irving Picard's 'money-in, money-out' formula to determine the claims for thousands of people swindled by Bernard Madoff, Reuters reported yesterday. Picard, who is overseeing the liquidation of the now defunct Bernard L. Madoff Investment Securities LLC, says investors' claims should be based on how much money they put into the firm minus how much they took out over the years. Many Madoff investors challenged him in court, arguing that their claims ought to be determined by the amounts in their accounts as of Nov. 30, 2008 -- two weeks before Madoff's arrest for orchestrating Wall Street's biggest investment fraud of up to $65 billion.'Equity is achieved in this case by employing the trustee's method, which looks solely to deposits and withdrawals that in reality occurred,' Judge Lifland wrote in his ruling. 'To the extent possible, principal will rightly be returned to Net Losers rather than unjustly rewarded to Net Winners under the guise of profits.' Madoff investors have previously said that they would appeal any decision made in favor of applying Picard's method. Read more.
Click here to read Judge Lifland's ruling.
Accuride Emerges from Chapter 11
Fueled by a prenegotiated restructuring deal that has sliced a chunk of debt from its balance sheet, Accuride Corp. has emerged from chapter 11 protection, the Deal Pipeline reported yesterday. Under the plan, which was confirmed on Feb. 18 by Bankruptcy Judge Brendan Linehan Shannon, holders of $291.22 million in subordinated notes are swapping their securities for 98 million shares of new common stock. Stockholders are getting 2 million shares as well as warrants to purchase roughly 22.06 million shares of additional common stock if they voted in favor of the plan, filings show. The stock going to noteholders and equity holders is subject to dilution from 7.5% convertible notes Accuride is issuing under a $140 million rights offering. The new senior unsecured notes can be converted into as much as 187.5 million shares of Accuride's common stock, court papers said. Read more. (Subscription required.)
Key senators were close to a deal on legislation to overhaul financial regulations as they near a breakthrough agreement to create a new consumer-protection division within the Federal Reserve, the Wall Street Journal reported today. Sens. Christopher Dodd (D-Conn.) and Bob Corker (R-Tenn.) were conferring with other members of their parties last night as they also reached a deal that would let the federal government break up large, failing financial companies. Agreements on these details are expected to shape a bill that Dodd plans to introduce in the Senate. President Obama has called for the creation of an independent Consumer Financial Protection Agency, which would write and enforce rules for any financial product, from mortgages to credit cards to payday loans. Many Republicans criticized that idea, saying that it would freeze up access to credit and create an unwieldy bureaucracy. Read more. (Subscription required.)
Equifax Inc. reported yesterday that more than 8 percent of homeowners were behind 30 days or more on their mortgage loans, up 4.4 percent from December 2009 and 21 percent from last January, Reuters reported yesterday. In January, one in every 409 U.S. housing units received a foreclosure filing, up 15 percent from the year-earlier month, according to RealtyTrac, based in Irvine, California. 'There is a large segment of homes that are going to enter foreclosure in the next 3 to 6 months, which then puts more pressure on home prices' by adding to supply, according to Equifax. Read more.
Orleans Homebuilders Inc., a housing developer operating mainly in the eastern United States, filed for chapter 11 protection yesterday after defaulting on a credit facility last month, Reuters reported yesterday. Orleans said it had $440 million of assets and $498.8 million of liabilities as of Dec. 31. Orleans CEO Jeffrey Orleans said that the company planned to seek a buyer through a negotiated sale, reorganization plan, or court-supervised auction. The company plans to continue normal operations while in bankruptcy. The case is In re Orleans Homebuilders Inc., U.S. Bankruptcy Court, District of Delaware, No. 10-10684. Read more.
Union Seeks to Restore Health Benefits for Visteon Retirees
The union representing 2,100 Visteon Corp. retirees and their dependents has asked a bankruptcy court to temporarily restore their medical insurance while they appeal a decision stripping them of benefits earned 'over a lifetime of service' to the auto-parts maker, Dow Jones Daily Bankruptcy Review reported today. Visteon, which reported a fourth-quarter profit amid improved industry conditions, cut off medical and insurance benefits to retired U.S. workers last year. Lawyers for the retirees say that the retirees 'contributed a substantial part of the costs' of the medical benefits by trading away wage increases in years of contract negotiations. After shaking off retiree health benefits, Visteon announced it also needs to jettison its pension obligations if it is to survive after it emerges from bankruptcy protection.
The union representing 2,100 Visteon Corp. retirees and their dependents has asked a bankruptcy court to temporarily restore their medical insurance while they appeal a decision stripping them of benefits earned 'over a lifetime of service' to the auto-parts maker, Dow Jones Daily Bankruptcy Review reported today. Visteon, which reported a fourth-quarter profit amid improved industry conditions, cut off medical and insurance benefits to retired U.S. workers last year. Lawyers for the retirees say that the retirees 'contributed a substantial part of the costs' of the medical benefits by trading away wage increases in years of contract negotiations. After shaking off retiree health benefits, Visteon announced it also needs to jettison its pension obligations if it is to survive after it emerges from bankruptcy protection.
Radio-station operator Regent Communications yesterday filed for chapter 11 protection, the Associated Press reported yesterday. The company said that it has reached a restructuring agreement with holders of more than 75 percent of its secured debt. The deal would reduce long-term indebtedness by about $87 million and provide full recovery for holders of unsecured claims. Regent Communications Inc. has about 800 employees and owns 50 AM and 12 FM stations in nine states. The company listed assets of about $166 million and total debt of about $211 million. Read more.
Influential Creditor Floats Plan to Restructure General Growth
The largest unsecured creditor of General Growth Properties Inc. says that he'd prefer to convert his holdings to new General Growth stock at a certain price instead of accepting the current offers to acquire or recapitalize the mall owner, Dow Jones Daily Bankruptcy Review reported. Fund manager Bruce Berkowitz's Fairholme Capital Management bought $2 billion of General Growth's $7 billion of unsecured debt in the past year at distressed prices. That makes Fairholme, a value investor that manages $14.7 billion of funds, a kingmaker of sorts in the takeover battle for General Growth, which owns more than 200 U.S. malls and is seeking to exit bankruptcy this year. Berkowitz said yesterday that he is 'not interested' in either of the bids currently on the table for General Growth. Rival mall owner Simon Property Group Inc. offered earlier this month to pay $10 billion to buy General Growth in its entirety. Last week, Brookfield Asset Management Inc., with General Growth's endorsement, unveiled an offer to provide $2.6 billion in exchange for an ownership stakes in two General Growth entities that would result from a proposed split of the company. Rather, Berkowitz said that he would prefer to convert his General Growth debt into new stock at a price of $8 per share - well below the stock's current trading price. He said he would then invest another $500 million to buy additional stock at that price.
The largest unsecured creditor of General Growth Properties Inc. says that he'd prefer to convert his holdings to new General Growth stock at a certain price instead of accepting the current offers to acquire or recapitalize the mall owner, Dow Jones Daily Bankruptcy Review reported. Fund manager Bruce Berkowitz's Fairholme Capital Management bought $2 billion of General Growth's $7 billion of unsecured debt in the past year at distressed prices. That makes Fairholme, a value investor that manages $14.7 billion of funds, a kingmaker of sorts in the takeover battle for General Growth, which owns more than 200 U.S. malls and is seeking to exit bankruptcy this year. Berkowitz said yesterday that he is 'not interested' in either of the bids currently on the table for General Growth. Rival mall owner Simon Property Group Inc. offered earlier this month to pay $10 billion to buy General Growth in its entirety. Last week, Brookfield Asset Management Inc., with General Growth's endorsement, unveiled an offer to provide $2.6 billion in exchange for an ownership stakes in two General Growth entities that would result from a proposed split of the company. Rather, Berkowitz said that he would prefer to convert his General Growth debt into new stock at a price of $8 per share - well below the stock's current trading price. He said he would then invest another $500 million to buy additional stock at that price.
US Fidelis, Inc. announced yesterday that it filed for chapter 11 protection, the St. Louis Globe-Democrat reported today. US Fidelis was at one time the nation?s largest marketer of vehicle service contracts, but suspended all sales and marketing activity in December 2009. US Fidelis said that it will continue to help customers with their existing vehicle service contracts while the bankruptcy process moves forward. The company also announced that it will have a chief restructuring officer, Scott Eisenberg of Amherst Partners, LLC, to lead the company during its efforts to reorganize in chapter 11. Read more.
Golf Resort Files for Chapter 11
The owners of Florida?s Sawgrass Marriott Resort & Cabana Club, the site of the U.S. PGA Tour?s Tournament Players Championship, sought bankruptcy protection from creditors yesterday, Bloomberg News reported yesterday. RQB Resort LP listed assets and debt of as much as $500 million each in chapter 11 documents filed yesterday. The resort is the home of the TPC Sawgrass golf club where Tiger Woods apologized on Feb. 19 for his marital infidelity. The 508-room hotel resort has rights to 85 percent of starting times each day to the Players Stadium Course through 2089. TPC Sawgrass, which didn?t file for bankruptcy, is the headquarters of the U.S. PGA Tour. The case is In re RQB Resort LP, 10-01596, U.S. Bankruptcy Court, Middle District of Florida (Jacksonville). Read more.
CIT Loses $900 in the Fourth Quarter as It Exits Bankruptcy
CIT Group Inc., the large U.S. commercial lender that filed for bankruptcy in November and emerged the following month, said yesterday it lost about $900 million in the fourth quarter and $4 billion in all of 2009, Reuters reported yesterday. The New York-based company said that the losses exclude the impact of the reorganization and accounting adjustments. It said the full-year results reflect a $692 million charge for goodwill and asset writedowns, an increased reserve for credit losses, and higher professional fees. The $4 billion loss should be 'essentially offset' by the impact of the reorganization, mainly because it reduced debt, as well as accounting adjustments, CIT said. Read more.
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