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April 27, 2010

Mortgage Deals Under Scrutiny as Goldman Faces
Senators

The legal storm buffeting Goldman Sachs continued to rage just ahead
of what is expected to be a contentious Senate hearing today at which
bank executives plan to defend their actions during the housing crisis,
the New York Times reported today. Senate investigators yesterday
claimed that Goldman Sachs had devised not one but a series of complex
deals to profit from the collapse of the home mortgage market. The
claims suggested for the first time that the inquiries into Goldman were
stretching beyond the sole mortgage deal singled out by the Securities
and Exchange Commission. The SEC has accused Goldman of defrauding
investors in that single transaction, Abacus 2007-AC1, have thrust the
bank into a legal whirlwind. The stage for today's hearing was set with
the release of new documents from the panel, the Permanent Senate
Subcommittee on Investigations.
href='http://www.nytimes.com/2010/04/27/business/27goldman.html?hp=&pagewanted=print'>Read
more.

href='http://hsgac.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=f07ef2bf-914c-494c-aa66-27129f8e6282'>Click
here for more information on today's hearing.

Walking Co. Receives Confirmation of
Chapter 11 Plan

Bankruptcy Judge Robin L. Riblet signed an order yesterday
confirming Walking Co.'s reorganization plan, the Deal Pipeline
reported yesterday. Under the second amended plan, filed March 19,
administrative claims will be paid in full in cash on the plan's
effective date. Priority tax claims will also be paid in full but
through semi-annual cash payments, with the first one due 30 days after
the plan's effective date. Pre-petition and debtor-in-possession lender
Wells Fargo Retail Finance LLC had its $25 million in prepetition debt
rolled into a $30 million DIP loan. Wells Fargo will now roll its DIP
loan into a $30 million exit loan. The exit loan will mature four years
from the plan's effective date.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005419191'>Read
more. (Subscription required.)

Republicans Block Debate on Financial
Oversight Bill

Senate Republicans, united in opposition to the Democrats?
legislation to tighten regulation of the financial system, voted
yesterday to block the bill from reaching the floor for debate, the
New York Times reported today. Republicans said that they were
intent on winning substantive changes to the bill and accused the
Democrats of rushing the most far-reaching overhaul of the financial
regulatory system since the Great Depression. Both sides say they expect
the overhaul eventually will be approved. Democratic leaders said that
they would keep the regulatory bill on the floor - and delay the
rest of their busy legislative agenda - to ratchet up the pressure
on the Republicans.
href='http://www.nytimes.com/2010/04/27/business/27regulate.html?ref=business&pagewanted=print'>Read
more.

Shareholders Amend Lehman Suit to Include
Examiners Claims

A group of shareholders suing Lehman Brothers Holdings Inc.'s former
top executives and directors have amended a lawsuit over the company's
collapse into bankruptcy to include allegations the company failed to
disclose transactions that masked its true financial picture, Dow Jones
Daily Bankruptcy Review reported today. The third amended
complaint filed on Friday incorporates claims by the court-appointed
bankruptcy examiner for Lehman that the company engaged in balance sheet
manipulation and used transactions that allegedly helped hide the true
extent of its use of leverage. In part, the lawsuit claims bond and
stock offerings by the company between 2007 and 2008 failed to disclose
'Repo 105' and other transactions that allegedly temporarily removed
billions of dollars from its balance sheet at the end of financial
reporting periods. The lawsuit also claims that Lehman, while publicly
promoting its risk management, regularly exceeded or disregarded its
risk limits and failed to disclose that the Repo 105 transactions 'had
the effect of materially understating Lehman's liquidity risk.'

Judge Allows Three Bidders for Philadelphia
Newspapers

Bankruptcy Judge Stephen Raslavich said yesterday that all
three bids submitted for Philadelphia Newspapers LLC were qualified to
be included in today?s auction for the distressed company that owns
them, the New York Times reported today. The auction will be held
at 11 a.m. in the New York offices of Proskauer Rose, a law firm that
represents the newspaper company. In each round bidders will get a
chance to increase their offer until no more raises are made. The
company entered bankruptcy in February 2009 after struggling to make
ends meet under declining revenues and large debt payments.
title='Read more.'
href='http://www.nytimes.com/2010/04/27/business/media/27paper.html?src=busln&pagewanted=print'>Read
more.

General Growth Bankruptcy Exit Plan Hearing
Delayed

U.S. mall owner General Growth Properties Inc. said yesterday that a
bankruptcy court hearing scheduled for Thursday has been rescheduled to
next week, giving the company more time to talk to potential investors,
including larger rival Simon Property Group Inc., Reuters reported. The
hearing on the bidding procedures scheduled for Thursday has been
adjourned until May 4, the company said. Thursday's hearing was to focus
on a proposal for Brookfield Asset Management Inc., Fairholme Capital
Management and Pershing Square Capital to contribute $6.55 billion to
General Growth's plan to emerge as a stand-alone company. That proposal,
which would serve as an opening bid for other potential investors or
buyers to top, includes warrants that could add anywhere from $500
million to nearly $900 million, according to court documents. 
id='zu1l' title='Read more.'
href='http://www.reuters.com/article/idUSTRE63P3PY20100426'>Read
more.

REIT American Mortgage Files for
Bankruptcy

Real estate investment trust American Mortgage Acceptance Co. filed
for chapter 11 protection yesterday, blaming a sharp drop in property
values, Reuters reported yesterday. The company, which invests in
multifamily and commercial property mortgage loans, said in court
documents that it had assets of about $6.4 million and liabilities of
about $120 million, according to court documents. The case is In re
American Mortgage Acceptance Co., US Bankruptcy Court, Southern
District of New York, No.10-12196.
href='http://www.reuters.com/article/idUSN2620633720100426'>Read
more.

St. Vincent's to Sell Greenwich Village
Property for $48 Million

St. Vincent's Hospital on Friday sought bankruptcy court approval to
sell a staff house in Manhattan's Greenwich Village to an affiliate of
Taconic Investment Partners LLC for $48 million in cash, Reuters
reported yesterday. Taconic's affiliate, TIP Acquisitions LLC, will act
as the stalking horse bidder and set the floor at a court-supervized
auction, which will also be open to higher offers. St. Vincent's said
that there were various mortgages on the property and the sale will help
pay down the debt. The staff house is a residential building on Sixth
Avenue and primarily serves as a housing facility for graduate medical
residents. The building is currently occupied by about 160 residents and
other staff members whose leases are due to terminate on their own terms
by June 30, 2010, St. Vincent's said.
href='http://www.reuters.com/article/idUSSGE63P0PM20100426'>Read
more.

Judge to Confirm Magna Entertainment
Bankruptcy-Exit Plan

Canadian mogul and Magna Entertainment Corp. founder Frank Stronach
is poised to maintain control of many of the racetrack operator's most
valuable assets under a chapter 11 plan that received the bankruptcy
court's favor yesterday, Dow Jones Daily Bankruptcy Review
reported today. Bankruptcy Judge Mary F. Walrath indicated
yesterday that she would sign off on the reorganization proposal,
provided Magna tweaks some liability releases included in the plan. She
affirmed that a settlement between Magna's unsecured creditors and its
largest shareholder and lender, MI Developments Inc. was appropriate,
despite claims by a group of minority equity holders that MI
Developments was scoring a windfall at the expense of creditors. Under
the settlement, first introduced in January, the Stronach-controlled MI
Developments will funnel enough cash into the bankruptcy estate to
afford the unsecured creditors a 40-50 percent recovery on some $250
million in claims, in exchange for assets like Pimlico Race Course in
Maryland and Santa Anita Park in California.

CIT Group Turns Profit after Exiting
Bankruptcy

The business lender CIT Group Inc. said today that it turned a profit
in its first quarter since emerging from bankruptcy protection, the
Associated Press reported. CIT Group earned $97.3 million, or 49 cents
per share, during the three months ended March 31. CIT Group generated
$900 million in new loans and leases during the first quarter, which it
said in a statement was slightly below the fourth quarter's results.
Vendor finance started to recover and corporate finance began to
stabilize, the company said in a statement. Loans from CIT Group's
factoring business fell in the first quarter because of seasonal trends
and the residual effect of some clients ending their agreements with the
company last year. Because of the bankruptcy reorganization, CIT Group
had to re-establish some loan-loss reserves during the first quarter.
The bank set aside $186.6 million during the quarter to cover loan
losses and provide some protection against future defaults.
title='Read more.'
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/04/27/AR2010042701351_pf.html'>Read
more.

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