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March 16, 2010

Dodd's Reform Bill Adds Layers of New
Financial Oversight

Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) along

with Senate Democrats yesterday introduced a bill to overhaul financial
regulation that calls for the government to play a more active role in
policing Wall Street, the New York Times reported today. The
plan would create a nine-member council, led by the Treasury secretary,
to watch for systemic risks, and direct the Federal Reserve to supervise

the nation's largest and most interconnected financial institutions, not

just banks. However, the bill, which would amount to the most sweeping
change in financial rules since the Depression, would preserve much of
the existing regulatory architecture, which has been criticized for
being too fragmented. The bill would also create a $50 billion fund,
paid for by the largest financial companies, for the orderly liquidation

of a company that is collapsing and whose failure would have 'serious
adverse effects on financial stability in the United States.' The
provision for orderly liquidation would be invoked only as a last
resort, if a company's financial ties were too complex to be resolved
through normal bankruptcy proceedings. Such a liquidation would require
approval of the Treasury secretary and a two-thirds vote of the boards
of both the Fed and the FDIC Senate Republicans were muted in their
response, saying they would introduce amendments to press their case on
areas of disagreement, including the powers of a new Consumer Financial
Protection Bureau that would be set up inside the Fed.
title='Read more.'

href='http://www.nytimes.com/2010/03/16/business/16regulate.html?ref=business&pagewanted=print'>Read

more.

href='http://documents.nytimes.com/financial-regulatory-reform-senate-bill'>Click

here to read the bill text and

href='http://banking.senate.gov/public/_files/FinancialReformSummary231510FINAL.pdf'>click

here to read a summary of the bill.

Los Angeles Developer Seeks Approval of
Disclosure Statement

Los Angeles real estate developer Meruelo Maddux Properties Inc. on
Friday will request bankruptcy court approval of its disclosure
statement, the Deal Pipeline reported yesterday. Under the
reorganization plan, Meruelo will pay off all of its secured and
unsecured debt in full in cash with interest as it sells properties or
refinances the debt securing each of its properties. Meruelo filed a
first amended version of the plan with the U.S. Bankruptcy Court for the

Central District of California in San Fernando Valley on March 1. The
plan separates Meruelo and its dozens of affiliates that own and operate

its residential and commercial projects and calls for paying down the
debt attached to each project accordingly. Generally, lenders holding
secured debt of Meruelo's properties will be paid in full with interest
over a period of five years if they accept the plan at an interest rate
of 4 percent. If the secured lenders vote against the plan they will be
paid in full over a period of seven years.

href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005402322'>Read

more. (Subscription required.)

Lehman Files Reorganization Plan

Lehman Brothers Holdings Inc. filed its chapter 11 reorganization
plan yesterday with the U.S. Bankruptcy Court for the Southern District
of New York, Reuters reported yesterday. Under the reorganization plan,
Lehman sought authority to create an asset manager business called LAMCO

that would specialize in management of Lehman's commercial real estate,
mortgages, principal investments, private equity, corporate debt and
derivatives assets. Lehman said LAMCO would provide management services
to Lehman, administer its assets and offer long-term employment
opportunities for the hundreds of Lehman employees working to liquidate
the former investment bank's estate. The case is In re Lehman
Brothers Holdings Inc., U.S. Bankruptcy Court, Southern District of
New York, No. 08-13555.
href='http://www.reuters.com/article/idUSTRE62E4ZX20100315'>Read
more.

In related news, Lehhman Brothers Holdings Inc. ousted a
whistle-blower just weeks after he raised red flags about the securities

firm's accounting in 2008, the Wall Street Journal reported
today. Matthew Lee, a 14-year Lehman veteran, was let go in late June
2008 amid steep losses at the firm as it tried to maneuver through the
global financial crisis. Earlier that month, he had raised concerns with

Lehman's auditor, Ernst & Young, that the securities firm was
temporarily moving $50 billion in assets off its balance sheet. This
accounting strategy helped to mask the risks Lehman was taking amid
scrutiny by investors and regulators about the health of Wall Street
firms. Lehman said at the time it let go Lee, a senior vice president,
as part of a broader downsizing at the firm.

href='http://online.wsj.com/article/SB10001424052748704588404575124134271085018.html?mod=WSJ_hps_LEFTWhatsNews#printMode'>Read

more. (Subscription required.) 

BearingPoint Bankruptcy Trustee Sues Yale
for $8 Million

Trustee John DeGroote, a former BearingPoint executive hired to
manage a trust created to pursue recoveries for the firm's creditors, is

suing Yale for $8 million, according to a suit filed Friday in U.S.
Bankruptcy Court in Manhattan, Dow Jones Daily Bankruptcy Review
reported today. At issue are several payments BearingPoint made to the
school under a pair of agreements between BearingPoint and Yale's School

of Management, payments made when the consulting firm was sliding toward

bankruptcy. The payments were part of a $30 million, seven-year deal
where Yale granted BearingPoint 'naming opportunities.' Among such
opportunities were the rights to name a hall, a wing and an auditorium
in a new building at Yale. 

Congressman Unveils Small Business Relief
Measure

Acting House Ways and Means Chairman Sander Levin (D-Mich.) yesterday

unveiled a new package of incentives for small-business and
infrastructure investment, which he said the panel would take up
Wednesday, CongressDaily reported. The bill was still being
finalized as work continued on provisions dealing with relief for
companies with unexpected defined benefit pension plan shortfalls and
possible new fee disclosure requirements for company-sponsored defined
contribution retirement plans. However, it is expected to total around
$15 billion, with major pieces including tax breaks for investments in
start-up firms and increased deductions for their expenses and extended
bond-financing for state and local infrastructure, housing and economic
development projects.

In related news, the Senate Judiciary Subcommittee on Administrative
Oversight and the Courts will hold a hearing tomorrow at 10 a.m. ET
titled 'Could Bankruptcy Reform Help Preserve Small Business Jobs?'
id='ksmu' title='Click here'
href='http://judiciary.senate.gov/hearings/hearing.cfm?id=4471'>Click
here for more information.

Starwood Says Its Bid for Extended Stay
Would Provide Better Value for Creditors

An investor group led by Starwood Capital is saying its plan to take
U.S. mid-priced hotel chain Extended Stay America Inc. out of bankruptcy

would be a better option than the company's plan, which is backed by
rival private equity firms, Reuters reported yesterday. Starwood said
that it believes its offer would provide 'substantially greater' value
for the company's creditors and more access to new cash for the company.

Extended Stay, which filed for bankruptcy in June, said last week that
it could emerge from court protection later this year under a plan
backed by a new $450-million investment from private equity firms
Centerbridge Partners LP and Paulson & Co Inc. Starwood has not
filed details of its plan with the court, but said that it has given a
draft reorganization plan, as well as a commitment letter and an
investment and standby purchase agreement, to Extended Stay.
id='alhb' title='Read more.'
href='http://www.reuters.com/article/idUSN1520071320100315'>Read
more.

Anthracite Capital Files for Chapter 7 to
Liquidate

Anthracite Capital Inc., a commercial real estate investment firm
managed by a BlackRock Inc. subsidiary, filed for chapter 7 yesterday to

liquidate its assets, Dow Jones Daily Bankruptcy Review
reported today. Hammered by the collapse of the commercial real estate
market, Anthracite listed assets of between $100 million and $500
million and debts between $500 million and $1 billion on its bankruptcy
filing. At the end of 2008, the publicly traded firm listed assets of
$3.83 billion and debts of $3.21 billion, according to papers filed with

the U.S. Securities and Exchange Commission. Under Anthracite's
liquidation, it is 'likely that shareholders would not receive any value

and that the value received by unsecured creditors would be minimal,'
the firm said in statement. A court-appointed trustee will oversee the
company's wind down.

Six Flags Noteholders Want Committee Vote
Invalidated

Bondholders seeking control of Six Flags Inc. are asking a Delaware
bankruptcy judge to invalidate a vote by the unsecured creditors'
committee opposing the reorganization plan, the Associated Press
reported yesterday. The senior bondholders say that the committee's
actions should be voided because of misconduct by a member who was
removed from the committee last week and was a key swing vote against
the reorganization plan, which would give the bond holders control of
Six Flags. The note holders say John Gorman was put on the committee
even though he has no unsecured claims against Six Flags, and that a
Texas financial firm he founded and chairs traded in Six Flags
securities while he was on the committee. The noteholders are battling
in court against junior bondholders for control of Six Flags.
id='v4sd' title='Read more'

href='https://webmail.abiworld.org/owa/redir.aspx?C=ed2ff161084a4c44afd3d286b…'>Read

more.

Bank Chief Accused of TARP Fraud

Charles J. Antonucci Sr., the former president and chief executive of

the Park Avenue Bank of New York, was arrested yesterday on numerous
charges, including allegations of defrauding regulators in connection
with what prosecutors said was his desperate effort to save his New York

bank from failing, the Wall Street Journal reported today.
Prosecutors allege that Antonucci made false statements to regulators in

an effort to obtain about $11 million from the U.S. government's
Troubled Asset Relief Program. Park Avenue Bank, a lender with more than

$500 million in assets that specialized in commercial-real-estate loans,

failed on Friday after piling up more than $27 million in net losses
last year. Bad real-estate loans shrank the bank's capital to just $3.3
million at year's end, down 87 percent from two years earlier, according

to filings the bank made with the Federal Deposit Insurance Corp.
id='sf2:' title='Read more'

href='http://online.wsj.com/article/SB100014240527487039098045751236723474958…'>Read

more. (Subscription required.)

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