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September 25, 2009
Semgroup's Disclosure Statement Approved
Semgroup cleared a key hurdle in its plan to emerge from bankruptcy this year, although the judge warned the company that questions remained about the 'feasibility' of its its reorganization plan, Reuters reported yesterday. In approving the company's disclosure statement, Bankruptcy Judge Brendan Shannon said that the company must address objections to its planned restructuring. The particularly contentious case took a significant step toward resolution last week when Semgroup reached an agreement with a committee of energy producers, the last large group opposed to its reorganization plan. As a key component of the agreement, Semgroup said it planned to ask the court to release $122 million placed into escrow, pending the outcome of related disputes, by ConocoPhillips, BP and J Aron & Co, which is a unit of Goldman Sachs. The agreement with the producers required Semgroup to amend its reorganization for a fourth time, which was filed with the court earlier in the week.In approving the disclosure statement, Judge Shannon noted the objections of ConocoPhillips and BP, which said Semgroup did not give them proper time to review the latest plan. The case is In re SemCrude LP, U.S. Bankruptcy Court, District of Delaware, No 08-11525. Read more.
name='2'>Bankruptcy Court Approves Wrongful Death Suit against Chrysler LLC
A $24 million wrongful-death payment against Old Carco LLC, which holds the assets of the former Chrysler LLC, was approved yesterday in bankruptcy court, the Detroit News reported today. The court authorized the settlement in the case of the death of Richard Mraz, who was hit and killed by a Dodge Dakota pickup with a transmission defect, according to court documents. The Mraz estate was awarded a $55.4 million verdict in Los Angeles in 2007, and Chrysler posted an appeal bond through Safeco Insurance Company of America that guaranteed the automaker's ability to pay. However, Chrysler appealed the verdict, and payment became questionable after Chrysler filed for bankruptcy April 30 and shed many of its liabilities. The bankruptcy court, which still oversees the assets of Old Carco, allowed the Mraz estate and Safeco to negotiate directly, which led to the settlement. Read more.
name='3'>House Hearing to Focus on Legislation Calling for Transparency at the Federal Reserve
The House Financial Services Committee will hold a hearing today on H.R. 1207, the 'Federal Reserve Transparency Act of 2009.' Witnesses scheduled to testify on the legislation include Scott Alvarez, general counsel of the Federal Reserve, and Thomas Woods, Jr. of the Ludwig von Mises Institute. Click here to view the prepared witness testimony and a link to a Webcast of today's hearing. Read more.
Tribune Co. Wins Court Approval on Chicago Cubs Sale
Bankruptcy Judge Kevin Carey approved the Tribune Co.'s proposed sale of the Chicago Cubs, a baseball franchise valued at $845 million, the Chicago Tribune reported today. The move marks the first of two bankruptcy court approvals needed before the deal can officially close and the money flow to an escrow account for Tribune Co.'s creditors. No objections to the pending sale were brought to court yesterday. Tribune Co. and Ricketts officials expect that a quick in-and-out trip to court for the Cubs will bring an end to a deal. Read more.
name='5'>NAA: U.S. Newspaper Industry Not Seeking Bailout
Although the U.S. newspaper industry is struggling, with seven major companies in bankruptcy and 30,000 jobs lost since 2007, it will not seek a government bailout, the head of the Newspaper Association of America said Thursday, Agence France-Presse reported today. 'The newspaper industry is not seeking a financial 'bailout' or any other kind of special subsidy,' NAA president John Sturm told a committee hearing of the U.S. House of Representatives on 'The Future of Newspapers.' 'We don't believe direct government financial assistance is appropriate for an industry whose core mission is news gathering, analysis and dissemination,' he said. The NAA chief's remarks came a day after a poll released by Sacred Heart University found that nearly 80 percent of Americans opposed using tax dollars to help out failing newspapers. Sturm, whose association represents nearly 2,000 newspapers accounting for more than 90 percent of daily U.S. circulation, said there were several areas in which Congress could help the industry including amending the tax code and loosening pension requirements. A bill that would allow newspapers to become nonprofit entities while continuing to generate advertising revenue 'could work in certain situations,' he said, but is not a 'comprehensive solution to the problems in the industry.' Read more.
name='6'>GM Speeds Up Supplier Payments
General Motors Co. said Thursday it will pay suppliers more frequently in a move to improve the company's cash flow and appease struggling parts makers, the Wall Street Journal reported today. Starting Nov. 1, GM will launch a system in which suppliers of auto parts and logistics materials are paid weekly rather than every 47 days. The length of time between parts payments has been a major contributor to the financial problems of U.S. auto suppliers. GM's move covers 1,400 parts makers and 300 logistics suppliers in North America, with a plan to eventually implement the new schedule around the world. An overhaul of GM's cash management tactics has been a key priority for the company in the months since it emerged from a government-funded restructuring. Suppliers have had to wait as long as 90 days to get paid after they ship a part to the auto maker, forcing the companies to draw on credit lines to cover the gap.
name='7'>Simmons to File for Bankruptcy, Sell Bedding Unit
Simmons Co. said Friday it will file for bankruptcy and reorganization under Chapter 11 and has agreed to sell its core bedding business to Ares Management and Teachers' Private Capital, the investment arm of the Ontario Teachers' Pension Plan, MarketWatch reported today. As part of the restructuring plan, Atlanta-based Simmons will reduce its debt to about $450 million from $1 billion. The company will also pay in full its vendors, suppliers, employees, and bank lenders, while senior note holders will receive a pro rata share of $190 million in cash and discount holders will receive $15 million. A significant majority of Simmons note holders have already approved the plan, the company said.
name='8'>Gretzky Resigns as Coach of Bankrupt Coyotes
Wayne Gretzky stepped down as coach of the bankrupt Phoenix Coyotes hockey team on Thursday, the New York Times reported today. Gretzky, who had not shown up at training camp, which opened Sept. 12, announced his resignation on his Web site. He cited the Coyotes' continuing bankruptcy case, which is being heard in federal court in Phoenix, and the fact that the remaining bidders - the Canadian billionaire Jim Balsillie and the N.H.L. - had not included him in their plans. Hours after Gretzky's resignation, Maloney introduced Dave Tippett as his replacement. Tippett, who coached the Dallas Stars for the past six seasons, was signed to a four-year deal. Terms were not disclosed. Tippett, 48, was fired by the Stars in June after the team missed the Stanley Cup playoffs. After ending his record-shattering career in 1999, Gretzky joined the Coyotes in 2001 as managing partner. In 2005 he became the head coach, signing a multiyear contract to serve also as part owner, managing partner and alternate governor. The team won 143 of 328 games and did not make the playoffs in four seasons under Gretzky. During the bankruptcy proceedings surrounding the Coyotes, Gretzky came under criticism for the $8 million he received annually from the club. Read more (subscription required).
name='9'>Velocity Express Files for Bankruptcy in Delaware
Velocity Express Corp., a national provider of ground package-delivery services, filed for bankruptcy protection from creditors, Bloomberg News reported yesterday. The Westport, Conn.-based company listed assets of $94.1 million and debt of $120.6 million as of Sept. 1 in chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Del. Twelve affiliates including CD&L, Click Messenger Service, Silver Star Express, Olympic Courier Systems and Securities Courier System are also seeking protection. The case is In re Velocity Express Corp., 09-13294, U.S. Bankruptcy Court, District of Delaware (Wilmington).
name='10'>Mark IV Gets Court OK to Emerge from Bankruptcy
Mark IV Industries, the Amherst, N.Y.-based automotive components manufacturer that was one of the Buffalo Niagara region's fastest-growing companies in the 1990s, has won approval for its plan to emerge from bankruptcy court protection, The Buffalo (N.Y.) News reported today. A bankruptcy court judge in New York City has confirmed Mark IV's reorganization plan, which gives the company's senior secured lenders an 88 percent ownership stake in the restructured company and slashes its debt by $800 million. The approval by an overwhelming majority of Mark IV's creditors clears the way to emerge from bankruptcy protection in October. 'We are in a significantly stronger financial position today than we have been in the last nine years,' said Mark Barberio, Mark IV's co-chief executive officer and chief financial officer. The restructuring reduces Mark IV's debt obligations by roughly two-thirds to about $400 million from $1.2 billion. The remaining 12 percent ownership stake in the company will be controlled by unsecured creditors. The company's equity holders will receive nothing. Read more.
name='11'>SunCal, Lehman Bros. Battling in Bankruptcy Court over SoCal Properties
Former allies SunCal Cos. and Lehman Bros. Holdings Inc. are now battling for 19 Southern California properties in bankruptcy court, according to Bloomberg, Los Angeles BizJournals reported yesterday. The Marblehead housing project in San Clemente, one of the last remaining undeveloped tracts of land along the Orange County coast, is among the properties SunCal wants to sell off. Lehman wants to foreclose on the properties, but Irvine-based SunCal argues it can sell the San Clemente tract and seven other properties to D.E. Shaw for $200 million. D.E. Shaw reportedly would be interested in acquiring the remaining Lehman-financed properties as well at some point. SunCal blames Lehman for its projects' insolvencies and is hoping to prevent Lehman from using a $2 billion claim as a secured creditor to bid for eight of the properties, the report states. SunCal lawyers argued this week at a hearing in Santa Ana that Lehman's claims the projects should be thrown out since they are based on nearly $1.5 billion in loans that the bank sold just before it filed for chapter 11. However, Lehman attorneys reportedly argued that the loan-transfers were not sales and that, as common practice in the industry, Lehman is the authorized agent for whoever happens to own them. The U.S. Bankruptcy Judge said she will try to rule by Oct. 15. Read more.
name='12'>Bankruptcy Fears Easing for Airlines
At a roundtable held Wednesday by Fitch Ratings in New York City, the consensus opinion was that the threat of airline bankruptcies is waning, TheStreet reported yesterday. 'Those most at risk have some flexibility heading into the winter, the time when we usually see the most filings,' said Bill Warlick, senior director at Fitch. AMR, parent of American Airlines, raised $2.9 billion in deals last week. Meanwhile, US Airways and UAL, parent of United Airways, which had the highest threat of bankruptcy this summer, announced that they have liquidity initiatives on tap. Still, one independent research firm begs to differ. Audit Integrity, a Los Angeles-based financial analytics firm, identified both AMR and Continental Airlines as two of the top 20 U.S. companies with the highest probability of filing for bankruptcy in the next 12 months. With the exception of Southwest Airlines, all legacy carriers are in deep junk rating. Read more.
name='13'>Bankruptcy Judge Says Potential Sun-Times Buyer Can't Rush Union Concessions
The Chicago businessman who has offered to buy the Sun-Times Media Group can't demand quick concessions from the company's labor unions in order to close the sale, a Delaware bankruptcy judge ruled Thursday, the Canadian Press reported today. STMG Holdings LLC, led by banker Jim Tyree, has offered to pay US$5 million in cash for the Sun-Times assets and to assume about $22 million in liabilities in an effort to continue operating the newspaper company as a going concern. But Tyree wants several concessions from the Sun-Times' 18 unions, and has threatened to walk away from the asset purchase agreement, or APA, if the company doesn't deliver revised labor contracts by Sept. 29. At a hearing Thursday, Judge Christopher Sontchi rejected the deadline, noting that the sale doesn't have to close until early December and that Tyree would be liable if he walks away two or three months before closing. The judge also rejected an agreement with Tyree's group that called for any competing bidder to promise to operate Sun-Times Media as a going concern for at least six months. At issue are 18 separate union contracts, although two of the bargaining units are connected to production facilities that have closed or are being shutdown. Of the 16 others, five involve the news guild, which rejected the concessions last week. Read more.
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