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April 13, 2010
Bankruptcy Claim Trades Hit $2.89 Billion in
March
Trading platform operator SecondMarket reported yesterday that nearly
$2.89 billion worth of U.S. bankruptcy claims changed hands in March,
marking the biggest increase in claims trading since December, Reuters
reported. The trading was spurred largely by a spike in claims for
bankrupt investment bank Lehman Brothers Holdings Inc., which filed its
reorganization plan in mid-March, giving traders more information about
potential recoveries. SecondMarket said a monthly record 1,535 claims
were traded in March, up from 1,417 claims in February. Some 288 Lehman
claims were traded in March, with a total face value of $2.69 billion,
SecondMarket said. About $1.45 billion worth of those claims changed
hands after Lehman filed its plan on March 15.
href='http://www.reuters.com/article/idUSN1219104120100412?type=marketsNews'>Read
more.
Tamarack Resort Case Shifted to Chapter
11
In an order signed on April 9, Bankruptcy Judge Terry
Myers of the U.S. Bankruptcy Court for the District of Idaho in
Boise converted Tamarack Resort LLC's involuntary chapter 7 case to a
chapter 11 reorganization, the Deal Pipeline reported today. The
move comes weeks after Judge Myers affirmed the involuntary petition
filed against the Tamarack, Idaho-based debtor,
denying Tamarack's motion to dismiss the case. Banc of America Leasing
& Capital LLC, owed $4.65 million for damages on leases, led a group
of four creditors that put the owner of a four-season resort in the
Payette River Mountains into bankruptcy on Dec. 11. Tamarack responded
to the petition on Jan. 14, asserting that the creditors were not
eligible to file an involuntary bankruptcy against it. The debtor on
April 7 requested the conversion to chapter 11 without explanation.
id='cdnu' title='Read more'
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005413738'>Read
more. (Subscription required.)
House Panel to Examine Second-Lien
Mortgages
The House Financial Services Committee will hold a hearing today
titled 'Second Liens and Other Barriers to Principal Reduction as an
Effective Foreclosure Mitigation Program.' For more information on the
hearing scheduled at noon today, including the witness list and a link
to the live Webcast, please
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_040510.shtml'>click
here.
Lenders Bristle at Tribune's Reorganization
Plan
Tribune Co. filed its chapter 11 reorganization plan yesterday,
setting the U.S. newspaper publisher up for a showdown with a large
group of lenders that called the terms 'unfair' and demanded the right
to propose a rival plan, Reuters reported today. Tribune's filing came
four days after the company announced an accord with some creditors to
resolve potential claims tied to its $8.2 billion leveraged buyout in
2007. However, a group of roughly two dozen lenders, composed mainly of
hedge funds who say they represent $3.6 billion of senior debt, said in
a court filing yesterday that it was 'premature and misleading' for
Tribune to announce an accord, which they called 'dead on arrival'
without their support. Tribune said that its reorganization plan would
value the company's equity at $4.1 billion, give senior credit facility
lenders control of 91 percent of its stock, and allow it to emerge from
chapter 11 this year.
href='http://www.reuters.com/article/idUSN1218423920100412'>Read
more.
Trump and Bondholders Gain Control of
Casinos
As it prepares to exit bankruptcy court for the third time, Trump
Entertainment Resorts and its three Atlantic City casinos will be under
the control of Donald Trump and bondholders after a court ruling
yesterday, the New York Times reported today. Trump joined with
bondholders in a successful $225 million bid that beat out a rival offer
by Carl C. Icahn, known for his aggressive corporate takeovers. Much of
the money for the bid was put up by Avenue Capital Management, a New
York hedge fund. Trump will control 10 percent of the company and will
have the option to increase his stake in the future. Rather than cash,
Trump offered the bondholders the use of his name on the three casinos.
href='http://www.nytimes.com/2010/04/13/business/13trump.html?ref=business&pagewanted=print'>Read
more.
Memos Show Risky Lending at WaMu
New documents released by a Senate panel show how entrenched
Washington Mutual was in fraudulent and risky lending, and highlighted
how its top executives received rewards as their institution was
hurtling toward disaster, the New York Times reported today. The
problems at WaMu, whose collapse was the largest in American banking
history, were well known to company executives, excerpts of e-mail
messages and other internal documents show. The documents were released
yesterday by the Senate Permanent Subcommittee on Investigations, which
began an inquiry into the financial crisis in November 2008. The panel
has summoned seven former WaMu executives to testify at a hearing today,
including the former chief executive Kerry K. Killinger.
title='Read more'
href='http://www.nytimes.com/2010/04/13/business/13wamu.html?ref=business&pagewanted=print'>Read
more.
Analysis: Lehman Channeled Risks Through
'Alter Ego' Firm
In the years before its collapse, Lehman used a small company -
its 'alter ego,' in the words of a former Lehman trader - to shift
investments off its books, the New York Times reported today. The
firm, called Hudson Castle, played a crucial, behind-the-scenes role at
Lehman, according to an internal Lehman document and interviews with
former employees. The relationship raises new questions about the extent
to which Lehman obscured its financial condition before it plunged into
bankruptcy. While Hudson Castle appeared to be an independent business,
it was deeply entwined with Lehman. For years, its board was controlled
by Lehman, which owned a quarter of the firm. It was also stocked with
former Lehman employees. Critics say that such deals helped Lehman and
other banks temporarily transfer their exposure to the risky investments
tied to subprime mortgages and commercial real estate. Even now, a year
and a half after Lehman?s collapse, major banks still undertake such
transactions with businesses whose names, like Hudson Castle?s, are
rarely mentioned outside of footnotes in financial statements, if at
all.
href='http://www.nytimes.com/2010/04/13/business/13lehman.html?hp=&pagewanted=print'>Read
more.
GMAC to Sell Some ResCap Assets in Move to
Lower Risk
GMAC Financial Services is selling its European mortgage assets and
operations, including loans valued at about $1 billion housed in its
ailing mortgage unit, to private-equity firm Fortress Investment Group
LLC, Dow Jones Daily Bankruptcy Review reported today. The deal
accounts for about 10 percent of the $19 billion of assets at GMAC's
Residential Capital LLC and comes amid GMAC's efforts to manage risk
stemming from souring mortgages. ResCap, as GMAC's mortgage-lending
subsidiary is commonly known, was once the crown jewel in GMAC's
business. But over the last couple of years, it dragged down GMAC with
staggering losses from bad mortgages, fallout from its days as one of
the largest lenders to borrowers with shaky credit.
Simon Works to Address Antitrust Concerns
over General Growth Offer
Simon Property Group Inc. is looking at ways to revise its offer for
General Growth Properties to address the target's antitrust concerns,
Reuters reported yesterday. Simon and General Growth have discussed a
commitment by Simon to dispose of some assets, but the two have not
reached a deal. Simon has been weighing a new offer after its initial
$10 billion takeover bid for the second-largest U.S. mall owner was
rebuffed. General Growth, which filed for bankruptcy protection nearly a
year ago, has submitted a proposal to emerge from bankruptcy court
backed by three large investors. Under that plan, General Growth would
emerge as an independent company.
href='http://www.reuters.com/article/idUSN1220397620100412'>Read
more.
FDIC Expected to Extend Deposit-Insurance
Program
The Federal Deposit Insurance Corp.'s board is expected to vote today
to extend for at least six months its program offering unlimited deposit
insurance for business accounts, the Wall Street Journal reported
today. The program was set to expire June 30 and the extension is
expected to be for at least six months, though the FDIC's board could
extend it through mid-2011. The Transaction Account Guarantee program
was created in late 2008 as a way to prevent businesses and other large
depositors from hastily pulling funds from smaller banks and moving the
money to big banks. This was prompted by fears that small banks were
vulnerable to collapse and that government would not step in and prevent
href='http://online.wsj.com/article/SB10001424052702303828304575180304287489896.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
Treasury Makes Pitch for Shareholder
Rights
Deputy Treasury Secretary Neal Wolin yesterday called on Congress to
pass legislation giving shareholders greater rights to elect corporate
directors, a drive that business interests want to derail,
CongressDaily reported yesterday. Wolin told a conference of the
Council of Institutional Investors that the administration supports
language in Senate Banking Chairman Christopher Dodd's (D-Conn.)
financial regulatory system revamp that would give greater proxy access
to shareholders. The provision, included at the behest of Sen. Charles
Schumer (D-N.Y.) would authorize the SEC to issue such rules, similar to
House-passed legislation. The agency has given preliminary approval to
rules for greater access, which would allow shareholders to nominate up
to 25 percent of the board. SEC commissioners, however, have held off on
giving final approval.
U.S. Seeks Final Forfeiture on Madoff's
NYC Home
The U.S. government today sought a final order of forfeiture on
imprisoned swindler Bernard Madoff's Manhattan co-op apartment, clearing
the way for a sale to be completed this month, Reuters reported.
Madoff's three-bedroom, four-bath duplex on Manhattan's Upper East Side
was listed for sale at $8.9 million, and went into contract more than
two months ago. The government is selling Madoff's assets to reimburse
victims of his estimated $65 billion Ponzi scheme.
title='Read more.'
href='http://www.reuters.com/article/idUSN1323420220100413'>Read
more.
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