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September 15, 2009
Judge Rejects Settlement Over Merrill Bonuses
U.S. District Judge Jed S. Rakoff refused to approve a $33 million deal that would have settled a lawsuit filed by the Securities and Exchange Commission against Bank of America over BoFA failing to adequately disclose the bonuses that were paid by Merrill before the merger, the New York Times reported today. Judge Rakoff accused the SEC of failing in its role as Wall Street's top cop by going too easy on one of the biggest banks it regulates. He also accused executives of the Bank of America of failing to take responsibility for actions that blindsided its shareholders and the taxpayers who bailed out the bank at the height of the crisis. 'The SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger,' Judge Rakoff wrote in his ruling, and 'the Bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators.' Judge Rakoff called the $33 million settlement unfair and inadequate, and ordered Bank of America and the SEC to prepare for a possible trial that would begin by Feb. 1. Read more.
Lehman Brothers
name='2'>New York Seeks $1.2 Billion in Unpaid Taxes from Lehman Brothers
With the claims deadline looming in the Lehman Brothers Holdings Inc. bankruptcy, the estate has been flooded with claims, including one from New York state seeking more than $1.2 billion in unpaid taxes and interest from the investment firm, Bankruptcy Law360 reported yesterday. The claim Ñ filed Thursday in the U.S. Bankruptcy Court for the Southern District of New York by the New York Department of Taxation and Finance Ñ argues that Lehman owes the state in excess of $1.2 billion on a variety of corporate, sales and other taxes, as well as penalties and interest, dating back to 1994. The New York City Department of Finance has already filed a similar claim seeking $627 million. The bankruptcy court set a Sept. 22 deadline for creditors' claims. Read more (subscription required).
name='3'>Analysis: Behind Lehman's Big Property Struggle
A year after Lehman Brothers' collapse, the firm overseeing its bankruptcy is moving to restructure loans for 900 properties to help salvage a battered $16 billion real-estate portfolio, the Wall Street Journal reported today. The moves - involving commercial real-estate properties ranging from huge apartment holdings to office buildings to a Miami condominium complex - portend the strategies big U.S. banks are likely to undertake as they deal with their own troubled loans and buildings over the next 18 months, specialists say. In some cases, Lehman is generating new loans or even agreeing to buy condominium mortgage loans to keep projects afloat. As the big securities firm bulked up its real estate holdings, it ended up financing, for example, at least $2 billion in South Florida real-estate projects. The 66 people overseeing the Lehman portfolio, in addition to 250 outside contractors, represent the 'biggest real-estate workout department in the U.S.,' said Bryan Marsal, chief restructuring officer and chief executive officer at Lehman, and head of Alvarez & Marsal, the advisory firm overseeing Lehman's bankruptcy proceedings. Marsal said that it could take three to five years to work through the loans and equity stakes in properties. Read more (subscription required).
House Panel to Examine Mandatory Binding Arbitration Issues
The House Judiciary Subcommittee on Commercial and Administrative Law will hold a hearing today at 1 p.m. ET titled 'Mandatory Binding Arbitration - Is it Fair and Voluntary?' Witnesses to be announced. Read more.
Media
name='5'>Triple Crown Media Files for Chapter 11
Triple Crown Media Inc., which owns daily and weekly newspapers in Georgia, yesterday became at least the 11th newspaper publisher to seek bankruptcy protection over the past year, the Associated Press reported yesterday. The Lexington, Ky.-based company listed assets of about $33 million and liabilities of about $86 million in its prepackaged chapter 11 filing. Triple Crown, which operates six daily Georgia newspapers and one weekly with a total daily circulation of about 95,000, has about 330 employees. According to court papers, Triple Crown has entered into a restructuring support agreement under which holders of more than 80 percent of its second-lien debt would take a 90 percent equity stake in the company. Of the remaining equity interest, holders of the company's preferred stock would receive 5 percent, with the remaining 5 percent allocated to a management incentive plan. Read more.
name='6'>Star Tribune Nears Chapter 11 Exit
When the Minneapolis Star Tribune emerges from bankruptcy protection later this month, Minnesota's largest newspaper will be far leaner than it once was - but with the same pressure to generate revenue, the Associated Press reported yesterday. The newspaper used chapter 11 to wipe away nearly $400 million in debt and extract $20 million annually in union concessions that the 142-year-old newspaper considers essential to its survival. Its main challenge while it waits for an advertising drought to end will be to deliver a quality product to readers in print and online with a newsroom staff nearly one-third smaller than it was two years ago. Read more.
name='7'>Pacific Energy Receives Approval to Abandon Alaska Assets
Having failed to find a buyer for the unprofitable facilities, bankrupt Pacific Energy Resources Ltd. has won the right to abandon oil and gas production assets near Alaska's Cook Inlet Ñ despite opposition from government regulators over potential environmental liabilities, Bankruptcy Law360 reported yesterday. In an order handed down Friday in the U.S. Bankruptcy Court for the District of Delaware, Judge Kevin J. Carey approved the abandonment but granted key concessions to state regulators and two Alaska Native-run corporations that had objected to the proposal. Although the ruling allows Pacific Energy to relinquish its ownership of the facilities, nothing in the order sets out what party will assume the title of, or responsibility for, the assets. The order does not determine who will hold an interest in royalties from the abandoned operations. Pacific Energy will also be required to comply with an 'abandonment protocol' it set up to winterize pipelines, maintain offshore facilities, shut in wells and evacuate storage tanks, the ruling said. Read more (subscription required).
name='8'>Barzel Industries Files for Chapter 11 Protection
U.S. metal-processing company Barzel Industries Inc. filed for bankruptcy protection in a Delaware court along with seven affiliates, Reuters reported today. The Norwood, Mass.-based company listed assets of $365.8 million and liabilities of $384.6 million in its chapter 11 filing. Barzel Industries said on its Web site it operated 16 plants that service the North American, Latin American and European markets. The case is In re Barzel Industries Inc., U.S. Bankruptcy Court for the District of Delaware, No. 09-13204. Read more (subscription required).
name='9'>Lyondell Looks to Reorganize Using Stock Offering
Bankrupt petrochemicals maker LyondellBasell ACCELC.UL is planning a stock offering to raise funds so it can exit bankruptcy protection, Reuters reported yesterday. Lyondell, which was forced to file for chapter 11 in January amid a sudden cash crunch, filed its reorganization plan with the New York bankruptcy court on Friday. Under the reorganization plan, the company and its 94 bankrupt affiliates will simplify its corporate structure and position the company to exit bankruptcy protection with significantly less debt. Lyondell also said that it will repay administrative, tax and other priority claims in full and will repay the new money portion of its DIP loan in full. In addition, holders of the 'rolled up' portion of the DIP loan will receive new notes or cash in the full amount of their loan, and the company's pre-bankruptcy senior lenders will receive new common stock in the reorganized company. Read more (subscription required).
name='10'>Avaya Wins the Auction for Key Nortel Unit
Bankrupt Nortel Networks said yesterday that Avaya had won an auction for a unit that makes networking and communications equipment for corporations and governments, but the $900 million deal faces an objection and must still receive court approval, the New York Times reported today. Verizon Communications has asked a Delaware bankruptcy court, which will review the sale at a hearing today, to block the deal, contending that it endangers national security. Verizon has long resold Nortel equipment and software to customers that include 'virtually every department of the federal government, both civilian and military,' according to a court filing. The facilities that depend on Nortel's equipment include military bases around the world, law enforcement and antiterrorism agencies, Congress and local and state 911 call centers, Verizon said. Verizon is concerned about Avaya's decision not to assume contracts Verizon now holds with Nortel to provide support, maintenance and repair services for that equipment and its software. Read more.
name='11'>Integra Buys Bankrupt Spinal Implant Maker for $9.3 Million
Integra LifeSciences Holdings Corp. said yesterday that it bought almost all of the assets of implant maker Innovative Spinal Technologies Inc. in a bankruptcy auction for almost $9.3 million, the Associated Press reported yesterday. Mansfield, Mass.-based Innovative, whose products include the Paramount MIS/Open minimally invasive lumbar fusion system, had ceased operations in January and filed for chapter 7 protection in May. Integra said that it plans to launch the Paramount system in the first quarter of 2010. Read more.
name='12'>Court Approves Hawaiian Retailer's Bankruptcy Plan
U.S. Bankruptcy Court Judge Robert Faris yesterday approved a plan to reorganize Hilo Hattie, the Associated Press reported. The approval will enable the major retailer of Hawaiian souvenirs and aloha attire to emerge from chapter 11 protection on Oct. 4. The plan by Royal Hawaiian Creations would wipe out about $14 million in debt to keep Hilo Hattie in business while preserving numerous vendor relationships.
Royal Hawaiian Creations is the largest unsecured creditor in the bankruptcy case. Read more.
International
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