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January 25, 2010
Judge Approves Gottschalks'
Liquidation Plan
Former department store chain
Gottschalks Inc. has received approval for its liquidation plan,
which will give its unsecured creditors up to a 13.3 percent
recovery, the Deal Pipeline
reported on Friday. Bankruptcy Judge Kevin Carey approved the
debtor's disclosure statement on Jan. 20, court papers said. Under the
plan, which was filed on Jan. 14, administrative, priority tax claims
and other priority claims will be paid in full in cash on the plan's
effective date. The debtor's $125 million debtor-in-possession loan from
GE Capital Corp. paid off the $72 million in prepetition debt owed to GE
Capital. The outstanding DIP was already repaid through the sale of its
assets, the plan said. Other secured claims would also be paid in full
in cash. The confirmation hearing is scheduled for March 16.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005380605'>Read
more. (Subscription required.)
House Financial Services Chairman Calls for
End of Fannie Mae, Freddie Mac
House Financial Services Chairman Barney Frank (D-Mass.) said on
Friday that his committee was preparing to recommend 'abolishing'
mortgage-finance giants Fannie Mae and Freddie Mac and rebuilding the
U.S. housing-finance system from scratch, the Wall Street
Journal reported today. 'The remedy here is...as I believe this
committee will be recommending, abolishing Fannie Mae and Freddie Mac in
their current form and coming up with a whole new system of housing
finance,' Frank said. His comments initially rippled through bond
markets on concerns that the government might pull away from the
mortgage market. Many believe that's unlikely and that any revamp would
include continued government involvement. The government took over the
companies in September 2008 as loan losses mounted. Some Republicans
have argued that the companies should ultimately be reduced in size and
privatized, while some analysts have recommended turning the
companies into government agencies. Several industry groups and
academics, however, have suggested that the government is likely to
continue playing at least some role in the future of the
companies.
href='http://online.wsj.com/article/SB10001424052748704509704575019162391608940.html?mod=WSJ_hps_sections_realestate'>Read
more. (Subscription required.)
Financial Revamp Hits
Opposition
The Obama administration's decision to infuse its overhaul of
financial regulations with a populist appeal has run into a wall of
Republican senators who believe they can reshape the proposal or
potentially scuttle it altogether, the Wall Street Journal
reported today. After months of negotiations and signals that a
bipartisan compromise could be reached, the White House and many
Republicans retreated last week to entrenched positions. The dynamics
changed noticeably after Tuesday, when Democrats lost a special election
for a Senate seat in Massachusetts and with it their filibuster-proof
majority. Sen. Bob Bennett (R-Utah) said he and his colleagues are
'working on something that I think is a more intelligent alternative' to
the White House's proposal. Sen. Richard Shelby (R-Ala.) said the idea
of creating a 'freestanding' consumer regulatory agency, a White House
priority, would never win Republican support. Labor unions and consumer
groups are concerned that Senate Banking Committee Chairman Christopher
Dodd (D-Conn.) will cut a deal with Shelby and jettison the White
House's plan to secure Republican support.
href='http://online.wsj.com/article/SB10001424052748703822404575019732069339188.html?mod=WSJ_business_whatsNews'>Read
more. (Subscription required.)
In related news, a New York Times editorial today said that
President Obama has given the effort to enact serious financial
regulatory reform a rational starting point. The premise of the White
House’s earlier approach to
reform was that large banks were an immutable fact of life and the best
way to cope with them was to ensure that their failures would not
endanger the rest of the financial system. This approach ignored that
large and complex banks are a problem long before they fail: an
overgrown banking sector diverts resources from more productive uses
and, in the process, amasses riches at the expense of everyone else.
Obama’s new
proposals begin to correct those problems as they would ban banks with
federally insured deposits from making risky bets in the capital
markets. They would prevent the banks from owning, investing or
sponsoring hedge funds and private equity funds. Obama has also called
for new caps on the size of banks in order to limit the damage that a
failure could inflict and to promote healthy competition.
href='http://www.nytimes.com/2010/01/25/opinion/25mon1.html?ref=opinion&pagewanted=print'>Read
more.
Analysis: Stakes Are High as
Government Plans Exit from Mortgage Markets
The wind-down of federal support for mortgage rates, set to end in
two months, is a momentous test of whether the Obama administration and
the Federal Reserve have succeeded in jump-starting the housing market
and ensuring it can hold its own, the Washington Post reported
today. Keeping the mortgage rates at historic lows, which required a
commitment of more than $1 trillion, was viewed within the
administration as a central plank of the economic strategy last year,
senior officials said. 'We did what we thought was necessary to
stabilize the market, but we don't think the government should continue
special efforts forever,' said Michael S. Barr, an assistant secretary
at the Treasury Department. 'As you bring stability, private
participants come back in.' A few federal officials and many industry
advocates disagree, saying that the government is exiting too soon. They
offer dire warnings of higher rates and a slowdown in home sales. Fed
leaders say they will end a marquee program supporting the mortgage
markets in March. Obama's economic team, led by Treasury Secretary
Timothy F. Geithner, has decided not to replace it and has been shutting
down its own related initiatives.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/01/24/AR2010012402996_pf.html'>Read
more.
MediaNews Owner Files Pre-packaged
Bankruptcy
The holding company of MediaNews Group, which publishes the Denver
Post and Salt Lake Tribune, filed for bankruptcy protection
on Friday, saying that it has a fast-track plan to cut debt and boost
cash flow, Reuters reported on Friday. The owner of 54 daily U.S.
newspapers filed a pre-packaged chapter 11 under the name of its parent,
Affiliated Media Inc. In its bankruptcy filing, Affiliated Media listed
assets in the range of $100 million to $500 million and liabilities in
the range of $500 million to $1 billion. The company also owns Websites
and television and radio broadcasters, and papers like the Detroit
News and St. Paul Pioneer Press. The case is In re
Affiliated Media Inc., U.S. Bankruptcy Court, District of Delaware,
No. 10-10202.
href='http://www.reuters.com/article/idUSN2217991320100123'>Read
more.
Bankruptcy Court Ready to Approve
Tribune Co. Executive Bonuses
The U.S. Bankruptcy Court for the District of Delaware is ready to
approve Tribune Co.'s request to pay bonuses of up to $45 million to
hundreds of managers, including the media conglomerate's top 10
executives, the Associated Press reported on Friday. In an order last
week, a bankruptcy judge said that unless he receives any objection by
noon Tuesday, he is prepared to grant Tribune's request at a hearing
Thursday. Tribune attorneys informed the court that the bonuses at issue
typically are paid in February and asked that they be considered
separately from two other incentive plans the company has
proposed.
href='http://abcnews.go.com/Business/wireStory?id=9639473'>Read
more.
The Walking Company Seeks to Close 40 More
Stores
Bankrupt U.S. shoe retailer the Walking Company will seek court
approval next month to close 40 additional stores, Reuters reported on
Friday. The retailer, which sells shoes at its namesake stores and also
runs the Big Dogs sportswear clothing line, filed for bankruptcy in
early December with a plan to close 90 of its original 210 stores
immediately.The company said the 40 additional stores it is now seeking
to close were 'either unprofitable or only marginally profitable.' The
case is In re The Walking Company, U.S. Bankruptcy Court, Central
District of California, No. 09-15138.
href='http://www.reuters.com/article/idUSN2122087820100123'>Read
more.
Judge Allows Tousa Creditors' $60 Million
Suit over Failed Deal to Proceed
Bankruptcy Judge John K. Olson allowed unsecured creditors of
bankrupt homebuilder Tousa Inc. to file suit seeking about $60 million
that was paid to the former owners of rival builder Transeastern
Properties Inc. as part of a legal settlement over Tousa
lang='EN'>’s ill-fated attempt to take over
the company, Bankruptcy Law360 reported on Friday. The $60
million was paid to affiliates of Arthur J. Falcone and Edward W.
Falcone, former majority owners of Transeastern until the August 2005
acquisition, according to motion documents filed by the committee. The
entities were part of a joint venture partnership that acquired the
builder. The suit against the Falcone entities is one of a number of
avoidance suits the committee has launched over the Transeastern
transaction and the 2007 global settlement among Tousa, the Falcone
entities, a number of lenders and other parties involved in the deal,
according to the motion. The case is In re Tousa Inc., case
number 08-10928, in the U.S. Bankruptcy Court for the Southern District
of Florida.
href='http://bankruptcy.law360.com/print_article/145164'>Read
more. (Subscription required.)
Freedom to Seek Creditors' Vote on
Reorganization Plan
Bankruptcy Judge Brendan Shannon said on Friday that Freedom
Communications Holdings Inc. can begin soliciting votes from creditors
on its reorganization plan, Reuters reported on Friday. Judge Shannon's
order allows the broadcaster and newspaper publisher to seek creditor
approval for a reorganization plan that would cut its debt by more than
half to $325 million from $770 million. Creditors votes are due by March
1 and the company will seek formal court approval of its plan at a
hearing on March 9. The case is In re Freedom Communications Holdings
Inc., U.S. Bankruptcy Court, District of Delaware, No.
09-13046.
href='http://www.reuters.com/article/idUSN2221534720100122'>Read
more.
New York Housing Complex Returned to
Creditors
The owners of Stuyvesant Town and Peter Cooper Village, the iconic
middle-class housing complexes overlooking the East River in Manhattan,
have decided to turn over the properties to creditors, the New York
Times reported today. The decision by Tishman Speyer Properties and
BlackRock Realty comes four years after the $5.4 billion purchase of the
complexes’ 110 buildings
and 11,227 apartments in what was the most expensive real estate deal of
its kind in American history. This month, the partnership headed by
Tishman Speyer defaulted on $3 billion in debt on the properties, and in
the last few days secondary lenders have been calling to replace the
partnership.
href='http://www.nytimes.com/2010/01/25/nyregion/25stuy.html?hp=&pagewanted=print'>Read
more.
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