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October 16, 2009
Charter Communications Reorganization Plan
Approved
Charter Communications Inc., the bankrupt cable operator, won a
judge's approval of its plan to reorganize by reinstating $11.8 billion
in debt, Bloomberg News reported today. Bankruptcy Judge
size='3'>James Peck
yesterday approved the fourth-biggest U.S. cable company's chapter 11
plan. Charter said that it expects to emerge from bankruptcy shortly
after Judge Peck issues an order confirming the reorganization plan,
which the company said it expects to happen “within the next
several weeks.” The St. Louis-based company has about 5.5 million
customers in 27 states, according to its Web site. It sought bankruptcy
after being overwhelmed by more than $21 billion in debt.
href='http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_SlJwnA_XiI'>Read
more.
Commentary: Default Rates Raise Questions
on Government Role in Mortgage Lending
Recent reports that the Federal Housing Administration (FHA) will
suffer default rates of more than 20 percent on the 2007 and 2008 loans
it guaranteed has raised questions once again about the government's
role in the financial crisis and its efforts to achieve social purposes
by distorting the financial system, according a commentary in today's
Wall Street Journal. Far more
interesting than the FHA's prospective losses on its 2007 and 2008 book
are the agency's losses on its 2005 and 2006 guarantees, when the
housing bubble was inflating at its fastest rate and there was no need
for government support. FHA-backed loans during those years also have
delinquency rates of between 20 and 30 percent. These adverse results -
not the result of a 'policy' effort to shore up markets - pose a
significant challenge to those who are trying to absolve the U.S.
government of responsibility for the financial crisis. Read the
href='http://online.wsj.com/article/SB10001424052748704107204574475110152189446.html'>full
commentary. (Subscription required.)
Lehman Bankruptcy Fees Cross $400 Million
Mark
Bankrupt Lehman Brothers Holdings Inc. has already paid out $402.9
million in fees and expense reimbursements to attorneys, financial
advisers and other consultants, Bankruptcy
Law360 reported yesterday. The monthly operating report filed in the
U.S. Bankruptcy Court for the Southern District of New York on Wednesday
showed that payouts were made to more than 20 advisers and attorneys for
fees and expense reimbursements between September 2008, when the company
filed for chapter 11, through September 2009. Restructuring advisory
firm Alvarez &Marsal LLC, which has taken the lead in liquidating
Lehman, has so far collected $169.2 million in the past year, according
to the report. Lehman's lead bankruptcy counsel Weil Gotshal&Manges
LLP has received $98.5 million as of Sept. 30, the filing showed.
Milbank Tweed Hadley &McCloy LLP, lead counsel for the unsecured
creditors' committee, has picked up $29.2 million in fees and expense
reimbursements over the past year, the report said.
href='http://bankruptcy.law360.com/print_article/128635'>Read more.
(Subscription required.)
Government Pay Czar Blocks Bank of America
Chief's Pay
Kenneth Feinberg , the Treasury Department's pay czar, pushed
outgoing Bank of America Corp. CEO Kenneth D. Lewis into giving back
about $1 million he received so far this year and forgoing the rest of
his $1.5 million salary for 2009, the Wall
Street Journal reported today. Feinberg pushed for the deal because
he thought the package of retirement benefits and unvested stock Lewis
takes with him when he steps down at year's end - currently worth at
least $69.3 million, according to securities filings - was large enough,
and possibly too big. Feinberg doesn't have the authority to modify the
retirement package because it was awarded before this year, when he was
charged with overseeing pay practices at seven firms receiving large
sums of government aid. Bank of America said that Lewis voluntarily
agreed to the deal, which was completed yesterday.
href='http://online.wsj.com/article/SB125564137421788337.html?mod=article-outset-box'>Read
more. (Subscription required.)
In related news, Bank of America reported a loss in the third quarter
as growing numbers of consumer loans soured and the bank paid millions
of dollars to wean itself off government life support, the
face='Times New Roman'>New York Times reported today. The bank
said that it had a loss on $1 billion before accounting for preferred
dividends. When those dividends are included, the loss was $2.24
billion. Bank of America, which took $2.6 billion in write-downs, posted
a loss of 26 cents a share for the three months from July through
September, compared with a profit of $3.2 billion in the second
quarter.
href='http://www.nytimes.com/2009/10/17/business/17bank.html?_r=1&ref=business'>Read
more.
AHM Settles WARN Class Action for $6.5
Million
Bankruptcy Judge
size='3'>Christopher S. Sontchi on Wednesday granted
preliminary approval of American Home Mortgage Holdings Inc.'s $6.5
million settlement with former employees suing over the debtor's mass
layoffs in 2007, Bankruptcy
Law360 reported yesterday. Judge Sontchi cleared the way for a
fairness hearing in December to finalize the settlement, which puts to
rest allegations that American Home Mortgage violated the Worker
Adjustment and Retraining Notification Act (WARN) by failing to give its
workforce adequate notice before axing thousands in August 2007 when the
mortgage lender was driven into bankruptcy protection. The settlement
releases AHM from any claim arising from the mass layoff and plant
closing in exchange for a $6.5 million payment, comprising half of the
first $13 million in estate funds that would otherwise be available for
holders of general unsecured claims, according to the debtor's motion.
Read
more. (Subscription required.)
Judge Grants Bankrupt Mall Group $57.5
Million in Bonuses
Executives and employees of embattled shopping mall owner General
Growth Properties Inc. will collect potentially $57.5 million in bonuses
as part of two incentive plans crafted to align employees' goals with
the company's plan to emerge from chapter 11 next year,Bankruptcy Law360 reported yesterday. Bankruptcy
Judge
size='3'>Allan Gropper approved the bonus programs yesterday,
saying that the relief requested appeared to be in the best interests of
the debtors and all interested parties and authorizing the estate to
take all actions necessary to effectuate the order. The company's top 12
executives could earn as much as $11.6 million collectively under the
new plans, while 35 other senior executives could split as much as $6
million, and 2,800 other employees will divide another $30 million,
according to court documents.
href='http://bankruptcy.law360.com/articles/128609'>Read more.
(Subscription required.)
Dayton Superior Looks to Emerge from
Chapter 11
Commercial construction materials supplier Dayton Superior Corp. won
bankruptcy court confirmation of a reorganization plan expected to
eliminate $230 million in debt, a development Dayton Superior's chief
executive said cleared the way for the company to emerge from bankruptcy
before the end of October, Bankruptcy
Law360 reported yesterday. Bankruptcy Judge
size='3'>Brendan L.
Shannon signed off on an order Wednesday confirming Dayton
Superior's first amended chapter 11 plan. Under the plan, Dayton will
get rid of about 65 percent of the total debt the company had when it
filed for bankruptcy in April, and cut its annual interest payments by
approximately $24 million, the company said. All existing common shares
in the company will be canceled. The plan calls for $170 million in
prepetition senior subordinated notes to be converted into new stock in
the reorganized company. Oaktree Capital Management LP, the largest
prepetition noteholder, will own a substantial majority of stock in the
reorganized company, which will be privately held, Dayton Superior
said.
href='http://bankruptcy.law360.com/print_article/128533'>Read more.
(Subscription required.)
Analysis: Bailed-Out Banks Raking In Big
Profits
The nation's largest banks, preserved from failure by federal aid and
romping in markets revived by federal aid, are racking up vast profits
even as the broader economy struggles to emerge from recession, the
Washington Post reported today.
While loan losses continue to mount, the banks are making it up on Wall
Street, trading in stocks, bonds and other financial instruments, and
collecting fees for services such as helping companies raise money.
Goldman Sachs and Citigroup reported third-quarter profits yesterday,
joining J.P. Morgan Chase in outstripping the expectations of financial
analysts and solidifying their places as among the banks that have
benefited most from the government's massive rescue of the financial
industry. Goldman said it earned $3.19 billion between July and
September, nearly the most it has ever made in three months, a record it
set earlier this year. Citigroup, burdened by massive losses on loans
and investments, managed a profit of $101 million largely on the
strength of its investment bank.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/10/15/AR2009101504007.html'>Read
more.
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