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February 11, 2010
Bi-Lo Unsecured Creditors Withdraw Their
Reorganization Plan
A group of unsecured creditors has dropped its competing proposal to
reorganize bankrupt supermarket chain Bi-Lo LLC, the Deal
Pipeline reported yesterday. Bi-Lo's unsecureds had been pushing a
reorganization plan that they had filed jointly with an ad hoc committee
of term loan lenders. Under that plan, two term loan lenders, Wellspring
Capital Management LLC and Bayside Capital Inc., were to lead a $79.5
million equity investment in Bi-Lo. The term loan lenders were then to
swap the $260 million in principal they are owed for a pro-rata share of
43.1 percent of Bi-Lo's new common stock and a $164.1 million four-year
term loan. According to the withdrawal notice filed by the unsecured
creditors on Tuesday, however, Bi-Lo's term lenders terminated their
agreement to fund the deal on Feb. 4. As a result, the only plan on the
table remaining for Bi-Lo is the one the company submitted in November,
which is backed by private equity firm and current owner Lone Star
Funds.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005388847'>Read
more. (Subscription required.)
Judge: CalPERS Cannot
Collect on Lehman Claim Through Setoff
Bankruptcy Judge James Peck blocked a move by California's giant
pension fund to start collecting on a $433 million claim against Lehman
Brothers Holdings Inc. tied to bonds issued by the failed investment
bank, Dow Jones Daily Bankruptcy Review reported today. Judge
Peck didn't explain his reasoning in Tuesday's order but said that the
the California Public Employees' Retirement System (CalPERS) could come
back to court later with its request 'to the extent that the
circumstances of this bankruptcy changes in a material way.' CalPERS,
the country's largest public pension fund, went to court last year
seeking permission to satisfy some of its claim through a setoff under
which it would reduce its claim by $17 million it owes Lehman. CalPERS
owns a number of Lehman bonds with a face value of about $433
million.
Spansion Noteholders Oppose Silver Lake
Equity Financing Deal
Spansion Inc.'s noteholders are accusing the company of 'insider
dealing' in its decision to allow private-equity firm Silver Lake
Partners to backstop a $109.4 million stock offering rather than
selecting the noteholders' 'superior' offer to provide $112.4 million in
equity financing, Dow Jones Daily Bankruptcy Review reported
today. The noteholders are urging the U.S. Bankruptcy Court for the
District of Delaware to deny confirmation of Spansion's chapter 11
reorganization plan on the grounds that the company's poor business
judgment in choosing Silver Lake's backstop proposal over the
noteholders' offer renders the plan unconfirmable. Spansion is awaiting
court approval of a restructuring plan that relies on $559 million in
new financing to pay creditors and serve as working capital, including
$450 million in new debt financing arranged and underwritten by Barclays
Capital Inc. The remaining funding would be supplied under Silver Lake's
agreement to buy up whatever shares go unsold in the company's $109.4
million stock offering.
Federal Reserve's Strategy on Rate Increase
Lacks a Timetable
Federal Reserve Chairman Ben S. Bernanke yesterday outlined a
strategy, but not a timetable, for scaling back the extraordinary
measures it began taking in 2007 to prop up the economy as financial
markets teetered on collapse, the New York Times reported today.
Bernanke suggested that a new policy tool —
the interest rate on excess reserves, which the Fed
began paying in October 2008 —
lang='RU'>would be a vital part of the Fed
lang='EN'>’s strategy. Increasing that
interest rate, he said, will have the effect of pushing up other
short-term interest rates, including the benchmark fed funds rate
— the rate at which banks
lend to each other overnight. Bernanke did note that the Fed's balance
sheet would shrink on its own, over time, as assets like mortgage-backed
securities and debt guaranteed by Fannie Mae and Freddie Mac are prepaid
or mature. “
size='2'>In the long run, the Federal Reserve anticipates that its
balance sheet will shrink toward more historically normal levels and
that most or all of its security holdings will be Treasury
securities,”
size='2'>he said.
href='http://www.nytimes.com/2010/02/11/business/economy/11fed.html?ref=business&pagewanted=print'>Read
more.
Court Says Chemtura Can Tap
New $450 Million Chapter 11 Loan
Bankruptcy Judge Robert E. Gerber on Tuesday
granted Chemtura Corp. permission to enter into a $450 million
refinancing of its chapter 11 loan that will save the chemical company
$9.3 million in interest expense and give it more time to reorganize,
Dow Jones Daily Bankruptcy Review reported today. Judge Gerber
permitted Chemtura to tap the new loan, allowing the company to avoid
paying more than $4 million in penalties that lenders were set to impose
Feb. 20. The new loan, which increases the amount Chemtura can borrow by
$50 million, comes from the same group of lenders, including Citibank,
Bank of America, Barclays Bank PLC and Wells Fargo Foothill LLC, that
provided the company with a $400 million loan shortly after its March
2009 Chapter 11 filing. Gerber's interim approval will become final
today unless the court receives objections to the financing.
Creditors Seek to End
Rubicon's Exclusivity
Creditors of bankrupt Rubicon U.S. REIT Inc. have
asked a court to end the real estate investment trust's exclusivity to
propose a restructuring plan, Reuters reported yesterday. Noteholders
claimed on Monday that Rubicon signed a letter of intent last November
with Global Asset Capital LLC, according to which Global would act as
the stalking horse bidder at a bankruptcy court-supervised auction for
all of Rubicon's assets. The company had agreed to file for chapter 11
by Nov. 10. Once Rubicon failed to file for bankruptcy in November, it
was sued by Global, which obtained an order from the Delaware Chancery
Court that barred Rubicon from negotiating a deal with anyone else, the
noteholders group said. Rubicon later signed an exclusive agreement with
Global and filed for bankruptcy in January to get it approved by the
court, the noteholders said. A hearing on the matter is scheduled for
Feb. 22. The case is In re Rubicon US REIT Inc., U.S. Bankruptcy
Court, District of Delaware, No. 10-10160.
href='http://www.reuters.com/article/idUSSGE6190MN20100210'>Read
more.
Bankruptcy Judge Approves
Sale of 'Terminator' Franchise to Hedge Fund
Bankruptcy Judge Ernest Robles said
yesterday that the 'Terminator' movie franchise could be sold to
California-based hedge fund Pacificor LLC, ending months of speculation
about the future of the iconic film series after its current owner
collapsed into bankruptcy in August, Reuters reported yesterday. Judge
Robles overruled an objection from movie studios Columbia Pictures and
Lions Gate Entertainment Corp., who had claimed the auction process was
unfair after their joint bid for the franchise was not selected. Under
the deal, Pacificor would have the rights to the revenue from future
films, games, DVDs and certain television programming from the
franchise. The case is In re T Asset Acquisition Company LLC,
U.S. Bankruptcy Court, Central District of California, No.
09-31853.
href='http://www.reuters.com/article/idUSN1016361320100211'>Read
more.
Four CitiApartments
Affiliates File for Bankruptcy
Four real estate entities owned by San Francisco's
biggest landlord, the Lembi Group, filed for chapter 11 protection in a
California bankruptcy court on Monday, Reuters reported yesterday. The
four entities collectively own 16 residential properties, which were
collateral for a $132.4 million loan. The four entities that filed for
bankruptcy are Hermann Street DE LLC, LRL Citi Properties I DE LLC,
Sutter Associates DE LLC and Trophy Properties I DE LLC. Hermann Street
said that it filed for bankruptcy after CW Capital Asset Management LLC,
which is a special servicer for part of the loan, was unwilling to agree
to an extension on acceptable terms that would have allowed the company
to refinance. The case is In re Hermann Street DE LLC, U.S.
Bankruptcy Court, Northern District of California (San Francisco), No.
10-30413.
href='http://www.reuters.com/article/idUSSGE6190KK20100210'>Read
more.
AIG Plans Revamp on
Compensation
American International Group Inc. is rolling out a
plan to revamp how it doles out annual incentive pay to its employees,
as the government-controlled insurance giant moves away from retention
bonuses that have proved controversial over the past year, the Wall
Street Journal reported today. The new initiative, called a 'forced
distribution' system, is being pushed by Chief Executive Robert
Benmosche. Under the plan, thousands of AIG employees will be ranked on
a scale of 1 to 4 based on their performance relative to their peers,
and their annual variable compensation, which may include bonuses, will
be determined by their rank. Individuals ranked in the top 10 percent
will get far more relative to their peers. Similar forced-ranking
systems have been used by large companies such as General Electric Co.
under its previous chief executive, Jack Welch, to reward top performers
and to weed out underperforming employees over time.
href='http://online.wsj.com/article/SB10001424052748703455804575057604189369396.html?mod=WSJ_business_whatsNews'>Read
more. (Subscription required.)
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