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March 23, 2010

Senate Panel Clears Financial Regulatory
Overhaul Bill

The Senate Banking Committee voted yesterday to send to the full
Senate a Democratic bill to overhaul the nation?s financial system,
deferring, for now, an anticipated partisan fight over the legislation,
the New York Times reported today. Although the vote was along
party lines, with all 13 Democrats voting yes and all 10 Republicans
voting no, senators said the decision would give both sides more time to
shape a compromise that could attract broad support on the Senate floor.
Last week, Sen. Christopher J. Dodd (D-Conn.) unveiled a 1,336-page bill
without Republican support, and announced his plan for the committee to
vote on the bill before Congress recessed on March 26 for Passover and
Easter. Senators filed more than 400 amendments to the proposal, and
Dodd girded for what was expected to be a fractious series of late-night
committee meetings. Over the weekend, however, Dodd and Sen. Richard
Shelby (R-Ala.) agreed to move the legislation forward while continuing
to talk.
href='http://www.nytimes.com/2010/03/23/business/23regulate.html?ref=business&pagewanted=print'>Read
more.

Champion Enterprises Sale Completed

The sale of bankrupt Champion Enterprises Inc. to private equity fund
Centerbridge Partners LP, hedge fund MAK Capital Fund LP and affiliates
of PE fund Sankaty Advisors LLC was completed on March 19, the Deal
Pipeline reported yesterday. The cash, credit and debt sale closed
after it received approval from Bankruptcy Judge Kevin
Gross on March 2. Through the sale, the PE and hedge funds
bought 60 percent of the reorganized debtor's equity for $50 million in
cash. Champion's DIP lenders, led by the Cayman Islands branch of Credit
Suisse Group, credit bid the debtor's $80 million debtor-in-possession
loan and its prepetition debt in exchange for the remainder of the
reorganized equity. Troy, Mich.-based Champion, which makes
factory-built homes and modular buildings, said in court papers that it
had to file for chapter 11 on Nov. 15 because of the downturn in the
housing industry.

Seven More U.S. Banks Fail Last Week,
Bringing This Year's Total to 37

Regulators took down seven more banks on Friday with a combined $3.3
billion in assets, marking a total of 37 failures for 2010, Dow Jones
Daily Bankruptcy Review reported today. Among the seizures were
three more in the hard-hit state of Georgia and a $1.6 billion Draper,
Utah, unit of credit-card issuer Advanta Corp. The Federal Deposit
Insurance Corp. couldn't find another institution willing to assume the
$1.5 billion in deposits held by Advanta Bank Corp. Depositors with
insured funds of $250,000 or less are expected to receive their checks
on Monday. The bank had an estimated $247,000 in uninsured deposits at
the time of its closing Friday. The estimated cost to the FDIC's
insurance fund will be $635.6 million. Outside Georgia, the other
institutions to go down on Friday were Aurora, Minn.-based State Bank of
Aurora, Fort Deposit, Ala.-based First Lowndes Bank and Parma,
Ohio-based American National Bank. None of the banks had more than $138
million in assets.

Feinberg to Review Pay at Bailed-Out
Firms

The U.S. pay czar will review executive compensation at Goldman Sachs
Group Inc., JPMorgan Chase & Co., Morgan Stanley and 416 other firms
that took government bailout funds to determine if compensation paid
during the height of the financial crisis should be returned, the
Wall Street Journal reported today. Kenneth Feinberg, the
Treasury Department's special master for compensation, will send a
letter today requesting compensation data for as many as the top 25
executives at each of the 419 firms that received Troubled Asset Relief
Program funds. The pay review will cover only a short window, but one
that captures the 2008 end-of-year bonus season at most large firms.
id='lxhq' title='Read more.'
href='http://online.wsj.com/article/SB100014240527487048413045751377842463087…'>Read
more. (Subscription required.)

American Home Has Flawed Bookkeeping,
Moody's Says

Moody?s Investors Service said yesterday that American Home Mortgage
Servicing Inc., the loan-collections company assembled by billionaire
Wilbur Ross, has bookkeeping flaws that may hurt bond investors,
Bloomberg News reported yesterday. The servicer has been slow to
reconcile numerous items in custodial bank statements with its
accounting records, citing 'inconsistencies' between two technology
systems, the New York-based ratings firm said in a March 19 statement.
As a result, Moody's may downgrade as much as $225 million of securities
backed by American Home's advances of delinquent homeowners' payments to
mortgage-bond investors, even though the Coppell, Texas-based company
has boosted the transaction?s reserve fund by $20 million to protect
bondholders as it fixes its procedures, the analysts said. Defaults may
cost the Federal Reserve, which lent $107.5 million to buyers of
servicer-advance bonds when the debt was issued in August through its
Term Asset-Backed Securities Loan Facility.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aMNIEXIuOEVs&pos=5'>Read
more.

Appeals Court Rules against Philly Papers'
Lenders

The U.S. Court of Appeals for the Third Circuit affirmed a lower
court ruling yesterday that the bankrupt publisher of the
Philadelphia Inquirer newspaper can block lenders from using
what they are owed to bid in an asset auction, Reuters reported
yesterday. Philadelphia Newspapers LLC has proposed holding an auction
of the company's assets as part of its plan of reorganization. The
company proposed that bids must be in cash, preventing holders of $300
million in secured claims from bidding what they are owed, known as a
'credit bid.' A bankruptcy judge ruled that credit bids must be allowed,
a finding that was reversed by U.S. District Judge Eduardo Robreno for
the Eastern District of Pennsylvania. The secured lenders appealed to
the Third Circuit Court of Appeals. Their appeal was joined by the Loan
Syndication and Trading Association and the Commercial Finance
Association. An attorney for the company said that the publisher would
now seek to schedule an auction by the end of April.
title='Read more.'
href='http://www.reuters.com/article/idUSN2220407220100322'>Read
more.

AmTrust Financial Seeks to Keep Control of
Bankruptcy Case

The former parent company of AmTrust Bank, the Cleveland thrift
seized by U.S. federal banking regulators late last year, is seeking a
90-day extension to develop a bankruptcy plan amid a brewing legal
dispute with the Federal Deposit Insurance Corp., Dow Jones Daily
Bankruptcy Review reported today. In court papers filed Friday in
U.S. Bankruptcy Court, AmTrust Financial Corp., the former corporate
parent of AmTrust Bank, asked a bankruptcy judge for more time to
address 'several significant legal, business and financial issues'
before it files a chapter 11 plan. AmTrust Financial wants to retain
exclusive control over its chapter 11 case for another three months as
it decides whether to sell off its 'significant real estate and other
investments' immediately or 'in the future after confirmation of a plan
of reorganization,' the company's lawyers said Friday in court papers.
The holding company's bid to retain control of its chapter 11 case comes
as it continues to spar with the FDIC, which says it has a $2.2 billion
unsecured 'priority claim' against the parent based on its failure to
maintain minimum capital levels at the thrift.  

Union Opposes Flying J's Refinery Sale to
Alon USA Energy

A refinery-workers union has moved to oppose Flying J Inc.'s attempt
to sell its idled Bakersfield, Calif., refinery to Alon USA Energy Inc.,
arguing that the deal would violate labor laws, Dow Jones Daily
Bankruptcy Review reported today. Flying J, which filed for chapter
11 protection in December 2008, has been selling off assets to emerge
from bankruptcy; the sale of the 70,000-barrel-a-day refinery will be
reviewed by a bankruptcy court in Delaware today. The United
Steelworkers Union filed with the court an objection to the proposed
sale, saying Flying J failed to include a key labor agreement as part of
the sales contract and that Alon USA refused to meet with union
representatives to discuss the issue. The dispute centers around a
so-called successorship clause that would require the buyer to honor
existing labor contracts by offering comparable wages, benefits and
retirement plans. 

Judge Seeks Settlement in Yellowstone Club
Case

Bankruptcy Judge John Peterson, who is serving as a mediator,
not the presiding judge, has ordered three days of settlement talks in
May for the tangle of legal claims arising from the bankruptcy of the
ultra-exclusive Yellowstone Club, the Associated Press reported
yesterday. Creditors want $286 million out of the resort's high-flying
founder, Tim Blixseth, who they say bankrolled a luxury real estate
shopping binge with money he 'stole' from the club. Blixseth claims the
club was the victim of a conspiracy engineered by his former wife Edra,
new club owner Sam Byrne and executives at the financial giant Credit
Suisse. The millionaires-only ski resort near Yellowstone National Park
emerged from bankruptcy protection almost 10 months ago. Credit Suisse
arranged a $375 million loan to Blixseth in 2005 but is now trying to
distance itself from the case. Judge Peterson said in an order on March
12 that he wants the firm to attend the settlement talks scheduled to
start May 5 in Butte. Peterson's order noted that the talks would not
delay rulings from Bankruptcy Judge Ralph Kirscher, who is
overseeing many of the Yellowstone Club cases. Parties in the $286
million complaint against Tim Blixseth submitted their final legal
briefs to Kirscher on Friday.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/03/22/AR2010032203105_pf.html'>Read
more.

Walking Co. to Exit Bankruptcy

U.S. shoe retailer Walking Co. Holdings Inc. said yesterday that it
is ready to emerge from bankruptcy protection as soon as April, Reuters
reported yesterday. The company, which filed for bankruptcy protection
in December facing high rents and a difficult retail environment, said
that it has submitted a reorganization plan that will keep 207 of its
214 current store locations open and pay off all of its debts and future
obligations to trade creditors. The company had earlier sought to close
about half of its stores, but was able to work out deals with its
landlords, banks, and vendors to restructure its balance sheet and
long-term financial obligations during the bankruptcy, it said. The
court is expected to hold a hearing on the company's chapter 11
reorganization plan on April 23, the company said, and that it would be
ready to exit chapter 11 early in the week of April 26.
title='Read more.'
href='http://www.reuters.com/article/idUSN2220666920100322'>Read
more.

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