href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
October 9, 2009
JPMorgan, Banks to Pay $100
Million in Lender Bankruptcy Case
JPMorgan Chase & Co., Bear Stearns, Morgan Stanley
and Credit Suisse Group AG agreed to pay $100 million to settle a
lawsuit over their roles in the bankruptcy of a Philadelphia mortgage
lender, Bloomberg News reported today. The trustee for defunct American
Business Financial Services Inc. sued the banks in state court in
Philadelphia claiming they helped keep the company going by enabling it
to overstate the value of its assets. The banks agreed to the settlement
on Oct. 7, Steven Coren, an attorney for trustee George Miller, said
yesterday. JPMorgan and Bear Stearns agreed to pay $55 million, Coren
said. JPMorgan acquired Bear Stearns in June 2008. Credit Suisse and
Morgan Stanley will pay $37.5 million and $7.5 million respectively,
Coren said. The companies denied any wrongdoing. American Business,
which offered loans to people with low credit scores, filed for court
protection in 2005, listing debt of as much as $1.1 billion, according
to papers filed in U.S. Bankruptcy Court in Delaware. Miller was seeking
at least $750 million from the banks, their auditors and former officers
and directors on behalf of more than 20,000 people, many of them
elderly, who lost their life savings when the company became insolvent.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aGtyMqQPN9gc'>Read
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aGtyMqQPN9gc'>
Senators Ready to Work on
Overhaul of Financial Regulatory Structure; New Study Says CFPA Would
Restrict Availability of Credit
Senate Banking Chairman Christopher Dodd (D-Conn.)
said yesterday that he has no current sticking points with Banking
ranking member Richard Shelby (R-Ala.) that could derail an agreement to
revamp the nation's financial regulatory structure,
face='Times New Roman'>
size='3'>CongressDaily reported yesterday.
Dodd has been working behind closed doors to strike an agreement with
Shelby that would make it easier to pass the measure on the Senate
floor. Dodd is trying to move a bill quickly because of a fear that
momentum could be stymied if it is kicked over to next year. Shelby has
stressed that he wants a major curb on the Federal Reserve's power,
especially in limiting its role to be a systemic-risk regulator to
monitor the entire financial system.
Meanwhile, a
href='http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1483906'>new
research report released this week predicts that the proposed new
agency would have severe adverse effect on credit.
Media
Court Approves Sun-Times
Asset Sale to Investor Group
Bankruptcy Judge
face='Times
New
Roman' size='3'>Christopher S. Sontchi
size='3'>approved bankrupt newspaper publisher Sun-Times Media Group
Inc.'s asset sale to STMG Holdings LLC, a private investor group led by
Chicago businessman and Mesirow Financial Holdings Inc. CEO James C.
Tyree,
face='Times
New
Roman' size='3'>Bankruptcy Law360 reported
yesterday. The total transaction is valued at about $25 million and is
expected to close by the end of October, Sun-Times said. Tyree's group
will pay $5 million in cash and assume about $20 million in liabilities.
The closing remains contingent on approvals by two of the
company’s 16 bargaining units of amendments to their collective
bargaining agreements, Sun-Times said. Those agreements are expected to
be reached in the next few days.
href='http://bankruptcy.law360.com/print_article/127308'>Read more.
(Subscription required.)
Judge Rules that Lenders
Can Use Debt to Buy Philly Newspapers
A federal judge ruled yesterday that secured creditors
of Philadelphia's major daily newspapers can use the $300 million debt
they're owed to bid for the company in a bankruptcy auction, the
Associated Press reported yesterday. CEO Brian Tierney and other company
officials had hoped to block creditors from making a credit bid in the
bankruptcy auction they proposed. The senior creditors include the Royal
Bank of Scotland Group PLC, CIT Group Inc. and Angelo, Gordon & Co.,
and they had complained that the company drew up a reorganization plan
designed to exclude credit bids and keep Tierney and his team at the
helm. The plan includes a proposed auction along with a stalking-horse
bid of $67 million in cash and real estate from a new ownership group
that includes two of the existing owners. The auction date has not yet
been scheduled.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/10/08/AR2009100803871_pf.html'>Read
more.
Rival Disclosure Statements
Approved in Trump Chapter 11
Bankruptcy Judge
face='Times
New
Roman' size='3'>Judith Wizmur approved two
rival disclosure plans in the chapter 11 case of Trump Entertainment
Resorts Inc., despite objections from the debtors,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported today. In
a hearing held Wednesday, Judge Wizmur approved the two plans, one from
the bankrupt company and one from an ad hoc investors’ committee,
according to a entry on the docket report. Judge Wizmur did not issue
any memorandum explaining her reasoning, and representatives for Trump
and the ad hoc committee did not immediately respond to requests for
comments. On Aug. 3, Trump filed a chapter 11 reorganization plan and
disclosure statement calling for the restructuring of $488 million in
first-lien debt to Beal Bank while providing nothing for holders of
$1.25 billion in senior secured notes and $3.3 million in unsecured
claims. The disputed plan also calls for Beal and Donald Trump to invest
$100 million in Trump Entertainment in exchange for all the stock in the
reorganized company. The company's existing stock would be canceled. The
ad hoc committee of investors have put forward a plan and disclosure
statement that would give unsecured claims holders the right to acquire
75 percent of the new common stock of the restructured entity, or an
equivalent amount of cash.
href='http://bankruptcy.law360.com/print_article/127235'>Read
more. (Subscription required.)
Commentary: In Today's LBO
Arena, There Is a Lot Less Leverage
While two new deals this week show that private equity
is awakening after a miserable two-year period, they also reveal how
hard it is to complete a transaction, the
face='Times
New
Roman' size='3'>Wall Street Journal reported
today. Far more banks are needed to stitch together far less leverage
for transactions that are taking far longer to get done than during the
boom. As expected, Blackstone Group LP announced Wednesday that it would
buy Anheuser-Busch InBev's theme-park business for $2.3 billion in the
year's largest leveraged buyout (LBO). The same day, Clayton
Dubilier& Rice Inc. announced its intent to invest $477 million for
a 46 percent stake in JohnsonDiversey Inc., a deal that values the
cleaning-products company at $2.6 billion. It took Blackstone more than
six months to line up seven lenders to provide $1.4 billion in debt
financing for the theme-parks deal. Clayton Dubilier had to corral a
group of 11 banks to provide the $1.9 billion in new debt financing on
the JohnsonDiversey deal. Contrast that to the buyout boom period of
2005 to 2007, when firms could line up multiple billions of dollars in
financing within weeks. For example, lining up $9 billion of debt for
the $17.6 billion buyout of Freescale Semiconductor Inc. took only20
days.
href='http://online.wsj.com/article/SB125504590683074801.html?mod=WSJ_hps_sections_markets'>Read
more. (Subscription required.)
Wheel Maker Accuride Files
for Chapter 11
Accuride Corp., an Evansville, Ind.-based maker of
medium- and heavy-duty steel and aluminum wheels, said yesterday that it
was filing for bankruptcy under a prearranged agreement with bondholders
and senior lenders,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The filing, in the U.S. Bankruptcy Court
for the District of Delaware, amounts to a balance sheet restructuring
with a committee of holders of $275 million worth of its senior
subordinated notes and a committee of senior lenders, the company said.
The company's Canadian and Mexican subsidiaries are not part of the
filing, the company said, and all company operations will continue to
operate normally. In order to maintain smooth operations, the company
said it has secured a $50 million debtor-in-possession credit facility
from noteholders and senior lenders that will allow the company to
maintain normal terms with suppliers.
href='http://bankruptcy.law360.com/print_article/127253'>Read
more. (Subscription required.)
Labor Group Asks Government
Pay Czar to Stop BofA CEO Pension
A top U.S. labor group yesterday asked Kenneth
Feinberg, the Obama administration's pay czar, to stop any retirement
payments to Bank of America Chief Executive Ken Lewis, Reuters reported
today. The Service Employees International Union sent a letter to
Feinberg calling Lewis 'one of the chief architects' of the economic
crisis and saying that he should not receive any retirement or severance
package until the bank stops foreclosures and increases lending. Bank of
America announced last week that Lewis will leave the company by
year-end. Lewis' retirement pay includes $53.2 million, mostly from a
pension program frozen years ago, and $72.8 million in accumulated stock
and other compensation, according to an analysis by New York-based
compensation consultant James F. Reda & Associates.
href='http://www.reuters.com/article/governmentFilingsNews/idUSN0839427120091008'>Read
more.
House Bill Seeks to Aid New
Small Businesses
The House Small Business Finance and Tax Subcommittee
approved a bill yesterday to authorize grants and microloans to assist
new small businesses and those owned by women, veterans and
minorities,
size='3'>CongressDaily reported today. The
measure sponsored by Rep. Brad Ellsworth (D-Ind.) was approved by
unanimous voice vote as part of a package of bills to modernize the
Small Business Administration's capital access programs, which Finance
and Tax Subcommittee Chairman Kurt Schrader (D-Ore.) said had not been
updated in more than eight years. The bill updates the SBA's microloan
program, which provides loans of up to $35,000 to start-up and newly
established small businesses. The program is designed to help low-income
borrowers, especially those with little credit history, along with
women, minority and veteran borrowers who do not qualify for larger SBA
or conventional loans. The program also helps intermediaries such as
nonprofits with experience helping low-income small businesses get loans
in order to meet their goals. The bill authorizes $80 million for
technical assistance and $110 million in direct loans annually for
FY10-FY11.
International
Click here to review
today's global insolvency news from the GLOBAL INSOLvency site.