Lott Files for Cloture
Senate Majority Leader Trent Lott (R-Miss.) filed cloture last night,
forcing a vote on the bankruptcy overhaul legislation. He
indicated that he thought all legislative business could be finished by
tomorrow, allowing for a vote on the bankruptcy bill (H.R. 2415).
The cloture vote is necessary because Sen. Paul Wellstone (D-Minn.), one
of the bill’s biggest opponents, has promised a filibuster.
“This conference report is worse than the bill that passed the
Senate,” Wellstone said. “It is absolutely amazing to me
that we would try to jam through a bill, which I believe is very harsh
toward the most vulnerable citizens, which purports to deal with the
abuse—the American Bankruptcy Institute states, at best, a
3-percent abuse—but, at the same time, enables people who have
millions of dollars to buy luxurious homes in some states in the United
States of America and shield all their assets from bankruptcy. I
hope my colleagues will defeat this piece of legislation,” he
said.
Sen. Jeff Sessions (R-Ala.) disagreed with Wellstone and expressed his
belief that the President will sign the bill. “It is
true—I do not believe it is 3 percent—the majority of people
who file bankruptcy will not be affected by this bill. But those who are
abusing it will be,” he said. “We have a problem with
bankruptcy. We can do better. This bill is fair. It raises
protections for women and children far above anything before. This
is a good bill. I think the President will
reconsider.”
Sen. Charles Schumer (D-N.Y.) expressed his disappointment with the
removal of the abortion language (Schumer amendment) from the bill and
vowed that without the amendment, the legislation would fail.
“To me, it is the most important provision in this bankruptcy
bill,” he said. “Because the amendment I have added
addresses head-on this fundamental use of the bankruptcy system, I will
not rest until we do everything procedurally possible to make sure that
a bankruptcy reform package without it fails.”
After cloture is agreed on, Wellstone could then delay a vote on the
final bill for a maximum of 30 hours. Lott hopes that with no
other business pending, Wellstone and other Democrats would forgo the
time and allow a final vote. President Clinton has promised to
veto the bill and with Congress likely out of session, there would be no
time for an override.
House to Pass New Chapter 12 Bill
Legislation that waved extending chapter 12 of the Bankruptcy Code,
relating to family farm bankruptcies, will be considered and passed in
the House today under suspension of the rules. Once the
legislation is passed it will then be sent to the Senate.
The legislation would be retroactive to the chapter 12 sunset day of
June 30, so that family farmers who sought bankruptcy protection during
the hiatus may convert to chapter 12 from whichever chapter they were
forced to file under in the absence of chapter 12. Under the bill,
chapter 12 would sunset on July 1, 2001.
Brennan’s Offshore Trust Protected by Bankruptcy Stay
Disgraced penny stock mogul Robert E. Brennan will not be forced to
repatriate $5 million from an offshore asset protection trust following
a ruling Oct. 26 by the Second U.S. Circuit Court of Appeals. A
divided court found that a lower court’s order to have Brennan,
now in bankruptcy, return the money to the United States violated the
automatic stay provision of the Bankruptcy Code. During the trial,
but before the judgment, Brennan established the Cardinal Trust on
Gibraltar, naming his three sons and the Robert E. Brennan Foundation
Inc. as beneficiaries. Under the trust terms, the trustee had no
obligation to make payments to the beneficiaries during the life of the
trust.
“Although the question is a close one, we agree with Brennan that
the repatriation order first within the exception to the governmental
unit exception and that the order therefore violates the automatic
stay,” said Judge Jose A. Cabranes. “It is well
established that the governmental exception of §362 (b) (4) permits
the entry of a money judgment against a debtor so long as the proceeding
in which such a judgment is entered is one to enforce the governmental
unit’s police or regulatory power.”
Aryans Leader Files for Bankruptcy
Aryans Nation leader Richard Butler filed a pro se chapter 7
bankruptcy yesterday in Idaho, according to a release from the U.S.
Bankruptcy Court, District of Idaho. Last month, Butler agreed to
give up his northern Idaho compound to satisfy a $6.3 million state
court verdict against the white supremacist organization. As part
of the agreement, Butler was to vacate the compound by Oct. 25. In
September, a jury found Butler and the Aryans Nation negligent in hiring
and training security guards who shot and assalted two people near the
compound. The couple was awarded $330,000 in compensatory damages
and $6 million in punitive damages. Butler deeded the property to
the couple to satisfy the judgment. In his petition, Butler listed
assets of $300,000 and debts of more than $5.8 million.
Winn-Dixie to Buy Stores From Jitney Jungle
Winn-Dixie Stores Inc. yesterday announced an agreement with
Jitney-Jungle Stores of America Inc. to purchase 72 grocery stores, 32
fuel centers and 2 liquor stores, according to a newswire report.
The Jitney-Jungle companies, headquartered in Jackson, Miss., have been
operating under chapter 11 since Oct. 12, 1999. The Jacksonville,
Fla.-based Winn-Dixie has agreed to pay approximately $85 million plus
inventory for the stores, which currently generate approximately $650
million in annual sales.
Fifty-five of the grocery stores are located in Mississippi, eleven
in Alabama, three in Louisiana and three in Florida. Most of the
stores will become part of Winn-Dixie's Louisiana division and will be
serviced from the Hammond Retail support facility. Most of the
stores will continue to operate under their current Jitney Jungle,
Jitney Premier, Sack & Save, MegaMarket, Delchamps and Pump &
Save banners. Winn-Dixie is one of the nation's largest
supermarket retailers.
Bruno's Announces Plans to Purchase 17 Supermarkets
Bruno's Supermarkets Inc. yesterday announced that it has entered into
an agreement to purchase 17 supermarkets from Jitney-Jungle Stores of
America Inc. and its wholly owned subsidiary, Delchamps Inc., according
to a newswire report. The supermarkets to be purchased include 12
in Alabama, four in Florida and one in Mississippi. In addition,
Bruno's will purchase three liquor stores in Florida and two gas
stations — one in Alabama and one in Mississippi — from
Jitney Jungle. Fifteen of the supermarkets to be acquired by the
Birmingham, Ala.-based Bruno's currently operate under the Delchamps
name and two operate under the Jitney-Jungle name. Bruno's currently
operates stores primarily under the Bruno's, Food World and Food Fair
formats. The completion of the acquisition is subject to a
number of conditions, including the approval by the U.S. Bankruptcy
Court for the Eastern District of Louisiana. Bruno's currently
owns and operates 153 supermarkets in Alabama, Florida, Georgia and
Mississippi.
Russian Bank Receives Assistance From U.S. Bankruptcy Court
Alexander Livshits, the chairman of the board of Rossiyskiy Kredit
Bank (RKB), yesterday announced that the U.S. Bankruptcy Court in New
York City entered an order on Oct.11 that granted the bank a permanent
injunction under Section 304 of the U.S. Bankruptcy Code, preventing
creditors of RKB from bringing lawsuits or enforcing judgments against
RKB in the United States, according to a newswire report. Mr.
Livshits said, 'The ruling in New York represents the first time a
bankruptcy court in the United States has given its assistance to the
reorganization of a Russian bank. The ruling is an important
stride toward giving Russia access once again to the international
capital markets.'
One year ago, the newly created Russian Agency for Reconstruction of
Credit Organizations (ARCO), took over RKB and obtained a moratorium
(akin to an 'automatic stay' in U.S. bankruptcy cases) that prevented
creditors from prosecuting lawsuits or collecting judgments against RKB
in Russia. The moratorium resulted from newly adopted Russian
laws, similar to chapter 11 of the U.S. Bankruptcy Code, designed for
the reorganization of financial institutions. Because the New York
state court had no power to force the dissenting bank creditors to
participate in the Amicable Settlement, the Russian reorganization
proceeding was threatened with failure because RKB could not conduct
business if its assets could be attached in the United States or in
other countries that would enforce U.S. judgments. Consequently,
ARCO commenced an 'ancillary proceeding' in the Bankruptcy Court in New
York in early August under provisions of U.S. law which allow the
Bankruptcy Court to block creditors from bringing lawsuits in the U.S.
against an enterprise which is the subject of a bankruptcy proceeding in
another country.
In early August, the U.S. Bankruptcy Court granted a temporary
injunction stopping lawsuits in the United States against RKB. Later in
August, the Commercial Court in Moscow approved the Amicable
Settlement. Standing by its preliminary ruling from early August
in favor of ARCO and RKB, the U.S. Bankruptcy Court on Oct. 11 entered a
permanent injunction preventing all creditors from bringing lawsuits
against RKB or attaching its assets in the United States.
Bankruptcy Court Grants Imperial Home Decor Group Inc. Exclusivity
Extension
Imperial Home Decor Group Inc. (IHDG) yesterday said that the U.S.
Bankruptcy Court for the District of Delaware has extended the period in
which the company has the exclusive right to file and advance a plan of
reorganization in its chapter 11 case, according to a newswire
report. IHDG has been granted another 60 days, until Dec. 18, in
which the company has the exclusive right to file a reorganization
plan. The Cleveland-based company also has the exclusive right for
another 60 days after that date, until Feb. 16, 2001, to solicit
creditors to vote for the plan. Imperial Home Decor Group is the
world's largest designer, manufacturer and distributor of residential
wall covering products.
Tri-Valley Growers Return To Court
Representatives of the Tri-Valley Growers Cooperative returned to
bankruptcy court yesterday to discuss a controversial severance
package. The northern California cooperative applied for
bankruptcy last July with a debt of more than $400 million. Growers who
belong to Tri-Valley have lost about $140 million. But, at the
same time, a judge has approved a $12 million bonus package for co-op
employees. Among them are Tri-Valley's CEO, who could pocket
$750,000 in severance, plus a bonus of up to $600,000.
Texfi Industries Announces New $25 Million Financing
Texfi Industries Inc. yesterday announced it has arranged a new
revolving working capital financing with CIT Commercial Services, a
division of The CIT Group in the amount of $25 million, according to a
newswire report. The financing is for one year and requires the company
to submit a reorganization plan by April 2001. Texfi filed for chapter
11 in the Southern District of New York on Feb. 15 and has been
operating as debtor-in-possession (DIP) since that date. The textile
manufacturer and marketer expects to submit its reorganization plan
ahead of schedule in 2001.
Iridium Seeks Court Approval of $25 Million Offer For Assets
After searching for a qualified buyer for its assets for the last 17
months, Iridium LLC has finally submitted a purchase offer for
bankruptcy court approval that it deems acceptable, according to a
newswire report. According to filings made with the U.S.
Bankruptcy Court in Manhattan, a Delaware entity known as Iridium
Satellite LLC submitted a $25 million offer for the former satellite
telecommunication provider's assets Thursday after months of
negotiations. Of the $25 million purchase price, Iridium Satellite
would pay $6.5 million in cash and $18.5 million in senior unsecured
convertible debt securities, which will provide deferred cash as well as
a 5 percent equity stake in Iridium Satellite.
Iridium is still accepting competing bids for the assets. The
company's motion notes that competing bidders must state their intent to
Iridium before the Nov. 8 sale hearing. Competing bids must
contain a cash component of at least $7.5 million, matching Iridium
Satellite's offer, plus the up to $1 million break-up fee the bidder
would be entitled to if Iridium selects a third-party bid. Iridium
and eight affiliates on Aug. 23 filed for Chapter 11 bankruptcy
protection in the U.S. Bankruptcy Court in Wilmington, Del. The
company had $3.4 billion in assets and $4.2 billion in debts as of Sept.
30, 1999.
Grand Union to be Bought by C&S Wholesale
Supermarket chain Grand Union Co. said yesterday it plans to sell
substantially all of its assets and business to its main supplier,
C&S Wholesale Grocers Inc., in a deal worth about $300 million,
according to a Reuters report. Under terms of the letter of
intent, the Wayne, N.J.-based C&S will pay just over $300 million in
cash for about 185 of Grand Union's 197 stores and its Montgomery, N.Y.,
distribution center. C&S intends to assign its right to
purchase some of these assets to third parties.
The closing of the deal is subject to the signing of a definitive
agreement and other customary closing conditions, including governmental
antitrust approval, bankruptcy court approval and C&S obtaining
financing pursuant to a bank commitment letter, which it expects to
obtain shortly. The deal will also be subject to higher or better
bids for Grand Union's assets. Grand Union filed a voluntary
chapter 11 petition in the U.S. Bankruptcy Court in Newark, N.J. on Oct.
3, the third time in five years it filed for bankruptcy protection.
