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December
20, 2007
size='3'>
id='1'>Calpine Reorganization Plan Approved
Bankruptcy Judge
Burton R. Lifland
size='3'>approved Calpine Corp.'s reorganization plan after the debtors,
creditors and shareholders reached a highly unusual settlement that
staved off an expected battle over the value of the company,
Bankruptcy Law360
reported yesterday. Under the settlement, Calpine's
stipulated post-bankruptcy value will be $18.95 billion. Unsecured
creditors are set to recover over 90 percent of their claims, while
shareholders will receive warrants to purchase up to 10 percent of the
stock in the reorganized company. The company is now set to emerge from
chapter 11 by Feb. 7, the deadline to close on its $7.6 billion exit
financing.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=42767'>Read
more. (Registration required.)
Mortgage
Lending
id='2'>Senator Presents Proposals to Calm Housing Market
Turmoil
Sen. Charles Schumer
(D-N.Y.) laid out an expansive platform yesterday to help calm turmoil
in the housing market, including legislation that would give states and
cities a greater role in rescuing subprime borrowers at risk of
foreclosure,
size='3'>CongressDaily reported. Schumer
spelled out targeted measures that he said would help settle a housing
market racked by a high number of defaults in the subprime market. He
proposed expanding a recent Treasury Department proposal to allow states
and cities to use tax-exempt bonds to refinance troubled loans. Such
bonds can only be used to assist first-time homebuyers or borrowers in
certain distressed areas. Schumer said that his bill would double the
department's proposed cap, make a portion of the cap increase permanent,
and allow states and cities to use such bonds for multifamily rental
housing. 'The insistence that all of the volume cap go to single-family
is not ideal for cities that have been hardest hit by the subprime
crisis, places like Buffalo, Cleveland and Detroit,' said Schumer, a
member of Democratic leadership and a Banking Committee
member.
id='3'>Former Delta Financial File Suit against
Layoffs
Three former employees of
Delta Financial Corp. subsidiaries on Tuesday filed a complaint against
the bankrupt subprime mortgage lender for allegedly not giving
appropriate notice when it cut nearly 97 percent of its
workforce, Bankruptcy
Law360 reported yesterday. The plaintiffs are
seeking respective wages and other pay for 60 days following their
terminations, plus 401(k) contributions, health insurance coverage and
other employee benefits under ERISA for 60 days. The purported class
includes anyone terminated without cause on Aug. 22, Nov. 8, or within
30 days of those dates. The complaint said the plaintiffs are entitled
to claims as an administrative expense.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=42817'>Read
more. (Registration required.)
id='4'>$9.4 Billion Write-Down at Morgan Stanley
Morgan Stanley reported
the first quarterly loss in its 72-year history yesterday, heightening
fears that the financial toll would keep mounting from the
fast-spreading crisis in the subprime mortgage market, the
New York Times
size='3'>reported today. The company took a $9.4 billion charge on
subprime-linked investments for the fourth quarter, bringing its
cumulative charges for subprime mortgages to $10.8 billion. In a stark
reflection of its diminished status it also said it would sell a $5
billion stake to a Chinese investment fund to shore up its
capital.
href='http://www.nytimes.com/2007/12/20/business/20wall.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
W.R.
Grace Grants DOJ $34 Million Superfund Claim
W.R. Grace & Co. settled an
asbestos claim the federal government lodged in its c
face='Times New Roman'>hapter 11 case, agreeing to cede
an allowed general unsecured claim of $34 million for the cleanup of 33
Superfund sites,
size='3'>Bankruptcy Law360 reported yesterday.
Under the settlement, which still must receive the bankruptcy court's
approval, the Department of Justice would also receive an administrative
priority claim of close to $3 million, and other potentially responsible
parties at the sites in question would receive an allowed general
unsecured claim of $7.7 million. If approved, money from the claim would
reimburse the U.S. Environmental Protection Agency for cleaning up the
sites. The DOJ had found Grace liable under the Comprehensive
Environmental Response, compensation and Liability Act.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=42791'>Read
more. (Registration required.)
id='6'>Pacific Lumber Creditors Call for End of
Exclusivity
In the wake of failed
talks between Pacific Lumber Co. and its creditors, noteholders have
asked the bankruptcy court overseeing the defunct lumber company's
chapter 11 case to terminate the debtors' exclusivity rights and to
allow them to submit their own alternative reorganization plan,
Bankruptcy Law360
reported yesterday. The debtors first presented a joint
motion in August to extend their right to exclusively file a
reorganization plan. The motion was met by fierce opposition from the
noteholders. Judge Richard S. Schmidt heard arguments in September, and
again in October, granting the debtors a limited extension but ordering
the parties into mediation to hammer out a consensual plan. Mediation
commenced on Nov. 26, but the talks broke down a week ago.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=42787'>Read
more. (Registration required.)
id='7'>Synova Healthcare Group Inc. Files for
Bankruptcy
Synova Healthcare Group
Inc., the maker of the Today Sponge, filed for chapter 11 protection on
Tuesday, the Associated Press reported. In court documents on Tuesday,
Synova listed assets of about $21 million and liabilities of almost $27
million. Earlier this year, Synova bought a
w:st='on'>New
Jersey
Pharmaceuticals, that had begun selling the Today Sponge in
size='3'>U.S.
size='3'>stores in 2005. A decade earlier, the product's prior maker had
stopped making the contraceptive rather than pay to fix manufacturing
deficiencies federal inspectors found at its factory.
href='http://biz.yahoo.com/ap/071219/sponge_maker_bankruptcy.html?.v=2'>Read
more.
id='8'>Lionel Struggles to Exit Bankruptcy
Lionel LLC CEO Jerry
Calabrese said that the model train maker has yet to line up financing
to emerge from chapter 11 protection, the latest company to have trouble
exiting bankruptcy amid the credit crunch, the Associated Press reported
yesterday. With a resurgent Lionel recently pegging its value upon
exiting chapter 11 at $100 million, Calabrese said that the company is
looking for lenders or equity investors in for the long haul. Lionel
recently reached a tentative deal with rival MTH Electric Trains to
settle their long-running, trade-secrets battle. The 107-year-old toy
company has already filed a reorganization plan with the bankruptcy
court that would pay its creditors in full. Judge
face='Times New Roman' size='3'>Burton R. Lifland
size='3'>set Lionel’s deadline to exit chapter 11 at the end of
March.
href='http://biz.yahoo.com/ap/071219/lionel_bankruptcy.html?.v=1'>Read
more.
id='9'>Tropicana Casinos Nears Deal to Avoid
Bankruptcy
Tropicana Casinos and
Resorts is close to a deal with lenders that could help it avoid filing
for bankruptcy, according to the trustee of the company's
size='3'>Atlantic City
size='3'>casino, the Associated Press reported yesterday. The deal,
which could be approved by debt holders today is designed to avoid
harming Tropicana's casinos in other states, including Nevada,. where
regulators say they will more closely examine the company's operations
after
size='3'>New Jersey
Commission strips the company of its license to operate the Tropicana
Casino and Resort in
w:st='on'>Atlantic
City
Court Judge Gary S. Stein, who had been overseeing the Tropicana as a
trustee since the license denial a week ago, said yesterday that
commission staff met earlier in the day with Tropicana lawyers, as well
as agents for the holders of the Tropicana's main debt, and worked out a
deal under which the lenders will not demand immediate repayment of the
loans.
href='http://biz.yahoo.com/ap/071219/tropicana_future.html?.v=1'>Read
more.
size='3'>