A skeptical unsecured creditors’ committee in the RadioShack Corp. case issued more than a dozen subpoenas as part of an investigation into whether bankruptcy was necessary for the electronics retailer, now trying to sell its 4,000 stores, Bloomberg News reported on Friday. The committee asked advisors and business partners to provide all documents related to pre-petition loans and credit-default swaps late last year and, if relevant documents were destroyed, to explain why. The Fort Worth-based company sought bankruptcy protection in February citing $1.39 billion of debt.
Trump Entertainment Resorts on Thursday was cleared to exit bankruptcy proceedings, following a series of deals with former foes, including Donald and Ivanka Trump, who abandoned efforts to reclaim their brand from the downtrodden Atlantic City, N.J., boardwalk gambling operation, Dow Jones Daily Bankruptcy Review reported today. The confirmation decision by Bankruptcy Judge Kevin Gross, however, wasn't the last word on the future of the casino company, which has been at odds with the union representing more than 1,100 casino workers for much of its stay under chapter 11 protection. Unite Here Local 54 marched on Friday to protest the loss of health care and retirement rights allegedly at the hands of its secured lender and new owner — activist investor Carl Icahn.
Bankruptcy Judge A. Benjamin Goldgar on Thursday gave the examiner in Caesars Entertainment Operating Co.’s bankruptcy case a wider scope of power than the casino company wanted, the Wall Street Journal reported on Saturday. Judge Goldgar approved Caesars’ request for the independent examination but said that the individual could go beyond just the seven “challenged” transactions that have prompted four separate investor lawsuits. The judge already had said that he would allow the examiner, he just hadn’t decided on the scope. Thursday’s decision decision is a win for a group of junior bondholders, who had said that an examiner should be allowed to look at more than just those seven transactions, which Caesars had requested. Judge Goldgar said that the examiner could look at any transactions or “apparent self-dealing or conflicts of interest” for which creditors might bring claims against Caesars, including current and former officers of Caesars.
Revel AC Inc. failed in its third attempt to sell its bankrupt casino, opening the door for other potential bidders for the Atlantic City, N.J., resort, Bloomberg News reported yesterday. After months of false starts, Revel finally reached an $82 million deal with Florida real estate investor Glenn Straub’s Polo North Country Club Inc. Bankruptcy Judge Gloria Burns shot down that sale at a Friday hearing in Camden, N.J., saying that she can’t approve it because an earlier version of the deal is still being weighed by another court. After opening at a cost of $2.4 billion in 2012, Revel sought bankruptcy protection in June for the second time in as many years. It closed in September after failing to draw interest for a quick sale. The casino was one of four in Atlantic City to fold last year as competition from surrounding states lured away customers. The bankrupt casino owner originally had a $110 million deal with Toronto-based Brookfield Property Partners LP, but Brookfield walked away after failing to come to terms over energy payments. Straub, who had been the lead bidder at auction, stepped back in to scoop up the property but failed to close the $95.4 million sale by a Feb. 9 deadline. Revel moved to terminate the deal after the closing date lapsed.
Ernst & Young LLP has agreed to settle a pair of lawsuits filed by the state of New Jersey and a handful of California cities and counties over losses they suffered when Lehman Brothers Holdings Inc. collapsed, the Wall Street Journal reported on Saturday. Lawyers for New Jersey and the California municipalities each said they have reached “an agreement in principle” to settle their legal disputes with the accounting firm, according to documents filed in U.S. District Court in New York. New Jersey, seven California cities and counties, plus one California-based insurer had accused Ernst & Young of helping Lehman hide its true financial condition while the bank’s executives were pitching them to invest in “safe” Lehman stock and securities. Pension funds, municipalities and individuals from places as far as Scotland, Ireland and Guam, sued Lehman a few months before its September 2008 collapse after their investments in some $30 billion in Lehman debt and equity went sour. The suits claimed Lehman’s use of so-called Repo 105 deals — repurchase transactions that allowed Lehman to temporarily lower its leverage — falsely allowed the bank to present itself as financially stronger than it really was. The lawsuits also took aim at Ernst & Young for saying Lehman was in compliance with accounting rules even though the auditor was aware of the bank’s use of Repo 105 transactions to buff up its balance sheet.
Colorado Springs developer Ray Marshall and more than 80 partnerships and limited liability companies in which he owns an interest have filed for bankruptcy protection, the Associated Press reported yesterday. Marshall's involvement in the U.S. Olympic Committee headquarters project led to charges of theft and racketeering. Marshall's debts include a $1 million judgment from First Citizens Bank of Raleigh, N.C., which took over the failed United Western Bank in Denver that had financed the USOC building renovation. Marshall cited $4 million in debts stemming from his developments.
A bankruptcy judge granted a number of requests from fresh salad franchiser Saladworks LLC Wednesday, siding with the company and its majority owner and warning the feuding parties to keep their rhetoric in check, Dow Jones Dow Jones Daily Bankruptcy Review reported today. "The rhetoric in the filings is unhelpful," said Judge Laurie Selber Silverstein, who was appointed to the U.S. Bankruptcy Court in Wilmington, Del., last October. "I don't want to read through 10 pages of why the other guy is wrong — not wrong, but bad — and all the things that have happened before I get to the substance of the dispute."
Exide Technologies Inc. is proposing to exit bankruptcy largely being the property of senior secured noteholders, but some of those noteholders won’t be getting a slice of the reorganized battery company, which some believe could be sold for far more than the value assigned to it in estimates on file with the bankruptcy court, the Wall Street Journal reported today. Instead, senior secured noteholders who bought Exide’s debt will get something that they estimate is worth nothing or next to it because they don’t qualify as “accredited investors” under a definition established by the Securities and Exchange Commission and invoked by Exide. Generally speaking, the measurement is money, and investors that don’t have enough of it are believed to be “incapable of protecting or reasoning for themselves,” investor James Reise said in a letter to the U.S. Bankruptcy Court in Wilmington, Del. Exide filed for bankruptcy protection in that court in 2013 and has watched its bond prices suffer during struggles with regulators. Exide’s chapter 11 payout scheme has been tweaked so that not even very wealthy, well-advised accredited investors qualify for a cut of the equity. The distinction between people and institutions is becoming an issue for Exide’s chapter 11 plan confirmation, a March 27 court session that will test the legality of its restructuring strategy. (Subscription required.)
In related news, Exide Technologies has agreed to shutter its lead-acid battery recycling facility in Vernon, Calif., and pay $50 million in clean-up costs to avoid criminal prosecution for illegal storage of hazardous waste, Reuters reported yesterday. As part of a deal reached on Wednesday with the U.S. Attorney's Office in California's central district, Exide also admitted to storing lead-contaminated hazardous waste inside leaking van trailers on a number of occasions over the past two decades. Exide will "immediately and permanently cease" recycling operations at the plant, demolish the facility and clean up any groundwater contamination at the site and surrounding neighborhoods, according to the agreement.
Chassix Holdings Inc., a parts supplier to large automakers, filed for chapter 11 protection yesterday with a prepacakaged restructuring plan that has the support of a majority of its bondholders, the Wall Street Journal reported yesterday. Chassix, owned by private-equity firm Platinum Equity LLC, had been working in February on a restructuring plan that would hand ownership stakes to creditors in exchange for debt forgiveness and would rework contracts with big automakers including General Motors Co., Ford Motor Co. and Chrysler. The Southfield, Mich.-based company said in a court filing yesterday that it has $833 million in assets and $784 million in liabilities. Stress on its facility in Bristol, Ind., in particular, including equipment failures and delays, led to daily losses there of between $350,000 and $500,000 by the fourth quarter of last year. The company, which has more than 4,500 employees, makes steering knuckles, control arms and brake components.
A bankruptcy judge will rule today on the proposed sale of Atlantic City's former Revel casino to a Florida developer for $82 million, the Associated Press reported today. Bankruptcy Judge Gloria Burns said yesterday that she will rule on the purchase of the $2.4 billion casino by Glenn Straub's Polo North Country Club. But a loophole in the deal still leaves the door open for owner Revel AC to accept a higher bid if one materializes before the March 31 scheduled closing date. Nineteen other would-be purchasers have expressed interest in outbidding Straub, but none has put any money on the table.
