Walter Energy Inc. is preparing to file for bankruptcy protection this week after agreeing on a fast-track restructuring process that would hand ownership of the coal miner to senior creditors, the Wall Street Journal reported today. The company, which has been battered by a sharp drop in coal prices, plans to swap its senior creditors’ debt for ownership of the company in a chapter 11 restructuring that would largely wipe out junior creditors and reduce labor and pension costs. Walter and a group of senior bond and loan holders yesterday were finalizing an agreement that would allow the company to use cash pledged as collateral to fund its operations in bankruptcy. Walter had $434.7 million in cash as of March 31, according to a regulatory filing.
Sabine Oil & Gas Corp., the Houston-based exploration and production company that merged with Forest Oil Corp. last year, filed for bankruptcy amid falling oil prices, Bloomberg News reported today. Sabine had about $2.5 billion in assets and about $2.9 billion in liabilities as of May 31, according to chapter 11 filings in bankruptcy court in New York. The company continues to discuss a consensual financial restructuring plan with lenders and debt holders. Sabine has sold assets, cut expenses for drilling and new wells and froze wages to cope with a sharp decline in energy prices, according to court filings. “Given the severity of the current market conditions and their impact on the company’s cash flow situation, the company has been unable to right-size its balance sheet through cost-cutting and self-help measures alone,” Chief Financial Officer Michael Magilton said. Read more.
Trump International Golf Club Puerto Rico filed for bankruptcy as Donald Trump, the billionaire real estate mogul who licensed his name to the property, makes a bid for the White House, Bloomberg News reported yesterday. Donald Trump isn’t involved in the operations of the golf course and a “difficult business climate in Puerto Rico” resulted in the owner’s financial woes, said Eric Trump, the presidential candidate’s son and an executive at the Trump Organization. “We have zero financial investment in this course,” Trump said in a phone interview. “This has absolutely nothing to do with Trump. This is a separate owner. We purely manage the golf course.” The Puerto Rico resort, which opened in March 2004 as Coco Beach Golf, renamed itself in 2008 after licensing the use of Trump’s name. Trump, an avid golfer, is affiliated with 17 golf properties worldwide, according to his website. The golf division of Trump Organization Inc. owns and manages most of the courses.
With an eye towards the Christmas shopping season, lawyers for Family Christian Stores and its creditors approved a plan that could put the nation's largest chain of Christian book and gift stores under new ownership by mid-August, MLive.com reported on Friday. Family Christian's creditors will decide by Aug. 7 whether to approve a transfer to new owners who have pledged to continue operations, according to a plan approved on Friday by Bankruptcy Judge John Gregg. Brad Baldwin, a lawyer for Family Christian, said that they need to emerge from chapter 11 protection by mid-August so the company can prepare their Christmas catalogs and order holiday inventory for the chain's 266 stores in 36 states.
Bankruptcy Judge Arthur Federman on Thursday cleared AM Pyrotechnics LLC, which makes and choreographs fireworks displays, to get out of bankruptcy protection with a plan to repay some of its debt over five years, Dow Jones Daily Bankruptcy Review reported today. AM Pyrotechnics' reorganization plan said that it plans to use future profit to make quarterly payments to unsecured creditors who will be repaid 35.5 percent of their claims, according to court documents. The quarterly payments will flow to Chinese fireworks supplier Hunan Liuyang Huan Yu. (Global) Co., which sued AM Pyrotechnics in March for an unpaid bill of about $107,000.
Signal International LLC filed for chapter 11 protection yesterday to deal with lawsuits accusing it of labor trafficking involving citizens of India recruited to work in the U.S., the Wall Street Journal reported today. A Gulf Coast marine services operator, the company was hit earlier this year with a $14 million damages award in a case brought by five people who said they paid $10,000 to $20,000 for jobs they were told would turn into permanent residency in the U.S. Instead, they were forced to live in guarded labor camps under allegedly poor conditions, according to the suits they brought. A jury found for the Indian citizens, and in May a federal court entered judgment against Signal. Trial was supposed to start July 20 in the next case, but the bankruptcy filing in the U.S. Bankruptcy Court in Wilmington, Del., halts continued litigation. Signals said that it is trying to implement a deal in chapter 11 that will resolve the litigation and save its business. Signal faces 11 similar lawsuits involving 227 people recruited from India under allegedly illegal conditions, lured by alleged false promises to work as welders, pipe fitters and in other positions under the U.S. government’s H-2B guest worker program.
A group of companies that together own eight Texas hotels on Wednesday sought chapter 11 protection after failing to reach a deal to refinance their debt, the Wall Street Journal reported today. The companies’ hotels are located in the Texas cities of Andrews, Midland, Cuero, Pearsall, Pecos and Port Arthur, with another hotel in Hobbs, N.M. — all areas the companies say have “high concentrations” of oil and gas activity. As a result, much of the hotels’ business is “closely tied” to the industry, which employs many out-of-town workers who need lodging. In court papers, the companies say they’re hoping to continue to operate the hotels, which they say are cash-flow positive. To that end, they’ve asked a Texas bankruptcy court for the right to tap their lender’s cash collateral. The first hearing in the case is set for today.
Dune Energy Inc. yesterday asked a Texas bankruptcy judge to overlook objections from its creditors and approve the sale of most of its assets to White Marlin Oil and Gas Co. and Trimont Energy LLC, Dow Jones Daily Bankruptcy Review reported today. But while Dune's unsecured creditors’ committee pressed the judge not to approve the sale, the company worked with a handful of other creditors who had objections, and resolved them. Exterran Energy Solutions L.P. withdrew its objection in exchange for a $100,000 payment from Trimont. Another objection, from Emerald Land Corporation, was also resolved prior to yesterday’s hearing.
Lawmakers are weighing tweaks to the Bankruptcy Code to prepare the federal court system for the next big bank failure by allowing a quick sale without the financial-market freeze that occurred when Lehman Brothers Holdings Inc. filed for chapter 11 in 2008, the Wall Street Journal reported today. Several bankruptcy lawyers testified yesterday before a U.S. House subcommittee on regulatory reform about the recently reintroduced Financial Institution Bankruptcy Act, which would give bankruptcy judges the power to privately transfer a struggling bank’s assets to a new, more stable owner in less than 48 hours. For several lawmakers, there was a lingering concern about who will pay for the bank-transfer process. The wind-down of Lehman Brothers, for example, has cost more than $2 billion in fees to professionals. Experts on big bank failures have said that the U.S. government might be the only body willing to lend to a struggling bank, leading to the problem of bailouts. Bankruptcy lawyer Richard Levin of Jenner & Block LLP said that he supports the availability of government money to provide liquidity to the transferred bank assets, saying that financial markets are likely to run more smoothly knowing that such a funding mechanism exists. Levin testified alongside fellow restructuring lawyers Donald Bernstein of Davis, Polk & Wardwell and Stephen Hessler of Kirkland & Ellis. All three agreed that the bill could have helped saved Lehman Brothers from collapse, in addition to the other measures that passed after the financial crisis. Read more. (Subscription required.)
Click here to watch a replay of the hearing and to read the prepared witness testimony.
