Creditors of Puerto Rico's electric power authority are likely to agree by a Tuesday deadline to extend a forbearance agreement aimed at avoiding a potentially messy default, Reuters reported on Friday. Negotiations between the power authority PREPA and creditors holding some $9 billion in debt will likely continue over the weekend, Lisa Donahue, PREPA's chief restructuring officer, said on Thursday. "PREPA expects to meet with the media and make a public statement on Monday," Donahue said in a statement. An extension appears likely in the wake of a productive meeting between PREPA and its creditors on Thursday. One group comprised of 60 percent of PREPA's bondholders has proposed to help finance PREPA's turnaround, though it is unclear how much momentum the proposal has. The group, which includes OppenheimerFunds, Franklin Templeton, BlueMountain Capital Management and others, suggested that it would be willing to backstop a financing arrangement that would be brought to the broader market, in exchange for concessions such as using savings generated by recent drops in oil prices to pay down debt.
Nevada gambling regulators are calling the bankruptcy of Caesars Entertainment Corp.’s debt-heavy subsidiary an embarrassment and lamenting the company’s inability to pay 63 former executives some $33 million in promised pension payments, the Associated Press reported yesterday. The Nevada Gaming Commission pressed Caesars executives yesterday about the pension payments that aren’t guaranteed in the case of a bankruptcy. Kenneth Ng-Houng says that he was promised a fully-funded pension after working at the company for 32 years, guaranteeing him an annual salary of $71,000 after he retired. Caesars’ general counsel apologized to Houng at the meeting but explained the company can’t make the payments without bankruptcy court permission and Caesars didn’t plan to seek it because it would have little chance of approval.
A deal to keep 1,740 RadioShack Corp. stores open hangs in the balance in a Delaware court after its top creditor, a losing bidder in an auction for the bankrupt retailer, called the process a "sham" and demanded a new sale, Reuters reported yesterday. RadioShack, which filed for bankruptcy last month, told a bankruptcy judge that it had selected the Standard General hedge fund as the winning bidder in the private four-day auction, which ended just before a court hearing yesterday. Standard General plans to operate most of the stores in conjunction with wireless phone company Sprint Corp. While RadioShack's attorney told the court the deal saved 7,500 jobs and was $23 million more than a bid by liquidators, the deal included less than $40 million in cash, according to court testimony. The hearing to approve the agreement quickly deteriorated into disputes among lenders over the complex agreements that governed the repayment among creditors. An attorney for Salus Capital Partners, which is owed $150 million and is RadioShack's largest creditor, blasted the auction process and demanded it be reopened. http://www.reuters.com/article/2015/03/26/radioshack-bankruptcy-idUSL2N0WS2O020150326
In related news, personal information gathered by RadioShack Corp. from shoppers is not included in its sale, the consumer privacy ombudsman in the electronics retailer's bankruptcy case said in response to concerns shared by several states that the data could be sold, Reuters reported. If that changes, Elise Frejka also said in a letter on Wednesday to Bankruptcy Judge Brendan L. Shannon that she would file a report with recommendations based on specific facts and circumstances. Her letter came as Oregon and Pennsylvania on Wednesday joined Texas and Tennessee in objecting to RadioShack selling names, email addresses and other personal information gathered from shoppers. Personally identifiable information of 117 million consumers could be made available in RadioShack's proposed sale, Oregon Attorney General Ellen Rosenblum said in a filing that urged stripping out information such as telephone numbers and mailing addresses from assets. In a separate filing, Pennsylvania Attorney General Kathleen Kane said that selling the information would violate parts of her state's Unfair Trade Practices and Consumer Protection Law. Texas Attorney General Ken Paxton last week objected to the sale of personally identifiable information and requested RadioShack's buyer be required to set a separate price for it. http://www.reuters.com/article/2015/03/26/idUSL2N0WS29H20150326
Wireless venture LightSquared yesterday concluded three years of litigation with creditors, securing bankruptcy court approval of a reorganization plan to end its chapter 11 case and repay in full its largest creditor, Dish Network Corp. Chairman Charles Ergen, Reuters reported yesterday. The ruling ends one of the longest and most litigious bankruptcies in recent years, and will yield a hefty profit for Ergen, who other stakeholders portrayed as the villain for his unwillingness to take a haircut on his debt. Under the reorganization plan greenlighted by Judge Shelley Chapman in U.S. Bankruptcy Court in New York, LightSquared will exit chapter 11 under the control of Centerbridge Partners and Fortress Investment Group. Ergen, who amassed a $1 billion stake of the company's loan debt, will receive about $1.5 billion in cash, reflecting accrued interest. Founded by Phil Falcone's Harbinger Capital Partners, LightSquared had planned to build a massive wireless network when the Federal Communications Commission revoked its spectrum license over concerns of GPS interference, pushing it into bankruptcy in May of 2012. Since then, there have been about a dozen failed restructuring plans and litigation between the company and Ergen over the legality of his debt purchases.
A California raisin-packing business is seeking bankruptcy protection in the face of $39 million in bank debt and another $16 million owed to raisin growers, who are first in line for repayment under state laws protecting farmers, Dow Jones Daily Bankruptcy Review reported today. West Coast Growers Inc., based in the Central Valley city of Kerman, filed for chapter 11 on March 20 in U.S. Bankruptcy Court in Fresno. The company, which said that it plans to sell itself, has an estimated $10.1 million in assets and $59.6 million in liabilities.
A lawyer who made his name as a Watergate prosecutor was approved yesterday to begin investigating a series of corporate deals in the lead-up to the bankruptcy of the casino operating unit of Caesars Entertainment Corp., Reuters reported yesterday. Creditors allege those deals looted billions of dollars from the operator of 38 casinos for the benefit of the parent company, which is not bankrupt, and its private equity backers, Apollo Global Management and TPG Capital. Richard Davis, a former partner at bankruptcy powerhouse Weil Gotshal & Manges, will investigative whether the operating unit received fair value for choice properties such as the Linq complex in Las Vegas. Davis was given a wide-ranging role by the judge who tasked him with investigating any apparent conflicts of interest by the bankrupt unit.
As the 11-month mark of its chapter 11 filing approaches, Energy Future Holdings’ (EFH) campaign to get out of bankruptcy court probably remains at least another a year away, the Dallas Morning News reported yesterday. The creation of Energy Future Holdings — through the $45 billion buyout of the former TXU Corp. in 2007 — brought together some of the biggest names on Wall Street on a bet that electricity prices would rise. Almost a year after executives sought financial protection in the courts, there is little if any public indication progress has been made on determining how to divide the company’s assets, spread across subsidiaries Luminant, TXU Energy and Oncor. Negotiations are continuing between EFH and the various creditor groups, say attorneys in the case, who declined to comment publicly due to the sensitivity of the proceedings. But that process has been held up as interest spirals around the sale of power transmission company Oncor, which counts 10 million customers in Texas. When EFH filed for bankruptcy last April the plan was that Oncor would be taken over by a group of creditors aligned with Hunt Consolidated, the Dallas energy and real estate conglomerate run by billionaire Ray L. Hunt. But then NextEra Energy, a Florida-based power company with considerable assets in Texas, raised its hand with a bid later valued at $18 billion, and EFH had to scrap its restructuring plan. Now U.S. Bankruptcy Judge Christopher Sontchi has approved an auction process scheduled to conclude in August. With companies including Houston utility Centerpoint Energy and Warren Buffett’s Berkshire Hathaway reportedly having explored bids, some are speculating the sale price could reach $20 billion.
Bankrupt LightSquared, after three years of litigation with creditors, today will seek U.S. court approval of a mostly consensual plan to end its bankruptcy and repay in full its largest creditor, Dish Network Corp. Chairman Charles Ergen, Reuters reported today. LightSquared's bankruptcy is being closely watched because its main asset, wireless spectrum, is considered very valuable. Just how valuable it is, and what it can be used for, has been fiercely debated among stakeholders, and the bankruptcy will determine who ultimately controls it. LightSquared, the wireless venture owned by Phil Falcone's Harbinger Capital Partners, entered bankruptcy in May 2012 when the Federal Communications Commission revoked its spectrum license over concerns of GPS interference. Since then, there has been a parade of failed restructuring plans and litigation between the company and Ergen over the legality of his purchase of a huge chunk of LightSquared loan debt. However, LightSquared today will present a plan to give Ergen what he has long demanded: repayment of his $1 billion claim, in full, in cash, and with interest — a $1.5 billion tab.
A RadioShack Corp. lender asked a bankruptcy judge to intervene in the auction of the electronics retailer and said it had submitted a bid to liquidate the chain that was "materially superior" to one favored by RadioShack, Reuters reported yesterday. Salus Capital Partners said in a court filing yesterday that it had submitted a bid jointly with three liquidators to offer $271 million in cash at the auction that began on Monday. The lender said, however, that RadioShack favored a proposal from hedge fund Standard General, even though its bid included only $16.4 million in cash. Standard General planned to keep open about 1,740 RadioShack stores, many in conjunction with wireless operator Sprint Corp.
