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The ABI Chapter 11 Reform Commission conscientiously considered the impact of any of its recommendations it included in the Final Report on the credit markets in general and the market for credit extensions to distressed businesses in particular, according to a commentary today in ABL Advisor by Commission co-chairs Bob Keach and Al Togut. Despite that balanced approach, a minority of critics has asserted that adoption of certain of the Report’s recommendations would necessarily lower secured creditor recoveries. That criticism ignores what the Report actually says, and certainly ignores its intent, according to Keach and Togut. The minority chorus has particularly focused on the Commission’s recommendations concerning (a) the definition of adequate protection; (b) section 363 sales and related DIP financing provisions; and (c) redemption option value (“ROV”). This article addresses each of those recommendations, and discusses why none of them should negatively impact legitimate secured lender recoveries.

Madera Roofing, one of the largest roofing contractors in Central California, has emerged from chapter 11, the Pacific Business Journal reported today. Madera Roofing originally filed the petition in October 2013 as a result of being named a co-defendant in at least 28 construction lawsuits in various venues. The costs of legal fees, insurance payments and management distraction were huge and propelled the company to file and reorganize its financial affairs, said Victor Breedlove, Madera Roofing president. The chapter 11 plan results in 100-percent payment of all credit claims plus interest, said James Lowe of Executives Edge, which served as the chapter 11 trustee.

An upstate New York boarding school that’s sent 23 athletes to the Winter Olympics recently sought bankruptcy protection as administrators work to revive the 38-year-old institution, the Wall Street Journal reported today. National Sports Academy, nestled near the base of Whiteface Mountain in the village of Lake Placid, N.Y., has seen its admission numbers dwindle and debts rise in recent years. Before the holidays, the school made last-minute pleas to donors to keep it operating through the end of the school year. It’s now looking to the Chapter 11 bankruptcy process to help turn things around. The not-for-profit school, which historically averaged 60 to 70 students per year, is down to 21 this year, said Lisa Wint, the head of the National Sports Academy. The majority are members of a boy’s hockey team, plus a few individual athletes who compete in bobsled, Nordic and luge events. The school relies heavily on room and board fees of $36,000 per student, Wint said, and is looking to rebuild the student body, including restarting a girl’s hockey team. The academy has $1.9 million in liabilities, according to a bankruptcy petition filed in U.S. Bankruptcy Court in Albany, N.Y.

The trustee representing bankrupt Universal Health Care Group Inc. has filed at least 11 lawsuits, seeking to recover nearly $5.9 million from vendors, the Tampa Bay Business Journal reported today. In some cases the payments to the vendors were made while Universal and a related company, American Managed Care LLC, were insolvent, while in other cases, the payments caused the companies to become insolvent, according to the lawsuits. Universal Health, a St. Petersburg-based holding company that provided health insurance and managed care through its subsidiaries, filed for chapter 11 protection in February 2013. AMC, which handled finances for Universal, filed for bankruptcy three months later. The company was shut down and nearly 700 employees laid off when federal and state investigators raided Universal Health and seized records. After allegations of mismanagement, fraud, dishonesty and inside deals, Soneet Kapila was appointed chapter 11 trustee.

Revel AC Inc., the bankrupt Atlantic City, New Jersey, casino owner, asked a judge to penalize its power provider for planning to cut off electricity on Feb. 5, Bloomberg News reported yesterday. Revel said in court papers yesterday that it received a letter from ACR Energy Partners LLC over the weekend announcing its plan to terminate service, which the casino company called a violation of the Bankruptcy Code’s automatic stay. ACR Energy should be fined $10 million for shutting off the power, plus $1 million a day until the juice is restored, Revel said in the filing in U.S. Bankruptcy Court in Camden, N.J.

The team unwinding Lehman Brothers Holdings Inc. boosted its estimate of how much cash it expects to bring in for creditors to $90.6 billion, buoyed primarily by a settlement with Lehman Brothers Bankhaus A.G., the German arm of Lehman’s investment-banking operation, the Wall Street Journal reported today. The new projection represents a $1.8 billion increase over an estimate late last summer of $88.8 billion, according to the company’s most recent cash flow estimates, filed on Friday with the U.S. Bankruptcy Court in Manhattan. Lehman Brothers officially emerged from chapter 11 protection in March 2012 and began paying back creditors the following month. Although Lehman is out of bankruptcy protection, its case is far from over and will likely continue for years as a bankruptcy team continues to liquidate Lehman’s assets. Lehman said that the wind-down of the business “may extend beyond 2018.” As a result of the gains on its real estate, derivatives and private-equity investments, Lehman Brothers still has $13.8 billion on its balance sheet after making six distributions of $66.1 billion to creditors. Lehman paid out $9 billion to third-party creditors in October.

RadioShack Corp. is preparing to shut down the almost-century-old retail chain in a bankruptcy deal that would sell about half its store leases to Sprint Corp. and close the rest, Bloomberg News reported yesterday. The locations sold to Sprint would operate under the wireless carrier’s name, meaning RadioShack would cease to exist as a stand-alone retailer. The Chinese backers who took the Brookstone chain out of bankruptcy, Sanpower Group, also have been in discussions about bidding for RadioShack assets. The New York Stock Exchange said yesterday that it would suspend trading of the RadioShack’s stock immediately. The exchange took the step after RadioShack failed to submit a business plan that would address its lack of compliance with NYSE rules. 

Caesars Entertainment Corp. supports demands by creditors for an independent examiner to review recent deals by the casino company's bankrupt operating unit, Reuters reported yesterday. Caesars' operating unit plans to cut its debt to $8.6 billion from $18.4 billion. The operator of 38 casinos has blamed a saturated U.S. gambling market and sluggish economic recovery for its financial problems. Creditors led by the Appaloosa Management hedge fund have said that Caesars "plundered" billions of dollars in choice assets from the operating unit, including Planet Hollywood and The Linq in Las Vegas. The creditors asked for the appointment of an examiner to investigate the operating company's deals dating back to 2010. The parent company said in a filing with Chicago's U.S. Bankruptcy Court on Sunday that an examiner would confirm the property transfers were fair and provided billions of dollars in cash to the operating unit.

With an outstanding debt of more than $6.2 million, Albuquerque, N.M.-based Flying Star Cafe filed for chapter 11 protection and closed two of its restaurants on Friday, the Albuquerque Journal reported on Saturday. Underperforming restaurants in Bernalillo and Santa Fe forced the move, said Jean Bernstein, co-owner of the 28-year-old company, and both were shut down on Friday. Flying Star will continue operating as a debtor in possession of its business under a chapter 11, through which it will attempt to negotiate with its creditors to pay off the outstanding debt. Those plans have the support of St. Louis, Mo.-based US Bank, according to court documents. US Bank is the company’s only creditor with claims secured by cash collateral.

The YMCA of Metropolitan Milwaukee announced that its reorganization plan has been confirmed by a U.S. bankruptcy court, WISN.com reported on Friday. The organization voluntarily filed for chapter 11 protection in June 2014, and a reorganization plan, which was submitted on Nov. 30 and amended on Dec. 17. The plan approved by the court on Friday has been approved by all of the YMCA's major creditors.