DirectBuy, one of the few national brands to emerge from Northwest Indiana, has filed for bankruptcy and is selling itself to creditors, NWI.com reported yesterday. The Merrillville, Ind.-based buying club, which purports to offers members straight-from-the-manufacturer prices at showrooms, said that it has reached an agreement with current lenders, who are unnamed. DirectBuy once had a million members nationwide, and more than 160 showrooms in the United States and Canada. The company filed for chapter 11 protection in Delaware, and plans to continue to operate as it reorganizes its debt.
During a trial that could end her career in the securities industry, turnaround executive Lynn Tilton took the witness stand to defend against civil fraud charges stemming from her handling of a $2.5 billion investment portfolio, the Wall Street Journal reported today. Tilton and her Patriarch Partners LLC investment firm deny the Securities and Exchange Commission’s allegations that she hid losses from investors in her Zohar I, II and III funds, which are collateralized loan obligation vehicles packed with loans to troubled companies. In a trial that began last week, the SEC says that Tilton failed to tell investors in the Zohar funds that she was extending loan maturities based on her belief that the troubled companies had a chance to survive. Tilton said yesterday that investors knew that the loan portfolio included distressed companies and therefore should have expected those companies’ payments on their loans to be “irregular and lumpy.” Instead of calling troubled companies in default on the loans, Tilton said that she typically gave businesses more time to turn themselves around by allowing them to defer their interest payments. She said that she had broad discretion to make this call.
Lawyers who put International Shipholding Corp. into bankruptcy in July have announced a deal that would lead the vessel owner to be taken over by a larger maritime services firm, the Wall Street Journal reported today. In court papers, International Shipholding officials said that Florida-based SEACOR Capital Corp. has offered to pay $10 million plus whatever company officials have spent on a roughly $18 million bankruptcy loan, for its operations. At the time of its bankruptcy filing, it operated 21 U.S. and foreign flag vessels that provide maritime transportation services. The deal still needs approval from Bankruptcy Judge Stuart M. Bernstein. The proposed takeover doesn’t include an International Shipholding division that handles logistical and seaborne transportation services in Southeast Asia. International Shipholding officials said that a company controlled by Chief Executive Erik L. Johnsen has offered to buy that division for $18 million.
Power producer NextEra Energy Inc. said yesterday that it would buy the remaining stake in Oncor Electric Delivery Co. for about $2.4 billion in cash, Reuters reported. The company said it would buy the estimated 20 percent indirect stake owned by Texas Transmission Holdings Corp. NextEra said in July it would buy bankrupt Texas power company Energy Future Holdings Corp.’s 80 percent indirect stake in Oncor in a deal valued at about $18.4 billion. That deal, which is expected to close in the first quarter of 2017, provides NextEra access to the largest network of power lines in Texas.
Performance Sports Group Ltd., the maker of Bauer ice hockey gear, said yesterday that it had filed for bankruptcy protection in the U.S. and Canada to facilitate a restructuring and sale of almost all of its assets, Reuters reported. The company, which also makes baseball bats and other sports equipment, said that it would put its assets up for auction but already had a deal to sell nearly all of them for $575 million to an investor group led by Sagard Capital, its biggest shareholder, and Fairfax Financial Holdings Ltd. Former Performance Chairman Graeme Roustan told Reuters in August that he was working with investment banks to explore a bid for the company. The company listed assets of $500 million to $1 billion and liabilities of $500 million to $1 billion in its voluntary petition filed in Delaware under chapter 11 of the U.S. Bankruptcy Code. Performance said that it expected operations to continue uninterrupted during the bankruptcy process, through a $386 million debtor-in-possession financing provided by existing lenders and the investor group.
Renewable energy giant SunEdison Inc. has placed its Canadian arm into bankruptcy while the parent company seeks more time under court protection in the U.S. to sell off assets and work out a strategy for repaying billions of dollars in debt, the Wall Street Journal reported today. The company’s Canadian division, which also designs and develops renewable energy projects, says that it can no longer fund its operations. It sought protection on Thursday from both creditors and lawsuits under Canada’s Companies’ Creditors Arrangement Act, or CCAA, the equivalent of chapter 11 in the U.S. The Canadian operation, which is concentrated in Ontario, says its financial woes are largely tied to liquidity issues stemming from the bankruptcy of its parent company in the U.S. The Canadian unit’s businesses listed about $80 million in total assets and about $30 million in liabilities, in addition to about $90 million in other potential liabilities that are the subject of pending litigation.
The estate of one of Bernard Madoff’s oldest friends agreed to pay the con man’s victims $277 million to settle claims that the Beverly Hills money manager, who died in 2010, got rich from Madoff’s fraud at the expense of thousands of investors, including his own clients, Bloomberg News reported on Friday. Stanley Chais, who was well-known in the U.S. and Israel for his donations to Jewish charities, was also one of Madoff’s earliest investors. But after the Ponzi scheme collapsed in 2008, Chais denied knowing about it, insisting he’d been duped along with everyone else. That didn’t stop the lawsuits against him, which his estate has been battling for years. Now, the estate is ready to move on: It will pay more than $262 million to Irving Picard, the New York-based trustee liquidating Madoff’s firm and another $15 million to California’s attorney general to resolve a related class-action lawsuit, Picard said on Friday. Read more.
Delivery Agent Inc., which helps entertainment and sports operations sell products online, is seeking to pay top executives up to $3 million in bonuses during its bankruptcy proceedings, the Wall Street Journal reported on Friday. The e-commerce company outlined a plan to reward six executives, including Chief Executive Mike Fitzsimmons, with bonuses tied to the success of its pending sale, according to court papers filed on Thursday with the U.S. Bankruptcy Court in Wilmington, Del. Delivery Agent said in a court filing that the bonuses will be granted “only upon the successful closing of a sale or sales of Delivery Agent’s assets, and, therefore, are directly linked to results.” At next month’s auction, Hillair Capital Investments LP will start the bidding for Delivery Agent’s assets with its offer to forgive nearly $19 million in debt through a so-called credit bid. At a minimum, executives, such as Chief Financial Officer Jeff Hagan and President of E-Commerce Peter Lai, will be eligible for bonuses if a winning bidder pays enough to satisfy Hillair’s debts plus an extra $2 million. If winning bidders offer more than that, the bonus payments will increase, for a maximum payout of $3 million. The U.S. Bankruptcy Court in Wilmington, Del. is expected to review the bonuses at a Nov. 17 hearing. Any objection to the pay proposal plan must be filed with the court by Nov. 10.
The bankruptcy trustee mopping up after the collapse of ITT Educational Services Inc. has lined up $6 million worth of financing for the cleanup effort, the Wall Street Journal reported on Saturday. Loans are coming from finance affiliates of Cerberus Capital Management, an existing lender to the failed for-profit educator, operator of the ITT Tech chain. Lawyers for bankruptcy trustee Deborah J. Caruso say that the cash is desperately needed, as the trustee can’t do much without funding. A bankruptcy judge in Indianapolis will review the loan at a hearing next week. ITT Tech shut its doors abruptly in September, after federal education authorities cut off its access to taxpayer-backed loans. The sudden closure was a shock to some 40,000 students enrolled for the fall semester and some 8,000 employees.
SandRidge Energy Inc. defended its move to purchase Atinum Midcon I LLC’s oil and gas drilling investments out of bankruptcy, urging a federal judge to disregard protest from Wells Fargo Bank N.A. officials who said the bank’s proposal to forgive $75 million is a better offer, the Wall Street Journal reported today. In court papers, SandRidge lawyers said the offer from Wells Fargo, which handles Atinum’s loan of more than $265 million, wasn’t valid because it covered only a subset of Atinum’s roughly 1,600 oil and gas wells in northern Oklahoma and southern Kansas. Under its offer, Wells Fargo offered to forgive $75 million in debt owed by Atinum, a Houston energy investor. SandRidge’s bid is valued about $67 million, made up of $47 million in cash and about $19 million in forgiven debt. Earlier this week, Wells Fargo officials argued that lawyers who put Atinum into bankruptcy in U.S. Bankruptcy Court in Houston on July 22 wrongly declared SandRidge’s offer as superior.
