Former billionaire entrepreneur Samuel Wyly is “stiffing” his creditors by attempting to shield $249 million in offshore annuities and a $12 million Texas mansion in his bankruptcy, federal regulators told a judge, Bloomberg News reported yesterday. “It is a request to enjoy a lifestyle of unfathomable wealth” while seeking the court’s protection from litigation, the U.S. Securities and Exchange Commission said in a filing yesterday in bankruptcy court. The SEC is seeking hundreds of millions of dollars from Wyly and the estate of his late brother Charles Wyly after they lost a fraud trial in Manhattan. The Internal Revenue Service is seeking $2 billion in the same case.
Oil and gas explorer Magnum Hunter Resources Corp. struck a deal in court yesterday to resolve the first of several requests to exit burdensome pipeline agreements as part of its restructuring, Dow Jones Daily Bankruptcy Review reported today. Instead of arguing for the right to tear up pipeline agreements with Texas Gas Transmission LLC, which committed to expanding a pipeline system that stretches from Louisiana to Ohio, lawyers for both sides announced a deal that gives Magnum Hunter an out. Texas Gas lawyer John Melko told the U.S. Bankruptcy Court in Wilmington, Del., that in return for allowing Magnum Hunter to reject the pipeline agreements, Texas Gas would get a $15 million unsecured claim against Magnum Hunter in its bankruptcy case. Magnum Hunter's pending repayment plan allows unsecured creditors to choose between receiving cash or equity. Read more. (Subscription required.)
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Lawyers for rapper 50 Cent have reached deals with creditors who hold more than 95 percent of the hip-hop mogul's debts, the Hartford Courant reported today. Bankruptcy Judge Ann Nevins scheduled yesterday’s hearing to hear what 50 Cent had to say about a variety of photos posted on social media — including one that showed him lying amid bundles of cash and another with the bundles arranged to spell "BROKE." The largest of 50 Cent's creditors raised questions about the photos in a court filing and questioned whether the entertainer, whose real name is Curtis James Jackson III, was reporting all of his income. Shortly after the judge ordered Jackson to court, Jackson's lawyers got together with the creditors' lawyers to assure them that the cash in the photos was fake and that Jackson was reporting all income and expenses as required by the bankruptcy court. Those talks have been ongoing over the past three weeks and have yielded an agreement that, if approved by Nevins, would have all secured creditors paid in full and have unsecured creditors paid between 74 and 92 percent of what they are owed over five years.
Aspect Software, a provider of software systems and equipment for call centers, has filed bankruptcy so it can reduce a $795 million debt burden that has limited its ability to invest in next-generation products and services, CFO.com reported yesterday. Aspect said in its chapter 11 petition filed yesterday that a capital restructuring plan backed by its creditors would eliminate $320 million of second-lien debt and convert $60 million of first-lien debt into 100 percent of the reorganized company’s equity. Over the past three years, Aspect has invested $160 million in acquisitions, technology agreements and partnerships. It serves 2,200 call centers in more than 70 countries, generating annual sales of more than $400 million.
A bankruptcy judge approved GT Advanced's plan to exit chapter 11 protection, closing the book on the New Hampshire's manufacturer's case that began with a disastrous run-in with smartphone giant Apple Inc., Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Henry J. Boroff on Tuesday signed off on GT Advanced’s exit from bankruptcy, which was triggered by the collapse of a supply deal with Apple Inc. Tapped as a supplier of scratch- and shatter-resistant sapphire screen material for Apple's smartphones, GT Advanced piled on debt and transformed its business operation. Apple rejected the material GT Advanced produced, for reasons that were disputed. GT Advanced resorted to bankruptcy in October 2014 to repair its tattered finances. The company is returning to its roots as a manufacturer of industrial equipment. It reached a settlement with Apple that resolves the smartphone giant's claim to be owed $439 million due to the failed sapphire supply venture.
U.S. coal company Alpha Natural Resources Inc. said that it sought approval from a U.S. bankruptcy court last month to sell its core assets as part of a plan to emerge from chapter 11 protection, Reuters reported yesterday. Alpha Natural said that it filed a motion in the U.S. Bankruptcy Court for the Eastern District of Virginia in February, seeking permission to sell the assets through a stalking-horse bid of at least $500 million from its first-lien lenders led by Citicorp North America Inc. A hearing is scheduled for March 10 and the company expects a conclusion of its bankruptcy proceedings by June 30, Alpha Natural said yesterday.
A failed effort to find a buyer has roiled the bankruptcy of Molycorp Inc., a rare-earths company that is pursuing a plan that will make it largely the property of Oaktree Capital Group LLC, the Denver Post reported today. After scrapping an auction because of a lack of acceptable bids, Greenwood Village, Colo.-based Molycorp is trying to get out of bankruptcy reorganized around one line of business, Neo, with the fate of another still up in the air. Bondholders are saying that Molycorp wrongly rejected their bid for the Mountain Pass facility, the only bid that came in for a line of business Molycorp spent $1.7 billion to establish. Molycorp filed for chapter 11 protection in June 2015, its balance sheet rendered unworkable due to a switch in Chinese trade policy that sent the prices of rare earth's diving. Shareholders sued, and hoped to collect against Molycorp's officers and directors liability insurance. The settlement instead lets Molycorp's leaders and its insurance company off the hook in exchange for some money for unsecured creditors. Molycorp, Oaktree and unsecured creditors say the settlement was the best way out of a morass of arguments that marked the Chapter 11 proceeding. Bondholders left out of the negotiations say the deal is bad and that they will challenge it when Molycorp's bankruptcy exit plan is presented for confirmation. Read more.
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Sabine Oil & Gas Corp. won an important court ruling yesterday that will allow the bankrupt energy producer to shed certain pipeline contracts, potentially exposing companies that transport and process gas to the crisis in the energy industry, Reuters reported. The bankruptcy court ruling is the first major test of whether chapter 11 can be used to end a contract with companies in what is known as the midstream sector of the energy industry. "The debtors have satisfied the standard for the rejection of the contracts," said Bankruptcy Judge Shelley Chapman. Her decision can be appealed and is not binding. But it may encourage other struggling producers to follow suit at a time when scores of oil and gas companies are teetering on the brink of bankruptcy. Judge Chapman's decision clears the way for Sabine to seek a new midstream operator to build a pipeline system in southern Texas to replace the existing one built by an affiliate of Cheniere Energy Inc. The company's lawyers have also said they may use the ruling to renegotiate with Cheniere. Sabine said in court papers a new midstream operator would save it $35 million. Read more.
Will exploration and production hit bottom in 2016? Be sure to attend ABI's Annual Spring Meeting in Washington, D.C., from April 14-17, as a panel of experts will be addressing this topic. Register today!
Creditors of Russian billionaire Vladislav Doronin's Aman Resorts Group Ltd., are trying to push the ultra luxurious resort operator favored by rock royalty, Hollywood stars and business tycoons into bankruptcy, Dow Jones Daily Bankruptcy Review reported today. The backers, namely American venture capitalist Omar Amanat, British hedge fund manager George Robinson and resort founder Adrian Zecha, said in court papers filed yesterday that the hotel chain owes them about $70.9 million in unpaid fees.
The owner of HomeTown Buffet and other buffet dining chains filed for chapter 11 protection, blaming a lawsuit that was not disclosed when its current owner bought the businesses in August, Reuters reported yesterday. Buffets LLC, an affiliate of Food Management Partners, in August paid an undisclosed amount for the chains Old Country Buffet, Ryan's, Fire Mountain and Tahoe Joe's, in addition to HomeTown, according to Food Management Partners' website. Those chains, which operate 150 restaurants, were part of the bankruptcy filing yesterday, according to court documents. The firm that sold the restaurant chains in August did not disclose a pending lawsuit, which resulted in an $11.4 million judgment, according to a statement from Peter Donbavand of San Antonio, Texas-based Food Management Partners.
