Bankrupt gunmaker Colt says settlement talks with the landlord of its Connecticut factory are being put at risk by its official committee of unsecured creditors, which wants to bring claims over the facility's lease, Reuters reported today. The committee last month filed a motion seeking an order that would give it standing to bring and settle claims related to Colt's soon-to-expire lease for its West Hartford, Conn., factory. The committee said that its concerns about the lease are rooted in ties between the facility's landlord and Sciens Capital Management, which owns about 87 percent of Colt. It said that the private equity firm is using the lease unfairly to increase its leverage in the case and to discourage possible bidders for Colt.
The former RadioShack tripped over a major hurdle on Friday, when a bankruptcy judge ruled the distressed former electronics retailer owes the Internal Revenue Service at least $72 million and possibly more in interest and penalties, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Brendan Shannon had urged the former RadioShack and the IRS to resolve the tax dispute consensually, but negotiations ultimately came to an impasse. The former RadioShack, already short on cash, must now find a way to satisfy the IRS's priority claim before its chapter 11 plan goes before Judge Shannon for final approval next week.
Ryan Kavanaugh’s salesmanship, smarts and charisma help explain how the founder of a company that has regularly experienced financial strains, lawsuits and executive turnover is also widely credited with leading a revolution in which Wall Street banks became comfortable investing in the notoriously high-risk movie business, the Wall Street Journal reported today. In recent months, as debt payments were missed and cash ran short at Relativity Media, the CEO insisted that employees focus on the positive: No one was allowed to discuss “bankruptcy” in front of him. Nonetheless, on July 30 Relativity filed for chapter 11 restructuring, declaring that it had assets worth $560 million and liabilities of $1.18 billion. It laid off 75 employees without severance, leaving 89. The studio, distributor of midrange movie releases like “Act of Valor” as well as the reality show “Catfish,” is now up for sale. Interested bidders must make offers by Sept. 25. Already, there is a $250 million stalking-horse bid by creditors who are at odds with the CEO. Some of Relativity’s more successful divisions, like its TV operation, could be appealing to smaller studios, but the bankruptcy sale isn’t expected to set off a bidding war in Hollywood.
Patriot Coal faces several dozen objections to a chapter 11 plan that calls for the sale of its mines, with the federal government, key creditors and its miners’ union among those crying foul, the Wall Street Journal reported yesterday. Many creditors don’t believe that the company’s plan to sell its mines to new owners is feasible, according to court filings. That includes the official committee representing Patriot’s unsecured creditors, including the miners’ union, a related pension fund, bondholders and the company’s suppliers and vendors. West Virginia’s environmental regulator said that the contingencies involved make Patriot’s plan “nothing more than a wing and a prayer” and is thus “destined to fail.” In court filings, Patriot acknowledged the risk that its sales might not close, among other contingencies. Still, the company said that the “compromises and transactions” at the heart of the plan are fair and provide the best possible recovery to creditors.
Columbia House, the once wildly successful mail-order music brand, will soon ask a bankruptcy judge to sign off on an expedited sale process, one that would hand control of the brand to a new owner by the end of October, Dow Jones Daily Bankruptcy Review reported today. Filmed Entertainment Inc., the current owner of Columbia House and its remaining DVD club business, will ask Bankruptcy Judge Shelley Chapman to approve the rules governing its sale process at a hearing Sept. 24, according to Scott Griffin, a lawyer for FEI. That process will call for an auction Oct. 16, followed by a hearing to approve the results of the auction Oct. 20.
Struggling surfwear maker Quiksilver Inc. said that it filed for chapter 11 protection for its U.S. units yesterday, Reuters reported. The company listed assets of more than $100 million and liabilities of more than $500 million in the filing. The European and Asia-Pacific businesses are not part of the filing as those "operations remain strong," Quiksilver said. Quiksilver added that holders of its Eurobonds, sufficient to waive any technical default arising from the filing, had agreed to allow it to reorganize its U.S. operations under chapter 11. The company said that it had requested the court to approve $175 million in new debtor-in-possession financing with affiliates of private equity firm Oaktree Capital Management and Bank of America.
The U.S. government's bankruptcy watchdog blasted an agreement aimed at bringing Energy Future Holdings out of chapter 11 because it requires Texas's biggest power company to pay millions of dollars in fees to lawyers, according to a court filing, Reuters reported yesterday. Energy Future Holdings struck a "plan support agreement" in August that binds key parties to work together to end the contentious bankruptcy, which began in April 2014. The support agreement is aimed to preventing pitched legal battles if the current bankruptcy exit proposal, based on the sale of the Oncor power distribution business, fails. However, the plan support agreement also requires Energy Future's creditors "to vote in favor of a plan that provides for millions of dollars (and possibly billions)" for 45 professionals working for undisclosed parties, according to the U.S. Trustee. Energy Future's bankruptcy exit plan also contains "illegal provisions," according to the U.S. Trustee, including a management incentive plan and legal settlements. Energy Future said in a separate court filing that the objectors to the plan support agreement were misreading the document, which the company said allowed it to pursue any proposed deal that was more favorable to creditors. Under the bankruptcy exit plan, a group of investors including an affiliate of Hunt Consolidated Inc. will finance a $12.2 billion deal that will give them control of Energy Future's Oncor power distribution business. The plan has the support of creditors on Energy Future's generation and retail utility side of its business, while paying off creditors on the Oncor side.
Grower’s Organic LLC, doing business as GO Transportation, has filed for chapter 11 bankruptcy, ThePacker.com reported on Friday. The Denver-based distributor reported assets of less than $50,000 and debts of $1 million to $10 million in the Aug. 28 bankruptcy petition. Co-founder and managing member Brian Freeman said in court documents that many of the company’s creditors are covered by the Perishable Agricultural Commodities Act. Of the top 20 creditors, at least nine are organic produce growers or shippers. The total owed to those 20 creditors holding the largest unsecured claims is more than $473,000. Freeman has temporary permission to use cash collateral to pay employees, according to a Sept. 3 order from U.S. Bankruptcy Judge Elizabeth Brown. She set a final hearing on the cash collateral for Sept. 16.
Cambridge Endoscopic Devices, a Framingham, Mass., medical device manufacturer, has filed for bankruptcy after its sales declined and it couldn’t find a buyer, the Boston Globe reported on Saturday. The company listed assets of $3 million and liabilities of $17 million in filings in federal bankruptcy court. According to court filings, its advanced endoscopes and laparoscopes, which are used to make surgery less invasive, became too expensive for many hospitals to buy after the passage of the Affordable Care Act. More than 40 potential buyers contacted over the past two years but didn’t make a “viable offer” for the company, it said in a filing. It listed $355,000 in income in 2013, $328,000 last year, and $70,000 so far this year. The vast majority of its assets were intellectual property, including patents filed for surgical instruments.
