Texas-based Falcon Steel Co. is preparing to send its bankruptcy-exit plan to creditors, who have the power to reject the company's proposal to repay debts in quarterly installments, Dow Jones Daily Bankruptcy Review reported today. Creditors have until March 24 to vote on a reorganization plan for the maker of steel lattice towers for power lines, according to a timeline set by Bankruptcy Judge Michael Lynn. Since Falcon Steel filed for bankruptcy on June 29, company officials found new orders to build transmission towers for the utility industry and negotiated a deal to refinance a $17.5 million bank loan.
The judge overseeing RadioShack Corp's chapter 11 bankruptcy case yesterday approved a revised $1.5 million bonus plan for eight top executives at the electronics retailer, over the objection of the U.S. Trustee in the case, Reuters reported yesterday. Bankruptcy Judge Brendan Shannon said that while he shared some of the trustee's concerns over the key executive incentive plan, he was convinced the executives would be "up to their elbows" with the sale of 2,000 RadioShack stores. Shannon also said he was impressed the plan's payout had been reduced through negotiations. Acting U.S. Trustee Andrew Vara on Saturday filed an objection to the plan, initially set at $2 million. Vara said it would reward the executives for staying put at RadioShack after reaching the stalking-horse bid for the 2,000 stores. The bid was reached before RadioShack filed for bankruptcy in February. RadioShack said that its executives worked to increase the value of the bid by $30 million during negotiations. http://www.reuters.com/article/2015/03/04/radioshack-bankruptcy-bonusplan-idUSL1N0W62N620150304
In related news, RadioShack Corp.'s creditors ironed out the final details of a $285 million bankruptcy loan at a court hearing yesterday amid indications that suppliers, landlords and other unsecured creditors will sustain significant damage in the retailer's chapter 11 proceeding, Dow Jones Daily Bankruptcy Review reported today. The Fort Worth, Texas, company filed for bankruptcy on Feb. 5 after a long losing streak. It is selling off and shutting down about half its 4,000-store chain, but hopes to keep the rest in operation, in the hands of new owners. (Subscription required.) http://bankruptcynews.dowjones.com/Article?an=DJFDBR0120150304eb34p25nb&cid=32135009&ctype=ts
Creditors have come to terms with RadioShack Corp. over bonuses top-ranking insiders stand to earn in the weeks ahead, as the retailer attempts to save a slice of its battered collection of stores, Dow Jones Daily Bankruptcy Review reported today. Jay Indyke, lawyer for the official committee representing suppliers, landlords and others owed upwards of $500 million, said yesterday that the panel has negotiated a resolution with the company over the pay-enhancement request. A bankruptcy judge must sign off on the bonus program, which faces opposition from federal bankruptcy watchdogs. On Saturday, U.S. Trustee Andrew Vara filed papers saying that RadioShack is paying too much for too little in the way of performance from its leaders.
Solus Alternative Asset Management LP said its proposal to pump $2 billion into LightSquared is better than the plan the company has presented, which involves little new money and puts the company in the hands of investors including Centerbridge Partners LP and Fortress Investment Group LLC, Dow Jones Daily Bankruptcy Review reported today. The LightSquared proposal "unfairly discriminates" against other creditors in favor of Fortress, Centerbridge and an entity controlled by JPMorgan Chase & Co., Solus said in one of its two Wednesday filings. Solus wants its proposal to be heard on the same timetable as the LightSquared plan. Judge Shelley C. Chapman yesterday denied Solus's request to shorten the timetable for its plan, but did say that it can be discussed at a hearing next Wednesday.
The bankrupt main operating unit of Caesars Entertainment Corp. has asked that an outsider be summoned to probe alleged insider-led looting of the gambling operation, a request slated for court review next week, the Wall Street Journal reported today. The call for a probe of its own affairs was an unusual, perhaps unprecedented move by the Las Vegas casino operating unit, which was being pursued through the courts of two states by angry investors ever since it filed for chapter 11 protection Jan. 15. It provoked an even more unusual, perhaps unprecedented response by the trustee for bondholders owed $479 million. Forget about an examiner for now, and just let creditors with money riding on Caesars’ bankruptcy conduct their own investigations, said Wilmington Trust, trustee for investors in senior unsecured notes. Caesars “requested an examination of the challenged transactions, not to find out what they did or what they should do now to remedy their wrongs, but rather to forestall creditor investigations and access to documents,” lawyers for the bond trustee wrote.
Bankrupt RadioShack Corp. spent an emergency loan on fees and other payments to favored lenders in what creditors said was a departure from a judge’s orders, Bloomberg News reported yesterday. The judge overseeing the bankruptcy approved RadioShack’s borrowing of $10 million on Feb. 10 to allow it to make essential payments. Instead, the company’s budget shows that it used $3.2 million for interest and fees to select lenders and almost $8.7 million for fees and retainers to advisers, a committee of creditors said in a court filing yesterday. The electronics retailer also intends to make unauthorized payments this month of around $38.4 million to lenders who agreed to advance money solely to pay their earlier loans, the committee said. RadioShack has been met with harsh criticism of its borrowing plan and a deal to sell its best stores to its biggest shareholder, Standard General LP, which arranged a large pre-bankruptcy loan. The creditors’ committee has now asked the judge to rewrite his temporary approval to clarify what he was authorizing.
Bankrupt consumer-electronics chain RadioShack Corp. pushed back against a creditor panel’s criticisms of its proposed auction procedures, saying that a drawn-out sales process could diminish the value of the assets and hurt recoveries, Bloomberg News reported yesterday. RadioShack, with about 4,000 locations, sought protection from creditors Feb. 5, with an agreement to sell 1,500 to 2,400 of its locations to a unit of hedge fund Standard General LP, its biggest shareholder. Some of those stores would be operated under a co-branding deal with Sprint Corp., the wireless carrier. The proposed sale procedures permit Standard General to credit bid its $250 million secured claim as currency at an auction in lieu of cash. The official creditors’ committee filed objections last week saying that credit bidding will chill the sale process. Standard General also defended the auction procedures, calling the creditor criticisms a “litany of innuendo and irrelevant detail.”
Caesars Entertainment Operating Co. asked a judge to disband a committee of creditors that was set up to represent the interests of investors hostile to the bankrupt gambling company’s restructuring plans, Bloomberg News reported yesterday. The panel of second-lien noteholders is dominated by hedge funds that sued the Las Vegas-based gambling company before it filed for bankruptcy last month and accuse it of scheming to defraud creditors. They have also sued the non-bankrupt parent, Caesars Entertainment Corp. Caesars asked the judge overseeing its bankruptcy to either disband the committee, combine it with a related committee of unsecured creditors or limit how much the second-priority group can spend on legal fees. Because the two committees, organized by the U.S. Justice Department’s bankruptcy watchdog, have official status with the court, Caesars must pay their expenses, which in large cases can run into the tens of millions of dollars.
A panel representing Trump Entertainment Resorts Inc.’s unsecured creditors reached a deal to resolve disputes over a restructuring plan with the bankrupt casino company and lenders controlled by billionaire Carl Icahn, Bloomberg News reported yesterday. The settlement “allows us to support the plan” and opens a path for Trump Entertainment to exit bankruptcy on schedule, Karen A. Giannelli, a lawyer for the unsecured creditors’ committee. Trump Entertainment filed for bankruptcy Sept. 9 and shut the Trump Plaza days later, one of four Atlantic City casinos that closed last year as the New Jersey gambling hub was battered by competition from surrounding states. The Trump Taj Mahal remains open after weathering multiple threatened closings and has secured financing from the Icahn group to keep running until the turnaround plan takes effect. Under the plan, the Icahn lenders would get control of the two casinos through a conversion of debt into equity in the reorganized company. The unsecured creditors had opposed Trump Entertainment’s reorganization plan, backed by the Icahn lenders, because they would only get to split a $1 million fund, for a recovery of less than 1 percent, according to court documents.
RadioShack Corp.’s unsecured creditors say that the retailer should have left a suicide note instead of a trail of unanswered questions about opportunities missed to save the business, the Wall Street Journal reported today. With more than 1,700 stores already being liquidated, the rest of the iconic retailer is headed toward the bankruptcy auction block. It’s a process that unsecured creditors say might have worked last year as part of a measured turnaround effort. Instead, they say, hedge funds engineered a bankruptcy crash landing designed to favor RadioShack’s top-ranking lenders, including the big shareholder that is poised to buy some of the company at a fast auction, Standard General LP.
