Zetta Jet announced that the U.S. Bankruptcy Court for the Central District of California approved the U.S. Trustee’s and its joint request to appoint a chapter 11 trustee, the Aviation Tribune reported on Saturday. The company said that it took this action to ensure a unified direction in the Company’s restructuring efforts amidst continued shareholder disputes. The U.S. Trustee’s Office is expected to appoint the chapter 11 trustee shortly. The company also announced that to facilitate normal business operations, it has received court permission to pay a select group of critical vendors in the ordinary course of business for pre-petition debts owed. Zetta Jet also said that a recent emergency injunction ordered by a Singapore Court to stop the chapter 11 proceedings was null and void given that a Singapore Court has no jurisdiction in U.S. federal bankruptcy court.
The Hongkong and Shanghai Banking Corp. won a temporary reprieve from an investigation into its collection practices leading up to China Fishery Group Ltd.’s bankruptcy, the Wall Street Journal reported on Friday. During a hearing in New York on Thursday, U.S. Bankruptcy Judge James Garrity Jr. agreed to place the investigation, which he had authorized, on hold while lawyers for HSBC pursue an appeal. William Brandt Jr., a bankruptcy court-appointed trustee currently marketing China Fishery’s Peruvian fishing enterprise, won a court order from Judge Garrity in July allowing him to investigate the bank for aggressive collection efforts that Brandt says may have damaged China Fishery’s business. HSBC says it is being unlawfully burdened by having to litigate in a foreign jurisdiction. The bank says it has no connection to China Fishery in the U.S. and shouldn’t be subjected to a bankruptcy probe by a U.S. court.
Of at least 10 merchants to file for chapter 11 protection from creditors in the past year, four are taking the trip to bankruptcy court for the second time in as many years, Bloomberg News reported on Friday. After struggling to boost earnings after the financial crisis, retailers have been battered by declining foot traffic, the rise of big-box stores and the growing clout of Amazon.com. Many were further encumbered when they took on debt to fund private equity-sponsored acquisitions. The existence of repeat filers points not only to the depth of the retail crisis, but also to the tensions at play in any restructuring. “Unfortunately, there’s a natural pressure to over-lever a company coming out of bankruptcy,” said Keith Maib, a senior managing director at turnaround advisory firm Mackinac Partners. “The old holders want to continue to be debt holders,” he said, which makes it difficult for a company to reduce the amount of money it owes. Data from the UCLA-LoPucki bankruptcy research database show that of 66 retailers that filed for chapter 11 since 1979, only 40 emerged, with the rest liquidating their assets in the court process. Of those that did survive, 19 eventually ended up back in court.
