Two-Year Delay in Confirmation Requires Holding Another Valuation Hearing
Passage of time converts a final order into an interlocutory order.
Judge Name - Do not use it.
Robin L. Rosenberg
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Bankruptcy Code
Trustee Not Obligated to Obtain Best Price at Auction, Delaware Judge Says
Immunity, fiduciary duty and damages discussed in the context of a low sale price.
Judge Name - Do not use it.
Mary F. Walrath
Analysis: Valuation in the Spotlight for Horsehead Holding Chapter 11
Valuation has become a contentious issue in the chapter 11 case of Horsehead Holding as some shareholders are alleging that the company’s assets are actually worth more than the company contends, the New York Times reported on Saturday. The company listed $421 million in secured and unsecured debt obligations in its February bankruptcy filing. Like many companies in the commodities business, Horsehead has stumbled. Spot prices for zinc and nickel swooned in 2015, and a new zinc plant it built in Mooresboro, N.C., encountered production problems. Still, metals prices have rebounded significantly since the company filed for bankruptcy. And some Horsehead shareholders contend the company is lowballing the value of its assets to let leading creditors gain control of it at a bargain price. The decline in Horsehead’s assets has certainly been precipitous. Just before the February filing, its assets were valued at $1 billion. Six months later, Horsehead’s financial adviser estimated that the company’s assets were worth about one-third of that. Diane Lourdes Dick, an associate professor of law at Seattle University Law School, said the Horsehead case highlighted a flaw in the bankruptcy process. “What we have here are equity owners that are functionally shut out of the process, and that provides the opportunity for exploitation by other stakeholders,” she said. “It is yet another example of the unique challenges that equity holders face when the company they’ve invested in is in chapter 11.” Read more.
Get additional insights and analysis on valuation topics by picking up a copy of ABI’s A Practical Guide to Bankruptcy Valuation.
Caesars Judge Questions Need to Halt Suits Until Bankruptcy Ends
Bankruptcy Judge A. Benjamin Goldgar said yesterday that Caesars Entertainment Corp. is unlikely to get protection from bondholder lawsuits that would last as long as its insolvent operating company is in bankruptcy, Bloomberg News reported. Judge Goldgar today will decide whether to extend a halt on lawsuits in New York and Delaware, and if so, for how long. Goldgar made it clear yesterday that he would not give Caesars a lawsuit shield that lasts until after Caesars Entertainment Operating Co. wins approval of its reorganization plan, which can’t happen until next year at the earliest. “I’ve said that isn’t going to happen,” Goldgar said yesterday near the end of a three-day hearing on possibly halting bondholder lawsuits that could impose $11.4 billion in judgments on the parent company. The lawsuits are the biggest obstacle left to getting Caesars’ main operating unit out of bankruptcy. Bondholders want to use the suits, which a court examiner found have a good chance of succeeding, to boost their recoveries to more than the 34 percent offered by CEOC.
Hogan Says Gawker’s Denton Is Lowballing Condo in Bankruptcy
Hulk Hogan helped bring down Gawker Media and now he’s throwing a wrench into the personal bankruptcy proceedings of company founder Nick Denton, Bloomberg News reported yesterday. Denton’s plan to rent his $4.25 million condominium at 76 Crosby Street in lower Manhattan for $12,500 per month shouldn’t be allowed to go forward, because it won’t come close to covering the property’s monthly costs, and will make it more difficult to sell, Hogan’s lawyers said in court papers filed yesterday. The property is Denton’s “only salable investment asset,” and depending on what happens in Denton’s personal chapter 11 case, could “prove to be nearly his entire estate,” lawyers for Hogan wrote. The math doesn’t work out, Hogan said, noting monthly carrying costs are $20,590.08. The rent wouldn’t even cover Denton’s $14,985 in monthly mortgage payments, never mind condo association fees of $3,410.57, real estate taxes, homeowner insurance and upkeep expenses, Hogan said, estimating the lease agreement would result in an annual loss of $100,000. Denton filed for personal bankruptcy Aug. 1 after he was unable to win a legal shield from the $140 million damages awarded in pro wrestler Hogan’s lawsuit that drove Gawker into bankruptcy June 10. Denton and the company are jointly liable.
Evidence Rule Gives Wide Latitude for a Homeowner’s Opinion on Value
Evidence Rule 701 requires the homeowner’s opinion on value, not someone else’s.
Judge Name - Do not use it.
Louise W. Flanagan
SunEdison Adviser Says Assets Now Worth Up to $1.5 Billion
SunEdison Inc.’s assets in bankruptcy are now worth $1 billion to $1.5 billion, based in part on recent offers to buy some of its solar and wind farms, a company financial adviser testified, Bloomberg News reported yesterday. Homer Parkhill of Rothschild Inc., which is counseling the renewable-energy giant on the sale process following its April chapter 11 filing, offered the new valuation in Manhattan federal court yesterday. The estimate replaces a figure of $850 million that Parkhill put forward in June. The latest price tag also factors in recent rises in the shares of SunEdison’s two yieldcos, Parkhill said. The company holds controlling stakes in both yieldcos, which were set up to buy energy projects that SunEdison develops. Read more.
Get additional insights and analysis on valuation topics by picking up a copy of ABI’s A Practical Guide to Bankruptcy Valuation.
