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Hawker Beechcraft Inc. won court approval on Friday of its plan to exit bankruptcy under the control of a group of hedge funds, a ruling that the company hopes will lead to it being out of chapter 11 by the end of February, Dow Jones Daily Bankruptcy Review reported yesterday. Bankruptcy Judge Stuart M. Bernstein signed off on the company's plan after the company changed the wording of the official plan document related to the worthless equity of operating subsidiary Hawker Beechcraft Corp. The proposal confirmed by the judge calls for hedge-fund managers Centerbridge Partners, Angelo, Gordon & Co., Capital Research & Management and Bain Capital's Sankaty Advisors to exchange $921.6 million in debt for an 81.1 percent equity stake in the reorganized Hawker. Senior bondholders, owed $510.2 million, would get between nine and 10 cents on the dollar, while subordinate debtholders, owed $308.3 million, would be wiped out.

Eastman Kodak Co. is seeking to extend the exclusive control it has over its bankruptcy case for a few more months, citing significant progress towards the targeted mid-2013 exit date, Dow Jones Newswires reported yesterday. The bankrupt photography company is asking the court to give it until May 31 to file a bankruptcy-exit proposal without threat from competing plans and until July 31 to seek support for the plan.

With its patient census shrinking after news of a Medicare audit, San Diego Hospice filed for chapter 11 protection yesterday, the San Diego Union-Tribune reported today. San Diego Hospice’s financial problems began in mid-November, when it revealed that it faced the possibility of refunding millions to Medicare because its admissions policies did not follow government guidelines closely enough. The hospice, which potentially owes millions to the government, enacted an austerity plan in late November, laying off more than 260 employees and closing its 24-bed hospital in Hillcrest. Read more:
http://www.utsandiego.com/news/2013/feb/04/hospice-files-for-bankruptcy/

For more on financial distress in the health care industry, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition available now in the ABI Bookstore.

Creditors of Residential Capital LLC objected to a proposed settlement the bankrupt home lender made with investors in its mortgage-backed securities that would give the investors an $8.7 billion claim in the chapter 11 case, Bloomberg News reported yesterday. ResCap’s unsecured creditors’ committee said in a court filing on Friday that it was "dismayed" to have found that the negotiations that led to the settlement were dominated and controlled by ResCap’s parent company, Ally Financial Inc. The committee said that Ally was concerned with limiting its own liability. In exchange for the investors' support for the $750 million settlement of Ally’s exposure, ResCap agreed to give the investors a bankruptcy claim that is $4 billion more than what the company publicly has stated was its potential liability from claims by the trusts overseeing its residential mortgage-backed securities, according to the creditors’ committee.

Utah coal producer American West Resources Inc. has filed for chapter 11 protection with a plan to sell its assets, Dow Jones DBR Small Cap reported today. America West is the parent company of Hidden Splendor, an 80-acre property with an 8.9-acre mine located outside of Helper, Utah. Hidden Splendor, acquired by America West during the mine's 2007 chapter 11 filing, stopped mining coal in 2012 but the company has continued to incur costs of $40,000 to $50,000 a week to maintain the mine.

The number of businesses and individuals that sought bankruptcy protection last year fell to 1,221,091 from 1,410,653 in 2011, according to data released yesterday by the Administrative Office of the U.S. Courts, Dow Jones Daily Bankruptcy Review reported today. Business filings measured 40,075, down 16 percent from 47,806 in 2011. Now, low interest rates are enabling companies to refinance, kicking their financial troubles down the road and staying clear of bankruptcy court. "I think bankruptcy filings on the business side will continue to be suppressed," said ABI Executive Director Sam Gerdano. "I think that's the reality; that's the new normal."

Fiat SpA's CEO Sergio Marchionne said that he expected to complete the acquisition of Chrysler Group LLC next year, once the Italian automaker reached a price agreement for the remaining stake in its U.S. unit, the Wall Street Journal reported today. Fiat and a United Auto Workers union retiree trust that owns 41.5 percent of Chrysler disagree on the value of an option that Fiat exercised last July to buy a 3.3 percent stake in Chrysler. Fiat offered the trust, called the Voluntary Employee Beneficiary Association, $139.7 million to buy the stake, and has since proposed paying $198 million for another 3.3 percent stake. But the trust wants about $343 million for the first stake. Marchionne earlier set 2015 as the deadline for completing the acquisition.

Two national restaurant chains that quietly filed for bankruptcy and tried to keep the news from their 1,400 employees caught the attention of the U.S. Trustee’s Office, which has ordered the company to notify them, the Wall Street Journal reported on Saturday. A representative from the U.S. Trustee’s Office instructed the owners of Garcia’s and Garfield’s restaurant chains to notify creditors, including many employees, that the chain’s two holding companies had filed for chapter 11 protection on Dec. 28. Both holding companies left out the names of the restaurants they operate throughout several hundred pages that were filed to the U.S. Bankruptcy Court in Oklahoma. But more detailed court papers, including a list of their lawsuits and trademarks, make it clear that the chains are Garcia’s Mexican restaurants and Garfield’s casual-dining restaurants.

Hostess Brands Inc. Chief Executive Officer Greg Rayburn said that stalking-horse bids for assets of the bankrupt maker of Twinkies and Wonder bread now total $858 million, with about $100 million more for sale, Bloomberg News reported yesterday. Hostess, based in Irving, Texas, announced on Wednesday that it had chosen a joint offer from Apollo Global Management LLC and C. Dean Metropoulos & Co. as the lead bid for Twinkies and other cake brands in a March auction. Apollo and Metropoulos offered as much as $410 million for the Hostess snack-cake business, which also includes Dolly Madison brands, five bakeries and equipment. Leon Black’s Apollo, based in New York, managed $109.7 billion in assets as of Sept. 30.

Bankruptcy Judge Stuart M. Bernstein yesterday confirmed most of Hawker Beechcraft Inc.'s plan to exit bankruptcy under the control of a group of hedge funds, a ruling that the company hopes will lead to it being out of chapter 11 by the end of February, Dow Jones Newswires reported yesterday. Judge Bernstein signed off on most of Hawker's proposal, but said that the company had to change wording in the official plan document related to the worthless equity of operating subsidiary Hawker Beechcraft Corp. The judge said that the Bankruptcy Code prohibits him from approving the plan for the Hawker Beechcraft Corp. subsidiary because, even though the equity is worth nothing, the equity holders would technically be "retaining" their interests. The company said that it hopes to make changes that satisfy the judge by next week.