Commentary Housing Prices Stabilizing Where Lenders Can Enforce Contracts
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Sbarro Closer to Bankruptcy Exit
Pizza chain Sbarro Inc. is one step closer to emerging from bankruptcy under the control of its first-lien lenders, the Wall Street Journal reported today. Bankruptcy Judge Shelley C. Chapman on Tuesday said that she would clear the company to distribute its reorganization plan to creditors for a vote. Judge Chapman's approval comes just a few days after Sbarro rolled out a few revisions to its plan, most notably $35 million in fresh capital lenders are now committing to funnel into the revamped company. Under the proposal Sbarro wants to use to guide its exit from chapter 11, the reorganized chain would have $110 million in new debt: $35 million in bankruptcy loans and $75 million in existing first-lien debt converted into a new term-loan facility.
New Bill on Bankruptcy Video Fee Agreement Puts Law Firm In Trustees Sights
Law firm Kaye Scholer LLP and financial advisor Capstone Advisory Group LLC are in the sights of a U.S. Trustee aiming to claw back $12 million for an undisclosed agreement to share fees awarded in the now-completed bankruptcy of GSC Group Inc. In their latest video, Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle pose the question of whether the dispute involves a serious ethical lapse or a hypertechnical reading of an ambiguous statute. Click here to view.
Union and Chrysler Spar over Automakers IPO
Chrysler Group LLC could be forced to stage an initial public offering as a means of resolving a dispute over its value with a United Auto Workers' retiree trust that holds a 41.5 percent stake in the automaker, the Wall Street Journal reported today. The trust yesterday presented Chrysler with a "registration demand" asking it register a portion of its holdings. Chrysler's sales and profit has bounced back strongly since emerging from bankruptcy protection under the management of Italy's Fiat SpA, its majority owner. The move comes amid a court dispute between Fiat and union retirees over the value of the trust's Chrysler shares. The trust recently maintained some of its shares are worth twice what Fiat offered to pay last year.
American Medical Seeks to Retain Control of Chapter 11
American Medical Technologies Inc. is seeking an extension of its exclusive right to file a bankruptcy-exit plan as the company works to resolve key disputes with the Centers for Medicare and Medicaid Services and the Internal Revenue Service, Dow Jones DBR Small Cap reported today. The company's exclusivity period is set to expire on Jan. 14, and the period during which it can solicit votes from creditors is set to expire on March 5. American Medical is seeking a 120-day extension, which would push its protected plan filing period to May 14 and its right to solicit votes to July 3.
AIG Says It Will Not Join Lawsuit Against Government
The board of the American International Group has declined to join a lawsuit against the federal government over its $182 billion taxpayer-financed bailout, the New York Times DealBook blog reported yesterday. The decision follows a public uproar over the possibility that AIG would sue the same authorities that rescued it during the financial crisis. The board had been weighing whether to join a $25 billion lawsuit filed by its former chief executive, Maurice R. Greenberg, on behalf of shareholders, arguing that they lost tens of billions of dollars when the government attached onerous terms to the bailout.
MF Global Judge Nixes Customer Groups Bid to Depose Corzine
Bankruptcy Judge Martin Glenn rejected a bid by former MF Global customers to depose the collapsed brokerage's former chief, Jon Corzine, Reuters reported yesterday. Judge Glenn said that the Commodity Customer Coalition, which had sought permission to question Corzine and other former MF Global insiders, lacked standing because it is not a direct creditor in the case. The coalition, a grassroots group led by Chicago-based commodities trader James Koutoulas, bills itself as representing the interests of thousands of traders whose accounts at MF Global were frozen when the company went under. But the coalition itself is merely a "'watchdog' entity with its own independent goals," hoping to depose Corzine "in furtherance of its own interests" rather than those of the MF Global estate, Judge Glenn said in his decision.
Manufacturer of Gulistan Carpet Falls Into Chapter 11
The North Carolina manufacturer of Gulistan-branded carpeting has filed for bankruptcy as it struggles to pay off roughly $50 million worth of debt, Dow Jones DBR Small Cap reported today. Executives for Hampton Capital Partners placed it under chapter 11 protection on Monday as they prepare to sell the 395-worker company's operations, which include its manufacturing plant and corporate headquarters in Aberdeen, N.C., and a dyeing plant in nearby Wagram.
LightSquared Lenders Targeting Falcone Not Company Officers
A group of LightSquared Inc.'s lenders reiterated its desire to go after Phil Falcone and Harbinger Capital Partners for a pre-bankruptcy loan made to the wireless satellite company, making it clear that the troubled venture's officers and directors will not be a target of the lawsuit, Dow Jones Daily Bankruptcy Review reported yesterday. In a bankruptcy court filing on Friday, the lenders said that while they still want a court to let them challenge a July 2011 loan Harbinger made to LightSquared, they do not "at this time" seek any action against LightSquared itself. In a Dec. 12 filing, LightSquared said that it was concerned that its officers and directors would be targets of the suit.
AMR Sees Reasonable Possibility of Shareholder Value
AMR Corp., the bankrupt parent of American Airlines, says that its value has "significantly appreciated" and there may be value for shareholders, Bloomberg News reported yesterday. AMR, which is considering a merger with US Airways Group Inc., notified the Office of the U.S. Trustee of the development in a Jan. 3 letter filed today with the Securities and Exchange Commission. "Depending upon the ultimate strategic alternative adopted and pursued, there exists a reasonable possibility that there may be value for AMR equity holders," AMR attorney Harvey Miller wrote.