Bankruptcy Judge Charles E. Rendlen has cleared Bakers Footwear Group Inc. to replace its bankruptcy financing with a new $9.5 million loan with a later maturity date, Dow Jones DBR Small Cap reported today. Judge Rendlen signed off on the loan, which pays back borrowings under a $22 million loan from Crystal Financial LLC. That loan was slated to mature on Sept. 16, and failure to repay the borrowings would have triggered the chain to liquidate.
The Las Vegas Monorail Co. has emerged from chapter 11 protection, LasVegas.cbslocal.com reported yesterday. CEO Curtis Myles said that the move will allow the rail system to “again focus completely on serving” Las Vegas visitors. The company filed for chapter 11 in January 2010, because of a high debt load, which was reduced to $13 million. The monorail runs behind and along the Vegas Strip, with seven stops at major resorts and the Las Vegas Convention Center.
The Justice Department has been successful recently in efforts to block proposed bonuses for executives of companies under chapter 11 protection, the Wall Street Journal reported today. As the government raises objections, judges are rejecting some pay plans, riling restructuring advisers trying to keep managers of troubled firms from jumping ship. The latest fight: Hostess Brands Inc., in which the government this week challenged roughly $1.8 million in bonuses proposed for senior managers under a liquidation plan the baker submitted on Friday. That challenge will likely be heard by a judge soon after a last-minute mediation failed yesterday between Hostess management and its bakers union. The allegation in the Hostess matter is similar to claims the government has made in several bankruptcy cases this year, including LightSquared Inc., Eastman Kodak Co., and Hawker Beechcraft Inc. In these cases, the Justice Department has objected to proposed executive compensation plans on the grounds they run afoul of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 restricting retention bonuses for managers who run distressed firms.
Hostess Brands and one of its major unions agreed yesterday to a mediation session, in a last-ditch effort to avoid winding down the bankrupt maker of Twinkies and Wonder bread, the New York Times DealBook blog reported yesterday. The company and the union agreed to mediation at the behest of Bankruptcy Judge Robert D. Drain. The talks may also include representatives of the Teamsters union and the company’s lenders. Should the talks collapse, lawyers for Hostess will be back in court on Wednesday morning to seek approval of a close-out plan.
US Airways pilots have filed a motion in the American Airlines bankruptcy case, seeking to be involved in the process that could lead to a merger that would shape their careers, Forbes.com reported today. The motion filed by the U.S. Airline Pilots Association would "give us access to critical testimony and information presented during the closed bankruptcy hearings," said USAPA President Gary Hummel wrote in a letter. During the summer, Hummel wrote, USAPA negotiated a preliminary memorandum of understanding with US Airways, addressing wages and working conditions that would take effect if a merger occurs. But two months ago US Airways and American signed a non-disclosure agreement, bringing an end to the information flow and to discussions about the memorandum of understanding.
A trustee representing equipment noteholders who are owed $1.2 billion is suing AMR Corp. to block the American Airlines parent from refinancing the notes without covering certain early-repayment fees, Dow Jones Newswires reported yesterday. The lawsuit filed Friday joins a similar adversarial suit filed in early November by the representative of $174.2 million in secured notes. AMR is trying to refinance a total of $1.3 billion in equipment notes and to avoid this fee on all of those notes. U.S. Bank National Trust Association, in a complaint filed as part of AMR's chapter 11 case, said that AMR's request to refinance the notes with $1.5 billion in new financing is purely to take advantage of the favorable credit market. The refinancing has nothing to do with AMR's bankruptcy filing, it said, and the company's attempt to avoid paying certain obligations to noteholders violates the terms of the indenture agreement.
A bankruptcy judge has cleared HMX Group to sell Coppley Corp., its men's clothing brand in Canada, to Tennessee-based suit maker Tom James Co., Dow Jones DBR Small Cap reported today. Bankruptcy Judge Allan L. Gropper on Friday signed off on the $3.5 million sale to Tom James, which is buying the Canadian unit through an entity called Very Best Apparel Corp.
Residential Capital LLC won bankruptcy court approval to sell its mortgage servicing unit to Ocwen Financial Corp. for $3 billion after putting off a fight with loan investors and resolving other objections, Bloomberg News reported yesterday. Bankruptcy Judge Martin Glenn said that he will sign an order as early as today approving the sale after the company works out the final wording with creditors. The ruling comes after ResCap resolved the main objections from the servicing unit's biggest customers, including mortgage- owners Fannie Mae and Freddie Mac. ResCap will continue negotiating with Fannie Mae and other mortgage holders over their demands for cure payments, cash payments that compensate creditors for actual and potential losses caused by a bankruptcy filing.
Pipeline Data Inc., a provider of payment-processing services for merchants, filed for chapter 11 protection yesterday, Bloomberg News reported. The company listed assets of less than $10 million and debt of $50 million to $100 million in its chapter 11 documents filed yesterday. Pipeline Data, through its subsidiaries, provides payment- processing services to small and midsize retailers that operate in physical "brick-and-mortar" stores or over the Internet, according to its website. Cynergy Data LLC is listed as the Brasher Falls, New York- based company’s largest creditor without collateral backing its claims. Cynergy is owed $1.6 million, according to court papers.
Citigroup Inc. has agreed to pay $360 million to the brokerage estate of Lehman Brothers to resolve a dispute over $1 billion in collateral that the investment bank was forced to post in the days leading up to its bankruptcy in 2008, Reuters reported yesterday. According to a settlement reached on Friday with the trustee liquidating Lehman Brothers's U.S. brokerage unit, Citigroup will also relinquish its claim to $75 million that was contingently paid to the estate at the beginning of the liquidation, court documents showed. The trustee, James Giddens, filed the claim against Citigroup and its subsidiaries early last year, arguing that the $1 billion was obtained under coercion and that the amount should be part of a general asset pool to be divided among creditors in accordance with bankruptcy law.
