Residential Capital LLC, the bankrupt mortgage lending unit of Ally Financial Inc., lost $109.3 million in the month and a half since it filed for bankruptcy, Reuters reported yesterday. The losses were disclosed in a June monthly operating report filed yesterday in bankruptcy court. Taxpayers own about 74 percent of Ally, which did not file for bankruptcy. Ally put ResCap into chapter 11 on May 14 as a means of addressing the unit's mortgage-related liabilities.
Another potential bidder is balking at proposed deal sweeteners for LSP Energy's proposed stalking-horse bidder, which could get a payment of $7.5 million if it is beat out at auction, Dow Jones DBR Small Cap reported today. In court papers filed on Tuesday, Quantum Utility Generation LLC said that the proposed breakup fee increases the cost of participating in the auction for rival bidders by $9.5 million over previously approved auction rules that didn't require the payment of a breakup fee or an initial $2 million overbid.
Former Kodak employees who fear for their pensions and other benefits are urging a bankruptcy judge to think of them and not rubber-stamp $8.8 million in executive bonuses, the Wall Street Journal reported today. In letters filed to Kodak's bankruptcy docket yesterday, Richard Pignataro and Cecil D. Quillen Jr. said that it is not fair for Kodak to reward executives while they and other former Kodak workers face the risk that the company could seek to trim or modify their benefits. Kodak’s plan proposes to set aside $8.8 million in cash and deferred stock for 15 "key management employees," including nine executives, deemed "essential" to Kodak’s ability to successfully restructure. Pignataro, who says that he is a Kodak retiree, wrote that he was "outraged" to learn that Kodak Chief Executive Antonio Perez would "even ask to be included" among the bonus recipients "after he led the company into bankruptcy." Perez's expected bonus payment would be 200 percent of his base salary, according to Kodak. The CFO’s target bonus would be 178 percent of his salary, while the other managers’ bonuses would range from 16 to 206 percent of their salaries.
Chemical maker W.R. Grace & Co reported a higher-than-expected quarterly profit and said that it would seek to emerge from its 11-year asbestos-related bankruptcy in the expectation that court appeals would be unsuccessful, Reuters reported yesterday. W.R. Grace filed for Chapter 11 bankruptcy in April 2001, weighed down by asbestos-related claims. A district court approved its reorganization plan earlier this year, clearing a major hurdle for it to emerge from bankruptcy protection. The plan was reaffirmed in June. Eight parties filed notices of appeal before a July 11 deadline. The timing of the emergence from Chapter 11 will depend on satisfaction or waiver of the conditions set forth in the reorganization plan, according to the company.
Tribune Co. creditors appealed the newspaper chain’s reorganization plan and asked a judge to temporarily halt the company's effort to exit bankruptcy, Bloomberg News reported yesterday. Aurelius Capital Management LP and other holders of Tribune’s oldest debts asked Bankruptcy Judge Kevin Carey to suspend his order approving the plan and a related legal settlement until a higher court reviews the case. Aurelius claims that Judge Carey erred when he approved a settlement that ended some lawsuits against lenders that financed the more than $8 billion leveraged buyout of Tribune in 2007. The creditors hold debt that preceded the buyout loans and claim that the settlement robbed them of the ability to collect by leaving Tribune insolvent. They want the settlement set aside so they can sue.
Laser developer and manufacturer Deep Photonics Corp . filed for chapter 11 on Friday amid a dispute with its former chief executive, who the company says violated his contract and unlawfully used trade secrets, Dow Jones DBR Small Cap reported yesterday. The company did not provide specific reasons for entering chapter 11 in court documents, but said that the $500 million laser market is underserved and is expected to grow 30 percent in the next five years.
Hawker Beechcraft wants to pay eight senior executives more than $5.3 million in bonuses as it tries to emerge from bankruptcy, but the request was challenged yesterday by U.S. Trustee Tracy Hope Davis and the company's machinist union, the Associated Press reported yesterday. The Kansas-based airplane maker has not shown that its proposed bonus plan is not a "disguised retention plan," Davis argued in court documents. Hawker Beechcraft calls the bonuses an incentive award. The company said the plan was developed to recognize the critical role certain employees have in the bankruptcy process, arguing that their continued employment is essential to the company's ongoing business operations and restructuring.
Abound Solar was negotiating for financing until the day before it announced bankruptcy, but could not compete with the plunging prices of Chinese solar panels, former company executives said yesterday during a Congressional hearing, the Denver Post reported yesterday. Executives of the defunct Loveland, Colo.-based company and U.S. Department of Energy officials appeared before the House Committee on Oversight and Reform. Abound, which had received a $400 million DOE loan guarantee, filed for bankruptcy July 2. Abound had spent about $70 million of its guarantee. After liquidation, taxpayers may be left with a $40 million to $60 million bill, according to the DOE. Read more.
US Airways Chief Executive Doug Parker said on Wednesday that he is pleased with AMR executives' recent decision to weigh a standalone restructuring of the airline against such other options as a merger with a rival during bankruptcy, Dow Jones Daily Bankruptcy Review reported today. However, Parker, who has spent months courting AMR but largely has been rebuffed by AMR's management, warned against delay. "US Airways is here now, and we're ready to do this now. There's no guarantee that'll be the case forever," Parker said. Last week, AMR said that it would work with its unsecured creditors to discuss possible mergers as an alternative to its preferred strategy of emerging from its chapter 11 bankruptcy as a restructured, but independent, company. It sought chapter 11 protection last November and is working to secure new union agreements in a bid to reduce its annual labor costs by $1.25 billion.
In related news, American Airlines parent AMR Corp. won more time to develop its plan to restructure and exit bankruptcy as it works to consider possible mergers, Bloomberg News reported yesterday. American's request for an extension of a deadline for filing the plan was approved by Bankruptcy Judge Sean Lane at a court hearing yesterday. The ruling extends American's exclusive right to file a proposal to Dec. 28 and blocks competing plans. Read more. http://www.bloomberg.com/news/print/2012-07-19/amr-wins-extension-of-so…
Syms Corp., the bankrupt discount clothing chain, and its Filene's Basement LLC are seeking court permission to sell a Miami property at auction with an opening offer of $4.5 million, Bloomberg News reported yesterday. Syms will ask a judge to approve bidding procedures for the proposed auction at a hearing set for July 31, according to court documents filed on Tuesday. The company plans to hold the auction on Aug. 14, followed by a hearing to approve the sale on Aug. 16, according to court papers. All bids would be due by Aug. 13.
