The family trust that owns the Los Angeles Clippers is in danger of defaulting on hundreds of millions of dollars in loans if a planned sale of the team doesn't go through, an executive testified Monday in a case over whether co-owner Donald Sterling can halt the sale, The Wall Street Journal reported yesterday. The trust owes at least $480 million to three banks, said Darren Schield, chief financial officer of Beverly Hills Properties, in Los Angeles Superior Court. His company manages properties owned by Sterling and his estranged wife, Shelly. Sterling revoked the trust on June 9 in an attempt to stop his wife from selling the Clippers. Schield said that he had cautioned Sterling against revoking the trust, which he added would cost $500 million in loan payoffs and other costs.
Florida-based power company NextEra Energy is raising the ante in its bid to take over Texas transmission company Oncor, Dallas News Business reported on Friday. As the Energy Future Holdings bankruptcy unfolds in federal court, NextEra has opted to outbid itself in what appears to be turning into a bidding war with the team of Hunt Consolidated and the Teacher Retirement System of Texas. NextEra proposed a merger with EFH that would give it control of Oncor, the company’s transmission arm. EFH’s power generation and retail businesses, Luminant and TXU Energy, would be spun off into a new company. NextEra and Hunt had been competing to provide debtor-in-possession financing to Oncor’s holding company, a move that would probably lead to ownership once the EFH bankruptcy concludes. Last week, the power company postponed a hearing on the financing after a warning from Hon. Christopher S. Sontchi that EFH’s arguments up until that point had not been convincing. Exactly how much NextEra is offering to merge with EFH was not clear, but the merger represents a higher valuation for Oncor than under EFH’s restructuring plan and even beat its own earlier proposal by $500 million. The deal to take over Oncor would ultimately require the approval of the Texas Public Utility Commission. Last month, state Sen. Troy Fraser said that he wanted a company with a long-term commitment to take over Oncor, which delivers power to 3.5 million Texas customers.
A private school in De Pere, Wis., has closed and filed for bankruptcy, leaving some parents out nearly $30,000 in tuition payments, The Associated Press reported yesterday. The Wisconsin International School filed for chapter 7 this month after notifying staff and parents by email that the school was shutting down immediately. The school has estimated assets of $50,000 and liabilities of about $550,000, and staffers who haven't been paid their wages and parents who already prepaid student tuitions may be out of luck. School officials offered little explanation when they shut down the school last month after six years. It sent letters to parents saying that it couldn't balance its books due to declining enrollment and fundraising shortfalls. The school said it was on pace to enroll 120 students for the upcoming year, a 30 percent drop from last year. Fundraising efforts also fell 30 percent short of budget.
Efforts to cap the amount of interest due to U.S. bondholders of Nortel Networks Ltd. are a "blatant attempt" to "subvert" the priority of debtholders in bankruptcy cases, Nortel's U.S. bondholders argue in new legal filings, Dow Jones Daily Bankruptcy Review reported today. Canada's Globe and Mail reported an ad hoc group of U.S. bondholders and debenture trustees filed court submissions on Tuesday, arguing that they deserve to be paid the contractual amount of interest that has accrued on $4.1 billion (U.S.) of outstanding bonds since Nortel filed for bankruptcy protection in 2009 — an amount estimated to be worth $1.6 billion and climbing.
M*Modal, a leading provider of clinical documentation and Speech Understanding solutions, announced that it expects to emerge from chapter 11 within three weeks following a recent confirmation of the company's reorganization plan by a bankruptcy court, ABLAdvisor.com reported today. The company’s plan reflects the terms of M*Modal's previously announced agreement with its controlling bondholders and lenders on the terms of a financial restructuring plan. Once completed, this financial restructuring will strengthen the company's balance sheet resulting from reducing its debt by more than 55 percent and establishing a capital structure supporting M*Modal's continued investment in clinical documentation services and solutions.
The bankruptcy court overseeing the chapter 11 proceeding of Revel AC Inc. approved bid procedures for the company that would see qualified bids submitted by Aug. 4, an auction, if one is required, on Aug. 7, and a sale hearing on Aug. 8, according to a court order, LeveragedLoan.com reported yesterday. Letters of intent to bid are due by July 18, the order said. The auction would take place at the New York offices of the company’s counsel, White & Case, and the sale hearing at bankruptcy court in Camden, N.J. According to the July 14 order, lenders under the company’s DIP facility and its pre-petition first-lien credit agreement will be permitted to credit bid.
Windsor Petroleum Transport Corp., citing a drop in oil exports and a worldwide tanker glut, sought bankruptcy protection to restructure more than $188 million of debt, Bloomberg News reported yesterday. Windsor, a subsidiary of billionaire John Fredriksen’s oil-shipping company Frontline Ltd., listed debt of more than $100 million and assets worth about $50,000 in a chapter 11 petition filed yesterday in U.S. Bankruptcy Court in Wilmington, Del. The company operates four very large crude carriers. The filing came a day before Windsor officials were slated to make a $14 million payment on more than $188 million of debt, according to Tradewinds, an oil-shipping newsletter. Windsor officials said that they’ve reached an agreement with noteholders of more than 70 percent of the company’s 7.84 percent secured notes to swap debt for equity. The company will wipe out $188.5 million of bonds under trusteeship of Bank of New York Mellon Corp.
Former executives and officers of sandwich chain Quiznos are suing several Quiznos-related entities that didn't file for bankruptcy, demanding the entities defend them in litigation being promised by former Quiznos owners Avenue Capital Management and Fortress Investment Group LLC, Dow Jones Daily Bankruptcy Review reported today. This lawsuit brought by Quiznos founder Richard Schaden, former board members, a former chief executive and a former chief financial officer says that the entities agreed to pay in advance for legal fees and costs associated with defending their work for Quiznos, according to the lawsuit filed Friday with the Delaware Chancery Court.
The liquidating trustee of defunct law firm Dewey & LeBoeuf is arguing that his clawback suit against two former firm leaders should not be stayed while they face criminal charges because there is little overlap between the criminal and bankruptcy cases — and because every delay diminishes recovery for creditors, the New York Law Journal reported today. "The trustee's urgency in pursuing these claims is heightened by the real risk that [Joel Sanders and Stephen DiCarmine's] assets will dry up while they scramble to defend themselves against the criminal charges and other potential lawsuits," trustee Alan Jacobs said in court papers filed on July 4. Jacobs is seeking more than $21.8 million from Sanders, the firm's former CFO, and DiCarmine, former executive director, in Jacobs v. DiCarmine, 13-01765. Jacobs claims that the former executives' employment contracts awarded them exorbitant compensation that required nothing in return. Meanwhile, Sanders and DiCarmine are also facing criminal charges that they defrauded and stole from the firm's lenders, investors and others. They have pleaded not guilty. http://www.newyorklawjournal.com/home/id=1202662172414?kw=Dewey%20Trust…
In related news, three former top executives at Dewey & LeBoeuf, charged by New York prosecutors with breaking the law in a failed bid to keep the struggling law firm afloat, contend they always intended to pay back the firm’s lenders and bond investors, New York Times DealBook blog reported today. The three defendants said that the criminal charges against them should be dismissed because they lacked the intent to deprive the law firm’s creditors of their money. The defendants also said that that they did not understand “complex, arcane and nuanced accounting rules.” A joint motion filed on Friday to dismiss the charges argues that prosecutors working for the Manhattan district attorney, Cyrus R. Vance Jr., are making “scapegoats” out of the defendants: Steven Davis, Dewey’s former chairman; Stephen DiCarmine, the firm’s former executive director; and Joel Sanders, the former chief financial officer. http://dealbook.nytimes.com/2014/07/14/former-dewey-executives-seek-dis…
Philip Falcone’s LightSquared Inc. settled a fight with Dish Network Corp. Chairman Charles Ergen over more than $1 billion in debt he holds in the bankrupt wireless broadband company, taking it one step closer to exiting court protection, Bloomberg News reported yesterday. Details of a new chapter 11 plan will be filed within a week, Joshua Sussberg, a lawyer for a special committee of LightSquared, told Bankruptcy Judge Shelley Chapman at a court hearing yesterday. A dispute between the company and Ergen, its one-time suitor, scuttled a prior plan to reorganize. The deal with Ergen, which has yet to be completed, “will alleviate a significant burden and execution risk around the plan,” Sussberg said.
