Drybulk shipper Genco Shipping emerged from chapter 11 protection, the Associated Press reported yesterday. The company says it reduced its debt by $1.2 billion while eliminating $192.8 million in amortization payments and $40 million in annual interest payments. Genco also says that it got $100 million in new capital through a rights offering. Genco Shipping & Trading Ltd. filed for bankruptcy protection in April, saying it had $1.3 billion in debt and needed to reduce debt and restructure its business.
Energy Future Holdings Corp.'s $42 billion bankruptcy restructuring took an interesting turn this week when the company pushed a controversial $1.9 billion loan onto the back burner for discussions of "potentially beneficial" developments, Dow Jones Daily Bankruptcy Review reported today. Instead of going ahead Thursday and Friday with a continued court fight over the loan, Energy Future said that it would postpone the session "to provide the time needed to address...post-petition developments potentially beneficial" to those caught up in its chapter 11 proceedings. Energy Future also said it needs time "to continue discussions among certain creditors and third parties."
The debtors in the Garlock Sealing Technologies bankruptcy proceeding have filed a heavily redacted opposition to reopening the sealed record of 2013’s estimation hearing that led to only $125 million being placed in a trust for asbestos claimants, the Washington Examiner reported today. The company’s asbestos personal injury claimants’ committee has asked a bankruptcy judge to reopen the record, claiming the debtors misled and committed a fraud upon the court. The debtors claim that the arguments presented by the committee in its motion provide no sound reason for reopening the estimation record as most arguments have already been rejected by the court. The debtors — which include Garlock, Garrison Litigation Management Group and The Anchor Packing Company — filed their opposition on July 3 in the U.S. Bankruptcy Court for the Western District of North Carolina. The action arises out of Judge George Hodges’ Jan. 10 bankruptcy ruling in favor of Garlock, ordering the gasket manufacturer to put $125 million in an asbestos trust — roughly $1 billion less than what plaintiffs’ representatives felt was proper. In his decision, Hodges noted how attorneys had been withholding evidence while pursuing claims against Garlock.
Harbinger Capital Partners has sued Dish Network Corp. and its Chairman Charles Ergen, seeking at least $1.5 billion for allegedly trying to strip the hedge fund of its control of bankrupt wireless company LightSquared, Reuters reported yesterday. The lawsuit filed in a Colorado federal court on Tuesday accused Ergen of engaging in fraud and of violating a federal anti-racketeering law, according to court documents. Harbinger controls LightSquared, which has been mired in chapter 11 bankruptcy since 2012, and Ergen is LightSquared's largest creditor.
A federal judge yesterday rejected PricewaterhouseCoopers' request to dismiss a $1 billion lawsuit accusing the auditor of providing bad accounting advice that contributed to the October 2011 collapse of MF Global Holdings Ltd., a brokerage run by former New Jersey Governor Jon Corzine, Reuters reported yesterday. U.S. District Judge Victor Marrero rejected PwC's argument that the MF Global's bankruptcy plan administrator, which brought the lawsuit, "stands in the shoes" of the company under the “in pari delicto” legal doctrine, and cannot recover because Corzine and other officials were also to blame for the collapse. Judge Marrero has yet to review other PwC arguments for dismissal, including that the administrator had no authority to sue and did not show that the accounting advice was a "proximate" cause of MF Global's bankruptcy.
American Apparel Inc. confirmed yesterday that investment firm Lion Capital has demanded repayment of a $10 million loan, asserting the casual clothing maker defaulted under their credit pact when Dov Charney ceased to be chief executive, the Wall Street Journal reported today. The company, which makes T-shirts, leggings and other casual clothes, said it disputes the lender's claims and may seek damages from Lion for what it deemed an invalid acceleration of the loan maturity. American Apparel added that its revolving credit pact doesn't permit the repayment of the loans from Lion, but it is seeking consent from those lenders to do so and believes it will be able to repay the loan if consent is given. The company, meanwhile, is in talks with hedge fund Standard General to shore up its finances, reconstitute its board and strengthen its management. The moves are aimed at resolving a crisis at the company that was set off last month when the board voted Charney out as chairman and told him he would be fired as president and CEO once a 30-day waiting period called for in his contract expired. Lion had the right to call in the loan if Charney was removed, but the company argued in yesterday’s regulatory filing that such a move couldn't be made before July 19.
In the wake of an accounting scandal at Spanish Wi-Fi provider Let's Gowex SA, cities around the world are scrambling to figure out whether deals they have with the company to create hot spots will still go ahead, the Wall Street Journal reported today. Officials in cities from Dublin to Dubai signed deals with Gowex to create hot spots or boost connectivity in parks and neighborhoods. Over the weekend, Gowex admitted to falsifying its accounts and said that it would file for bankruptcy protection. New York City's Economic Development Corp., which signed a deal for Gowex to provide 60 hot spots throughout its five boroughs, has reached out to Gowex representatives, but discussions have been inconclusive, spokesman Ian Fried said yesterday. The group has spent $185,000 of $245,000 it had allocated to a Gowex contract, he said.
Exide Technologies wants to borrow $65 million more from its bankruptcy lenders, money that could carry the battery maker through its busy fall and winter seasons as it pursues a new restructuring plan, Dow Jones Daily Bankruptcy Review reported today. In a filing made last Thursday with U.S. Bankruptcy Court in Wilmington, Del., Exide said that the senior lenders behind its latest reorganization proposal would provide the $65 million so that the company could build its battery inventory.
Nuclear power plant fuel supplier USEC Inc. was cleared Monday to start polling creditors on a chapter 11 bankruptcy plan that would put the U.S. government contractor into the hands of bondholders, the Wall Street Journal reported today. Bankruptcy Judge Christopher Sontchi signed off on voting materials for USEC's restructuring at a court hearing. Once the ballots are in, the company is expected to return to court in September to seek confirmation of the chapter 11 plan. USEC has been negotiating with the U.S. Department of Energy to continue the government support that has sustained it for years, pursuing a loan guarantee, which hasn't been forthcoming. The company is also awaiting action from Congress for continued funding under a contract for the American Centrifuge Project, court papers say. Under a major research and development agreement, the DOE funded 80 percent of the cost of the project, a plant in Ohio that uses advanced U.S. government centrifuge technology to produce nuclear power plant fuel. USEC's role in the project has been cut back, and the cost-sharing replaced by a reduced agreement.
Crumbs Bake Shop Inc. notified employees yesterday that it would be closing all of its stores at the end of the business day, the Wall Street Journal reported today. "Regrettably Crumbs has been forced to cease operations and is immediately attending to the dislocation of its devoted employees while it evaluates its limited remaining options," the company said. Those options could include a bankruptcy filing, according to the company. Crumbs went public three years ago at the height of the gourmet-cupcake boom. Since then, its financial outlook has grown bleak amid several years of losses, a dwindling cash supply, and a food craze that is petering out. It currently has 48 stores in 10 states and the District of Columbia, according to its website. In March, Crumbs said it closed nine underperforming stores during the last three months of 2013, shut six at the start of 2014 and had more closures on the way.
