Vitamin and supplement seller Natrol Inc. yesterday asked a bankruptcy judge to allow it a shot at survival in spite of having veteran distressed lender Cerberus Business Finance LLC hot on Natrol's heels, demanding the ouster of the company's management, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Brendan Shannon indicated that he would grant Natrol spending authority to preserve the business while the battle with the lender plays out.
The committee representing equity holders of Genco Shipping and Trading Ltd. began making its case for receiving a larger distribution in the shipping company's chapter 11 restructuring yesterday during the first day of what's expected to be a four-day confirmation trial, Dow Jones Daily Bankruptcy Review reported today. Based on the lowest-end valuation of Genco determined by the equity committee's experts, holders of Genco equity securities should be able to recover nearly $100 million, Steven Bierman of Sidley Austin LLP argued in opening arguments on behalf of the equity committee — made up of Aurelius Capital Partners LP, Och-Ziff Capital Management Group and Mohawk Capital LLC. This estimate stands in contrast to the currently promised warrant recovery for equity holders, a gift valued by Genco at $32.9 million.
Months after a trust fund established as part of Eastman Kodak Co.'s bankruptcy sued hundreds of businesses around the planet, including a slew in the Rochester, N.Y., region, a growing number of those suits have been settled or dropped, the Rochester Democrat & Chronicle reported today. The Kodak General Unsecured Creditors Trust filed a mountain of suits — roughly 750 — in U.S. Bankruptcy Court in January, seeking to claw back potentially hundreds of millions of dollars Kodak spent in the weeks prior to it filing for Chapter 11. About a third of the cases have been settled or dropped, according to U.S. Bankruptcy Court filings. The court documents give no details on the settlements. In Kodak's case, the trust — set up by the bankruptcy court — apparently is suing pretty much everyone who received a payment from Kodak in the 90 days leading up to its filing for bankruptcy, looking for "preferential payments." Any money the trust raises is to go to the unsecured creditors who were left with unpaid bills and invoices when Kodak filed for chapter 11 bankruptcy in January 2012.
A Minnesota liberal arts college that was once a beneficiary of Tom Petters’s largesse will return $600,000 of the $3 million it received, the Wall Street Journal reported today. The College of St. Benedict, of St. Joseph, Minn., in 2003 proudly announced a $3 million gift from Petters, a local businessman, to renovate the school’s 1,078-seat auditorium. The facility was renamed the Petters Auditorium in honor of Petters’s parents. His mother was an alumna of the women’s college, while his father graduated from its brother school, St. John’s University. When Petters was arrested and charged with operating a Ponzi scheme that bilked investors out of several billion dollars. Following his arrest, his business empire — which once encompassed Polaroid and Sun Country Airlines — filed for bankruptcy protection. Officials overseeing the companies’ wind-downs has since sued those to whom Petters made payments of what was ultimately determined to be stolen funds, including charities and other organizations like College of St. Benedict (which ultimately renamed Petters Auditorium). With litigation to recover $2 million of the donated funds reaching as high as a U.S. appeals court, the College of St. Benedict and the bankruptcy trustee demanding the return of the funds participated in mediation in February. The talks yielded a settlement in which the college joined the ranks of other organizations that have agreed to return a portion of their funds.
The personal injury lawyers repeatedly painted as the villains in Garlock Sealing Technologies' chapter 11 case are hitting back, claiming that the company is in fact the one withholding evidence, the Rochester (N.Y.) Democrat & Chronicle reported today. The asbestos personal injury claimants’ committee last week filed a motion in bankruptcy court asking Judge George Hodges to revisit a ruling early this year about Garlock's financial obligations to people suffering from asbestos-related health claims. "Garlock has committed a fraud upon the court," the committee wrote in a memorandum supporting its motion, claiming that the Palmyra company cherry-picked evidence that it presented to Hodges — the same legal chicanery Garlock has accused attorneys of. The fight revolves around a ruling by Judge Hodges in January that the company would likely have to pay no more than $125 million to settle any current and future mesothelioma claims against it — mesothelioma being a rare cancer of the lining around the lungs. A pair of bankruptcy committees of attorneys representing plaintiffs or future plaintiffs against Garlock had argued for a figure in excess of $1 billion. The Wayne County gasket and seal maker has been a defendant in literally thousands of asbestos-related lawsuits dating back decades. But when it filed for chapter 11 bankruptcy protection in June 2010, it cited a recent wave of substantial verdicts against it in mesothelioma cases. In his January ruling, Judge Hodges said that Garlock had demonstrated that numerous other manufacturers were almost surely far more responsible for any mesothelioma cases than would have come from the relatively small doses of low potency asbestos once associated with Garlock's seals and gaskets. He also was particularly condemning of plaintiff legal tactics, writing that as a number of other large thermal insulation companies went bankrupt, and attorneys began suing Garlock more, "evidence of plaintiffs' exposure to other asbestos products often disappeared (and) certain plaintiffs' law firms used this control over the evidence to drive up the settlements demanded of Garlock."
The bankruptcy trustee unwinding defunct law firm Dewey & LeBoeuf LLP has brought new allegations against two former Dewey executives in a lawsuit seeking the return of more than $21.8 million the two allegedly were paid as the law firm “fell deeper and deeper into insolvency,” the Wall Street Journal reported today. The amended complaint, filed in bankruptcy court on Monday against Dewey’s former executive director, Stephen DiCarmine, and ex-chief financial officer, Joel Sanders, comes six months after Dewey trustee Alan Jacobs first sued the pair. The updated suit incorporates criminal and civil allegations brought against DiCarmine and Sanders in March by the Manhattan district attorney’s office and the Securities and Exchange Commission. Those actions, which also charge Dewey’s former chairman, Steven Davis, and a former lower-level employee, claim that Dewey employees used fraudulent accounting methods to cover up the state of Dewey’s finances for several years leading up to the firm’s 2012 collapse. All four have denied wrongdoing.
Coldwater Creek Inc. has adjusted its chapter 11 payout plan but still faces a fight with unsecured creditors over its offer to give them seven cents to nine cents for each dollar they are owed, Dow Jones Daily Bankruptcy Review reported today. Coldwater Creek's lawyers filed a revised chapter 11 plan on Friday reflecting better-than-expected results from the women's clothing retailer's bankruptcy auction and asked for an Aug. 7 confirmation hearing to lock the plan in place.
Energy Future Holdings Corp. is meeting strong headwinds as it attempts to put the financial framework in place for a $42 billion bankruptcy restructuring, the Wall Street Journal reported on Saturday. Objections are piling up from creditors that say the Texas power seller is planning to throw away hundreds of millions of dollars to push through a balance-sheet revamp engineered by lawyers and advisers who rang up $130 million in fees before Energy Future even filed for chapter 11 protection. The objections are aimed chiefly at loans slated for review next week in the U.S. Bankruptcy Court in Wilmington, Del. Creditors take issue with what they say are unnecessary payments in connection with financing arrangements, including at least $105 million to be paid each month to one group of lenders and a $57 million breakup fee Energy Future wants to pledge to another group of lenders.
A group of creditors attempting to force defunct consumer law firm Jacoby & Meyers Bankruptcy LLP into chapter 11 protection are urging a court to rule that bankruptcy is the best way to protect unhappy clients left in the lurch by the firm’s demise, the Wall Street Journal reported today. In a court filing on Tuesday, creditors like online document service Legal Zoom say that “the total lack of disclosure and transparency” surrounding the firm’s December 2013 closure prompted them to file an involuntary bankruptcy petition against the firm in March. Jacoby & Meyers Bankruptcy was formed in June 2012 as an alliance between national consumer firm Jacoby & Meyers LLC — which lent its well-known brand name to the partnership — and the bankruptcy practice of Chicago lawyer Thomas Macey. A year and a half later, Jacoby & Meyers Bankruptcy closed and put itself into the hands of a trust intended to liquidate the firm and repay its debts. Creditors say that the firm’s trustee isn’t going far enough and would like to see the firm unwound through bankruptcy.
Brookstone Holdings Corp.'s creditors can begin voting on a bankruptcy-exit plan that relies on the sale of the specialty retailer at an upcoming auction, Dow Jones Daily Bankruptcy Review reported today. The voting follows the Monday approval of Brookstone's disclosure statement by Bankruptcy Judge Brendan Shannon. Brookstone filed for chapter 11 protection in early April with a $146.3 million offer from an affiliate of Spencer Spirit Holdings Inc.
