A Connecticut hospital put itself under chapter 11 protection on Wednesday with plans to sell itself to a nearby healthcare system, five years after an unsuccessful bankruptcy reorganization left it saddled with $40 million in debt, Dow Jones Daily Bankruptcy Review reported today. Johnson Memorial Medical Center Inc. and five affiliates filed for bankruptcy in U.S. Bankruptcy Court in Hartford, Conn. with a sale agreement in hand to turn over its entire operation — including a 92-bed hospital, 180-bed skilled nursing facility, and hospice-care services arm — to Saint Francis Care Inc.
Investment bank Lazard, which advised retiree negotiators during Detroit's bankruptcy, slashed about $3 million off its bill, the Detroit Free Press reported today. The firm's revelation is the first in what is expected to be a series of statements by law firms, financial advisers and consultants about how much they cut their fees in Detroit's historic restructuring. Bankruptcy Judge Steven Rhodes, who retains the power to decide whether the fees were reasonable, had invited bankruptcy professionals to consider revealing how much they reduced their fees before he makes a decision. Collectively, advisers to the city and the retiree committee charged about $170 million in the bankruptcy, which ended in December and will allow Detroit to slash $7 billion in liabilities and reinvest $1.7 billion over 10 years in services. Lazard — which helped negotiate a settlement on pension cuts and retiree health care benefits on behalf of the U.S. government-appointed Official Committee of Retirees — had accumulated a bill of $8.44 million for its work on the case. But it's only charging the city $5.56 million after agreeing to a 37% cut in mediation sessions overseen by U.S. District Chief Judge Gerald Rosen, the chief mediator in the bankruptcy. The city agreed at the beginning of the bankruptcy to pay the retiree committee's costs.
A federal bankruptcy judge on Tuesday approved a reorganization plan for the Roman Catholic Diocese of Helena, Mont., that includes a $16.4 million settlement for hundreds of people who sued the diocese over clergy sex abuse from the 1940s to the 1970s, the Associated Press reported yesterday. The plan, approved by Bankruptcy Judge Terry Myers, includes another $4.45 million payment from the Ursuline Sisters of the Western Province to settle a lawsuit filed by 45 Native Americans who alleged abuse and sex abuse at the Ursuline Academy in St. Ignatius over the same time period. The plan will now go to a vote of creditors, the 362 plaintiffs in two lawsuits against the Diocese, and the plaintiffs in the Ursuline lawsuit.
The operating unit of Caesars Entertainment Corp, the largest U.S. casino company, filed for chapter 11 protection in Chicago yesterday to cut $10 billion of debt, but a Delaware judge intervened to halt the case before it got started, Reuters reported yesterday. The unusual legal standoff marked the start of a more public phase of complex and contentious debt negotiations. Until now, the company's attempts to cut interest payments after years of red ink have been kept mostly private. Caesars maintains it has the support of its senior noteholders to implement the bankruptcy plan, which would reduce the operating unit's debt to $8.6 billion from $18.4 billion. The bankruptcy was filed overnight yesterday by Caesars Entertainment Operating Company Inc. and 179 affiliates in the U.S. Bankruptcy Court in Chicago. However, junior noteholders, led by the Appaloosa Management hedge fund, filed an involuntary bankruptcy petition against the operating unit on Monday in Delaware. They argued at an emergency hearing in Wilmington yesterday that their case should take precedence and the bankruptcy should proceed in Delaware. Bankruptcy Judge Kevin Gross agreed to put the Chicago proceeding on hold, but said that he would allow routine "first-day" requests, such as those that would enable employees to be paid. Judge Gross asked what agreements he might be disrupting by issuing a stay and taking time to sort out which court would handle the case.
RadioShack Corp. is preparing for a bankruptcy filing and is in talks with Sprint Corp. to sell leases on some of its stores to the wireless carrier, Bloomberg News reported yesterday. The court restructuring would allow RadioShack to emerge with a leaner business after a migration of consumers to the Internet left it with 11 straight quarterly losses and depleted its cash. The company would file for bankruptcy protection as early as the first week of February. Under the developing plan, RadioShack would seek to complete a bankruptcy reorganization with 2,000 to 3,000 stores, compared with the more than 4,000 it has now. The company also has been reaching out to potential lenders for a loan that would finance its operations during court proceedings.
Wet Seal Inc. filed for chapter 11 protection yesterday, becoming the fourth apparel retailer to file for bankruptcy in two months, as the sector struggles with growing competition and a slowdown in spending among teen shoppers, Reuters reported yesterday. Wet Seal said in its bankruptcy filing that it received $20 million in debtor-in-possession financing from B. Riley Financial Inc., and intends to reorganize its business around e-commerce and its remaining 173 stores. The company, which sells apparel and accessories for teen girls and young women, laid off 3,700 employees and closed 338 stores last week. Wet Seal listed assets of $10 million-$50 million and liabilities of $100 million-$500 million, and hired FTI Consulting Inc. as a restructuring advisor, according to the filing.
EnPro Industries and a bankrupt subsidiary, Garlock Sealing Technologies, have struck a deal with a plaintiffs' lawyer to set aside $357.5 million to cover asbestos related claims, but others are expected to oppose the deal, Reuters reported yesterday. EnPro and Garlock, a bankrupt maker of asbestos-lined gaskets, said on Tuesday that the agreement could be approved in 15 to 24 months as part of an amended reorganization plan it will submit to the North Carolina court where Garlock filed for chapter 11 bankruptcy in June 2010. If approved, the plan would allow a reorganized Garlock to shed its liability for asbestos litigation, the latest phase in a bankruptcy touted by manufacturers as fundamentally shifting the legal terrain in asbestos cases in their favor.
The operating unit of Caesars Entertainment Corp, the largest U.S. casino company, filed for chapter 11 protection to implement its plan to cut $10 billion of debt, Reuters reported today. The company said it has the support of its senior noteholders to implement the plan, which will reduce the operating unit's debt to $8.6 billion from $18.4 billion. The bankruptcy protection was filed by Caesars Entertainment Operating Company Inc. and several affiliates in the U.S. Bankruptcy Court for the Northern District of Illinois. They listed assets and liabilities of over $1 billion, according to the filing. Much of the debt is a legacy of the $30 billion leveraged buyout of Harrah's Entertainment that was led by Apollo Global Management and TPG Capital in 2008. Under the plan, the operating unit will be split into a casino company and a publicly traded real estate investment trust.
The Supreme Court appeared open yesterday to clarifying the powers of nearly 1,000 judges in the federal court system, a group whose constitutional authority has come into question since a 2011 high-court decision involving the late Playboy playmate Anna Nicole Smith, the Wall Street Journal reported today. Depending on how the court rules in Wellness International Network Ltd. v. Sharif, argued yesterday, the bankruptcy court system could remain mired in confusion over when it has the power to offer final judgments on certain issues. By extension, the ruling could also curtail the ability of the federal magistrate system to handle some of the work of district-court judges. Bankruptcy-court judges have worked under a cloud of uncertainty since the Supreme Court’s 2011 decision in Stern v. Marshall, which found bankruptcy judges only have the authority to offer a final ruling on a dispute that “stems from the bankruptcy itself” — a phrase whose definition has generated much debate. Other issues, the court ruled, must be decided by the district court. During arguments Wednesday, the justices questioned why the court should limit the powers of the bankruptcy court when district-court judges routinely sign off on decisions reached by arbitrators — independent parties not affiliated with the court system — that litigants use as an alternative to the courts to settle disputes. To read the transcript from yesterday’s oral argument, please click here: http://www.supremecourt.gov/oral_arguments/argument_transcripts/13-935_…
A U.S. bankruptcy judge told Texas power giant Energy Future Holdings yesterday that it can move ahead on auctioning off its transmission arm, Oncor, the Dallas Morning News reported today. Judge Christopher Sontchi set the deadline for opening bids for March 2. The process is expected to stretch through the summer and attract some of the largest players in the Texas power industry. EFH filed for bankruptcy in April, seeking protection from $40 billion in debt largely amassed during a 2007 leveraged buyout by private equity firms KKR & Co. and TPG. EFH announced it was putting Oncor up for auction in August after Hunt and NextEra offered competing bids for the company. EFH CFO Paul Keglevic put the value of NextEra’s bid at $18 billion. In November, Sontchi put a halt to the process, telling EFH it was moving too quickly and had failed to work with creditors. Tuesday the power company filed a motion arguing it had carried out the judge’s orders and requested that the auction process resume.
