Revel, a brand new but struggling Atlantic City casino, has formally emerged from bankruptcy, the Associated Press reported yesterday. The pre-packaged chapter 11 filing wiped out $1.2 billion of the casino’s $1.5 billion in debt by giving lenders an 82 percent ownership stake. Revel posted a $149 million operating loss from its April 2, 2012, opening through the end of March 2013.
The bankrupt units of specialty chemicals maker RPM International Inc. may have to set aside twice as much money for asbestos-related liabilities as the company estimated, after a bankruptcy judge rejected what she called a "novel" theory from the debtor, Reuters reported yesterday. Bankruptcy Judge Judith Fitzgerald ruled that $1.2 billion was an appropriate net present value for current and future asbestos claims for Specialty Products Holding Corp and Bondex International Inc. The two units of RPM had argued that the liability should be between $300 million and $575 million. Specialty Products and Bondex filed for bankruptcy in May 2010 with the intent of creating an asbestos trust that would settle all personal injury claims stemming from the two companies' products. The companies and RPM would then be shielded from any further lawsuits related to those products. Specialty Products argued that the history of asbestos claims brought against the company overstated the number of injuries caused by its products, because it was settling nuisance cases to cut the cost of litigation. If those nuisance settlement costs were stripped out of the estimation process, Specialty Products argued it would need to set aside far less money to cover future claims. Judge Fitzgerald rejected that argument.
A bankruptcy judge has given final approval to the reorganization plan of failed battery maker A123 Systems Inc., which was the recipient of a $249 million Department of Energy grant, the Associated Press reported yesterday. A court hearing yesterday resolved minor outstanding issues following the sale of most of the company’s assets to the U.S. arm of Chinese auto parts conglomerate Wanxiang Group Corp. for nearly $257 million. One issue was approval of a settlement involving the Waltham, Mass.-based company, now known as B456 Systems, its official creditors' committee, and Milwaukee-based auto parts maker Johnson Controls Inc. The committee had suggested that JCI improperly lobbied to torpedo the sale to Wanxiang after losing out on the bidding. Johnson Controls has agreed to pay $200,000 to the bankruptcy estate, and the committee will drop any claims against JCI.
Revstone Industries LLC will continue to control its bankruptcy case for at least two more months as it seeks to auction a group of its assets, Dow Jones Newswires reported on Friday. Bankruptcy Judge Brendan Shannon said on Thursday that Revstone will have the exclusive right to file a chapter 11 plan until July 31 and can solicit support for that plan until Sept. 30. Creditors, including General Motors Co. and the U.S. Department of Labor, have requested that the court appoint a chapter 11 trustee to administer the case going forward, arguging that it was Revstone's mismanagement that landed it in bankruptcy to begin with.
Patriot Coal Corp. can pay $6.9 million in bonuses to key employees, a judge said, rejecting union claims that the payments wrongly benefit corporate insiders, Bloomberg News reported yesterday. Bankruptcy Judge Kathy A. Surratt-States yesterday granted the company’s request to pay 274 people under two bonus plans. Patriot said that the money would give managers an incentive to improve the company’s performance and stay through its chapter 11 reorganization. The United Mine Workers of America, which represents 42 percent of Patriot’s workforce, objected, calling the payments “massive bonuses to corporate insiders” at a time when the company is seeking concessions from regular employees and claiming it faces a liquidity crisis. The company’s top 35 officers, who make up 13 percent of the bonus plan participants by number, will get 42 percent of one payment plan by amount and 61 percent of the other, the union said.
An effort by creditors to force defunct investment vehicle TPG Troy into bankruptcy has fallen flat after a judge dismissed the case, citing ongoing litigation over the creditors' claims, Reuters reported yesterday. Tossing out the chapter 7 proceeding on May 9, Bankruptcy Judge Martin Glenn said that there was a "bona fide dispute" over whether TPG Troy, a vehicle of private equity giant TPG Capital, owes the creditors money. The unconventional liquidation was filed on TPG Troy's behalf by a group of hedge fund creditors led by SPQR Capital, which claimed to be owed 111 million euros ($143 million) stemming from TPG Troy's investments in TIM Hellas, a Greek telecommunications company. In February, TPG Troy sought to have the case dismissed, arguing that it could not be in bankruptcy because it had wound down its operations in 2007. It pointed to more than 10 lawsuits filed against it by the creditors over the same alleged debts, saying that the bankruptcy was the latest in a line of creditor attempts at "forum shopping."
Without clear instructions from the Bankruptcy Code on what to do with the unclaimed money that is too small to distribute among a liquidated company’s creditors, ABI is encouraging members to donate the money to the organization’s own nonprofit endowment fund, the Wall Street Journal reported today. “Rather than having it [turn over] to the state, why not recycle it into the bankruptcy community?” said ABI executive director Sam Gerdano. ABI has a 131-word passage posted on its website that bankruptcy attorneys can copy and paste into creditor payout plans to direct the money to the fund, which pays for scholarship and bankruptcy research. The trade group’s initiative comes at a time when many restructuring professionals are confused over what to do with unexpected leftover money in a liquidating chapter 11 bankruptcy case. That money can come from uncashed creditor checks, tax rebates or returned utility deposits. ABI’s endowment fund pays for bankruptcy-related research into topics such as the high fees in corporate bankruptcy cases or the cost of bankruptcy for individuals. “In lieu of people throwing around anecdotes or impressions or first-hand experiences, we provided data-supported conclusions,” said University of Maine Law Professor and Bankruptcy Attorney Lois Lupica.
For more information about donating unclaimed liquidation funds to the ABI Endowment Fund, please click here: http://endowment.abi.org/unclaimed
ABI’s Commission to Study the Reform of Chapter 11 will hold its fourth public hearing of 2013 from 3-5 p.m. ET following ABI’s Bankruptcy Fundamentals: Nuts & Bolts for Young and New Practitioners Program in New York City. Two panels of expert witnesses will provide their testimony on chapter 11 issues before the Commission. Issues to be discussed include financial contracts, derivatives, safe harbor, orderly liquidation authority, chapter 14 and other alternatives. To watch a live webcast of the hearing, view the witness list and access the prepared witness testimony, be sure to visit http://commission.abi.org.
The House Financial Services Oversight and Investigations subcommittee will hold a hearing today at 10 a.m. ET titled “Who Is Too Big to Fail: Does Title II of the Dodd-Frank Act Enshrine Taxpayer-Funded Bailouts?” The witness list includes Prof. David A. Skeel of the University of Pennsylvania Law School, Dr. John B. Taylor of Stanford University, Josh Rosner of Graham Fisher & Co. and Michael Krimminger of Cleary Gottlieb. For more information, please click here: http://financialservices.house.gov/calendar/eventsingle.aspx?EventID=33…
The U.S. Trustee Program yesterday demanded extraordinary penalties for financial adviser Capstone over alleged coverups during GSC Group Inc.'s bankruptcy, seeking to strip millions of dollars in fees as a heated trial came to a close, Reuters reported today. The U.S. Trustee Program alleged that Capstone deliberately misrepresented the employment status of the adviser assigned to the GSC case in an effort to cover up unlawful fee arrangements. It earlier settled similar allegations against the adviser, Robert Manzo, and against Kaye Scholer, the law firm that advised GSC, which the U.S. Trustee said knew about the fee arrangements. Kaye Scholer agreed to pay $1.5 million and to appoint an independent expert to review its disclosure policies. Both Kaye Scholer and Manzo agreed to leave the case.