Journal Register Co., a newspaper publisher in bankruptcy for a second time, won court approval to sell its assets to an affiliate of its current owner in exchange for $114 million in secured debt and about $6 million in cash, Bloomberg News reported yesterday. Bankruptcy Judge Stuart Bernstein yesterday overruled a union, part of the Communications Workers of America, that had objected to the deal with the buyer, 21st CMH Acquisition Corp. "In light of [the] fact that the transaction will not close until after the termination of the collective bargaining agreements, the court overrules the unions’ objection," Judge Bernstein said in his written ruling. The union contract expires on March 31.
Documents in 12 major asbestos-related bankruptcies could be unsealed for the first time next month in a novel bid by a manufacturer to bolster its defense against a barrage of claims that its products caused deadly cancer and mesothelioma, Reuters reported yesterday. Garlock Sealing Technologies LLC won access to lists of clients of plaintiffs' attorneys after a federal judge in Delaware on March 1 reversed a bankruptcy court judge who kept the documents from the public. The bankruptcies include Pittsburgh Corning Corp., W.R. Grace & Co., Kaiser Aluminum Corp. and nine others. Law firms that opposed opening the records called the volume of material "staggering" and "of almost unprecedented scope." The order by Delaware District Court Judge Leonard Stark comes amid a push in Congress and state legislatures for greater transparency in the multibillion-dollar world of asbestos litigation, which critics say carries great potential for fraud. Garlock filed for bankruptcy in 2010 under a mounting number of lawsuits claiming the asbestos in its sealants caused deadly cancer and other diseases. It is currently trying to estimate the size of its asbestos liability, which will likely lead to the creation of a trust to pay claimants over the coming years. Garlock hopes the documents from the bankruptcy cases will help to limit the amount of money needed to provide compensation.
To read the bill text of H.R. 982, the "Furthering Asbestos Claim Transparency (FACT) Act of 2013,” please click here. To read the prepared testimony from the House Judiciary Committee's March 13 hearing on the bill, please click here.
Unsecured creditors of Reader's Digest Association say that its $105 million bankruptcy loan unfairly allows lenders "complete control" over the publisher's restructuring and will tie up assets that the unsecured creditors were counting on for payment, Dow Jones Daily Bankruptcy Review reported today. Reader's Digest's unsecured creditors' committee is specifically eyeing the $45 million "new money" portion of the $105 million loan, the remainder of which will refinance the company's old debt. According to the committee, the new money lenders have structured the financing in a way that will harm unsecured creditors.
Peregrine Financial Group Inc.'s chapter 7 trustee won court approval to create three classes of firm commodity customers, a ruling that he said may lead to full repayment for one class of account holders, Bloomberg News reported yesterday. Bankruptcy Judge Carol A. Doyle yesterday approved trustee Ira Bodenstein's request to divide account holders based on whether they traded on U.S. commodity exchanges, traded on exchanges outside the country, or hold warehouse receipts for taking or making delivery under commodity contracts. Such a division may enable customers who traded on foreign commodities exchanges to be repaid in full, Bodenstein said after the hearing. Peregrine, a Cedar Falls, Iowa-based commodities firm with offices in Chicago, filed to liquidate in July after the National Futures Association said more than $200 million in customer funds were missing.
Ahern Rentals Inc. says that it is ready to start searching for lenders to provide the $350 million in new financing it needs to pay down its debt and take it out of chapter 11 protection, Dow Jones Daily Bankruptcy Review reported today. The construction-equipment-rental company on Monday filed papers requesting bankruptcy court approval to hire Bank of America and its Merrill Lynch unit to put together the bankruptcy exit loan and line up lenders to participate in the financing. Bank of America would act as agent for the $350 million senior secured asset-based revolving credit facility, while its Merrill Lynch unit would serve as lead arranger and bookrunner.
Snack-maker Hostess Brands Inc. won approval of asset sales totaling more than $800 million, Bloomberg News reported yesterday. Bankruptcy Judge Robert Drain yesterday approved sales to Flowers Foods Inc., Grupo Bimbo SAB, Apollo Global Management LLC and C. Dean Metropoulos & Co. for most of Hostess's cake and bread brands. Before the sales were approved, lawyers for buyers expressed concern about possible liability after they acquire the properties. Judge Drain suggested "wordsmithing" the sale agreements slightly to protect the buyers. Hostess was given extra time by Judge Drain to file a bankruptcy plan after arguing it still has significant assets to sell that may yield more than $100 million to help pay creditors. Hilco Trading LLC was hired last year with court permission to sell real estate, leases, machinery, equipment and intellectual property not part of going-concern sales.
Elliott International LP and a unit of Fortress Investment Group LLC are among hedge funds that failed to reach an agreement with the trust liquidating General Motors' old assets over $3 billion in claims related to the automaker's 2009 bankruptcy filing, Bloomberg News reported yesterday. The dispute stems from a settlement made between the hedge funds and a Canadian unit of GM the day of the bankruptcy filing. The trust liquidating the old assets, called Motors Liquidation Company GUC Trust, seeks to reduce or eliminate the claims that the hedge funds negotiated. General Motors Co.'s Chief Financial Officer, Daniel Ammann, testified in past hearings that a negative outcome in the dispute over the Canadian notes could cost the automaker, now out of bankruptcy, as much as $918 million. That damage estimate is the upper end of a range, Amman said, and was disclosed in the company's August quarterly report. Through the settlement, the noteholders had a $3 billion claim against Old GM’s estate, more than the $1 billion face value of their notes, according to lawsuit.
Rather than ruling yesterday, a bankruptcy judge is examining an objection to Journal Register Co.'s asset sale to an affiliate of its current owner in exchange for $114 million in debt and at least $6 million in cash, Bloomberg News reported yesterday. Bankruptcy Judge Stuart Bernstein said yesterday that he will review in more detail an objection by a division of the Communications Workers of America regarding how future grievances may be handled by the proposed buyer, 21st CMH Acquisition Corp. Judge Bernstein asked lawyers for all the parties how the deal will be affected by the March 31 expiration of the union's collective bargaining agreement and said that he will rule later on the issue.
The Supreme Court yesterday heard oral argument in Bullock v. BankChampaign, N.A. (click here for the transcript). The Court granted certiorari to resolve a Circuit conflict as to what degree of misconduct by a trustee of a trust fund constitutes “defalcation while acting in a fiduciary capacity” within the meaning of the nondischargeability provision of section 523(a)(4) of the Bankruptcy Code. Click here to read a full summary of the case. For more information related to Bullock v. BankChampaign, N.A., please click here.
Prommis Holdings LLC, which provides processing services for defaults and foreclosures in the residential mortgage industry, sought chapter 11 protection from creditors yesterday, Bloomberg News reported. The Atlanta-based company listed debt of more than $50 million and assets of as much as $50 million in chapter 11 documents filed yesterday. Ten affiliates also filed for bankruptcy. The company said in the filing that it plans to sell virtually all its assets in a court-supervised auction. No terms were disclosed. The case is In re Prommis Holdings LLC, 13-10551, U.S. Bankruptcy Court, District of Delaware (Wilmington).
