A deal to acquire the stalled Chicago Spire project out of bankruptcy hasn't closed and may not, according to a lawyer for the project's longtime leader, leaving the future of the proposed high rise in doubt, Dow Jones Daily Bankruptcy Review reported today. Thomas Murphy, a lawyer for Irish developer Garrett Kelleher, said on Friday that new investor Atlas Apartment Holdings LLC hasn't yet met Friday's deadline to obtain the financing it needs to pay off the Spire's creditors and take over the project.
A federal judge on Friday approved a revised bankruptcy loan for Exide Technologies Inc., but granted junior creditors the right to float their own chapter 11 emergence plan for the distressed battery maker, the Wall Street Journal reported on Saturday. The ruling from Judge Kevin Carey opens up the Georgia company’s contentious chapter 11 case, which has been marked by escalating problems with environmental regulators. Exide gets extended bankruptcy financing from a syndicate led by JPMorgan Chase & Co., but unsecured creditors will be free to compete with the company over how to get Exide out of chapter 11. Exide has been protected from the threat of rival reorganization proposals since filing for chapter 11 bankruptcy in June 2013. Unsecured creditors, however, don’t like the course the company is steering. Friday’s ruling gives them a chance to explore other options for Exide, a global company with a substantial business.
A bankruptcy judge on Thursday approved a restructuring plan that will hand control of ComcastSportsNet Houston, a regional sports network, to DirecTV and AT&T Inc., the Wall Street Journal reported on Saturday. The plan, which Judge Marvin Isgur approved over the objections of Comcast Corp., will shut down the network and then relaunch it under the name Root Sports Houston. Comcast, through subsidiaries, owns about 23 percent of CSN Houston, which broadcasts games for Major League Baseball’s Houston Astros and the National Basketball Association’s Houston Rockets. The Astros own about 46 percent of the channel and the Rockets own 30 percent. Comcast is owed more than $100 million stemming from funding it provided to create the network. During the hearing, Craig Goldblatt, a lawyer representing Comcast, said the restructuring plan “jumps through a series of hoops” to deprive Comcast of its right to be repaid. Under the plan, Comcast will receive the proceeds of the sale of the network’s assets, for which the Astros and Rockets have agreed to place an initial $26.2 million bid. “Comcast’s economic recovery here is better than if we don’t confirm the plan,” Judge Isgur said as he gave his ruling from the bench. “A denial of confirmation results in liquidation.”
It has been three years since the last Borders store closed its doors, but that hasn’t stopped a group of jilted gift-card holders from continuing to fight for their unredeemed vouchers to be turned into cash, the Wall Street Journal reported on Saturday. The group faced its latest setback on Wednesday when the U.S. Court of Appeals for the Second Circuit sided with two lower courts and ruled that the former customers waited too long to raise their claims for the unused gift cards. According to Borders, the former bookseller had 17.7 million unredeemed gift cards worth $210.5 million at the time it closed, dating back to when the first card was issued in 1998. Since January 2012, attorney Clinton Krislov has argued that Borders didn’t make enough of an effort to notify the gift-card holders that they had to act fast to use the cards once Borders entered chapter 11. Krislov said he plans to appeal last week’s decision by either requesting that the full appeals-court panel hear the case or by offering it up for the U.S. Supreme Court’s consideration.
The Supreme Court is slated to hear arguments tomorrow in a case that could determine when and how borrowers are allowed to cancel their mortgages, American Banker reported on Friday. The case, Jesinoski v. Countrywide, centers on how consumers can exercise their statutory rights to request a rescission of their mortgage, which is allowed if the finance charge was understated by at least $36. Banks and other mortgage lenders are anxiously awaiting the outcome of the case, as some lawyers for troubled borrowers have attempted to invoke rescission in an effort to delay foreclosures. Under the Truth in Lending Act, a consumer has three business days after the closing of a refinancing or home equity line of credit to rescind the transaction. That right of rescission is extended for up to three years if the mortgage disclosures are found to be inaccurate or the lender fails to provide the borrower with the proper disclosures. The statute requires borrowers to notify the lender in writing that they are exercising their right to rescind the loan. The chief question is whether a borrower can simply send a notice or if they have to file a lawsuit to receive a rescission. Several U.S. appeals courts have ruled the borrower must file a lawsuit to exercise the extended right of rescission but other circuit courts have stuck to the literal language of the statute, resulting in a split among the courts.
A bankruptcy judge refused last week to dismiss lawsuits against seven former Dewey & LeBoeuf LLP partners seeking nearly $16 million for the defunct law firm’s creditors, ruling that under New York state law, any money the partners were paid while the firm was insolvent can be clawed back, the Wall Street Journal reported on Saturday. The decision comes 2 1/2 years after the firm’s dramatic collapse and after the vast majority of ex-partners have rid themselves of most Dewey-related liability. In the months after Dewey entered bankruptcy protection, 475 of the firm’s former partners agreed to join a $70.4 million settlement that formed the basis of Dewey’s creditor repayment plan. Others have since settled individually. The ruling, released on Wednesday from U.S. Bankruptcy Judge Martin Glenn in New York, is a big win for Dewey’s liquidating trustee. Judge Glenn found that under New York’s debtor and creditor laws, the partners can’t argue that the value of the work they did for Dewey offsets the money they were paid, a defense that can sometimes be used in such clawback suits. If such a defense were available, a partner who, for instance, brought in $2 million in fees and received $1 million in compensation during the same period could argue that he or she owes the bankrupt firm nothing.
Siga Technologies Inc., the biological-warfare defense firm supplying the only smallpox drug for the U.S. strategic stockpile, received court permission to mediate a damages award in a licensing dispute that drove it into bankruptcy, Bloomberg News reported on Friday. Siga and competitor PharmAthene Inc., which won a 2006 lawsuit, agreed to mediate a final resolution over the amount of damages Siga must pay, Bankruptcy Judge Sean Lane said in a ruling on Thursday in Manhattan. A creditor committee that includes PharmAthene had supported mediation, according to court papers. The litigation, pending in Delaware state court, will continue during mediation, and any accord over a possible $232 million in damages reached by the companies will require bankruptcy court approval, Judge Lane said. Delaware’s highest court last year upheld a judge’s 2011 finding that Siga violated promises to negotiate in good faith with Annapolis, Md.-based PharmAthene over a license for Tecovirimat when it was being developed. Siga may have walked away from the talks after realizing the drug’s potential value, the court ruled.
A bankruptcy judge signed off on C&S Wholesale Grocers Inc.'s $288 million purchase of Pennsylvania-based food distributor Associated Wholesalers Inc., Dow Jones Daily Bankruptcy Review reported today. Judge Kevin Carey approved the sale of Associated, a cooperative whose subsidiaries include White Rose and Nell's Shurfine Markets, at a Wednesday hearing. The sale, which is expected to close by Thanksgiving, includes almost all of Associated's assets as well as its 2,200 employees. (Subscription required.)
A bankruptcy judge in New Hampshire yesterday ordered the unsealing of papers spelling out, in detail, the reasons jilted Apple Inc. supplier GT Advanced Technologies Inc. filed for chapter 11 protection, the Wall Street Journal reported today. Apple sought to keep the information under wraps out of fear it will harm its reputation and its relationships with other suppliers. Over Apple’s protests, Judge Henry Boroff said that he would take another look at the challenged document, an affidavit signed by GT Advanced Chief Operating Officer Daniel Squiller and filed with the court. Next week, the judge said, he will issue an order unsealing Squiller’s statement. The Oct. 6 bankruptcy filing sent GT Advanced’s stock into a dive and bond prices tumbled, as shocked investors clamored for more information about what went wrong between the smartphone maker and the company it had set up in the business of producing sapphire material for smart screens. At a court hearing Thursday, Judge Boroff said that Bankruptcy Code protections against defamatory information don’t apply to Squiller’s characterizations of Apple’s behavior.
A large group of creditors of MF Global Holdings Ltd.'s bankrupt brokerage unit will soon receive their first payout, as $518.7 million of checks start to be mailed out on Friday, the third anniversary of the company's chapter 11 filing, Reuters reported yesterday. James Giddens, the trustee liquidating the MF Global Inc. brokerage unit, said yesterday that the payout to unsecured general creditors will cover 39 percent of claims he has deemed valid. He said another $32.3 million will be distributed to some "priority" claimants, covering all of their valid claims. Giddens is keeping roughly $300 million in reserve for unresolved unsecured and priority claims, and said he expects another significant distribution by next June.
