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Associated Wholesalers Inc., a food distributor, filed for bankruptcy with a plan to sell its assets, citing “fierce competition” in the grocery supply business, Bloomberg News reported today. The company in chapter 11 papers filed in court yesterday listed as much as $100 million in debt and said that it planned to hold an auction with C&S Wholesale Grocers Inc. as the lead bidder. AWI listed some of the biggest U.S. brands as creditors, including Tyson, Kellogg, General Mills and ConAgra, each owed more than $2 million; and Smucker, Nestle, Kraft and Dannon, each owed more than $1 million. The company, whose White Rose unit also filed for bankruptcy, has been failing in part due to “compressed margins and fierce competition,” Chief Restructuring Officer Douglas Booth said in a court filing. In the planned sale, C&S will be the “stalking horse” or initial bidder in a court-supervised auction, subject to higher or better offers, AWI said. Booth said that AWI serves 800 supermarkets and other stores in the U.S. mid-Atlantic region, with about 1,400 employees.

Trump Entertainment Resorts Inc., which operates two casinos in Atlantic City, joined the list of casino operators in New Jersey that have filed for bankruptcy, Reuters reported today. Trump Entertainment operates the Trump Taj Mahal Casino Resort and the Trump Plaza Hotel and Casino in Atlantic City. The company, founded by Donald Trump, listed assets and liabilities of between $100 million and $500 million in its bankruptcy petition in a Delaware court. The case is In re: Trump Entertainment Resorts Inc., U.S. Bankruptcy Court, District of Delaware, No:14-12103.

A federal bankruptcy judge is becoming increasing concerned that Freedom Industries may abandon its former Elk River chemical storage facility without completing a proper environmental cleanup of the site of the January chemical spill that contaminated the drinking water supply for hundreds of thousands of residents across the region, the Charleston (W. Va.) Gazette reported today. Bankruptcy Judge Ronald Pearson says that the Freedom bankruptcy proceeding has not progressed adequately, and that too much of the company’s limited cash is being earmarked for attorneys, perhaps leaving inadequate funds to complete remediation required by existing enforcement orders from the state Department of Environmental Protection. In a seven-page order filed on Friday, Judge Pearson said recent bankruptcy case filings by Freedom’s lawyers cause him “to fear [Freedom] is not sufficiently committed to compliance with the demolition and cleanup orders of the” DEP or “other agencies of the state and federal government.” Judge Pearson cited language in Freedom’s proposed plan for liquidating the company stating that, while efforts “will be undertaken to remediate the site,” there are “financial limitations” to what Freedom “can viably undertake by way of compliance with” the remediation plan for its Etowah Terminal, site of the Jan. 9 leak of Crude MCHM and other chemicals into the Elk River.

First BanCorp Puerto Rico wants a quick win in a fight with Lehman Brothers Inc., arguing that its $63.5 million claim relating to an old swap agreement should be paid in full as a "customer" claim against the Lehman brokerage, the Wall Street Journal reported today. Lawyers for First BanCorp in a Friday court filing pressed their case that because Lehman's brokerage maintained a "securities account" for First BanCorp, the swap agreement technically makes the bank a Lehman customer. "FirstBank entrusted its securities to LBI for safekeeping in its role as securities intermediary, and LBI treated FirstBank as the owner of those securities at all times," lawyers for FirstBancorp said in their filing. James W. Giddens, the trustee unwinding Lehman's brokerage, is also asking for a quick ruling in his favor over the claim or asking for it to be expunged completely. Giddens said in court filings last month that if First BanCorp has a claim in the case at all, it isn't with the brokerage unit but rather with a Lehman derivatives unit, Lehman Brothers Specialty Finance.

Energy Future Holdings Corp. bondholders are asking what happened to a proposal from NextEra Energy Inc. that would have meant more money for creditors of the Texas energy seller, which is working out its financial troubles in bankruptcy, Dow Jones Daily Bankruptcy Review reported today. The trustee for some $3.5 billion worth of bonds said in a court filing on Friday that the facts leading to NextEra's decision to withdraw the offer are "entirely undisclosed" and "must be fully explored." In July, NextEra went public with a proposal to infuse value into Energy Future's bankruptcy to acquire the company's stake in Oncor, a Texas transmissions business. In August, the offer was withdrawn, after Energy Future said that it would hold an auction.

A bankruptcy judge said that he would allow Jon S. Corzine and other former MF Global Holdings Ltd. executives and employees to tap the rest of their insurance money to pay for defense costs, but he is "concerned" with how quickly the money is being spent — though it isn't within his power to stop it, the Wall Street Journal reported on Saturday. In a ruling filed on Thursday, Bankruptcy Judge Martin Glenn lifted bankruptcy law's automatic stay to allow more than a dozen defendants to tap most of the $200 million remaining on the failed commodities brokerage's so-called "directors and officers" insurance policies. Those defendants include onetime Chief Executive Corzine, former operating chief Bradley Abelow and other executives and higher level employees. The former company officials are defending themselves against a number of civil actions and regulatory proceedings related to the bankruptcy of the broker-dealer in the fall of 2011. The judge said that $13.1 million of the money will be reserved for a potential claim MF Global could make against the policies, but the rest would be available for the defense costs. Apart from that, though, he said that because MF Global entities don't have claims that could be covered by the insurance money, he can't stop the former employees from accessing the money.

Bankruptcy Judge Robert Drain’s ruling on Aug. 26 in the unrelated bankruptcy of chemical maker Momentive Performance Materials could end Energy Future's $1 billion battle with creditors and reinvigorate its restructuring, Reuters reported on Friday. The two cases are linked by disputes over “make-whole” provisions in bond contracts. Make-wholes are an early redemption payment to bondholders to compensate them for the loss of anticipated interest. Bondholders have become increasingly willing to fight for the make-whole payments in recent bankruptcies such as American Airlines in part because there are few places to invest their money to earn above-market returns given the current low-rate landscape. Energy Future filed one of the largest corporate bankruptcies in U.S. history in April with a plan that was premised in part on refinancing high-coupon secured bonds. Bondholders sued, arguing that the company was wrongfully denying them $1 billion in make-whole payments. Momentive proposed a plan that had similar elements, and last week Judge Drain swept aside objections from bondholders.
http://www.reuters.com/article/2014/09/05/us-energy-future-bankruptcy-a…

For further analysis of “make-whole” provisions and the effect of the Momentive Performance Materials decision, be sure to sign up for tomorrow’s abiLIVE webinar, “Understanding Make-Whole and No-Call Provisions: Key Takeaways from Recent Decisions.”
http://www.abiworld.org/webinars/2014/0909Web/index.html

Nuclear power plant fuel supplier USEC Inc. was cleared on Friday to exit chapter 11 protection, with a new name, Centrus Energy Corp., and significantly smaller than when it sought bankruptcy court protection in March, Dow Jones Daily Bankruptcy Review reported today. Ousted from its role leading the American Centrifuge project in Ohio not long after seeking bankruptcy protection, and no longer in the business of producing fuel, USEC plans to work through its contractual backlog of orders, court papers say.

Momentive Performance Materials Inc. amended its restructuring plan to comply with a bankruptcy judge's requirement that the silicone and quartz producer pay its top-ranking bondholders a slightly higher interest rate, Dow Jones Daily Bankruptcy Review reported today. With the updated plan, filed on Wednesday in bankruptcy court, Momentive took what is likely to be the final step in securing Judge Robert Drain’s signature on its proposal to slash more than $3 billion from its balance sheet. Under the revised plan, first-lien bondholders will receive an added 0.5 percentage points for a total interest rate of about 4.1 percent.

Tucson attorney Scott H. Gan has been appointed as a judge at the U.S. Bankruptcy Court for the District of Arizona, KGUN9.com reported yesterday. Chief Judge Alex Kozinski of the U.S. Court of Appeals made the announcement on Wednesday. Gan will take the oath of office in a Sept. 11 ceremony in Tucson and begin his duties Sept. 20. He replaces Judge Eileen C. Hollowell, who will retire Sept. 19 but will continue to work for the court on a recalled basis. Gan will serve a 14-year, renewable term. Gan is a shareholder and partner at Mesch, Clark & Rothschild, P.C., where he worked on the firm's bankruptcy section.