Bankruptcy Judge Magdeline D. Coleman approved the liquidation plan of the partnership behind the failed Foxwoods Casino project in South Philadelphia, Philly.com reported yesterday. The Foxwoods group, formally known and Philadelphia Entertainment & Development Partners L.P., has huge debts, including $55 million or more owed to RBS Citizens for a loan on land that has since been sold. Additional unsecured debt amounts to nearly $24 million. The only significant asset Foxwoods has is a claim — the subject of a related lawsuit — that Pennsylvania should return the $50 million license fee it paid in 2007.
Revel AC Inc., whose Atlantic City, N.J., casino has been in bankruptcy twice since it opened in 2012, won permission to pay executive bonuses of as much as $1.75 million tied to the sale of its business, Bloomberg News reported yesterday. U.S. Bankruptcy Judge Gloria M. Burns at a hearing yesterday authorized the company to make the bonus payments after the resort’s fate is determined at an auction set to be held next week. The company’s struggles illustrate the larger issues facing Atlantic City, which has already seen the Atlantic Club close and may have two other casinos shut down by the end of September. Caesars Entertainment Corp. plans to shutter the Showboat on Aug. 31 and the Trump Plaza Hotel & Casino said it plans to end operations on Sept. 16.
Bankruptcy Judge Alan S. Trust ordered Sherman Industry Inc., a Westbury, N.Y., home remodeler that lost its licenses to operate on Long Island amid consumer complaints, to liquidate rather than reorganize and resume operations, Newsday reported today. Judge Trust ordered that Sherman's bankruptcy be converted from chapter 11 to chapter 7, appointed an interim trustee for the case and set a creditors' meeting for 11 a.m. Sept. 3 at the courthouse in Central Islip. The Office of the United States Trustee on Monday asked Judge Trust to either dismiss Sherman's June 25 application for protection from creditors and reorganization under chapter 11 or convert it to a chapter 7 liquidation proceeding. The request made to Judge Trust said that Sherman, which is not operating, "has failed to demonstrate to the court and the trustee that it has either the means or the desire to proceed toward a successful reorganization."
Nursing-home owner Shlomo Rechnitz won approval from a federal judge to buy 19 nursing homes out of bankruptcy in southern California, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Catherine Bauer on Monday approved the winning offer from Rechnitz, who offered to pay $62 million cash for nursing home operator Country Villa Health Services. The company filed for bankruptcy earlier this year, blaming its financial troubles on the cost of fighting several lawsuits and funding delays from California's health care program.
One of the biggest hold-out creditors in Detroit's bankruptcy will argue next month for a dismissal of the historic case to bring about more equitable treatment of all the city's creditors, Reuters reported yesterday. Detroit's plan to adjust $18 billion of debt has been approved by most, but not all, of the city's unsecured creditors, bringing to center stage the possibility of a cramdown, where the plan could be imposed on objecting creditors if U.S. Bankruptcy Judge Steven Rhodes determines it is fair and feasible. Restructuring experts for one objector, Financial Guaranty Insurance Company, plan to testify at a critical confirmation hearing beginning Aug. 14 against the entire case, the cram down and the 'grand bargain' intended to ease pension cuts on city retirees and prevent selling Detroit's art collection.
Fisker Automotive Holdings Inc., the defunct maker of luxury plug-in cars, won bankruptcy court approval of a liquidation plan that will distribute proceeds from a $149.2 million asset sale, Bloomberg News reported yesterday. Fisker, now known as FAH Liquidating Corp., sought creditor protection in November, blaming the bankruptcy of its battery supplier, safety recalls and shipments lost to Hurricane Sandy. In February, the company won court approval to sell its assets to China’s Wanxiang Group Corp. for an offer valued at $149.2 million, almost six times what it had sought when it filed for bankruptcy. Wanxiang previously bought the successor to the U.S. company that had supplied Fisker’s batteries. U.S. Bankruptcy Judge Kevin Gross yesterday approved Fisker’s liquidation plan, which received support from about 95 percent of all voting creditors by number and more than 99 percent by value.
After California and New York courts in June and July tossed out “unfinished business” claims by trustees of failed firms against former partners and the firms they fled to, all eyes are now fixed on the outcome of a hearing today in the one remaining large firm bankruptcy where such claims are still being fought: the Howrey chapter 11 proceeding, American Lawyer reported today. A decision by U.S. Bankruptcy Judge Dennis Montali on a motion to dismiss could go one of two ways: provide trustees outside New York with a new path forward to press such suits, or put the last nail in the coffin on such litigation nationally. Unfinished business claims have cropped up in every major law firm bankruptcy over the past decade, from Coudert Brothers to Dewey & LeBoeuf. Most are based on precedent established in 1984 in the California case Jewel v. Boxer, which allowed trustees to claw back profits owed from unfinished matters that former partners took with them when they joined other firms. A 2008 decision by Judge Montali in the liquidation of Brobeck in 2003 affirming the applicability of Jewel v. Boxer emboldened trustees nationally to go after those firms. Judge Montali held that at the time of Brobeck's dissolution, partners owed the estate profits from unfinished matters, even though they had signed a waiver of that duty. Judge Montali found that the waiver constituted a fraudulent transfer of Brobeck property under bankruptcy laws. In New York in 2012, one federal district judge also sided with trustees that unfinished business belongs to the liquidated firm.
Ambient Corp., which sells "smart grid" technology to power companies, filed for bankruptcy yesterday with a $7.5 million offer from an affiliate of Sweden's Ericsson, Dow Jones Daily Bankruptcy Review reported today. Massachusetts-based Ambient filed for chapter 11 protection saying that the company has struggled to find buyers for its patented devices that plug into a utility's power grid to help the utility communicate with its end-users.
Federal bankruptcy officials asked a federal judge to dismiss the chapter 11 application for protection from creditors filed by Sherman Industry Inc., a geothermal heating and cooling installation company that lost licenses to operate on Long Island after dozens of consumer complaints, Newsday reported today. As an alternative to dismissal, the office of U.S. Trustee William K. Harrington asked Bankruptcy Judge Alan S. Trust yesterday to convert the filing to chapter 7. The application filed in federal court in Central Islip, N.Y., by an attorney for the U.S. trustee said, "Since the filing of this chapter 11 case, the debtor [Sherman] has failed to provide any financial information to the United States trustee...[and] has failed to demonstrate to the court and the trustee that it has either the means or the desire to proceed toward a successful reorganization."
GSE Environmental Inc., a maker of landfill liners and manhole systems, won court approval of a reorganization plan that hands control of the company to holders of $173.4 million in secured notes, Bloomberg News reported on Friday. Bankruptcy Judge Mary Walrath approved a program giving all the new stock to first-lien lenders, including Littlejohn Opportunities Master Fund LP, Tennenbaum Opportunities Partners V LP and Strategic Value Partners LLC. Under the plan, negotiated with first-lien lenders before the May chapter 11 filing, trade claims will be paid in full if the creditor is willing to continue doing business with GSE for one year and grant normal market trade-credit terms. General unsecured creditors will share a $1.3 million recovery pool.
