Nine of Dewey & LeBoeuf LLP 's former international partners are the latest targets of clawback litigation in the defunct firm's bankruptcy case, Dow Jones Daily Bankruptcy Review reported today. Dewey's liquidation trustee filed suits on Tuesday in bankruptcy court seeking the return of $22 million paid to the partners when the firm was allegedly insolvent. None of the lawyers named in the suits signed on to a $70.4 million settlement struck with the Dewey estate in 2012.
Investors owning $1.7 billion or more in top-ranking debt say a $7.3 billion piece of Energy Future Holdings Corp.'s financing plan is a flawed and "incoherent" attempt to evade bankruptcy rules, the Wall Street Journal reported today. Through their bond trustee, holders of a majority of some first-lien notes attached to the company's Energy Future Intermediate arm took aim at a planned series of transactions designed to rework the balance sheet of the business, one of two major divisions that filed for chapter 11 protection along with parent Energy Future in April. Investors say that the complex deals are an "unprecedented" effort by the Texas power seller and its affiliate "to reset their entire multibillion-dollar capital structure and lock in creditors" without offering creditors the protections of the Bankruptcy Code. Instead of a chapter 11 plan process with court-approved disclosures, Energy Future is using bankruptcy financing as a vehicle for revamping the balance sheet of the Energy Future Intermediate division, court papers say. The investors' big problem with the proposed financing is the treatment of a $1.4 billion early-payment premium on the Energy Future Intermediate debt. Energy Future says that it doesn't owe any early-payment premium, but it is willing to offer extra value in the financing for investors who agree to settle.
Genco Shipping & Trading Ltd.'s equity committee is asking a judge to put the brakes on the shipper's prepackaged bankruptcy, saying that there could be "a substantial recovery" for shareholders in this case, Dow Jones Daily Bankruptcy Review reported today. The company’s equity-security holders’ committee, which was appointed Friday, requested yesterday that Bankruptcy Judge Sean Lane put off considering confirmation of Genco's bankruptcy plan for at least 45 more days. If granted, the request would double the amount of time Genco had hoped to stay in chapter 11.
Bankruptcy Judge Nancy V. Alquist on Monday approved the $22.2 million sale of Baltimore manufacturer Hedwin Corp. to Japan-based Fujimori Kogyo Co., the Baltimore Business Journal reported yesterday. Judge Alquist said that she was satisfied with the quality and nature of the notices given to all parties associated with the sale. The deal is expected to keep the company’s 300 employees in their jobs, Hedwin officials said on Friday. The maker of industrial containers employs about 10 people in Reno, Nev., and the rest at its plant in Maryland.
Quiznos Corp., the Denver-based toasted-sandwich chain that entered bankruptcy in March, received court approval of a recovery plan that cuts debt by more than $400 million, Bloomberg News reported yesterday. First-lien lenders owed $445 million, including Oaktree Capital Management LP, MSD Capital LP and Caspian Capital LP, will get 70 percent of the new stock plus new debt, according to court papers. Remaining stock will go to second-lien lenders owed $174 million. Quiznos, founded in 1981, negotiated the plan with most of its senior lenders before seeking court protection on March 14, citing a weak job market and greater competition among fast-food restaurants. Quiznos franchisees operate about 2,100 restaurants in all 50 U.S. states and 34 countries, according to its website.
Lawyers for defunct brokerage MF Global yesterday asked a U.S. bankruptcy judge to impose procedures to limit mounting legal fees incurred by Jon Corzine and other former company insiders in litigation over their role in MF's 2011 collapse, Reuters reported yesterday. James Giddens, trustee for MF's former broker-dealer unit, and Bruce Bennett, a lawyer for its defunct parent company, in court papers said that former Chief Executive Officer Corzine, former Chief Operating Officer Bradley Abelow and other ex-insiders are mounting exorbitant legal bills through excessive defense tactics. The filings came in response to requests last month by the insiders for a $10 million increase, from $30 million to $40 million, on the money they are allowed to tap from MF Global insurance policies to fund their defense costs.
Unsecured creditors of bankrupt Energy Future Holdings, as well as one group of secured bondholders considered far out of the money, formed a committee yesterday that will play a major role in the restructuring of Texas' biggest power company, Reuters reported yesterday. The seven-member committee, appointed by the Office of the U.S. Trustee, included the Pension Benefit Guaranty Corp. as well as representatives of bondholders and suppliers to the company, which filed for chapter 11 protection on April 29 with $9.6 billion owed to unsecured creditors. The company owes another $32 billion to higher-priority creditors, making it one of the biggest non-financial companies ever to file for bankruptcy. In a rare move, the committee will include a representative of secured noteholders that the company says are so unlikely to get paid that they are essentially involuntarily unsecured.
West Virginia-based Fairmont General Hospital Inc . is preparing to hold a June 17 auction for potential buyers who want to challenge a $15.3 million offer from Alecto Healthcare Services LLC, Dow Jones Daily Bankruptcy Review reported today. In court papers filed on Friday, Fairmont laid out bidding procedures that, if approved by Judge Patrick Flatley, will name Alecto as the lead bidder for the hospital's assets. Fairmont has also asked Judge Flatley to approve protections for Alecto that would guarantee the company break-up fees and reimbursements of the lesser of $500,000 or 2.5 percent of the final purchase price should it fail to win the auction.
The historic Nortel Networks Corp. cross-border bankruptcy trial will begin today in Wilmington, Del., and Toronto, the Wall Street Journal reported today. Judges will decide how to divvy up $7.3 billion from the sale of patents and other assets between Nortel divisions in Canada, the U.S. and Europe. The trial is one of the largest bankruptcy cases ever dealt with in Canadian courts, and it will be closely watched in the legal community because of the unusual cross-border hearing conducted using closed-circuit video cameras before Justice Frank Newbold of the Ontario Superior Court and Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, Del. (Subscription required.) http://blogs.wsj.com/bankruptcy/2014/05/09/forward-motions-cross-border…
To hear more about the Nortel case and other top cross-border cases and issues, be sure to join ABI in New York on June 20 for the Cross-Border Insolvency Program. For more information or to register, please click here: http://www.abiworld.org/CB14/
Energy Future Holdings Corp. said that keeping the company’s bankruptcy in Delaware would give most advisers and creditors a much shorter trip to court than holding it in the company’s home state of Texas, Bloomberg News reported yesterday. In an objection to a creditor’s bid to move the case, Dallas-based Energy Future said that it also will be more likely to meet its goal of completing reorganization in 11 months if the case stays in Wilmington, Del., where it was filed last month. Wilmington Savings Fund Society FSB, a trustee for Energy Future’s junior noteholders, has said that the Delaware court would favor management interests over those of some creditors. More than 60 percent of Fortune 500 companies are incorporated in Delaware, which gives them access to the state and federal courts there.
For further analysis and insight about navigating American’s busiest bankruptcy courts, be sure to sign up for the May 28 abiLIVE webinar looking at representing creditors in Wilmington and Manhattan. To register or find out more, please click here: http://www.abiworld.org/webinars/2014/LITI/index.html
