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Mach Gen LLC emerged from bankruptcy on Monday, two weeks after a judge approved its restructuring proposal, the Wall Street Journal reported today. In a filing with U.S. Bankruptcy Court in Wilmington, Del., the electricity generator said that its plan to slash $1.6 billion debt down to $1 billion became effective on Monday. Mach Gen’s restructuring gives Beal Bank USA and other first-lien lenders owed more than $600 million new debt worth $683 million. Holders of the company’s second-lien debt, who are owed about $1 billion, get 93.5 percent of Mach Gen’s new common stock. The rest of those new shares go to Mach Gen’s existing equity holders. The company’s general unsecured creditors will be paid in full.

General Motors Co. customers, who filed about 50 lawsuits demanding compensation for ignition-switch problems, picked three lawyers to speak for them in bankruptcy court when a judge considers the automaker’s request to pare their claims, Bloomberg News reported yesterday. At a meeting in New York yesterday convened by Edward Weisfelner of Brown Rudnick LLP, about a hundred law firms for GM car owners delegated their host and two others to put their views to Bankruptcy Judge Robert Gerber at a May 2 conference. Sander Esserman of Stutzman, Bromberg, Esserman & Plifka in Dallas and Elihu Inselbuch of Caplin & Drysdale in New York were the other two lawyers selected, Weisfelner said. GM wants Gerber to reaffirm rulings made during its 2009 bankruptcy, saying that customer demands for money aren’t allowed by those orders. The customers say that the Detroit-based carmaker didn’t tell the judge about its ignition-switch problems, so he needn’t renew his rulings.
http://www.bloomberg.com/news/print/2014-04-29/gm-customers-pick-lawyer…

Edward Weisfelner is the author of ABI’s latest book, Advanced Fraudulent Transfers: A Litigation Guide, available for purchase in the ABI Bookstore. http://bookstore.abi.org/advanced-fraudulent-transfers-litigation-guide

Specialty retailer Brookstone Holdings Corp. has received bankruptcy-court approval to sell ownership of the restructured company at auction, with a $146.3 million offer from a Spencer Spirit Holdings Inc. affiliate setting the floor price, the Wall Street Journal reported today. Bankruptcy Judge Brendan Shannon on Friday approved the rules to govern the Brookstone auction, including a $3.7 million breakup fee and up to $500,000 in expense reimbursement to Spencer's if it is bested by another offer. The Spencer's offer is worth $120 million in cash plus $75 million in notes and assumption of liabilities. The auction is scheduled for June 2, and competing bids are due May 28. Those bids must be worth at least $250,000 more than the Spencer's offer and cover the cost of Spencer's breakup fee and expense reimbursement.

Energy Future Holdings Corp. filed for chapter 11 protection today after months of negotiations with creditors aimed at speeding the restructuring of the private-equity backed utility's debt load of more than $40 billion, the Wall Street Journal reported today. With more than $100 million in skipped debt payments coming due this week, the Texas energy company sought protection in the U.S. Bankruptcy Court in Wilmington, Del., with a plan that involves parceling out the company to appease lenders. In broad outline, Energy Future, once known as TXU Corp., hopes to swap Texas Competitive Electric Holdings, a subsidiary that sells power in wholesale markets to big companies and other utilities, to get $25 billion worth of debt forgiven. Additionally, the company has been in discussions with bondholders owed roughly $1.7 billion about converting their debt to ownership stakes in Energy Future Intermediate Holding Co., the subsidiary that owns Oncor, the company's regulated business that delivers power to more than 10 million customers across Texas.

Companies affiliated with Carol’s Daughter filed for Chapter 11 bankruptcy protection Thursday in connection with the beauty brand’s move to close most of its stores, the Wall Street Journal reported today. CD Stores LLC, formerly known as Carol’s Daughter Stores LLC, filed its chapter 11 petition with the Manhattan bankruptcy court, as did the individual companies behind Carol’s Daughter stores. Court papers show that CD Stores is 100 percent owned by parent company Carol’s Daughter Holdings LLC (the parent company didn’t file for bankruptcy). And the petition, which reported assets and debts each in the $1 million to $10 million range, was signed by Carol’s Daughter Chief Financial Officer John D. Elmer.

A bankruptcy judge yesterday cleared distressed investor Clearlake Capital Group to acquire plus-size women's clothing retailer Ashley Stewart out of its chapter 11 case, the Wall Street Journal reported today. Clearlake, a Los Angeles private-equity firm, was the lead bidder for Ashley Stewart Holdings Inc.'s retail chain. But the company canceled last week's scheduled auction after no rival bidders emerged, paving the way for Clearlake to acquire the chain in a deal valued in the range of $18 million to $23 million. In addition to approving the sale, Bankruptcy Judge Michael Kaplan yesterday also signed off on a settlement that allocates the sale proceeds among Ashley Stewart's objections. Under the deal, Ashley Stewart will use the sale proceeds to pay off what the company owes under its $17.5 million bankruptcy loan. The settlement sets out a "waterfall" scheme to pay the remainder of the sale proceeds out to high-priority creditors, then the retailer's bondholders and unsecured creditors.

General Motors Co.’s request for court protection from car-owner suits seeking compensation for recalled autos with defective ignition switches was attacked as legally “unsupportable,” Bloomberg News reported yesterday. Car owners challenged GM’s position that it may compensate accident victims but not them, claiming in a court filing yesterday that GM committed fraud by not revealing the defects, allegedly known since 2001, or listing either group as creditors in its 2009 bankruptcy. In the reorganization, Bankruptcy Judge Robert Gerber freed GM from most liabilities, leaving intact some warranty obligations and accident responsibility. Bankruptcy lawyers said that it will be hard for car owners to reopen the case, which is good news for GM. Fitch Ratings said last month the automaker faced more risk from recall suits than the cost of fixing millions of cars or fines stemming from a federal regulatory probe.
http://www.bloomberg.com/news/print/2014-04-23/gm-car-owners-attack-aut…

For further analysis, make sure to attend the "Large Complex Trusts: A General Motors Case Study" panel tomorrow at ABI's Annual Spring Meeting. This panel will discuss the General Motors bankruptcy case with an in-depth discussion about the issuance of public units in a major bankruptcy. The session will also include the challenges addressed by the trust such as liability claims. For more information or to register, please click here: http://www.abiworld.org/ASM14/

Sorenson Communications Inc. hasn't exited chapter 11 protection yet, but already a ratings agency is saying that further restructuring is highly likely, Dow Jones Daily Bankruptcy Review reported today. "We do not believe that the company is going to be able to earn its way into the amount of debt it has," Moody's analyst Edmond DeForest said on Monday. "In the medium to long term another restructuring — and perhaps another chapter 11 filing — is likely." The communication-services provider for those who are deaf or hearing-impaired received bankruptcy court approval of its restructuring plan in April and said it expects to implement the plan and exit chapter 11 protection in May. The plan shifts the ownership of the company to senior bondholders, but doesn't actually reduce the company's debt load, which DeForest pointed out, is one of the reasons Sorenson filed for bankruptcy.

Lawyers pressing cases against General Motors say that the automaker concealed the controversial ignition defect when it "took billions of dollars in taxpayer money" during its government-sponsored bankruptcy in 2009, CNNMoney.com reported yesterday. The claim, made by plaintiffs attorneys seeking court approval to bring class action suits against GM, came in court documents filed in federal bankruptcy court on Monday. GM also filed court papers on Monday seeking to protect itself from suits related to the ignition switch recall, which the company has tied to at least 13 deaths. The plaintiffs' lawyers argue that GM should not be able to use its bankruptcy reorganization as a shield against liability in cases stemming from the faulty ignition switch.

For further analysis, make sure to attend the "Large Complex Trusts: A General Motors Case Study" panel at this week's Annual Spring Meeting. This panel will discuss the General Motors bankruptcy case with an in-depth discussion about the issuance of public units in a major bankruptcy. The session will also include the challenges addressed by the trust such as liability claims. For more information or to register, please click here: http://www.abiworld.org/ASM14/

A proposal to pay Brookstone Holdings Corp. executives at least $840,000 in bonuses faces opposition from a federal bankruptcy watchdog, who argues that the company isn't making it difficult enough to earn the extra cash, Dow Jones Daily Bankruptcy Review reported today. U.S. Trustee Roberta DeAngelis said in a Friday court filing that tying the bonuses to a sale offer struck before Brookstone sought bankruptcy protection doesn't push the executives enough to enhance the company's value in order to earn the bonuses. Brookstone filed for bankruptcy on April 3 with a plan to sell its business to the owner of the Spencer's retail chain for $146.3 million.