A takeover vehicle associated with Hong Kong billionaire Richard Li yesterday mounted an emergency appeal attacking a bankruptcy-court decision that put Fisker Automotive Inc. on the auction block, Dow Jones Daily Bankruptcy Review reported today. Li's acquisition vehicle, Hybrid Tech Holdings LLC, is due to face off Feb. 12 against an affiliate of China's Wanxiang Group in a chapter 11 auction duel for the assets of Fisker, a failed luxury hybrid car maker.
Less than three weeks into the going-out-of-business sales, five Loehmann’s locations have already closed completely, the Wall Street Journal reported today, and six more will lock up for the last time this Sunday. Loehmann’s also announced on its website that Monday, Jan. 20, was the last day it would honor store credits. Gift cards will be honored until Feb. 7. Loehmann’s Holdings Inc., the owner of the Loehmann’s retail stores, filed for chapter 11 protection in late December. Through the process, the company sold its merchandise to a group of liquidators, which is conducting the going-out-of-business sales. That sale was approved by the bankruptcy court on Jan. 7, and the going-out-of-business sales began on Jan. 9.
Global Aviation Holdings Inc. won bankruptcy-court approval to sell itself to its lender, a unit of Cerberus Capital Management, subject to higher bids at a March auction, the Wall Street Journal reported today. Bankruptcy Judge Mary F. Walrath on Friday authorized Global Aviation to hold a March 19 auction, where the Cerberus unit will lead off the bidding. The Cerberus unit, Cerberus Business Finance LLC, is offering to sponsor Global Aviation's restructuring plan. If it wins the bidding, it will forgive at least some of the debt it holds in exchange for all of the new equity in the restructured charter airline operator. Court papers show would-be buyers' bids, due March 14, have to include at least $35 million in cash earmarked to repay Cerberus. The buyout firm is owed $39 million in pre-bankruptcy loan debt and also provided more than $50 million in bankruptcy financing to cover the costs of Global's chapter 11 case, its second in as many years. Judge Walrath will consider approving the winning bid at a March 25 sale hearing, according to court papers.
Bankruptcy Judge Allan Gropper on Friday ruled against a variety of former Eastman Kodak Co. shareholders hoping the company would compensate them for stock that is now worthless, the Rochester (N.Y.) Democrat and Chronicle reported today. Judge Gropper filed a series of rulings agreeing with Kodak objections to claims filed by the shareholders. The claims were filed in recent months by Kodak shareholders who saw their stock get canceled in September when the company emerged from its 20-month chapter 11 bankruptcy. The claims ranged from hundreds of dollars to more than $100,000.
As New York’s highest court considers whether defunct law firms’ estates may collect hourly fees made by other firms that take up the collapsed firm’s client matters, experts say that the decision will boil down to how heavily the judges value a client’s right to choose its lawyers, Law360.com reported today. Though the provision of the Uniform Partnership Act known as the unfinished business rule says collapsed firms are entitled to “any property, profit or benefit” a partner receives that derived from the firm after that partner leaves, courts have differed on whether that applies to profits gleaned from hourly fee matters attorneys take from their old firm to their new firm. Determining which firm rightly owns the profits of those cases will depend to some degree on how the courts view the importance of lawyer autonomy and clients’ right to choose who represents them, attorneys said. “On one side of the equation, you have lawyer mobility and the ability of a client to choose its counsel,” said Paul Labov, an Edwards Wildman Palmer LLP attorney. On the other, trustees overseeing the dissolved firm’s wind-down can argue that under the unfinished business doctrine, the profits made really belong to the firm in which the work began because the attorney used the now-defunct firm’s resources to obtain the client in the first place, he said. The New York Court of Appeals recently agreed to address how the unfinished business doctrine applies to hourly fees made by partners for work performed on matters that they took from their old firm to a new firm, as well as what defines “client matter.” Until now, that question has not made its way through the appellate courts because in most situations, the trustees and the firms that took on the dissolved firms’ casework settle.
Bankruptcy Judge Louis Kornreich formally on Thursday approved the Montreal, Maine and Atlantic Railway’s sale to Railroad Acquisition Holdings LLC, an affiliate of New York-based Fortress Investment Group. The decision came simultaneously with a Canadian bankruptcy court proceeding. The $15.85 million deal is expected to be closed by mid-March, said Robert Keach, the railroad company’s trustee in its bankruptcy proceedings. Railroad Acquisition Holdings began the bidding with a stalking-horse bid of $14.5 million. MM&A filed for chapter 11 bankruptcy in U.S. Bankruptcy Court in Bangor on Aug. 7, 2013, a month after one of its trains rolled driverless down a hill before derailing in the middle of the town of Lac-Megantic, Quebec, causing an explosion that killed 47 people on July 6, 2013.
Dish Network Corp. Chairman Charlie Ergen is again fighting with a group of hedge funds that hold LightSquared's bank debt, this time over which side should be providing a short-term bankruptcy loan to keep LightSquared afloat, the Wall Street Journal reported on Saturday. In a court filing on Thursday, lawyers for Ergen's SPSO Special Opportunities investment vehicle said the $33 million loan offer from the hedge funds to keep LightSquared afloat through April 15 is "inferior" to theirs. Ergen's loan, his lawyers said, "is not a coercive financing designed to benefit select parties in interest rather than the estate as a whole." After months of being on the same side in LightSquared's bankruptcy case, Ergen and the ad hoc group of hedge funds have been adversaries since Dish withdrew its $2.2 billion bid for LightSquared's spectrum assets earlier this month. The hedge funds, which like Ergen own LightSquared's bank debt, had filed a restructuring proposal for LightSquared based on the bid trying to force Dish into making the deal. However, a judge turned them down earlier last week, saying Dish properly abandoned its offer.
Bankruptcy Court Judge Kevin R. Huennekens on Friday approved motions that will enable Free Lance-Star Publishing Co. in Fredericksburg to continue operating its newspaper, radio and printing businesses while seeking to sell itself under chapter 11 protection, the Richmond Times-Dispatch reported on Saturday. Also on Friday, Lynn Tavenner, a Richmond lawyer who is representing Free Lance-Star Publishing, said that the company filed documents to set in motion a court-monitored auction of the company. Friday’s hearing largely focused on whether Free Lance-Star Publishing could use cash collateral for its ongoing operations without providing additional liens on some of its property — such as its radio transmission towers — to Sandton Capital Partners, the New York-based investment firm to which Free Lance-Star Publishing owes about $38 million. That $38 million is the remaining debt on a $50.8 million loan the company took out from BB&T Corp. in 2007 to build a new printing plant.
Women's clothing retailer Dots LLC won court approval to start drawing on a $36 million bankruptcy loan to keep its stores open while it searches for a buyer, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Donald H. Steckroth on Wednesday granted interim approval to Dots' bankruptcy loan, court papers show. Existing lender Salus Capital Partners LLC, already owed $30.6 million, is providing the loan. The bankruptcy financing package consists of a $20 million revolving credit facility and a $16 million term loan. Judge Steckroth will consider allowing Dots to draw the full amount of the bankruptcy loan at a Feb. 11 hearing.
The 129-year-old publisher of Fredericksburg, Va.’s Free Lance-Star newspaper filed for bankruptcy, saying that creditor Sandton Capital Partners LP pressed the company to enter court protection to sell its assets, Bloomberg News reported yesterday. Free Lance-Star Publishing Co., which also owns radio stations and websites, listed assets and debt of more than $50 million each in chapter 11 documents filed yesterday. Free Lance-Star, owned by the Rowe family, was undone by a loan it took out from BB&T Corp. to build a printing plant in 2007. Sandton, a New York-based investment firm, bought the loan in June after Free Lance-Star violated covenants, then urged the publisher to file in chapter 11 and sell its assets, according to a court filing.
