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Solyndra LLC, the solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before going bankrupt, won’t be able to provide lenders ranking ahead of the government with a full recovery, the company's financial adviser Eric Carlson said yesterday, Bloomberg News reported. The failed solar-panel maker generated about $117 million from assets sales, including the proposed sale of its manufacturing facility to a unit of Dublin-based Seagate Technology Plc for $90.3 million, subject to competing offers at a Nov. 14 auction, Carlson testified under questioning from Solyndra lawyer Maxim Litvak. The company incurred about $46 million in costs to achieve those sales, giving it about $71 million in net distributable assets. Lenders who rank ahead of the government, Argonaut Ventures I LLC and Madrone Partners LP, are owed about $77 million, about $6 million short of a full recovery, said Carlson of Imperial Capital.

ABI's Commission to Study the Reform of Chapter 11, whose 22 members constitute a venerable bankruptcy industry Hall of Fame, held a hearing yesterday to gather feedback on what is right and wrong with the statutory scheme that has governed chapter 11 bankruptcy since 1978, Reuters reported. The commission's charge includes "literally considering starting from scratch and re-inventing the statute," said Robert Keach, attorney and commission co-chairman. The commission plans to eventually submit a report to Congress, targeted for April, 2014, that could serve as "part blueprint, part outline" for new legislation, Keach said. The commission will study 13 areas of bankruptcy law, including labor & benefits issues, financing rules and government supervision. It is collecting feedback from several groups through a series of hearings, with upcoming dates at the National Conference of Bankruptcy Judges in San Diego on Oct. 26, and a convention of trade group the Turnaround Management Association in Boston on Nov. 3. Read more:
http://www.reuters.com/article/2012/10/18/bankruptcy-reform-idUSL1E8LHP…

To obtain the prepared witness testimony from yesterday's hearing, view background information on the Commission members or to see upcoming dates of activity, please click here: http://commission.abi.org/

Eastman Kodak Co. said that it will begin discussions with various creditor groups on a reorganization plan to emerge from bankruptcy protection, Reuters reported on Friday. The company said in a court filing that it expects revenue of $833 million for 2013 from its commercial imaging digital printing business and $1.72 billion from its commercial imaging graphics, entertainment & commercial films. Kodak said that there is interest from various parties in its commercial imaging business and interest among several potential lenders to finance the business.

NewPage Corp., the largest U.S. coated-paper maker, settled with creditors over its plan to exit bankruptcy by agreeing to give first-lien noteholders all of the stock in the reorganized company, Bloomberg News reported yesterday. Lower-ranking noteholders and some other unsecured creditors will split $30 million in cash and the first $50 million that might come from any lawsuits filed by a litigation trust, NewPage said today. NewPage, based in Miamisburg, Ohio, filed for bankruptcy in September 2011, listing $3.4 billion in assets and $4.2 billion in debt.

A section of secured bondholders of Residential Capital LLC, the bankrupt mortgage unit of Ally Financial, is pulling out of an agreement to support the company's reorganization plan, Reuters reported today. Ally said that the agreement between Ally and ResCap's third lien bondholders has been terminated by the bondholders. ResCap filed for bankruptcy in May with a plan in place for Nationstar Mortgage Holdings, owned by Fortress Investment Group, to make a $2.4 billion minimum offer for the mortgage servicing assets. Ally Financial also agreed to buy a group of ResCap mortgage loans for $1.4 billion. Ally is not in bankruptcy.

Creditors of bankrupt Residential Capital LLC asked a judge to let them probe, and possibly sue, bondholder trustees Wells Fargo & Co. and U.S. Bank NA, a move the creditors say could net "hundreds of millions" of dollars, Bloomberg News reported yesterday. When the mortgage company filed bankruptcy in May, it boosted the declared amount of collateral backing bondholder claims by $1.1 billion, to assets worth about $2.4 billion, the unsecured creditors' committee said yesterday in court papers. ResCap, as the company is known, thus waived its right to challenge the bondholders' claims to the collateral, creditors said.

Creditors owed $1.5 million have filed an involuntary chapter 7 petition against Absolute Fund LP, which in May was accused by regulators of running an $11 million Ponzi scheme, Dow Jones DBR Small Cap reported today. Three creditors---North East Capital Fund, OM Global Investment and Alpha Global Advisors---claiming to be owed a total of $1.5 million filed the petition to force the fund into a chapter 7 liquidation on Friday.

The wind-down team of defunct law firm Dewey & LeBoeuf revealed the identities of partners participating in a proposed $71.5 million settlement on Thursday, and disclosed how much money each partner had agreed to pay, Reuters reported on Friday. The settlement, if approved, would be the first major recovery for creditors who claim they are owned more than $500 million. Partners are agreeing to contribute back compensation -- between $5,000 and $3.5 million each -- in exchange for being released from potential clawback claims. The amounts contributed are pegged to the partners' compensation at the firm.

Technicolor Creative Services USA Inc., a creditor that is planning on making a bid for Digital Domain Media Group Inc.'s assets, is concerned about the pace of the special-effects company's sale process and says that the accelerated timeline could result in lower offers for the business, Dow Jones DBR Small Cap reported today. Bankruptcy Judge Brendan Shannon last week cleared Digital Domain to head to auction this Friday, following a high-stress hearing where the company teetered on the brink of liquidation as major movie studios---Digital Domain's chief clients---threatened to walk. The judge had initially balked at setting such a swift sale process in motion and is set to take a second look at the auction rules, and the objections they have elicited, at a hearing today.

A new bankruptcy study by two university professors found that incentive bonus plans for managers of bankrupt companies "significantly improve" outcomes for creditors, the Wall Street Journal's Bankruptcy Beat Blog reported on Friday. "Firms that adopt these plans—especially the incentive plans—are more likely to emerge, have shorter duration in restructuring and are less likely to violate the absolute priority rule under bankruptcy law," said Wei Wang, an assistant professor of business at Queen’s University. The study titled "Provision of Management Incentives in Bankrupt Firms" looked at 417 large public companies that filed for chapter 11 between 1996 and 2007. Of those, about 39 percent offered retention and incentive plans to key employees and the researchers looked at what effect, if any, those plans had on the outcomes of the bankruptcy cases. Wang, who co-authored the study with Vidhan K. Goyal, a finance professor at the Hong Kong University of Science and Technology, also said that the research does not support the common view among many bankruptcy observers that bonus plans enrich managers at the expense of creditors. On the contrary, creditor control—for example, when a hedge fund or lender is directing the bankruptcy case—increases the likelihood that bankrupt firms offer retention and incentive bonuses to managers, he said. Wang added that while it is true that retention plans did not have any impact on chapter 11 cases, companies that adopted incentive bonuses spent less time in bankruptcy and were in better shape when they emerged. To read the study, please click here: https://www.documentcloud.org/documents/408293-kerpaugust8.html