Bahrain-based investment firm Arcapita Bank said that it has filed an amended reorganization plan in its U.S. bankruptcy case that has the support of its main creditors, Dow Jones Daily Bankruptcy Review reported today. Like Arcapita's original plan, which it filed in February, the amended plan envisions the company ceasing to make new investments and focusing on selling its existing portfolio of assets to settle creditor claims, according to court documents.
Scooter Store Holdings Inc., a supplier of motorized scooters and wheelchairs throughout the U.S., filed for bankruptcy with a plan to sell virtually all of its assets, Bloomberg News reported yesterday. The closely held company, based in New Braunfels, Texas, listed assets of less than $10 million and debt of more than $50 million in chapter 11 documents filed yesterday. Seventy-one affiliates also sought protection. The company owes more than $19 million to the Centers for Medicare & Medicaid Services, administrator of the two government programs, according to court papers. The case is In re Scooter Store Holdings Inc., 13-10904, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Patriot Coal Corp., the bankrupt mining company facing protests as it seeks to cut benefits to union workers, revised its proposal and offered them an equity stake in a reorganized company, Bloomberg News reported yesterday. Under the new proposal submitted to the United Mine Workers of America (UMWA) on Wednesday, the UMWA would get a 35 percent stake in a reorganized company. The company’s initial proposal was made in November, and the latest proposal had been to give the UMWA an unsecured claim in the bankruptcy. Patriot filed for bankruptcy in July, citing falling demand for coal and obligations to pay $1.6 billion in lifetime health care for its 8,100 retirees. Patriot is seeking to trim costs by negotiating with unionized employees, and the St. Louis-based company said that it needs to shed at least $150 million more in labor expenses to avoid liquidating in bankruptcy, an outcome it says would be worse for retirees, employees and creditors.
Bankruptcy Judge Sean Lane has denied a proposed $20 million severance payment for the CEO of American Airlines as part of the company's merger with US Airways, the Associated Press reported today. The judge ruled yesterday that the proposed payment to CEO Tom Horton exceeded limits that Congress set for bankruptcy cases by BAPCPA in 2005. The U.S. Trustee's office had objected to Horton's compensation. At a hearing last month, however, Judge Lane approved the plan for American Airlines parent AMR Corp. to merge with US Airways Group Inc. in a deal that would create the world's largest airline. The merger is being reviewed by U.S. antitrust regulators. Under the merger deal, the new company will be called American Airlines but run by US Airways CEO Doug Parker. Horton would serve as chairman for a few months and then leave with a severance of $19.875 million equally divided between cash and stock. The Trustee's office argued that severance payments to insiders such as CEOs cannot be more than 10 times the average severance pay for non-management employees.
Residential Capital LLC wants to keep using the cash securing the claims of parent Ally Financial Inc. and bondholders, which ResCap says is necessary to complete the "great deal of work" that remains in its bankruptcy case, Dow Jones Newswires reported yesterday. In a court filing on Monday, ResCap asked Bankruptcy Judge Martin Glenn if it could continue using that cash as it works toward resolving the issues in its chapter 11 and filing a reorganization plan. The judge has already approved ResCap's prior requests to use the cash, which is secured by loans. ResCap said that it wants to use the cash to maintain certain loan portfolios, as well as to sell those loans.
Rotech Healthcare Inc., a provider of home respiratory products, has filed for bankruptcy, saying that its plan to cut its debt by about half and to reorganize is supported by a majority of its noteholders, Bloomberg News reported yesterday. Under the proposed reorganization plan, the company’s lenders, owed $23.5 million, and first-lien noteholders, owed $230 million, will receive an amended term loan. Second-lien noteholders will get all of the shares in the new Rotech, eliminating more than $300 million in debt, according to a company statement. The company, based in Orlando, Fla., said that it has more than $100 million in assets and owes lenders and noteholders about $543.5 million.
A variety of creditors that do not have a direct stake in the outcome of Patriot Coal Corp.'s bid to shed its union obligations in bankruptcy won court permission to have their voices heard during an upcoming labor trial, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Kathy A. Surratt-States on Friday cleared parties other than the company and the union it is facing off against during a battle over labor contracts to participate in the trial, to an extent. She opened up some aspects of the legal process to outsiders, allowing them to participate in depositions, submit briefs and make opening and closing statements at the court hearing.
Two years into Chapter 11 proceedings, the trustee for Howrey—the Washington, D.C.-based law firm that dissolved and entered bankruptcy in 2011—has reached a settlement with one of Howrey's insurance carriers, and is continuing to negotiate with 50 other law firms in an effort to recover millions of dollars to repay Howrey creditors, the Washington Post reported yesterday. Houston attorney Allan Diamond, whose role as trustee is to recover as much money as possible for the firm's creditors, filed papers with the bankruptcy court on Friday seeking approval for a settlement he has reached with the Attorneys’ Liability Assurance Society which provides malpractice insurance for Howrey. The agreement would funnel a minimum of about $5.2 million and up to $7.6 million to the Howrey estate. Diamond also filed lawsuits against seven law firms over "unfinished business" claims. Diamond has already reached such agreements with Holland & Knight and Fenwick & West that will bring at least $41,000 to the Howrey estate, according to papers filed with the bankruptcy court in late March.
To hear more about the Howrey case and law firm bankruptcies, make sure to register for next week's Annual Spring Meeting that will feature a joint session by ABI's Bankruptcy Litigation and Labor & Employment Committees on the topic. Click here for more information or to register.
MF Global on Friday won court approval of a plan to liquidate its assets, pay back creditors and end the $40 billion bankruptcy that rocked the financial world in 2011, Reuters reported on Friday. The commodities brokerage, run by former New Jersey Governor Jon Corzine, collapsed after investors were spooked by its exposure to about $6.3 billion in European sovereign debt. The approval marked a major step in ending the massive chapter 11 filing, as MF Global is now able to implement the plan and pay creditors. The case became a political firestorm after it was discovered that about $1.6 billion was missing from the accounts of the broker's commodities trader customers. Regulators later determined that MF Global had misappropriated the customer money to cover liquidity gaps as it faltered.
Greensboro, N.C., Mayor Robbie Perkins declared bankruptcy on Friday, the Greensboro News-Record reported on Saturday. "I have been experiencing financial difficulties resulting from the downturn in the economy and a domestic situation which I have been unable to resolve to date," Perkins said. He is a partner at NAI Piedmont Triad, a real estate firm that has suffered in the recession. He has been in a prolonged legal battle with his estranged wife, Carole Perkins. They have been separated since 2011. Carole Perkins filed a court motion March 6 alleging that her husband had not paid all of the financial support he owes her. Court records show he is responsible for about $13,000 a month in spousal and child support.
