Debt-laden Overseas Shipholding Group Inc., the world's No. 2 independent tanker operator by fleet size, filed for chapter 11 protection, Reuters reported today. The company, which has been struggling to plug a $300 million shortfall in its $1.5 billion fully drawn revolving credit facility, warned last month that it may have to seek bankruptcy protection. It had also said at that time that it may have to re-state results for at least three years due to a tax issue.
A group of creditors owed millions of dollars by Dewey & LeBoeuf LLP is seeking to sue its former top three managers, saying that the trio "engaged in rampant self-dealing" that led to the law firm's demise, the Wall Street Journal reported today. The move comes from the company's unsecured creditors' committee—staffing agencies, car services and other trade creditors that extended credit to Dewey. Those unsecured creditors, which also include federal pension regulators, have filed up to $500 million in claims against the failed law firm and are unlikely to recover all the money they are owed. The request to pursue claims against Dewey's former leaders, filed on Monday, seeks to recover money from about $50 million in management-liability coverage and other insurance policies held by the law firm. A hearing on the unsecured creditors' motion is set for Nov. 29.
With a market abundance of ethanol that has kept the fuel additive's price low and led Congress to stop encouraging production with a tax credit, Indiana-based ethanol producer New Energy Corp. has filed for chapter 11 protection to sell its 70-acre plant outside South Bend, Dow Jones DBR Small Cap reported today. New Energy executives placed its operations in bankruptcy last week as part of the sale demanded by its top lender, the U.S. Department of Energy , which is owed $33.3 million on a loan that it first extended in 1997.
Hostess Brands Inc., the maker of Wonder bread and Twinkies, said that it will begin permanently closing plants unless enough members of its striking bakery workers' union cross the picket lines to keep them open, Bloomberg News reported yesterday. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 at some plants over what the union called the "unilateral imposition of a horrendous contract" rejected by 92 percent of its members. By late yesterday, the strike affected 23 of Hostess's 36 plants, the company said. Enough union members are crossing picket lines at about half of the struck plants to allow "full operations," the company said.
W.R. Grace & Co. projected that it could complete its reorganization by the end of 2013 if it received positive outcomes regarding pending appeals of the order confirming its reorganization plan, the Deal Pipeline reported yesterday. Five appeals are pending in the U.S. Court of Appeals for the Third Circuit. The appeals generally deal with proposed interest rates, the validity of asbestos channeling injunctions and the classification of claims. W.R. Grace anticipates presenting oral arguments to the court in the first quarter of 2013 and receiving a ruling in the third quarter. Should the court rule in W.R. Grace's favor, the Columbia, Md., company would exit bankruptcy by the end of next year, more than 12 years after filing for chapter 11 on April 2, 2001.
The primary industry group for the corporate loan market warned that any attempt to limit the rights of secured creditors in the event of a bankruptcy could have a broader impact on companies' access to and cost of capital, the Wall Street Journal's CFO Journal reported today. The comments by the Loan Syndications and Trading Association (LSTA) were aimed at the American Bankruptcy Institute's Chapter 11 Commission, which is currently studying the 1978 bankruptcy code for areas in need of updating. The LSTA's general counsel Elliot Ganz announced the formation of a working group on the ABI's review that any attempt to limit secured creditors' rights could limit companies' access to capital both before and after bankruptcy, because lenders will feel less protected. Robert Keach, co-chair of the ABI Chapter 11 Commission, said that the Commission has so far only identified the role of secured debt in bankruptcies as an area of study and hasn’t taken any position on the issue. "The ABI commission is certainly not looking at the prevalence of secured debt that’s occurred over the last 30 years as a problem to be solved," he said. "We mentioned it in the mission statement because there have been changes that have occurred over time that have made the current Code somewhat obsolete."
The next hearing of ABI's Chapter 11 Commission will be on Thursday, Nov. 15, at the CFA Annual Convention in Phoenix. For more information on the public hearing schedule and the work of the Commission, please click here: http://commission.abi.org/
Omtron USA, which owns defunct North Carolina poultry processor Townsends Inc., filed for chapter 11 protection on Friday, the second poultry producer to do so in as many months, Dow Jones DBR Small Cap reported today. The subsidiary of Ukrainian egg and egg-product producer Agroholding Avangard, Omtron USA purchased Townsend's North Carolina plants out of bankruptcy in February 2011 for $24.9 million. Townsend had filed for chapter 11 bankruptcy in December 2010, blaming the high cost of feed in 2008 that had continued to suppress profitability.
Federal bankruptcy court in Manhattan will reopen today after being closed for more than two weeks due to flooding and other damage caused by Hurricane Sandy, Reuters reported yesterday. The court, which had been without steam, Internet and phone connection, is now operational. For large companies restructuring under chapter 11 in New York, like Patriot Coal Corp and American Airlines parent AMR Corp., it means returning to normal after days of postponed or relocated court hearings.
Eastman Kodak Co. reached a deal with bondholders for $793 million in loans that could help take the onetime photography icon out of bankruptcy proceedings if it sells a collection of patents for at least $500 million, the Wall Street Journal reported yesterday. Some Kodak bondholders, however, criticized the company in court saying that it had "squandered" the 10 months it had been in bankruptcy protection by pinning its hopes on the patent sale. Bondholders including Centerbridge Partners LP, GSO Capital Partners LP, JPMorgan Securities LLC and UBS AG are providing Kodak with the new financing. Kodak's board met Sunday night to approve the package.
Metex Manufacturing Corp., formerly known as Kentile Floors Inc., filed for bankruptcy protection for the second time since 1992 to cope with asbestos product-liability claims, Bloomberg News reported on Friday. The company, which manages two industrial facilities in New Jersey, listed assets and debt of more than $100 million each in chapter 11 documents filed on Friday. Metex faces about about 6,000 active asbestos claims tied to Kentile, according to court papers.
