US Airways Group Inc., which seeks a merger with AMR Corp.'s American Airlines, supports the carrier's bid for more time to develop a bankruptcy restructuring plan, Bloomberg News reported yesterday. AMR, based in Fort Worth, Texas, has asked to extend to the end of the year the company's exclusive right to file a plan as it considers mergers. US Airways, based in Tempe, Ariz., said yesterday that it supports the request, citing AMR's intention to consider strategic alternatives.
Kodak's top executives could be in line for big bonuses if creditors get some payback and if the company successfully emerges from bankruptcy or gets acquired, USA Today reported today. The printing and imaging company on Wednesday filed a motion in bankruptcy court seeking approval for as much as $17.6 million in bonuses for 15 executives. CEO Antonio Perez could receive up to $4.4 million if unsecured creditors get back all money they are owed. If they get back 30 cents on the dollar, which is Kodak's target, Perez would receive $2.2 million.
Dewey & LeBoeuf yesterday proposed a $104 million deal to recoup money from former partners who left the law firm as it teetered on collapse, Reuters reported yesterday. The proposed deal would cover clawback claims the estate has against hundreds of Dewey's former partners. The firm is seeking to clawback money paid out since the start of 2011. If partners accept the deal, it would provide the first big recovery for Dewey's creditors, who are owed $315 million stemming from the firm's bankruptcy filing in May.
U.S. Bank is being examined by investigators in relation to its role in overseeing client funds allegedly misappropriated by Peregrine Financial Group Inc., the Wall Street Journal reported today. The failed brokerage maintained an account holding client funds at a U.S. Bank branch near its headquarters in Cedar Falls, Iowa, according to court filings, and authorities are examining whether Peregrine Chief Executive Russell Wasendorf Sr. supplied fake bank documents to auditors in order to mask illicit use of his clients' money. Wasendorf is at the center of a probe into the futures and currency brokerage, which filed for bankruptcy on Tuesday after regulators uncovered what they called "missing" funds and alleged fraud.
In related news, the U.S. Trustee Program yesterday named a new trustee in Peregrine Financial Group Inc.'s bankruptcy case, according to the Wall Street Journal today. Ira Bodenstein of Shaw Gussis Fishman Glantz Wolfson & Towbin LLC said that he has accepted the appointment. He now is in charge of unwinding the Cedar Falls, Iowa, brokerage firm—whose clients' accounts were frozen this week amid a suspected $215 million shortfall in customer accounts.
Bankruptcy Judge James Peck ruled yesterday that a group of more than 20 hedge funds and money managers can't jump ahead of creditors of Lehman Brothers Holdings Inc.'s brokerage arm in the order to be repaid, the Wall Street Journal reported yesterday. Judge Peck said that Lehman's "soft-dollar" arrangements with the money managers don't entitle them to customer status over the brokerage unit's creditors. Soft dollars are credits a brokerage gives to hedge funds and other money managers for using its services, typically for securities research. Because soft-dollar credits cannot be used like cash to buy securities, Judge Peck said, they do not qualify for enhanced customer protection under the law.
RG Steel LLC is proposing to pay bonuses to the 10 top executives if the business is sold before the year’s end, according to the Bloomberg Bankruptcy & Restructuring Brief on Tuesday. The company does not yet have consent from second-lien lenders who in effect would pay the. The bonus pool would consist of 2.5 percent of the sale price for the assets in excess of the amount necessary to pay off funding for the chapter 11 case and first-lien debt. Additionally, managers would receive 5 percent of recoveries on subordinated debt owed to majority owner The Renco Group Inc. A hearing for approval of the bonus proposal is set for July 18.
The Archdiocese of Milwaukee has agreed to enter mediation with its creditors in bankruptcy court, the Associated Press reported on Tuesday. Most of the creditors are victims or alleged victims of sexual abuse by clergy or church workers. The archdiocese filed for chapter 11 protection in January 2011 to deal with sex abuse claims. Bankruptcy Judge Randall Newsome will be the mediator and mediation is expected to start July 20.
Arthur Gonzalez, the former chief bankruptcy judge of the U.S. Bankruptcy Court for the Southern District of New York, was named the independent examiner to investigate details of the bankruptcy of home lender Residential Capital LLC, Reuters reported on Tuesday. Berkshire Hathaway, which is seeking to buy two of ResCap's loan businesses, asked the Manhattan Federal bankruptcy court in June to appoint an examiner to look into pre-bankruptcy financial transactions between ResCap and its parent company, Ally Financial. Berkshire had said the transactions were "potentially improper" and wanted an examiner to evaluate them.
Bankruptcy Judge John E. Waites on Monday cleared Cliffs Club & Hospitality Group Inc. to begin polling creditors on its chapter 11 plan, which would hand control of the company to an investor consortium led by the Carlile Group, Dow Jones DBR Small Cap reported today. Cliffs Club is set to start soliciting voting creditors by July 9 in advance of an Aug. 1 voting deadline. The confirmation hearing is set for Aug. 6.
ankruptcy Judge Cecelia Morris said that she will allow a Dynegy Inc. unit’s creditors to vote on its reorganization plan after some wording changes are made, Bloomberg News reported yesterday. Judge Morris asked lawyers involved in the case to change the wording of an order approving the disclosure statement to give creditors more information about the unit’s proposed restructuring. The plan will pay bondholders between 59 cents to 89 cents on the dollar, the power producer says. The ruling moves Houston-based Dynegy closer to completing the restructuring of the holdings unit, whose creditors include holders of about $3.4 billion in senior notes. Dynegy put the unit into bankruptcy last year.
