AMF Bowling Worldwide Inc. wants to move forward with a restructuring that would see its senior lenders take over the bowling-alley chain after not being able to find a buyer, Dow Jones Daily Bankruptcy Review reported today. AMF sought chapter 11 protection last November after its senior lenders agreed to take over the company if it could not find any better offers. Under the plan, the Credit Suisse-led lender group would trade about $214 million in debt for all of the new equity in the restructured AMF, subject to dilution.
Washington, D.C., law firm Howrey LLP was in a "death spiral" for nearly two years, according to new lawsuits that claim that the firm's partners did not seem to know the depth of its financial problems, the Wall Street Journal reported yesterday. Six lawsuits filed in bankruptcy court this month by the trustee overseeing Howrey's liquidation paint a bleak picture of a firm that was fast to expand but slow to adapt, relying on borrowed money instead of profits to pay its partners. The lawsuits, based partly on the firm's books and records, allege that Howrey's partners were not aware of the true extent of the financial woes until it was too late. Howrey's independent and court-appointed bankruptcy trustee, Allan Diamond, is currently seeking to recover millions of dollars from certain former partners' new firms based on the profits from the work they brought to their new firms.
Revel, a centerpiece of New Jersey Governor Chris Christie's (R) effort to revitalize Atlantic City, said it hopes to complete a pre-packaged chapter 11 restructuring within 60 days after the casino filed for bankruptcy protection on Monday, Reuters reported yesterday. With help from $250 million of financing, Revel expects to continue operations during the restructuring after its chapter 11 filing. The restructuring plan calls for debt to be reduced by 82 percent to $272 million from $1.52 billion through a debt-for-equity swap. Lenders include Canyon Capital Advisors and Chatham Asset Management, which are expected to become owners after the bankruptcy ends.
Out of bankruptcy with a new owner that allowed "The Ice Cream of the Future" to live on for another day, the revitalized Dippin' Dots brand is making an ambitious move toward the school cafeteria with a healthier, fat-free product, the Wall Street Journal reported today. This spring, Dippin’ Dots plans to introduce its vanilla-and-chocolate YoDots line, which is made with nonfat yogurt and has only 70 calories per three-ounce pack. A five-ounce serving of the traditional Dippin’ Dots has about 10 grams of fat. Dippin’ Dots, which sells the bulk of its product through 1,400 "direct accounts" for spots like amusements parks, zoos and baseball stadiums, is not the only company to try to use healthy options to find stable financial footing after a chapter 11 reorganization. Mall food court fixture Sbarro, which emerged from bankruptcy protection in late 2011, recently rolled out its 270-calorie Skinny Slice. And buyers who offered to pay $410 million for the beloved Twinkies’ network of bakeries said that they could unveil “more health-conscious” versions of the spongy gold snack cake.
The future of struggling U.S. retailer J.C. Penney is looking increasingly dire, says BMO Nesbitt Burns analyst Wayne Hood, who warns that there’s a chance it could be heading into bankruptcy over the next couple of years, the Toronto Globe and Mail reported today. J.C. Penney's fourth quarter showed a continued steep deterioration in its business since launching a turnaround strategy nearly a year ago, with same-store sales dropping by 32 percent. Wood sees four potential outcomes for the company over the next 12 to 24 months— and three of the four would be bearish. In the most bullish scenario, J.C. Penney would restore sales growth and maintain sufficient liquidity by throttling back capital expenditures while selling non-core assets. Wood's “base-case scenario” sees the company reversing the steep slide in comparable store sales to post modest sales growth of 0.9 per cent in fiscal 2014. That scenario also assumes capital spending cuts and the sale of non-core assets, but assumes the company will continue to post annual earnings per share losses over the next five years. The last two scenarios involve bankruptcy filings. One would be a voluntary chapter 11 bankruptcy that enables the company to become smaller and more profitable. The fourth, and most dire, outcome would see the company forced into an involuntary bankruptcy in the first or second quarter of fiscal 2014.
Ormet Corp., the operator of an Ohio aluminum smelter, won court approval to hold an auction to sell virtually all its assets, with an affiliate of lender Wayzata Investment Partners LLC making the lead bid, Bloomberg News reported yesterday. Bankruptcy Judge Mary Walrath approved the procedures that will govern the auction process and also granted the company final approval of a $90 million loan from Wayzata and Wells Fargo Capital Finance LLC, according to court documents. Wayzata is providing $30 million and Wells Fargo the remaining $60 million. Ormet will hold an auction on May 13 to see if there are any potential buyers willing to top Wayzata’s stalking-horse offer of about $221 million in debt forgiveness, court filings show. The case is In re Ormet Corp., 13-bk-10334, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Documents in 12 major asbestos-related bankruptcies could be unsealed for the first time next month in a novel bid by a manufacturer to bolster its defense against a barrage of claims that its products caused deadly cancer and mesothelioma, Reuters reported yesterday. Garlock Sealing Technologies LLC won access to lists of clients of plaintiffs' attorneys after a federal judge in Delaware on March 1 reversed a bankruptcy court judge who kept the documents from the public. The bankruptcies include Pittsburgh Corning Corp., W.R. Grace & Co., Kaiser Aluminum Corp. and nine others. Law firms that opposed opening the records called the volume of material "staggering" and "of almost unprecedented scope." The order by Delaware District Court Judge Leonard Stark comes amid a push in Congress and state legislatures for greater transparency in the multibillion-dollar world of asbestos litigation, which critics say carries great potential for fraud. Garlock filed for bankruptcy in 2010 under a mounting number of lawsuits claiming the asbestos in its sealants caused deadly cancer and other diseases. It is currently trying to estimate the size of its asbestos liability, which will likely lead to the creation of a trust to pay claimants over the coming years. Garlock hopes the documents from the bankruptcy cases will help to limit the amount of money needed to provide compensation.
To read the bill text of H.R. 982, the "Furthering Asbestos Claim Transparency (FACT) Act of 2013,” please click here. To read the prepared testimony from the House Judiciary Committee's March 13 hearing on the bill, please click here.
Energy Future Holdings Corp., the power company that went private in a record $45 billion buyout only to say last month that it could go bankrupt, is facing a new headache as a unit's creditors have filed a $725 million lawsuit to recover unpaid interest, Reuters reported yesterday. Affiliates of the hedge fund Aurelius Capital Management LP sued seven current and former Energy Future Competitive Holdings Ltd directors, saying that they improperly let the parent once known as TXU Corp. be repaid billions of dollars of fraudulent intra-company loans without ensuring full payment to creditors. Aurelius accused Energy Future Chief Executive John Young and the other directors of showing a "demonstrated indifference" to creditors stemming in part from conflicts of interest, and said that these directors should pay the interest owed.
Ahern Rentals Inc. says that it is ready to start searching for lenders to provide the $350 million in new financing it needs to pay down its debt and take it out of chapter 11 protection, Dow Jones Daily Bankruptcy Review reported today. The construction-equipment-rental company on Monday filed papers requesting bankruptcy court approval to hire Bank of America and its Merrill Lynch unit to put together the bankruptcy exit loan and line up lenders to participate in the financing. Bank of America would act as agent for the $350 million senior secured asset-based revolving credit facility, while its Merrill Lynch unit would serve as lead arranger and bookrunner.
Italian automaker Fiat Chief Executive Sergio Marchionne said yesterday that he expected a U.S. court to rule on the valuation of a stake in Chrysler by June or July, Reuters reported yesterday. Fiat owns 58.5 percent of Chrysler, while VEBA, a health care trust affiliated with the United Autoworkers' Union, owns the rest. As part of Chrysler's 2009 exit from bankruptcy, Fiat was given the right to buy 16.6 percent of Chrysler in tranches of up to 3.3 percent until 2016. Fiat and VEBA are in court arguing over the value of the 16.6 percent stake. The next hearing in the court case is due on April 25.
