Oct. 8 (Bloomberg) -- True Temper Sports Inc., the world’s largest golf club shaft manufacturer, filed a so-called prepackaged Chapter 11 plan this morning in Delaware.

Already accepted by creditors, True Temper intends to have the bankruptcy court approve the plan at a confirmation hearing within 45 days.

True Temper announced on Sept. 30 that secured lenders, bondholders and shareholders agreed on the prepack designed to reduce funded debt by 80 percent, from $275 million to less than $40 million.

Debt holders and stockholders are injecting $70 million cash that will be used pay down first-lien debt totaling $105.6 million. The remainder of the first-lien debt will be converted into a new term loan under the plan.

The $45 million in second-lien debt is to have 11.4 percent of the new stock. Most of the remainder goes to the investors. While trade suppliers are to be paid in full, other unsecured creditors are to receive nothing.

The holders of $125 million in subordinated debt are to receive nothing. The investors financing the plan hold 45 percent of the subordinated debt.

The petition listed assets of $180 million against debt totaling $319 million.

True Temper blamed the filing on the recession and the resulting decline in sales. Where 2008 revenue was $124 million, sales of $39.7 million in the first half of 2009 were 46 percent below the same period in 2008. The net loss in the first half was $24.1 million.

Memphis, Tennessee-based True Temper didn’t make payments due in March on both the secured revolving credit and the $125 million in 8.375 percent subordinated notes.

True Temper is controlled by private-equity investor Cornerstone Equity Investors.

The case is In re True Temper Sports Inc., 09-13446, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Prepack Coming

Stallion Oilfield Announces Debt Swap by Prepack Plan

Stallion Oilfield Services Ltd., an oilfield drilling and supply provider owned by Carlyle Group and Riverstone Holdings LLC, said yesterday it would reduce debt by $515 million through a so-called prepackaged Chapter 11 filing.

The agreement in principle describes how $258 million on a bridge loan and $283 million on 9.75 percent unsecured notes will be exchanged for 98 percent of the common stock. The other 2 percent will go to existing shareholders who also will be given warrants for another 1 percent of the stock.

The arrangement also calls for paying down secured debt by $33 million.

The announcement said the parties are now seeking support from “broader lender and noteholder constituencies.” They expect the restructuring to be carried out through a Chapter 11 filing “in the near future.” All trade suppliers are to be paid in full.

Under a so-called prepackaged plan, creditors vote before the Chapter 11 filing, thus shortening stay in bankruptcy to a few weeks, assuming the plan has no structural infirmities.

Stallion said the restructuring is necessary given a “50 percent reduction in the sizes of its market.”

The company didn’t make the interest payment due in August on the senior unsecured notes and the senior unsecured term loan.

Stallion is based in Houston.

Statistics

Business Bankruptcies Rising Faster Than Individuals

Total bankruptcy filings in September almost reached the peak set in March while commercial filings and reorganization petitions by larger companies continued increasing at a rate higher than for individuals.

September had more than 125,000 total bankruptcy filings, according to data compiled from court records by Automated Access to Court Electronic Records. Annualized, filings are on a pace to reach 1.44 million, or 31 percent more than the approximately 1.1 million for all of 2008. Bankruptcies peaked in March and since then bounced between 125,000 and 130,000 a month.

It’s possible that individual bankruptcy filings are being held down by factors peculiar to this recession, two bankruptcy law professors said.

“Some people are going ‘off grid’ on the theory that they owe so much and have so little that they are just walking away from everything,” was the guess made by Nancy Rapoport from the Boyd School of Law at the University of Nevada at Las Vegas.

Along the same lines, Katherine M. Porter from the University of Iowa College of Law said that “bankruptcy is not effective for people whose mortgage payments are now higher than their incomes.” Porter, who’s a visiting professor this year at the University of California, Berkeley, added that bankruptcy isn’t useful for “outright poverty or income shortage.”

Filings by larger companies to reorganize or liquidate in Chapter 11 were essentially unchanged from August and the fewest since February. Chapter 11 filings this year already exceed the total for 2008 and are on course to reach approximately 15,000, or 52 percent more than 2008.

The report from AACER, a service of Jupiter ESources LLC from Oklahoma City, showed commercial filings, including companies and individuals operating businesses, also were the fewest since February. Annualized, the almost 67,000 commercial filings for nine months are on track to represent a 38 percent increase from 2008.

Nevada remains in first place as the state with the most bankruptcies per capita. Tennessee and Georgia are in second and third places, respectively.

Bankruptcy filings still remain behind the all-time record of 2.1 million set in 2005, when 630,000 Americans sought bankruptcy protection in the two weeks before revisions to federal bankruptcy laws in October of that year made it more difficult for individuals to erase debts.

Updates

Trump Entertainment and Bondholder Plans Go to Vote

Creditors of casino owner Trump Entertainment Resorts Inc. will have the opportunity to vote on two competing plans of reorganization, as the result of a ruling in court yesterday by Chief Judge Judith H. Wizmur from the U.S. Bankruptcy Court in Camden, New Jersey.

Wizmur approved a disclosure statement explaining the plan proposed by the company where Donald Trump and Beal Bank would invest $100 million, with Beal raising the interest rate while extending the maturity of a $486 million loan from 2012 to December 2020.

The competing plan comes from an ad hoc group of bondholders offering to buy the casinos by investing $225 million through a rights offering while selling one of the three casinos for $75 million to Coastal Marina LLC, a company controlled by Richard T. Fields.

The creditors’ plan would pay the first-lien debt in full by giving them new debt plus proceeds from the Marina sale and cash from the rights offering.

Creditors can vote for both plans if they wish, expressing their preferences in the process. If both plans are accepted by the required majorities, Wizmur will confirm the plan she finds to be in creditors’ best interests.

To read Bloomberg coverage, click here and here.

Trump Entertainment, the owner of three casinos in Atlantic City, New Jersey, filed again for Chapter 11 reorganization in February. The new petition listed consolidated assets of $2.06 billion against debt totaling $1.74 billion. Liabilities include $1.25 billion in second-lien notes, $489 million in first-lien bank debt with Beal as agent, $33.2 million in trade debt, and $6 million in liabilities on leases, according to a court filing.

The companies own the Trump Taj Mahal Casino Resort, the Trump Plaza Hotel & Casino, and the Trump Marina Hotel Casino. The new filings came less than four years after emergence from a prior bankruptcy reorganization.

The case is In re TCI 2 Holdings LLC, 09-13654, U.S. Bankruptcy Court, District of New Jersey (Camden).

Edge Petroleum Disclosure Statement Hearing Nov. 3

Edge Petroleum Corp., the independent oil and gas exploration and production company from Houston that filed for reorganization on Oct. 1, will return to bankruptcy court on Nov. 3 for a hearing to approve the disclosure statement filed along with its Chapter 11 petition.

The bankruptcy court also this week approved auction procedures to test whether there’s a better offer to buy the company.

Absent a higher bid at auction, the stock of the restructured company will be sold to PGP Gas Supply Pool No. 3 for $191 million, subject to downward adjustment not to exceed $23.9 million.

The Chapter 11 plan and sale are supported by the holders of at least two-thirds of the $227.5 million debt under the secured credit agreement, according to Edge. The disclosure statement says the secured lenders are to receive almost all proceeds from the sale and Edge’s cash. The lenders are to make a $350,000 “gift” to be shared by unsecured creditors. In addition, unsecured creditors can receive collections from preference suits. The “gift” and lawsuit collections may be used also to pay expenses of the Chapter 11 case.

The Chapter 11 petition listed assets of $264 million against debt totaling $234 million. Edge’s reserves are mostly in Texas.

The case is In re Edge Petroleum Corp., 09-20644, U.S. Bankruptcy Court, Southern District Texas (Corpus Christi).

BMHC Disclosure Statement Hearing Set Back to Oct. 22

Building Materials Holding Corp., a provider of building materials and residential construction services, has “intentionally left the committee in the dark” and “deliberately withheld material information,” the unsecured creditors’ representative said in a bankruptcy court filing this week.

At the committee’s behest, the Oct. 7 hearing for approval of the disclosure statement was pushed back to Oct. 22. The disclosure statement is intended to contain information allowing creditors to decide if they should vote for or against a Chapter 11 plan.

The company filed another revision to its proposed plan and disclosure statement early this month. BMHC had been hoping for a Nov. 19 confirmation hearing where the bankruptcy judge in Delaware would approve the plan after creditors have voted.

The revised Chapter 11 plan by San Francisco-based BMHC is designed to reduce debt to approximately $129 million by converting the existing $302 million term loan and revolving credit into a new $135 million secured note and all the new stock, except as much as 10 percent that could be given to management.

The disclosure statement explaining the plan says secured lenders are expected to recover 72.4 percent from the stock and new note.

Unsecured creditors are projected to recover 13 percent. The prior version of the disclosure statement had the recovery at 55 percent. The classes of unsecured creditors receive a distribution only if the classes vote to accept the plan. Otherwise, an unsecured class receives nothing.

BMHC listed assets for $480 million with debt totaling $481 million. Boise, Idaho-based BMHC has 31 distribution centers, 43 manufacturing plants and five construction-services facilities.

The case is In re Building Materials Holding Corp., 09- 12074, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Briefly Noted

Committee and U.S. Trustee Seeking Lyondell Examiner

The creditors’ committee of chemical producer Lyondell Chemical Co. is teaming up with the U.S. Trustee to request the appointment of an examiner at an Oct. 14 hearing. Meanwhile, the hearing that had been scheduled for Oct. 14 to approve the company’s disclosure statement was pushed back to Nov. 4. Creditors cannot vote on a reorganization plan until the explanatory disclosure statement is approved. To read Bloomberg coverage, click here. The indenture trustee for the 8.375 percent senior notes and the creditors’ committee are both bringing lawsuits against the secured lenders by attacking the foundations of the 2007 leveraged buyout. The first phase of a three-part trial on the committee’s suit is scheduled to begin Dec. 1. Lyondell and affiliate Equistar Chemicals LP, together constituting the third-largest independent producer of chemicals, filed under Chapter 11 in January, listing assets of $33.8 billion and debt totaling $30.3 billion. The parent LyondellBasell Industries AF SCA filed under Chapter 11 in April. Including the parent and European subsidiaries, the assets were $40 billion on Sept. 30. Total revenue in 2007 was $44 billion. The Lyondell petition says its assets are $27.1 billion against $19.3 billion in debt while Equistar’s listed assets and debt both total $9 billion. The case is Lyondell Chemical Co., 09-10023, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Lehman Gets Approval to Proceed with SunCal Chapter 11 Plan

Lehman Brothers Holdings Inc. received authorization from its bankruptcy judge at a hearing yesterday to proceed with a reorganization plan for SunCal Cos., a California developer where Lehman is a part-owner and lender. To read Bloomberg coverage, click here. SunCal and Lehman had been proposing competing Chapter 11 plans until they reached a settlement. The SunCal Chapter 11 filings took place in November after Lehman’s insolvency shut off funding for the projects. SunCal is California’s largest developer of master planned communities, with 250,000 residential lots and 10 million square feet of commercial space in 50 projects. The case is In re LBL-SunCal Northlake LLC, 08-17408, U.S. Bankruptcy Court, Central District California (Santa Ana).

1031 Tax Group Liquidation Plan Confirmed Yesterday

The plan of liquidation for 1031 Tax Group LLC will be approved, the bankruptcy judge said at a confirmation hearing yesterday. Unsecured creditors with $150 million in claims are projected to recover 35 percent, according to the explanatory disclosure statement. The plan was financed in part by $90 million in settlements, including one where Wachovia Corp. pays $45 million for a release from claims it knew the company’s principal Edward Okun was misappropriating customers’ deposits. Okun was convicted this year of conspiracy, wire fraud, money laundering, smuggling and perjury and given a 100-year prison sentence. The company was a “qualified intermediary” helping individuals avoid capital gains taxes by holding proceeds from the sale of real estate until a replacement property could be purchased. It liquidated after Okun caused 1031 improperly to loan $130 million to other companies he controlled, according to customers’ allegations. To read Bloomberg coverage, click here. The Chapter 11 filing in May 2007 by Richmond, Virginia-based 1031 listed assets of $154.6 million. A trustee was appointed in October 2007 on the motion of the U.S. Trustee and with support from the creditors’ committee. The case is In re The 1031 Tax Group LLC, 07-11448, U.S. Bankruptcy Court, Southern District New York (Manhattan).

U.S. Trustee Objects to RathGibson Release Ambiguity

RathGibson Inc., a manufacturer of welded tubing products, drew an objection to the reorganization plan from the U.S. Trustee, the arm of the Justice Department charged with overseeing bankruptcy. The U.S. Trustee contends the plan on one hand says creditors may opt out of releases given to third parties while another plan provision says the plan binds all creditors to release third parties. The U.S. Trustee wants the provisions clarified so creditors can opt out of releases. The company had its disclosure statement approved in August, in the process scheduling an Oct. 16 confirmation hearing for approval of the plan. Negotiated before the Chapter 11 filing with holders of 73 percent of the $209 million in senior unsecured notes, the plan is to pay $6.6 million of unsecured creditors in full while noteholders receive 82.5 percent of the new stock. Another 7.5 percent would go to the lenders for the reorganization. The Lincolnshire, Illinois-based company listed assets of $305 million against debt totaling $319 million. In addition to the $209 million in senior notes, debt includes $55.3 million on secured credit agreements and $10.4 million owing to trade suppliers. The holding company is also liable on $115 million in pay-in-kind notes. A group including management and an affiliate of DLJ Merchant Banking Partners acquired control of RathGibson in June 2007. The case is In re RathGibson Inc., 09-12452, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Fontainebleau Using $133,000 This Week for Security

While Fontainebleau Las Vegas LLC works on a contract where Penn National Gaming Inc. would have the first bid at an auction for the 70 percent completed project on the Las Vegas Strip, the company is seeking authority to use $133,000 in cash this week chiefly for security. The hearing on the motion to use secured lenders’ cash collateral will be held today. The $2.9 billion, 63-story Fontainebleau project, on the north end of the Las Vegas Strip, is to have 3,815 rooms. Assets and debt both exceed $1 billion, the petition says. The case is In re Fontainebleau Las Vegas Holdings LLC, 09-21481, U.S. Bankruptcy Court, Southern District Florida (Miami).

Broadstripe Reports $3.3 Million Net Loss in August

Broadstripe LLC, the St. Louis-based broadband cable operator, reported a $3.3 million net loss in August on $8 million in sales. Depreciation, amortization, and senior debt interest expense combined were $4.85 million. The company has been saying for some time that the chief impediment to emerging from Chapter 11 is a lawsuit by the creditors’ committee against the lenders, claiming secured debt should be subordinated or characterized as equity. The committee won’t support a plan until the suit is resolved while the lenders won’t allow confirmation until the validity of their claims is upheld. Broadstripe filed a reorganization plan to carry out an agreement reached before the Chapter 11 filing in January with holders of the first- and second-lien debt. Broadstripe has 93,000 customers in Maryland, Michigan, Washington State, and Oregon. It was created through four acquisitions in 1998 and 1999 and filed for Chapter 11 reorganization in January. The case is In re Broadstripe LLC, 09-10006, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Goody’s Receives Third Extension of Plan Exclusivity

Goody’s LLC, the moderately priced family apparel retailer that liquidated its 282 stores, sought and received an extension until Nov. 24 of the exclusive right to propose a liquidating Chapter 11 plan. Before a plan can be formulated, Goody’s said it may be necessary to deal with the $4.3 million in claims by workers for being fired without the required 60 days’ notice under federal law. Goody’s filed under Chapter 11 again in January, only three months after confirming a reorganization plan. Prentice Capital Management bought the chain in January 2006 and kept all the stock in the prior reorganization in exchange for the second- and third-lien loans. The new petition listed assets of $206 million against debt totaling $202 million. In the second Chapter 11 case, debt for the Knoxville, Tennessee-based company includes a $29 million secured revolving credit along with second-, third- and fourth- lien term loans for $10 million, $20 million and $15 million, respectively. The first case is In re Goody’s Family Clothing Inc., 08-11133, and the new case is Goody’s LLC, 09-10124, both in U.S. Bankruptcy Court, District of Delaware (Wilmington).

Hercules Seeks Exclusivity Extension ‘Just in Case’

Hercules Chemical Co., an employee-owned company from Passaic, New Jersey, has an Oct. 13 hearing for approval of the disclosure statement explaining the reorganization plan. In case there’s a delay in confirming the plan, the company will hold a hearing on Nov. 2 for an extension until Feb. 14 of the exclusive right to solicit acceptances of a plan. The plan calls for unsecured creditors, with an estimated $1.8 million in claims, to split up $720,000, representing a recovery around 40 percent. The plan principally deals with present and future asbestos claims. The employee stock ownership plan trust is to remain the company’s owner. Hercules needed bankruptcy protection to deal with some 7,200 asbestos claims in addition to a $1.3 million liability for claims that were settled. Hercules makes products for the plumbing, heating, air conditioning and electrical industries. It isn’t related to other companies with the name Hercules. The asbestos suits arose from a furnace cement made between 1939 and 1983. The case is In re Hercules Chemical Co., 08-27822, U.S. Bankruptcy Court, District of New Jersey (Newark).

Strauss Receives Approval for Labor Union Concessions

Strauss Discount Auto, an 86-store auto-parts retailer formally named Autobacs Strauss Inc., was given bankruptcy court approval for an agreement with the union representing retail workers. The agreement provides that employees won’t receive a general wage increase until 2010 and must contribute more to their own health plans. The current Chapter 11 case is company’s third. The preceding reorganization ended with confirmation of a Chapter 11 plan in April 2007. The company was then named R&S Parts & Service Inc. The stores are in New York, New Jersey and Pennsylvania. The new petition listed assets of $75 million against debt totaling $72 million. The current owner is Japan’s Autobacs Seven Co. Debt includes $42.4 million owing to the parent under loan agreements, $9.6 million owing to suppliers, and $12 million in debt owing to landlords and other unsecured creditors. There was no secured debt before bankruptcy. The new case is In re Autobacs Strauss Inc., 09- 10358, U.S. Bankruptcy Court, District of Delaware (Wilmington). The prior case was In re 1945 Route 23 Associates, 06-17474, U.S. Bankruptcy Court, District of New Jersey (Newark).

Baseline Completes Court Restructuring in Five Weeks

Baseline Oil & Gas Corp. didn’t waste any time. On Sept. 30 the independent oil and natural gas exploration and production company implemented a prepackaged Chapter 11 plan that the judge approved in a Sept. 25 confirmation order. Baseline filed the Chapter 11 petition on Aug. 28. The plan paid all creditors in full, other than holders of $133.5 million on two issues of senior notes who voted unanimously before filing to take new subordinated secured notes, junior preferred stock, and new common stock. Noteholders who provide the $5 million in exit financing also receive new senior secured notes and senior preferred stock. Baseline’s March 31 balance sheet had assets of $128.2 million against debt totaling $133.5 million. It has nearly 40,000 acres under lease in North Texas, the Texas Gulf Coast, and Southern Indiana. The case is In re Baseline Oil & Gas Corp., 09-36291, U.S. Bankruptcy Court, Southern District Texas (Houston).

Downgrade

Yellow Page Publisher Local Insight Lowered to CCC+

Yellow pages publisher Local Insight Regatta Holdings Inc. received a two-notch downgrade yesterday from Standard & Poor’s to match the action taken in March by Moody’s Investors Service.

The new corporate rating is CCC+ while the subordinated debt became CCC-.

S&P noted that consumers are shifting to online search tools and away from print.

Local Insight, whose yellow pages are also on the Internet, generated $290.1 million in revenue for six months ended June 30. The net loss for the period was $11.3 million.

The company is controlled by venture capital investor Welsh, Carson, Anderson & Stowe.

To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net.

Last Updated: October 8, 2009 08:55 EDT