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Ronco, Tweeter, Calpine, Delphi, ResMae: Bankruptcy

Ronco Corp., made famous by former owner Ron Popeil and his father for their Pocket Fisherman and Veg-O-Matic, filed a Chapter 11 petition June 14 with the intention of selling the business ``in the coming weeks.''

The filing in U.S. Bankruptcy Court in the San Fernando Valley, California, listed assets of $13.9 million and debt of $32.7 million. The assets include inventory of $7.7 million and $3 million in cash and accounts receivable, Ronco said in its court filings.

Located in Simi Valley, California, the company had sales of $45 million in 2006.

Popeil, who sold the company in 2005, is the largest unsecured creditor along with companies he controls. He sold the company for $40 million cash and a $16 million note. Ronco still owes Popeil $ll.7 million on the note.

Laurus Master Fund Ltd. is owed $7.8 million on a secured revolving credit and term loan.

Unsecured creditors other than Popeil are owed approximately $11 million, according to the company's filings.

Ronco's chief restructuring officer says there is a letter of intent with a prospective buyer. Neither the identity of the buyer nor the sale price was disclosed.

The case is In re Ronco Corp., 07-12000, U.S. Bankruptcy Court, Central District of California (Woodland Hills).

Prepackaged Chapter 11 Coming

Remy International Agrees With Debt Holders on Prepack

Remy International, Inc. announced June 15 that it has an agreement with holders of 75 percent or more three issues of notes on a restructuring to reduce debt by $630 million through a so-called prepackaged Chapter 11 plan.

Remy said it will solicit votes on the plan before filing the Chapter 11 petition so the reorganization can be complete less than 60 days after the filing date.

The plan will pay off the $125 million in second lien secured floating rate notes.

The $145 million in 8.625 percent senior unsecured notes will swap for $50 million cash and $100 million in new third lien pay-in-kind notes.

All of the new stock will go in exchange for the $148 million in 9.375 percent senior subordinated notes and the $165 million in 11 percent senior subordinated notes.

Trade creditors and suppliers will be paid in the ordinary course of business, Remy said it its announcement.

Existing stock will be cancelled.

Remy says it is working on financing for the reorganization and a $330 million secured financing package to become effect on emerging from Chapter 11 protection. The reorganized company is to receive another $75 million through the sale of preferred stock in an equity rights offering to the holders of the notes covered by the plan.

To improve margins, Remy says it is ``renegotiating certain key commercial agreements'' with customers. Remy's press release said it would solicit votes on the reorganization plan after completing ``key customer negotiations.''

Having reached agreement on the ``prepack,'' as a prepackaged reorganization is called, Remy did not make the June 15 payment on the 8.625 percent senior notes.

The 30-day grace period previously elapsed on the April 16 $7 million interest payment that Remy did not make on the 9.375 senior subordinated notes.

Remy had a forbearance agreement with holders of the 9.375 percent notes, 8.625 percent senor notes and 11 percent subordinated notes.

Remy previously announced it was negotiating with the subordinate debt holders on a restructuring.

Spun off from General Motors Corp. in 1994 and taken private in 2001, Anderson, Indiana-based Remy makes and remanufactures electrical components for the aftermarket and for auto and truck manufacturers, including starter motors and alternators.

Updates

Sleepy's Aiming to Buy Competitor Rockaway Bedding

Sleepy's LLC, a bedding retailer, joined forces with Hudson Capital Partners LLC to buy the assets of Rockaway Bedding Inc., the 194-store mattress retailer that filed under Chapter 11 in April.

The buyers will pay $12 million for the remaining inventory, the main warehouse, and not less than 138 leases. The buyers will have the right to conduct going-out-of business sales at the 73 locations where the inventory has not already been liquidated.

Rockaway will visit the U.S. Bankruptcy Court in Newark, New Jersey, on June 20 to make a request that the court require the submission of any competing bids by July 2 in advance of a July 6 auction.

Rockaway received bankruptcy court permission on May 11 to hire Hilco Merchant Resources LLC to liquidate the inventory at 121 locations that were closing.

Randolph, New Jersey-based Rockaway filed its Chapter 11 petition April 9, listing assets of $18.9 million and $20.2 million in debt.

The Rockaway stores are in New Jersey, New York, Connecticut and Pennsylvania.

The case is In re Rockaway Bedding Inc., 07-14890, U.S. Bankruptcy Court, District of New Jersey (Newark).

Tweeter Home Entertainment to Auction Assets on July 10

Two days after filing a petition to liquidate in Chapter 11, Tweeter Home Entertainment Group Inc., the 153 store consumer electronics retailer, filed a request in U.S. Bankruptcy Court in Wilmington, Delaware, to sell its assets at auction on July 10.

In papers filed June 14, Tweeter asked the bankruptcy judge to require that bids be submitted by July 9, the day before the auction.

At the auction, Tweeter intends to first offer the assets to buyers intending to conduct going-out-of-business sales. When the best offer has been determined among those bidders, Tweeter plans to begin an auction for anyone wishing to buy any or all of the stores and inventory as a going concern.

Tweeter will then hold a final auction between the highest bids from each of those groups.

Tweeter asked for permission to designate a so-called stalking horse bidder before the auction. The stalking horse bid would establish the minimum price at the auction. Tweeter is willing to award a 3 percent breakup fee to the stalking horse bidder if it is outbid at the auction.

The bankruptcy judge will consider the auction and sale procedures at a June 26 hearing.

Tweeter lost money six years in a row before filing its Chapter 11 petition on June 12. Its petition listed assets of $259 million and debt of $190 million.

Tweeter, based in Canton, Massachusetts, announced in March that it was closing 49 of its 153 stores.

The case is in re Tweeter Home Entertainment Group, Inc., 07-10787, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Calpine to Revise and Extend Refinery Energy Supply Contract

Power producer Calpine Corp. agreed to modify its power supply agreement with a refinery in Nueces County, Texas, if the U.S. Bankruptcy Court in New York approves the change at a June 26 hearing.

Calpine is the exclusive power supplier for the Flint Hills Resources LP plant that refines crude and produces petrochemicals.

Calpine and Flint Hills agreed to amend their agreement to extend the term by two years through 2009 and increase the capacity charge. The agreement can be automatically extended for one year with the price set by a market index.

Calpine says that the revised agreement will generate $2.8 million in additional cash flow over the extended term of the contract.

The largest Chapter 11 filing in 2005 as measured by assets, the petition by San Jose, California-based Calpine listed assets of $26.6 billion.

The case is In re Calpine Corp., 05-60200, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Le-Nature's Approaches Decision on Liquidation Methods

The liquidation of fraud-ridden beverage producer Le- Nature's Inc. could change direction when U.S. Bankruptcy Court Judge Bruce McCullough in Pittsburgh rules on several pivotal issues at three hearings, the first of which is scheduled for tomorrow.

McCullough will decide whether the case should be switched from a liquidation under a trustee in Chapter 11 to a liquidation in Chapter 7 in which another trustee would be appointed. McCullough may even make good on a threat to toss Le-Nature's out of bankruptcy entirely.

McCullough also will decide whether any or all of the warring factions must publicly disclose when they purchased claims against Le-Nature's and how much they paid for them.

In one camp is Wachovia Bank N.A., the agent for a group of lenders owed $278 million secured by nearly all of the assets.

A group of hedge funds forming an unofficial secured lenders' committee are in another corner. Wachovia says that the members of the ad hoc lenders' group all purchased parts of the secured loan after the fraud at Le-Nature's became public knowledge.

A third faction is composed of another unofficial committee of creditors owning the 9 percent subordinated notes.

A fourth player is the Chapter 11 trustee appointed in January as the result of a decision McCullough made in December.

Tomorrow's hearing will be the third time in three months that a bankruptcy judge has been called on to decide whether a bankruptcy rule requires members of an unofficial committee to disclose the claims they own, when they bought them, and what they paid for them.

Wachovia asked in May that both ad hoc committees be forced by McCullough to reveal their claim holdings. The committees opposed the request and demanded that Wachovia make a similar disclosure.

McCullough has two previous decisions he could follow regarding claim disclosure.

Bankruptcy Judge Allan Gropper in New York decided in February that the rule requires unofficial committee members to disclose the claims they held in the case of Northwest Airlines Corp. and what they paid for them.

Bankruptcy Judge Richard Schmidt in Corpus Christi, Texas, reached the opposite conclusion, deciding an ad hoc committee in the Scotia Pacific Co. LLC reorganization wasn't required to disclose.

No appellate court has addressed the issue.

McCullough initiated a second major dispute that will be considered at a June 26 hearing.

McCullough ordered all interested parties to explain in court why Le-Nature's bankruptcy shouldn't be dismissed entirely. Wachovia told the judge in a court filing that the case should remain in bankruptcy court to complete the sale of the company's closed plant in Latrobe, Pennsylvania, where Le-Nature's is based.

While Wachovia believes a liquidation in bankruptcy is proper, the subsidiary of Charlotte, North Carolina-based Wachovia Corp. doesn't think the case should remain in Chapter 11. On June 12, Wachovia asked McCullough to switch the case to a Chapter 7 liquidation in which the remaining assets can be sold by a new trustee and distributions made to creditors without approval of a Chapter 11 liquidation plan.

Wachovia's request, known as a ``conversion motion,'' will be considered at a hearing on July 10.

Wachovia contends that Chapter 7 is better because the liquidating Chapter 11 plan on file ``enjoys little chance of being confirmed.''

McCullough refused to approve the disclosure statement accompanying the plan at a hearing May 1. Wachovia noted that the official creditors' committee and the two ad hoc committees, which together proposed the plan, amended it once already and failed to file a second amendment that was originally due May 15.

Wachovia said continuing to liquidate in Chapter 11 is a wasted expense. The bank said in a filing that Le-Nature's already paid $5.5 million and will spend $7.8 million more in the next three months.

Wachovia and the ad hoc secured lenders' committee also are litigating in state court in North Carolina, where a judge barred the ad hoc committee members from suing Wachovia over its role as agent for the lenders.

The Delaware Chancery Court appointed a custodian to take over Le-Nature's in October after finding that its former managers might have committed criminal acts. The custodian put Le-Nature's into Chapter 11 reorganization in November in Pittsburgh, after creditors filed an involuntary Chapter 7 petition. Since then, Le-Nature's shut down, and a Chapter 11 trustee took over in January.

The custodian said Le-Nature's was keeping two sets of books and that annual revenue might have been as low as $32 million in 2005 when audited financials showed $275 million.

The case is In re Le-Nature's, Inc., No. 06-25454, U.S. Bankruptcy Court, Western District Pennsylvania (Pittsburgh).

Delphi to Sell Mexico Brake Plant to Bosch and Frenados

Delphi Corp., the world's largest auto-parts maker, has an agreement to sell its brake parts business in Saltillo, Mexico, for $15 million to Robert Bosch LLC and Frenados Mexicanos SA de CV.

If a higher bid is submitted by the July 10 deadline, Delphi will hold an auction on July 17, followed by a hearing July 19 to approve the sale.

The plant supplies both Bosch and General Motors Corp.

Delphi, based in Troy, Michigan, filed its Chapter 11 petition in October 2005. An agreement with the Internal Revenue Service requires Delphi to file a reorganization plan by July 31 and emerge from bankruptcy protection no later than Nov. 15.

The plan is being held up pending negotiations between Delphi and GM and an employee union.

The case is In re Delphi Corp., No. 05-44481, U.S. Bankruptcy Court, Southern District New York (Manhattan).

Fred Goldman Wins in Fight Over O.J. Simpson's Book Rights

Frederic Goldman, father of murder victim Ronald Goldman, won a round in his effort to collect $38.3 million owed on a judgment by O.J. Simpson for the death of Goldman's son.

Simpson transferred the rights to a book he wrote, ``If I Did It,'' to Lorraine Brooke Associates Inc., a company owned by his children.

The company filed a Chapter 7 liquidating bankruptcy petition in April in U.S. Bankruptcy Court in Miami, Florida. Judge A. Jay Cristol ruled in court June 15 that the transfer of the book rights to the company was a device to ``delay, hinder and also as a device to prevent judgment creditors from receiving any assets.''

Cristol ruled that Goldman's $38.3 million judgment against Simpson is also good against Lorraine Brooke Associates.

Cristol previously denied a request by the company to switch the case from a Chapter 7 liquidation to Chapter 11.

The case is In re: Lorraine Brooke Associates, 07-12641, U.S. Bankruptcy Court, Southern District of Florida (Miami).

Dana Judge Asked for Third Delay on Wage Cutting Decision

For a third time, Dana Corp. and its two unions asked U.S. Bankruptcy Judge Burton Lifland in New York to hold off deciding whether Dana can cut workers' salaries and trim benefits.

The trial on Dana's request for authority throw out collective bargaining agreements with the United Auto Workers and the United Steelworkers unions concluded April 3.

Lifland was required to issue his decision by the end of April. The company and the unions obtain two prior extensions of the deadline and sought a third in a letter June 15. The new deadline will be July 2.

Under bankruptcy law, Dana could lower wages absent a court ruling by the deadline. The unions have threatened a strike if Dana uses the bankruptcy court to lower wages.

Dana, based in Toledo, Ohio, began the Chapter 11 reorganization in March 2006, listing assets of $7.9 billion and $6.8 billion in debt.

The case is In re Dana Corp., 06-10354, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Downgrades

LaBranche Downgraded Second Time in Three Months

Despite a downgrade in March, Moody's Investors Service once again downgraded LaBranche & Co. LLC, one of the oldest and largest specialist firms on the New York Stock Exchange.

The June 15 one notch downgrade to B1 resulted from LaBranche's decision not to pay off all of the $200 million in senior notes of 2009 when they became callable May 15.

Moody's warned there would be more ``downward pressure'' on the rating if LaBranche fails to achieve a ``meaningful and sustainable'' improvement in earnings given the existing capital structure.

New York-based LaBranche & Co. LLC is a subsidiary of publicly held LaBranche & Co Inc.

Home Builder McMillin Downgraded on Negative Cash Flow

Moody's Investors Service concluded that California homebuilder McMillin Companies LLC will have negative cash flow from operations this year, interest coverage will be below the covenant target and the company will be drawing on its credit facilities in 2007.

The factors together led Moody's to lower the corporate and senior unsecured note ratings by one level each to B2 and B3.

McMillin, based in San Diego, generates more than $600 million in annual revenue building starter and move-up homes in central and southern California.

Bowater Rating Lowered on Newsprint Market Conditions

Bowater Inc. was downgraded to B by Standard & Poor's, a one-click demotion that didn't consider whether the proposed merger with Abitibi-Consolidated Inc. will close given what the rating agency described as ``significant regulatory and shareholder scrutiny.''

S&P pointed to ``difficult newsprint market conditions,'' the high Canadian dollar and continuing losses from lumber as reasons for the downgrade.

The S&P downgrade lines up with Moody's demotion in March.

The senior unsecured debt of Montreal, Canada-based Abitibi lost investment grade status from Moody's in November 2002. The similar debt of Greenville, South Carolina-based Bowater was also demoted to junk the same month.

Abitibi is a producer of newsprint, uncoated mechanical paper, and lumber businesses. Bowater also makes newsprint along with papers, bleached kraft pulp, and lumber.

Penn National Downgraded After Announced Acquisition

The announcement that Fortress Investment Group LLC and Centerbridge Partners LP are acquiring Penn National Gaming Inc. in an $8.9 billion all cash transaction resulted in a one-notch downgrade by Standard & Poor's.

Penn National's corporate rating is now BB-.

S&P said the rating could be lowered again into the B range once details of the financings are disclosed.

Penn National, based in Wyomissing, Pennsylvania, owns 18 casinos and horse racing tracks.

Newspaper Company Morris Publishing Downgraded On Weak Revenue

Revenue weakness at Morris Publishing Group LLC's newspaper in Jacksonville, Florida, caused Standard & Poor's to downgrade the company one notch, to BB-.

S&P also lowered its rating for the company's subordinate debt one notch to B.

Morris Publishing's first-quarter earnings before interest, taxes, depreciation and amortization fell 30 percent.

The company, based in Augusta, Georgia, has 27 newspapers in small and midsize markets in the southeastern and southwestern U.S.

Briefly Noted

ResMae Mortgage Corp., a subprime mortgage lender, announced June 15 that it completed the sale of the business to Citadel Investment Group LLC under the Chapter 11 plan that a U.S. Bankruptcy Court judge in Wilmington, Delaware, approved this month. Citadel paid $22.4 million for the lending platform and 98.5 cents on the dollar for ResMae's loan portfolio of about $160 million. Of six subprime lenders in reorganization, ResMae is the only one so to have sold a loan origination business. Unsecured creditors are to recover 14.6 percent of their claims. The case is In re ResMae Mortgage Corp., No. 07-10177, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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

To contact the editor responsible for this story: Patrick Oster at poster@bloomberg.net.

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