Accredited Home Lenders Holding Co., a former home mortgage originator and securitizer, is on the brink of filing a Chapter 11 plan that includes a settlement with owner Lone Star Funds.
In return, Lone Star would receive a release from claims that creditors want to bring in an unfiled lawsuit. As described in a court filing yesterday, the holding company would sell its assets, and any claims that could be brought on its behalf would go into a trust for creditors.
For all of the other companies, the Chapter 11 plan would be a settlement where Dallas-based Lone Star, in return for the release, would pay $10.5 million in cash, subordinate a $100 million claim and give up a secured claim on $1.25 million cash.
“A number of the major creditors” support the settlement, Accredited Home said, without identifying them.
In January the creditors’ committee filed a motion seeking authority to sue Lone Star. A hearing on the motion is set for May 17. Accredited Home is urging the court to deny the motion in view of the forthcoming plan and settlement.
The hearing also will deal with a motion by a secured lender who says the case should be converted to a liquidation in Chapter 7. Next week, American Home is seeking an extension of the exclusive right to propose a plan.
The creditors’ committee filed a lawsuit this week against an affiliated real estate investment trust that isn’t in bankruptcy. Accredited Home agreed in February to let the creditors file the suit, which aims to knock out $227 million in claims asserted by preferred shareholders of the REIT.
The indenture trustee for junior subordinated noteholders already sued Lone Star, contending that fraudulent representations were made in connection with the $300 million acquisition in 2007.
Accredited Home sold the mortgage-servicing business in July after the Chapter 11 filing in May 2009. Most of the mortgage loans were sold later. The Chapter 11 petition said assets are less than $50 million while debt exceeds $100 million.
Lone Star also owns Bruno’s Supermarkets LLC and Bi-Lo LLC, two grocery retailers in Chapter 11. Bi-Lo exited Chapter 11 this week under a plan confirmed in April. Lone Star retained control of Bi-Lo by making a new investment.
The case is In re Accredited Home Lenders Holding Co., 09- 11516, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Four Hyatt Place Hotels File in Forth Worth, Texas
The owners of four Hyatt Place hotels in Texas filed Chapter 11 petitions yesterday in Fort Worth. Each said the assets are worth less than $10 million while debt exceeds $10 million.
The hotels have a combined 513 rooms and were remodeled in 2007, a court filing says.
The mortgages matured, and the lender began foreclosure proceedings and a lawsuit to seize the properties’ income.
The hotels are subject to a mortgage in the original principal amount of $49 million, dating from April 2007.
The properties are known as Hyatt Place San Antonio Airport/North Star Mall; Hyatt Place Houston/Greenpoint/IAH Airport; Hyatt Place Austin/Arboretum; and Hyatt Place Dallas/North Arlington/Grand Prairie. The similarly named Hyatt Place Dallas/Arlington isn’t in bankruptcy.
The case is Texas Grand Prairie Hotel Realty LLC, 10-43242, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).
Highland Mall in Austin Files to Keep Dillard’s Tenant
Dillard’s, based in Little Rock, Arkansas, filed suit last year contending it is entitled to terminate the lease because the mall is half vacant and in disrepair. The mall had lost its other anchor tenant, J.C. Penney Co.
The mall already transferred the Dillard’s lawsuit to bankruptcy court.
American General Life & Accident Insurance Co., the owner of the underlying land, sued last year as well, seeking to terminate the ground lease. The unit of American International Group Inc. also contends the mall is in disrepair.
The mall is owned by a pass-through trust for which Wells Fargo Bank NA serves as trustee. The owner is an affiliate of a lender that made a $71 million loan for the property in 2001.
The petition says that the assets are worth more than $10 million while debt is less than $1 million.
The case is In re JPMCC 2002-CIBC4 Highland Retail LLC, 10- 11331, U.S. Bankruptcy Court, Western District of Texas (Austin).
Young Broadcasting Reorganization Plan Formally Confirmed
Young Broadcasting Inc., the owner of 10 television stations in 10 markets, won a bankruptcy judge’s formal approval of the reorganization plan on May 10 when he signed a confirmation order.
The judge wrote a 62-page opinion on April 19 saying he would confirm the plan when changes were made. The unsecured creditors’ committee unsuccessfully sought further delay of the confirmation, saying in a court filing that Young’s value had “substantially increased” since a January hearing.
The committee said it wanted more time to search for a buyer who might fund a plan with a better outcome for unsecured creditors.
Young’s plan calls for secured lenders owed $338 million to receive all the new stock, $75 million in a new secured term loan, and warrants. General unsecured creditors will split $1 million in cash. For details on the plan and reasons why the judge nixed a competing proposal by the committee, click here for the April 20 Bloomberg bankruptcy report.
Young filed under Chapter 11 in February 2009, originally intending to sell the business at auction until there were no acceptable bids. The petition listed assets of $576 million and debt of $980 million. Debt included $337 million on secured term loans and $484 million on subordinated notes.
The case is In re Young Broadcasting Inc., 09-10645, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Aleris Confirms Plan; Apollo, Oaktree to Take Control
Aleris International Inc., a producer of rolled and extruded aluminum products, received permission to exit Chapter 11 yesterday as the bankruptcy judge signed a confirmation order approving the reorganization plan.
Confirmation was facilitated by a settlement that converted the unsecured creditors’ committee from opponents into supporters of the plan. After the plan was revised, unsecured creditors will split $16.5 million for a projected recovery between 0.8 percent and 1.1 percent. Before the settlement, they were being offered $4 million.
The plan gives holders of U.S. and European term loans the option of taking cash at the value underpinning the plan or the ability to participate in a rights offering, for an estimated 28 percent recovery.
The plan is financed in significant part by a $690 million rights offering backstopped by the new controlling investors. The offering includes the right to buy $645 million in new equity. Other financing comes from a $500 million asset-backed loan. The three investors hold 67 percent of the existing U.S. term loan.
Aleris was acquired by TPG Inc. at the end of 2006 in a $2.3 billion transaction.
Aleris filed under Chapter 11 in February 2009, listing assets of $4.2 billion against debt totaling $4 billion, including $472 million on revolving credit and related facilities, plus more than $1.1 billion on secured term loans. In addition, there are $1.1 billion in unsecured notes.
The case is In re Aleris International, 09-10478, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Parking Co. Faces U.S. Trustee Objection to Releases
Parking Co. of America Airports LLC, the operator of 31 off-airport parking facilities, will go into today’s confirmation hearing with near-unanimous votes by secured and unsecured creditors in favor of approving the Chapter 11 plan.
The U.S. Trustee has a limited objection to the plan, saying it gives broader releases to third parties than bankruptcy law allows.
Today’s hearing is also for approval of the sale of the assets to Commercial Finance Services 2907 Inc., which won an auction in April with a $141 million bid. The price rose 26 percent at auction.
The plan was made possible by a settlement with the unsecured creditors’ committee. They are to receive at least $2.83 million from the sale. Before taking the price increase into consideration, the original carveout was projected to give unsecured creditors a 25 percent recovery on their $8.9 million in claims.
The liquidating Chapter 11 plan calls for secured lenders on the term loan, owed $199.5 million, to collect 49 percent from the sale of their collateral, again before taking the price increase into consideration.
The PCAA companies have parking lots near 20 major airports, including seven of the 10 largest in the U.S. They operate under the names AviStar, FastTrack and SkyPark. PCAA owns 70 percent of the facilities.
Assets were on the books for $94 million on Sept. 30 when debt totaled $233 million. For the nine months ended in September, revenue was $51 million. Revenue in 2008 was $75 million.
The case is In re PCAA Parent LLC, 10-10250, U.S. Bankruptcy Court, District of Delaware (Wilmington).
American Mortgage Has Plan with Stock for C-III
American Mortgage Acceptance Co. is a real estate investment trust that had $666 million of assets in 2007. What remains of the REIT will have a hearing on June 23 for approval of a disclosure statement explaining the reorganization plan.
The sale of most of the assets left $25 million in debt owing to Taberna Preferred Funding I Ltd. and $93 million to C- III Capital Partners LLC. The plan will give the new stock to C- III. Taberna will receive $100,000 plus some mortgage-backed securities. There is virtually no other unsecured debt, the disclosure statement says.
The disclosure statement says that the REIT will continue in business after plan confirmation and issue new preferred stock to fund operations, perhaps so the new owners can attempt to take advantage of American Mortgage’s tax losses.
American Mortgage, based in New York, filed under Chapter 11 on April 26. The petition listed assets of $6.4 million and debt totaling $120 million, all unsecured.
The company invested in commercial and residential mortgages, financed with repurchase agreement and collateralized debt obligations.
American Mortgage’s stock topped out during the past five years at a closing high of $19.82 on Nov. 21, 2006.
The case is In re American Mortgage Acceptance Co., 10- 12196, U.S. Bankruptcy Court, Southern District New York (Manhattan).
Midway Wants More Exclusivity If Confirmation Fails
In case Midway Games Inc. doesn’t have an approved Chapter 11 plan at the conclusion of the May 21 confirmation hearing, the creator of “Mortal Kombat” and other video games wants an eighth extension of the exclusive right to propose a plan.
The so-called exclusivity hearing will take place June 23. For details about Midway’s plan, click here and see the Midway item in the Feb. 23 Bloomberg bankruptcy report.
The chances for a recovery by unsecured creditors were dimmed when the bankruptcy judge dismissed most claims in a lawsuit by the official creditors’ committee against former owner Sumner Redstone and companies he controls. The committee argued that Redstone brought about a “disastrous and ill- advised” $90 million transaction in February 2008 that saddled Midway with $70 million in new debt it “had no ability to satisfy.”
The bankruptcy judge allowed the committee to continue prosecuting claims that aim to recharacterize parts of the transaction as secured lending rather than so-called true sales. Likewise, preference claims survive, depending on the outcome of the recharacterization claims. The committee can also go ahead with so-called constructive fraudulent transfer claims if it succeeds in recharacterizing the transaction.
Chicago-based Midway filed under Chapter 11 in February 2009, listing assets of $168 million and debt of $281 million. Including foreign subsidiaries not in bankruptcy, the asset and liability totals were $178 million and $337 million.
Midway sold assets to generate $43 million cash, leaving no substantial secured claims unpaid.
Midway’s debt originally included $150 million in convertible notes, $29 million on a secured term loan and revolving credit, $40 million on a secured loan facility and $20 million on a subordinated loan. Unsecured claims by suppliers totaled $96 million, the company said in a court filing at the outset.
The case is In re Midway Games Inc., 09-10465, U.S. Bankruptcy Court, District of Delaware (Wilmington).
AbitibiBowater’s Exclusivity Extended to July 21
AbitibiBowater Inc., the largest newsprint maker in North America, was granted its request and received an extension until July 21 of the exclusive right to propose a Chapter 11 reorganization plan.
Abitibi filed a plan, although without an explanatory disclosure statement. The plan proposes paying secured creditors in full, in cash, with unsecured creditors taking the new stock, thus wiping out existing shareholders. The plan would be financed in part by a rights offering to unsecured creditors. Terms of the offering weren’t included in the plan.
The creditors’ committee says it found defects in parts of a $400 million term loan made in April 2008. The committee claims the loan was a fraudulent transfer as to subsidiaries which guaranteed new debt because they weren’t obligated on the debt being paid off or refinanced.
AbitibiBowater was formed in October 2007 through a merger between Montreal-based Abitibi-Consolidated Inc. and Greenville, South Carolina-based Bowater Inc. Abitibi is a producer of newsprint, uncoated mechanical paper and lumber. Bowater also makes newsprint along with papers, bleached kraft pulp and lumber. The Montreal-based company began reorganizing with 24 pulp and paper mills plus 30 wood-product plants. Revenue in 2008 was $6.8 billion.
In Chapter 11 petitions filed in April 2009, the combined AbitibiBowater companies listed assets of $9.9 billion and debt totaling $8.8 billion as of September 2008.
The case is AbitibiBowater Inc., 09-11296, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Developer Tarragon Has June 18 Confirmation Hearing
Tarragon Corp., a Manhattan residential real estate developer being reorganized in U.S. Bankruptcy Court in New Jersey, will hold a June 18 confirmation hearing for approval of a Chapter 11 plan.
The explanatory disclosure statement was approved this week. The sponsor for the plan is UTA Capital LLC, an investor based in West Orange, New Jersey.
In the Chapter 11 filing in January 2009, Tarragon listed assets of $841 million against debt totaling $1.04 billion. The projects then in active development had 1,034 units while those in the so-called development pipeline numbered 1,846.
Tarragon’s investment division had almost 7,400 stabilized apartment units and three apartment communities with almost 650 units leased. Debt included $170 million owing to unsecured creditors, plus $185 million in mortgages. Taberna Capital Management LLC was the largest unsecured creditor, holding $125 million in subordinated notes. Tarragon specializes in mid-rise and low-rise developments.
The case is In re Tarragon Corp., 09-10555, U.S. Bankruptcy Court, District of New Jersey (Newark).
Midland Foods Reports $32,000 EBITDA in March-April
Midland Food Services LLC, the operator of about 86 Pizza Hut restaurants in six states, had a $291,000 net loss for four weeks ended April 12 on sales of $4.7 million. Earnings before interest, taxes, depreciation and amortization for the period were $32,000. Depreciation and amortization expenses exceeded $46,000. From the inception of the case in August 2008, cumulative Ebitda is $1.4 million on total sales of $97.4 million. At the outset of bankruptcy, Midland had 92 stores. The lists of assets and debt show property claimed to be worth $5.8 million against liabilities totaling $34.6 million, including $27.4 million in secured claims. The Chapter 11 filing in by Independence, Ohio-based Midland was the company’s second in eight years.
The case is In re Midland Food Services LLC, 08-11802, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Point Blank Gets Final Approval for $20 Million Loan
Point Blank Solutions Inc., a manufacturer of soft body armor for the military and law enforcement, obtained final approval this week for a $20 million credit to finance the Chapter 11 reorganization begun April 14.
Point Blank has a plant and head office in Pompano Beach, Florida, and a second plant in Jacksboro, Tennessee. Revenue was more than $153 million in 2009. The petition listed assets of $64 million against debt totaling $68.5 million. Debt includes a $10.5 million secured loan to be paid off by the financing. Point Blank said it also owes $28.2 million to trade suppliers.
Three former officers were indicted on charges of securities fraud. The company said it received a so-called Wells Notice in August, in which securities regulators said they intended to bring civil injunctive actions.
The case is In re Point Blank Solutions Inc., 10-11255, U.S. Bankruptcy Court, District of Delaware (Wilmington).