Point Blank, General Growth, Tronox: Bankruptcy

Point Blank Solutions Inc., the bankrupt maker of protective body armor, said it will explore alternatives including a sale of the company while under court protection.

The company is considering a sale as a way to “generate the highest value for all constituents,” Point Blank said in a statement issued yesterday along with a U.S. Securities and Exchange Commission filing. A sale would require bankruptcy court approval.

Point Blank, based in Pompano Beach, Florida, and three units filed to reorganize on April 14 in Wilmington, Delaware. The bankruptcy court approved the company’s agreement to borrow as much as $20 million to finance the Chapter 11 case, according to the statement.

The case is In re Point Blank Body Armor Inc., 10-bk-11257, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Debt Waivers

MGM Studio Said to Seek New Debt Waiver Amid Creditor Talks

Metro-Goldwyn-Mayer Inc., the film studio up for sale after falling behind on $3.7 billion in debt, will ask lenders to extend a moratorium on interest payments, Bloomberg’s Ronald Grover reported, citing two people with knowledge of the situation.

The Los Angeles-based company will e-mail ballots to more than 100 creditors this week, said one of the people, who asked not to be named because discussions are private. The current forbearance expires on July 14.

A payment waiver would be the sixth since October and give a committee of MGM’s five largest creditors time to negotiate a restructuring that would include a cash infusion. The lenders, who control more than 50 percent of the debt, are in talks with Spyglass Entertainment and “Twilight” producer Summit Entertainment, to run MGM for them, people said in May.

Lions Gate Entertainment Corp., which produces the Tyler Perry films and distributes the “Saw” horror series, also has held preliminary merger talks with MGM, people said last month.

Any proposal could be blocked by investor Carl Icahn, who controls almost 38 percent of Vancouver-based Lions Gate and has said he may seek control of its board.

MGM’s largest creditors had sought to put a restructuring deal in place before seeking the forbearance, one of the people said. The responses are due back by the middle of next week, the person said.

Updates

General Growth Has Deal for New Loan from Barclays

General Growth Properties Inc., the second-largest mall operator in the U.S., said it has an agreement for a new $400 million bankruptcy loan from Barclays Plc.

The mall operator wants court permission to use the new financing to replace its existing $400 million bankruptcy loan, it said yesterday in papers filed with the U.S. Bankruptcy Court in Manhattan.

General Growth, based in Chicago, said it will save $2.7 million per month in interest payments under the new agreement, “preserving capital,” by paying the original loan.

General Growth filed for bankruptcy last year after amassing a $27 billion debt load making acquisitions. It has said it expects to file its plan to restructure its remaining debt this week.

The new financing comes with a 5.5 percent interest rate compared with a variable interest rate under the existing loan, now at 13.5 percent, General Growth said.

The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Rangers May Negotiate Sale Agreement with New Bidder

The Texas Rangers may reach a sale agreement with a new bidder to lead off its auction, replacing a deal with a group led by Chuck Greenberg and Nolan Ryan, the chief restructuring officer for the team’s owners said.

The baseball team may scrap a sale agreement with the Greenberg-Ryan group and make one with a new buyer that would be subject to higher bids at an auction, William Snyder, the restructuring officer, said yesterday in a phone interview.

The Rangers yesterday withdrew a request in the U.S. Bankruptcy Court in Fort Worth, Texas, for permission to hold a July 16 auction. The team said earlier this week that it would hold an auction with the Greenberg-Ryan group acting as the lead bidder.

The Rangers will seek court approval for a sales process with new terms and conditions, Snyder said. He declined to name other potential bidders or say how many are interested in buying the baseball team. It’s possible the Greenberg-Ryan group could remain the lead bidder at the auction, according to Snyder.

The Rangers initially hoped to win court approval of the Greenberg-Ryan deal, valued at $575 million, without holding an auction. On July 5, the team said in court papers that it agreed to an auction following discussions with Snyder.

Snyder declined to comment yesterday on why the team had withdrawn its request for the auction or why a new sale agreement was possible.

Mark Seer, a spokesman for the Rangers, and Kevin Sullivan, a spokesman for the Greenberg-Ryan group, declined to comment.

The case is In re Texas Rangers Baseball Partners, 10- 43400, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).

Tronox to Give Company to Creditors under Bankruptcy Exit Plan

Tronox Inc. would be taken over by noteholders and other unsecured creditors under the chemical maker’s proposal for exiting bankruptcy.

General unsecured creditors owed $470.6 million would split all of the new stock Tronox will issue when it exits bankruptcy. Pollution claims of as much as $5.2 billion would be resolved by paying government agencies and other environmental creditors as much as $145 million in cash and giving them 88 percent of the proceeds from a lawsuit, new convertible, preferred stock and insurance proceeds.

Tronox makes chemicals for paints, coatings, plastics, paper, batteries, toothpaste, sunscreen and shampoo. The company has disputed its responsibility for many polluted sites, including more than 600 mining-related sites and 270 chemical labs.

It sued Anadarko Petroleum Corp. and Kerr-McGee in May 2009, saying the companies’ 2006 spinoff of Tronox left it with $550 million in environmental liabilities.

The bankruptcy case is Tronox Inc., 09-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Orleans Sued by Landscaping Company in Bankruptcy Court

Orleans Homebuilders Inc., a bankrupt builder and seller of homes and condominiums, was sued by Eric’s Nursery Inc. in bankruptcy court in Wilmington, Delaware.

Eric’s Nursery, based in Mount Laurel, New Jersey, seeks $45,000 in unpaid fees for landscaping services, court records show. The vendor wants the court to find that the debt is non- dischargeable, and seeks turnover of the money plus $13,000 in interest, according to the complaint.

Eric’s Nursery claims that Orleans asked it to perform landscaping services while insolvent, “unbeknownst to” Eric’s Nursery. Section 523 of the U.S. Bankruptcy Code lists exceptions to the general rule of discharge in bankruptcy cases, which include debts for services given “under false pretenses.”

Orleans, based in Bensalem, Pennsylvania, hasn’t yet responded to the complaint.

The bankruptcy case is In Re Orleans Homebuilders, Inc., 10-bk10684, and the adversary proceeding is Eric’s Nursery, Inc. v. Orleans Homebuilders Inc., 10-bk-10684, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Pasadena Playhouse Emerges From Chapter 11, L.A. Times Says

The Pasadena Playhouse, the State Theater of California exited Chapter 11 bankruptcy on July 7 after the U.S. Bankruptcy Court in Los Angeles approved its reorganization plan, the Los Angeles Times reported.

The theater filed for court protection on May 10, saying it had $2.3 million in debt and about $102,000 in cash. Most of the debt was money owed to subscribers, banks and vendors, the Times reported on May 11.

The theater received a matching pledge of $1 million from anonymous donors as part of its fundraising, and was given pro bono legal and financial advice, the newspaper reported.

The case is In Re Pasadena Playhouse State Theater of California, 2:10-bk-28586, U.S. Bankruptcy Court, Central District of California (Los Angeles).

WaMu Delays Hearing on Disclosure Statement, Examiner, AP Says

Washington Mutual Inc., the former parent of the biggest U.S. bank to fail, put off until July 20 a hearing on its disclosure statement and a request by shareholders for the appointment of an examiner, the Associated Press reported.

U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, agreed to postpone the hearing scheduled for yesterday after WaMu attorney Brian Rosen said the company needed more time to negotiate with shareholders and creditors, AP reported.

WaMu, based in Seattle, has proposed splitting almost $10 billion in cash and tax refunds with JPMorgan Chase & Co. and the Federal Deposit Insurance Corp. in exchange for agreeing not to sue them. The settlement is the cornerstone of WaMu’s proposal to liquidate most of its assets and distribute the proceeds to creditors. Shareholders would get nothing under the proposal, according to AP.

Shareholders requested a court-sponsored investigation of WaMu’s decision not to sue federal regulators and JPMorgan over the bank failure and WaMu’s assets. Walrath denied the request in June, ruling that WaMu and its official committee of unsecured creditors should share the results of their investigations.

The bankruptcy case is In Re Washington Mutual Inc., 08- 12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Briefly Noted

Dykstra Bankruptcy Trustee Seeks Settlement Approval

The trustee for the bankruptcy estate of Lenny Dykstra, the former Major League Baseball player who filed for protection under Chapter 7 just over a year ago, asked the U.S. Bankruptcy Court in San Fernando Valley, California, on July 7 to approve a settlement with Index Investors, according to court files. Index would receive $70,000 from the proceeds of an expected settlement with Fireman’s Fund that is to be paid into the estate. Index made loans to Dykstra of $370,000, $235,000 and $165,000. The settlement also resolves a lawsuit brought by Dykstra against Index, court files show. Dykstra played for the New York Mets and Philadelphia Phillies.

The case is In re Lenny Kyle Dykstra, 09-bk-18409, U.S. Bankruptcy Court, Central District of California (San Fernando Valley)

Teamsters Object to U.S. Concrete Reorganization Plan

Teamsters Local 641 Pension Fund and Local 734 Fund objected yesterday to U.S. Concrete Inc.’s reorganization plan, saying it “provides, or appears to provide, improperly, that withdrawal liability is discharged.” The funds argued in court papers that withdrawal liability doesn’t arise “until a contributing employer actually withdraws from an underfunded multiemployer pension plan.” The prepackaged plan of reorganization, which reduces debt by $285 million, is scheduled for a three-day confirmation hearing to begin July 23 and continue on July 28 and 29. For details of the plan, click here.

The case is In re U.S. Concrete, Inc., 10-11407, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Watch List

Skilled Healthcare Rebounds After Bankruptcy Concern Abates

Skilled Healthcare Group Inc., which had dropped the most ever after a jury returned a $671 million verdict against it, rebounded as Barclays Plc said the nursing-home operator can avoid bankruptcy.

Shares of the Foothill Ranch, California-based company had the second-biggest gain in the Russell 2000 Index, rising 54 percent to $2.34 in New York, after analyst Brendan Strong said a settlement may be reached during the next few weeks.

“Based on our discussions with one of the plaintiff’s attorneys, we believe a negotiated settlement is likely and believe there is a low likelihood that SKH would be forced into bankruptcy,” Strong wrote in a note to clients yesterday, referring to the company’s stock ticker.

Skilled Healthcare plunged 76 percent on July 7 after a California jury said the company was liable for $613 million in statutory damages, the maximum allowed by state law, and $58 million for restitution. The plaintiffs accused Skilled Healthcare of improperly staffing 22 California facilities.

The verdict is the largest jury award in the U.S. this year, according to data compiled by Bloomberg. Skilled Healthcare said the award exceeds its insurance policy limits.

Statistics

Default Rate Slows to 6.1 Percent, Moody’s Reports

The global speculative-grade debt default rate fell to 6.1 percent at the end of June after nine companies missed interest payments in the second quarter, Moody’s Investors Service said. Moody’s expects the global rate to decline to 2.4 percent by the end of the year and 1.8 percent by the second quarter of 2011, according to the statement.

Ratings Changes

First Industrial Corporate Credit Downgraded, S&P Says

First Industrial LP yesterday had its corporate credit ratings on units First Industrial Realty Trust Inc. and First Industrial LP downgraded to B+ from BB- by Standard & Poor’s.

First Industrial and its units also saw their senior unsecured notes cut to BB- from BB, and the rating for the preferred stock lowered to CCC+ from B-, S&P said in a statement. S&P said the outlook remains negative because of its “belief that cash flow and coverage metrics will remain under pressure.”

The ratings reflect “the company’s less-than-adequate liquidity and reliance on executing asset sales, secured debt financings, and possibly raising additional equity to meet its 2011 capital needs,” S&P credit analyst George Skoufis said in the statement.

DynCorp International’s Ratings Withdrawn, S&P Says

DynCorp International LLC, the Falls Church, Virginia-based government-services provider, yesterday had its ratings, including its BB corporate credit, removed by Standard & Poor’s Ratings Services.

S&P also removed the company’s ratings from CreditWatch, where it had placed them “with negative implications” on April 12, the rating company said in the statement.

The ratings withdrawal followed the completion of Cerberus Capital Management LP’s acquisition of the company’s parent, DynCorp International Inc., and repayment of the company’s existing debt.

To contact the reporter on this story: Carla Main in New Jersey at Cmain2@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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