General Motors, Innkeepers, QMG, Brisam Covina, Mexicana: Bankruptcy

General Motors Co. filed for an initial share offering that will mark the return of what was once the world’s largest automaker to public markets a year after it was bailed out by the government.

GM, 61 percent-owned by the U.S., didn’t disclose the number of shares that will be sold in the initial public offering or the price range in a statement filed yesterday with the U.S. Securities and Exchange Commission. The automaker won’t sell any common shares itself while offering preferred shares alongside the IPO, the filing showed.

The U.S. Treasury will sell some of the common shares it owns in GM, according to the filing. The aim is to sell a fifth of the Treasury’s 304 million shares, people familiar with the IPO said in June, cutting the government’s stake to less than 50 percent. GM may hold the IPO in November, people familiar with the matter have said.

General Motors Corp. filed for Chapter 11 bankruptcy protection on June 1, 2009, after posting $88 billion of losses since 2004, the last year the company reported an annual profit. General Motors Co. emerged 39 days later.

GM may seek to raise as much as $16 billion in the IPO, a person familiar with the plans said last week, making it the second-largest in U.S. history behind Visa Inc.’s $19.7 billion deal in March 2008. Outgoing Chief Executive Officer Ed Whitacre has pushed to end government ownership of the Detroit-based company, which received a $50 billion taxpayer bailout following its bankruptcy in June 2009.

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Innkeepers Creditors Want Apollo’s 2007 Deal Probed

Innkeepers USA Trust’s unsecured creditors asked for an investigation of the bankrupt company’s 2007 transaction with Apollo Investment Corp., including fairness opinions issued by Lehman Brothers Holdings Inc. and UBS Securities LLC.

A committee of the unsecured creditors on Aug. 17 asked the bankruptcy court in Manhattan to authorize the probe and compel other creditors, including Lehman and Apollo, to produce documents and witnesses to determine whether the deal harmed the hotel owner. The committee also wants to examine the validity of secured creditors’ claims and find out whether company executives breached their fiduciary duties.

Shareholders in Innkeepers are also seeking an investigation of plans by Apollo Investment Corp. and Lehman Brothers Holdings Inc. to reorganize the bankrupt chain of hotels. They said in their Aug. 12 request for a probe that the proposal is unfair to creditors as well as shareholders.

The deal would give Lehman all the hotel company’s stock, which it would split with Apollo, squeezing out other creditors and investors, a committee of preferred holders said in an Aug. 17 court filing.

Lehman, which helped Apollo finance the 2007 buyout of Innkeepers with a $1.2 billion loan, won court approval yesterday to lend Innkeepers $17.5 million to help it restructure. Lehman said last month that the refinancing would help it recoup a secured claim.

Innkeepers, whose parent is managed by an affiliate of Leon Black’s private-equity firm Apollo Global Management LLC, filed for bankruptcy on July 19 in U.S. Bankruptcy Court with a pre- arranged reorganization plan that has continued to draw objections.

The case is In re Innkeepers USA LP, 10-13794, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

QMG Winddown Wins Dismissal of Bankruptcy Case

QMG Winddown Inc., formerly known as Questex Media Group Inc., received a judge’s approval to end its bankruptcy case after all potential recoveries for creditors were exhausted.

U.S. Bankruptcy Judge Mary Walrath granted the company’s June 15 request and ordered the dismissal of the Chapter 11 case, according to court documents filed Aug. 17 in Wilmington, Delaware.

The Newton, Massachusetts-based company sold virtually all its assets to lenders in exchange for about $120 million in debt owed to them and the assumption of about $15 million used to finance the bankruptcy case. The lenders left QMG with $500,000 to “wind down” the estate.

“The creditors committee has investigated and determined not to pursue any” potential lawsuits, lawyers for the company said in court papers.

Questex was a business-to-business media and information provider with 23 trade publications, 150 digital media publications and 28 conferences, trade shows and events. The company listed assets of $299 million and debt totaling $321 million in Chapter 11 documents filed Oct. 5.

The case is In re QMG Winddown Inc., 09-13423, U.S. Bankruptcy Court, District of Delaware (Wilmington).

New Filings

EBG, Power Producer, Files Bankruptcy to Sell Assets

EBG Holdings LLC, a U.S. Power Generating Co. unit that supplies electricity in New England, filed for bankruptcy protection with a plan to sell its assets at an auction.

Constellation Energy Group Inc., based in Baltimore, will be the so-called stalking-horse bidder with an offer of $1.1 billion for New York-based U.S. Power’s five Boston-area power plants, announced Aug. 9. EBG’s Chapter 11 petition, filed today in U.S. Bankruptcy Court in Manhattan, listed debts and assets of more than $1 billion each.

Boston Generating LLC, EBG’s main operating arm, intends to “continue its business operations” the company said in a statement. Creditors, including first-lien lenders to a $1.1 billion bank loan and holders of $250 million in a first-lien synthetic letter of credit and a $70 million first-lien revolving loan, signed an agreement supporting the sale, the company said.

Credit Suisse Cayman Islands Branch is the largest unsecured creditor, as agent to lenders for a $426.9 million loan. The District of Massachusetts LLC has a claim for $50.7 million and Credit Suisse Energy LLC says it is owed $36.9 million, according to the filing.

The case is In re EBG Holdings LLC, 10-14417, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

CHOA Vision Files for Bankruptcy Protection in California

CHOA Vision LLC filed for bankruptcy protection yesterday in Los Angeles, where the hotel company is based.

Both assets and debts range from $10 million to $50 million, CHOA said in the Chapter 11 filing. Zep Inc., a maker of disinfectants, has a claim of $1.73 million.

The City of Hartford has claims totaling $1.2 million for property taxes and the State of Connecticut has a $300,000 claim for unpaid sales taxes. CHOA said it also owes Hess Corp. for electricity and InterContinental Hotels Group for franchise fees.

The case is CHOA Vision, LLC, 10- 44798 U.S. Bankruptcy Court, Central District of California, Aug. 18, 2010), Court Docket.

Rame Properties Files Chapter 11 Bankruptcy in Georgia

Rame Properties Inc., a real-estate development company, filed for Chapter 11 protection yesterday in Atlanta without giving a reason.

Rame, based in Dunwoody, Georgia, has assets of as much as $10 million and debts of as much as $50 million, according to the petition. CML-GARame Inc. is the largest unsecured creditor, with a claim of $13.8 million.

The case is Rame Properties, LLC, Debtor, 10-83988, U.S. Bankruptcy Court, Northern District of Georgia (Atlanta).

HF Three Files for Bankruptcy Protection in Arizona

HF Three I LLC, a single-asset real estate company, filing for Chapter 11 bankruptcy protection yesterday in Phoenix.

The company, based in Paradise Valley, Arizona, said assets and liabilities each ranged from $10 million to $50 million. It didn’t file a list of creditors, who are scheduled to meet Sept. 21 at the federal courthouse in Phoenix.

The case is HF Three I LLC, 10-26198, U.S. Bankruptcy Court, District of Arizona (Phoenix).

Brisam Covina LLC, Radisson Suites Hotel, Files for Bankruptcy

Brisam Covina LLC, which owns and operates a Radisson Suites Hotel in Covina, California, sought bankruptcy protection from creditors, saying the recession and renovations caused occupancy rates to fall.

The company, based in Uniondale, New York, listed as much as $50 million in both assets and debt in Chapter 11 documents filed Aug. 17 in U.S. Bankruptcy Court in Central Islip, New York.

The 63,431-square-foot hotel is a complex of two and three story buildings, with a total of 259 guest suites, according to court documents. Its amenities include a ballroom, an outdoor pool and a fitness center.

Brisam owns assets worth about $15 million based on current real-estate market estimates, the company said in court papers. The assets could be worth as much as $22 million if the company completes a plan to convert to a Holiday Inn, Brisam said.

The case is In re Brisam Covina LLC, 10-76441, U.S. Bankruptcy Court, Eastern District of New York (Central Islip).

Watch list

Highland Hotel Owner Explores Bankruptcy Filing, WSJ Says

A real-estate investment firm led by Joseph E. Robert Jr. is looking at a possible bankruptcy filing for Highland Hospitality Corp., the Wall Street Journal reported, citing unidentified people familiar with the situation.

Financial difficulties at the hotel chain have led to “maneuvering for control” of Highland between Robert’s JER Partners private equity firm and creditors including Wells Fargo & Co., Barclays Plc, Prudential Financial Inc. and Ashford Hospitality Trust, the newspaper said. JER Partners bought Highland for about $2.2 billion in 2007, according to the newspaper.

Highland may avoid bankruptcy court if it satisfies creditors with more funds, and the company is in discussions with potential investors including Abu Dhabi Investment Authority about an injection of at least $200 million, according to the report.

JER Partners, Highland’s creditors and Abu Dhabi Investment Authority all declined to comment, the newspaper said.

Briefly Noted

Viking Air Returns Leased Planes After Tour Operator Fails

Viking Airlines, which provides chartered and scheduled flights from northern Europe to the Mediterranean, will take three Boeing Co. 737 jetliners out of service following the collapse of a U.K. tour operator.

The Stockholm-based airline, which links cities in Britain and Sweden with resorts in countries including France, Greece, Spain and Turkey, will hand the planes back to leasing companies earlier than scheduled, spokesman Ian Bradley said by telephone.

Viking had worked with Flight Options Ltd., which traded mainly as Kiss Flights and ceased operating yesterday, leaving tens of thousands of Britons unable to fly. Viking also provided services for Goldtrail Travel Ltd., which folded last month.

The airline operates 12 aircraft in total, Bradley said.

Advent May Invest $49 Million in Mexicana, Clavel Says

Advent International may invest more than $49 million in Compania Mexicana de Aviacion, said Lizette Clavel, secretary general of the Flight Attendants Union.

The unions are in talks with Advent and other potential investors after the company filed for bankruptcy on Aug. 3, Clavel said yesterday in an interview on Radio Formula. Clavel said six groups are interested in investing in the airline.

Austexx Seeks to Avoid Administration, Financial Review Says

Austexx Pty Ltd., an Australian holding company, is in talks to save shopping-center chain Direct Factory Outlet from administration, the Australian Financial Review reported, without saying where it got the information. Melbourne-based Austexx is trying to sell its A$1.5 billion ($1.35 billion) of outlet shopping centers, while it owes about A$450 million to a group of banks, according to the report.

Quigley Obtains Order Extending Post-petition Financing

Quigley Co., the bankrupt non-operating Pfizer Inc. unit, received court permission to extend the term of its post- petition financing through Feb. 8. Quigley on July 28 asked the U.S. Bankruptcy Court in Manhattan for an order approving the amendment to its financing agreement with Pfizer. The order also extends approval of Quigley’s use of cash collateral. To read more coverage about Quigley, click here and click here.

The case In re Quigley Co., 04-15739, U.S. Bankruptcy Court, Southern District New York (Manhattan).

Default News

Local Insight Debt Falls 48.75 Cents After Possible Breach

Bonds of Local Insight Regatta Holdings Inc. tumbled the most on record Aug. 17 after the directory publisher owned by Welsh, Carson, Anderson & Stowe said it will likely breach the terms of its loan agreement.

The $210.5 million of 11 percent notes due in 2017 declined 48.75 cents to 23.75 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Local Insight said terms of the loan agreement will become “more stringent” and “it is likely the company will breach the covenants under its credit facilities” at Sept. 30 and at Dec. 31, the publisher disclosed in a regulatory filing. Spokeswoman Pat Nichols couldn’t immediately be reached for comment.

U.S. Credit-Default Swaps Benchmark Declines for Second Day

A benchmark gauge of corporate credit risk in the U.S. fell yesterday for the second day to the lowest since Aug. 10.

The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 1.1 basis point to a mid-price of 105.8 basis points as of 8:19 a.m. yesterday in New York, according to Markit Group Ltd. The index, which typically declines as investor confidence improves and rises as it deteriorates, fell 4.8 basis points over the two days.

Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

To contact the reporters on this story: Michael Bathon in Wilmington, Delaware, at; Carla Main in New Jersey at

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