Tribune, Amcore, Comerical Mexicana, American Safety Razor: Bankruptcy
Stock Chart for Amcore Financial Inc (AMFIQ)
Nuevo Grupo Aeronautico SA, the holding company for airline Compania Mexicana de Aviacion, was purchased Aug. 21 by a group of Mexican investors and the country’s pilots’ union, according to a member of the investment group and a union leader.
Tenedora K, which was formed in order to purchase Mexicana, bought 95 percent of the airline’s shares, union secretary general Fernando Perfecto said Aug. 21. The pilots’ union owns 5 percent of the company, said Perfecto, who was involved in the negotiations.
Andres Rozental, president of the board of Grupo Industrial Omega SA, said in an e-mail that his company is one of the investors, and that Tenedora K owns 95 percent of Nuevo Grupo Aeronautico.
Mexicana spokesman Adolfo Crespo declined to comment.
Private equity group Advent International Corp. helped arrange the deal, and isn’t investing in Mexicana, Perfecto said. Advent’s office in Mexico City didn’t answer calls made by Bloomberg outside of business hours to request comment.
CNN Expansion reported the sale earlier on its website and said Tenedora K’s investors also include Grupo Arizan SA. Grupo Arizan didn’t return a call seeking comment.
Grupo Posadas SAB, Mexico’s largest hotel operator, said Aug. 21 it had sold its 30 percent stake in Nuevo Grupo Aeronautico. It said the stake was sold for a “symbolic” value and the transaction was already written off by the company in December 2008.
Mexicana, Mexico’s biggest airline by passengers, filed for protection from creditors in Mexico and under Chapter 15 of the U.S. Bankruptcy Code on Aug. 3.
The U.S. case is Compania Mexicana De Aviacion SA de CV, 10-14182; U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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Tribune to File New Plan of Reorganization After Deal Fails
Tribune Co. said it will rewrite its reorganization plan after a deal by some lenders to divide the bankrupt publisher among themselves fell apart.
Company attorney James Conlan said the company must again delay the start of a court battle that may determine which group of creditors will control the company once it exits bankruptcy. Conlan said the company has been excluded from a new round of talks being held by various creditor groups.
Tribune will instead file a new plan designed to attract as much creditor support as possible, Conlan told U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, Delaware, at a hearing Aug. 20.
A group of lenders, including JPMorgan Chase & Co., had agreed to support the company’s current reorganization plan. That plan would have given those lenders and some other creditors more than 90 percent of Tribune once the newspaper and television company exited bankruptcy.
That deal was terminated, Conlan said. The agreement fell apart after a report by court-appointed examiner Kenneth N. Klee found part of the company’s 2007 buyout may be a fraudulent transfer.
In bankruptcy, a fraudulent transfer means a company took on debt that it knew it could not repay, or got nothing of value in return for the borrowing.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Amcore Financial Files for Bankruptcy Protection
Amcore Financial Inc. filed for bankruptcy protection, about four months after regulators closed the Chicago-based company’s bank subsidiary.
The company Aug. 19 listed assets of $7.2 million and debt of $75.4 million in Chapter 11 documents in U.S. Bankruptcy Court in Chicago.
Among the largest unsecured creditors are Wilmington Trust as trustee for Amcore Capital Trust II, owed $57.5 million, and JPMorgan Chase Bank NA, owed $11.9 million under a 2007 credit agreement, according to the petition.
Amcore in May received a notice of default and a demand from JPMorgan for payment of the credit facility.
Bank of Montreal bought assets of Amcore Bank NA in April after the Federal Deposit Insurance Corp. closed the Amcore Financial unit and placed it in receivership.
The bankruptcy case is In re Amcore Financial Inc., 10- 11567, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).
Petroflow Energy Files for Chapter 11 Bankruptcy
Petroflow Energy Ltd., a natural gas company with operations in Oklahoma, filed for Chapter 11 bankruptcy three months after two of its units sought bankruptcy to restructure.
Petroflow listed $151 million in assets and $130 million in liabilities in a filing Aug. 20 in U.S. Bankruptcy Court in Wilmington, Delaware.
The Denver-based company’s North American Petroleum Corp. and Prize Petroleum LLC units filed for bankruptcy on May 25, citing a business dispute with Enterra Energy Corp. The company said in May that it had entered into a forbearance agreement with pre-bankruptcy secured lenders on May 11, which was terminated on May 24 by the lenders.
The case is In re Petroflow Energy Ltd., 10-12608, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Midwest Banc Holdings Seeks Chapter 11 Bankruptcy
Midwest Banc Holdings Inc., whose Midwest Bank & Trust was closed in May by Illinois regulators, filed for Chapter 11 bankruptcy protection.
Midwest listed $9.7 million in assets and $144.7 million in debt in a filing today in U.S. Bankruptcy Court in Chicago.
The bank had received $84.8 million in U.S. bailout funds from the Troubled Asset Relief Program. Its lender, Midwest Bank and Trust, with $3.17 billion in assets and 23 retail branches at the time, was shut May 14 with Firstmerit Bank of Akron, Ohio, assuming all the $2.42 billion in deposits.
The case is In re Midwest Banc Holdings Inc., 10-37319, U.S. Bankruptcy Court, Northern District of Illinois (Chicago.)
Professional Veterinary Seeks Bankruptcy Protection
Professional Veterinary Products Ltd., a Nebraska-based veterinary supply distributor, sought protection from creditors, citing slumping sales in the faltering economy.
Professional Veterinary listed as much as $100 million in assets and $100 million in debt in its Chapter 11 filing in U.S. Bankruptcy Court in Omaha, Nebraska.
Officials of the Omaha-based firm are shopping it around to potential buyers, Cindy Christensen, a company spokeswoman, said in an e-mailed statement.
Professional Veterinary notified Pennsylvania officials last week that they would be closing one of the company’s facilities in York, Pennsylvania, and laying off 31 employees, according to the Central Pennsylvania Business Journal newspaper.
In June, the closely held company reported a $3.6 million loss for the first quarter, according to another SEC filing. Professional Veterinary officials reported a $1.1 million loss for the first quarter of 2009, the filing said.
The case is In re Professional Veterinary Products Ltd., 10-82436, U.S. Bankruptcy Court, District of Nebraska (Omaha).
Philadelphia Newspapers, Unions End Fight Over Bankruptcy Exit
Philadelphia Newspapers LLC agreed to pay union pension funds as much as $1.5 million to clear the last major hurdle to the publisher’s plan to exit bankruptcy under the ownership of its lenders.
The seven pension funds, operated by unions including the Teamsters and the Newspaper Guild, agreed to drop an appeal of the company’s reorganization plan in exchange for the right to pursue $1.5 million in claims in the bankruptcy case, according to court papers filed last night.
Under the reorganization plan, a group of lenders including hedge fund Angelo Gordon & Co. and a unit of Credit Suisse Group AG had until Aug. 31 to complete the purchase of the company and take control of the newspapers.
The lenders have said they don’t plan to continue contributing to the seven pensions once they gain control of the company. Canceling their participation would leave the pensions with a combined $28 million deficit, the unions claimed in court papers.
The company and the buyers haven’t made a final decision about whether to continue contributing to any of the pension funds, according to court papers.
The newspaper company filed bankruptcy in February 2009, blaming the recession and a slowdown in advertising.
The case is In re Philadelphia Newspapers LLC, 09-11204, U.S. Bankruptcy Court, Eastern District of Pennsylvania (Philadelphia).
Madoff Trustee Seeks Four-Month Fee of $34.6 Million
Irving Picard, the trustee liquidating con man Bernard Madoff’s firm, asked a judge to approve fees of $34.6 million for legal work done from February through May, bringing his total requests to $96.7 million. “Thousands of hours have been expended” by the trustee and his firm” Picard said in the filing.
The fee request, for Picard and his law firm, Baker & Hostetler LLP, was filed Aug. 20 in Manhattan, where U.S. Bankruptcy Judge Burton Lifland is overseeing the bankruptcy of Bernard L. Madoff Investment Securities LLC.
Picard has recovered more than $1.5 billion for Madoff’s victims. He said the fees in the case are paid by the Securities Investor Protection Corp. and don’t reduce the amount of money available to pay Madoff’s creditors.
Madoff, 72, pleaded guilty to masterminding the biggest Ponzi scheme in history. He is serving a 150-year prison term in a federal prison in North Carolina.
The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Comercial Mexicana Gets Recognition of Foreign Main Proceeding
Controladora Comercial Mexicana SAB, Mexico’s fourth- largest retailer by market capitalization, Aug. 19 obtained recognition from U.S. Bankruptcy Judge Stuart M. Bernstein that the company’s Mexican bankruptcy filing is a foreign main proceeding and Comercial Mexicana is entitled to relief and protection from creditors under Chapter 15 of the U.S. Bankruptcy Code, according to court papers.
Comercial Mexicana “is entitled to all of the relief” provided in the bankruptcy code for cross-border insolvencies, “including without limitation” the automatic stay provided for under Section 362 of the U.S. Bankruptcy Code, Bernstein wrote in the order.
The U.S. bankruptcy court will retain jurisdiction to enforce the order, hear requests for additional relief, and preside over adversary proceedings, Bernstein wrote in the order.
Comercial Mexicana filed for pre-approved bankruptcy in Mexico July 14 and Chapter 15 bankruptcy in the U.S. on July 16. The company said that 98 percent of its creditors support the filing. A Mexico federal judge Aug. 9 accepted a bankruptcy petition from Mexico City-based Comercial Mexicana SAB, the company said in an e-mailed statement at that time.
The case is In re Controladora Comercial Mexicana SAB, 10- 13750, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
American Safety Razor Meets With Objection on Financing Request
American Safety Razor LLC, the maker of shaving blades that filed for bankruptcy July 28, met with an objection Aug. 19 to its request for orders approving proposed post-petition financing and other relief, court files showed.
Second-lien lenders GSO/Blackstone Debt Funds Management LLC and BlackRock Kelso Capital Corp. objected to the debtor’s request to use cash collateral and grant protection to repetition secured parties. They also objected to the terms of American Safety’s retention of Lazard Middle Market LLC as a financial adviser, according to court papers.
Court files show that American Safety won interim approval from U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, in a July 30 order, to borrow as much as $25 million, use cash collateral and take other steps “to provide certain protections” to first-lien lenders.
GSO/Blackstone and BlackRock Kelso, which together own 27.6 percent of the second-lien bank debt, assert in a court filing that the debtor could restructure through a plan of reorganization rather than “throw the keys” to the first-lien lenders, which are owed $245 million, it said in court papers.
American Safety filed for Chapter 11 protection July 28 with a proposal to sell the company to first-lien lenders in exchange for debt unless second-lien creditors make arrangements to pay off the senior creditors within seven weeks.
A hearing is scheduled for Aug. 25.
The case is In re American Safety Razor Co., 10-12351, U.S. Bankruptcy Court, District of Delaware (Wilmington).
For more about the reorganization, click here.
Bankruptcy/Credit Default Swaps
Boston Generating Bankruptcy Triggered Swap Contract Protections
The committee of banks and investors that governs credit- default swaps in North America said contracts protecting against default by Boston Generating LLC were triggered by the company’s bankruptcy filing.
The International Swaps and Derivatives Association’s determinations committee said the Aug. 18 filing by the unit of EBG Holdings LLC, itself a division of New York-based U.S. Power Generating Co., is a so-called credit event, the group said Aug. 19 on its website.
Boston Generating is a member of all six series of the LCDX Index, which are linked to the senior secured loans of as many as 100 companies. A net total of $12.4 billion of the contracts were outstanding as of Aug. 13, according to the Depository Trust & Clearing Corp., which runs a central registry for the market.
Barzel Industries Inc., a steel processor and manufacturer, obtained an order Aug. 19 extending the time in which it has the exclusive right to propose a Chapter 11 plan. The order, signed by U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Delaware, set Oct. 11 as the new deadline for filing a plan. Barzel also will be the exclusive party that may gather support for its plan. Its time to do so has been extended to Dec. 8. The company said when making the request that it’s evaluating whether “a liquidating plan is feasible.” Barzel sold most of the assets in November to Norwood, Massachusetts-based Chriscott USA Inc. for $75 million. The company later settled with secured lenders who released their claims in return for giving up $800,000 from sale proceeds.
The case is In re Barzel Industries Inc., 09-13204, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Lehman Brothers Holdings Inc. fee examiner Kenneth Feinberg chopped $5.2 million off the fees of the defunct firm’s advisers including $1 million deducted from lead law firm Weil Gotshal & Manges LLP for the four months ended Jan. 31, according to a court filing Aug. 20.
Weil Gotshal items queried by the examiner, who didn’t publish advisers’ total fees demanded in the period, included “non-reimbursable overhead” and insufficiently explained car rentals. For July, Lehman said it paid its lawyers and managers $44.5 million.
Loan Obligor Concentration Risk Decreased Marginally
Obligor concentration risk decreased marginally among Standard & Poor’s Ratings Services’ outstanding rated U.S. cash flow collateralized loan obligation transactions in the second quarter of 2010, according to a recent report. Exposure to the top 250 corporate loan obligors decreased to 55 percent from 57 percent of the outstanding principal balance for U.S. collateralized loan obligations between the first and second quarters.
For more about the report, click here.
ShoreBank May Be Shut, Reopen as Urban Partnership
ShoreBank Corp., the Chicago lender operating under a Federal Deposit Insurance Corp. cease-and-desist order for 13 months, will be shut and most of its assets will be bought by Urban Partnership Bank, two people with direct knowledge of the matter said.
Urban Partnership, created to make the acquisition, will keep branches in Chicago, Cleveland and Detroit and continue to focus on low-income communities, the people said, speaking anonymously because the matter is private. Urban Partnership will have Tier 1 capital of at least 8 percent and its chief executive officer will be William Farrow, a former executive at the Chicago Board of Trade and Bank One Corp., they said.
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Two Florida Banks Closed; Deposits Acquired by CenterState
Community National Bank at Bartow of Bartow, Florida, and Independent National Bank of Ocala, Florida, were closed Aug. 20 by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corp. as receiver for the two banks, according to the FDIC’s website.
The FDIC entered into purchase and assumption agreements with CenterState Bank of Florida NA of Winter Haven, Florida, to assume all the deposits and essentially all the assets of the two failed banks, which were not affiliated with one another.
Downgrades/Other Ratings Action
Affinity Group Holding and Unit Downgraded on Missed Payment
Affinity Group Holding Inc., a member-based direct marketing company, and its unit, Affinity Group Inc., saw their corporate credit ratings lowered by Standard & Poor’s to D from CCC, according to a statement by the ratings company.
S&P also lowered the issue-level rating on Affinity Group Holding’s 10.875 percent senior notes to D from CC, while leaving the recovery rating on this debt unchanged at 6, indicating an “expectation of negligible recovery for noteholders,” S&P said in the statement.
The rating downgrade reflects the “failure” by Affinity Group Holding and unit Affinity Group “to make the Aug. 15 interest payment on its holding company’s 10.875% senior notes. While not considered a default under the notes’ legal provisions because of a grace period, S&P considers it a default when a payment related to an obligation is not made, in the event that the nonpayment is a function of the borrower being under financial stress,” and S&P is “not confident” the payment will be made in full.
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Deltek’s Outlook Revised to Positive by Moody’s
Deltek Inc.’s ratings outlook was revised to positive from stable by Moody’s Investors Service, affecting “approximately $174 million of debt,” according to a statement by the ratings company.
The revision “was driven by the company’s strong credit metrics through the downturn and Moody’s expectations of continued debt paydown,” Moody’s said in the statement.
Moody’s also affirmed Deltek’s B1 corporate family rating and senior secured debt rating, and revised the liquidity rating to SGL-2 from SGL-1 “as a result of reduced cash levels” following the Maconomy acquisition, according to the statement.
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