Pfizer Inc.’s Quigley unit, a former asbestos maker, was denied permission to exit bankruptcy by a judge who found the world’s largest drug company manipulated the bankruptcy process to benefit itself.
U.S. Bankruptcy Judge Stuart M. Bernstein in New York yesterday rejected Quigley’s fourth reorganization plan and said parties should discuss dismissal of the case. He said the plan was filed in “bad faith” by Pfizer and cited testimony that asbestos claims directed at Quigley could total $4.45 billion over the next 42 years. To read details of the ruling, click here.
Quigley, founded in 1916, made three products containing asbestos from the 1940s to the 1970s. It was bought by Pfizer in 1968.
The case is In re Quigley Co., 04-15739, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Truvo USA Gets Permission to Send Plan to Creditors for Vote
Truvo USA LLC, a bankrupt directory publisher, won court permission to move forward with its restructuring plan by sending the proposal to creditors for voting.
U.S. Bankruptcy Judge Arthur Gonzalez in New York yesterday approved a summary of the plan, known as a disclosure statement, in a written order, allowing voting to proceed. Truvo’s unsecured creditors, including AllianceBernstein LP, are fighting the plan.
Truvo, a unit of Truvo Luxembourg Sarl, publishes print and online telephone directories in Europe. It filed for bankruptcy in July with a restructuring plan to give control of the company to senior lenders with claims of 777.6 million euros ($991 million) plus interest.
The case is In re Truvo USA LLC, 10-13513, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Capmark Creditor Committee Opposes Disputed Loan Deal
Low-ranking creditors of Capmark Financial Group Inc. will fight the bankrupt company’s plan to use most of its remaining cash to repay a $1.5 billion loan made by a group that includes Goldman Sachs Group Inc.
U.S. Bankruptcy Judge Christopher Sontchi scheduled a two- day hearing beginning Oct. 14 to resolve a dispute over the loan, which the unsecured creditors committee claims wasn’t legitimate. Capmark and the lenders behind the loan have signed a deal that would repay most of the loan’s principal balance and protect the lenders from legal liability. To read Bloomberg coverage, click here.
At the October hearing, Sontchi will decide whether to approve the deal between the lenders and Capmark. If he doesn’t, he may allow lower-ranking creditors to file a lawsuit challenging the loan’s legitimacy.
Capmark, based in Horsham, Pennsylvania, is partly owned by KKR & Co. and Goldman Sachs. The committee, which represents lower-ranking creditors, says the loan was a fraudulent transfer because it did nothing but exchange unsecured debt held by the lenders for a secured loan that would have a higher repayment priority.
The committee is seeking permission to file a lawsuit that would reduce the loan’s higher repayment status. Should Sontchi approve the settlement between Capmark and its lenders, the committee would be unable to challenge the loan. Other lenders include Bank of America NA, Citicorp North America Inc. and Credit Suisse Group AG, according to data compiled by Bloomberg.
Capmark filed for bankruptcy on Oct. 25, blaming falling property values and a drop in lending.
The case is In re Capmark Financial Group Inc., 09-13684, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Credit Suisse Can’t Collect From Yellowstone Founder
Credit Suisse Group AG’s “greedy antics” bar it from collecting $229 million on a soured loan the bank arranged for the Yellowstone Club, a ski resort for millionaires, a court ruled.
While under Blixseth’s control, Yellowstone borrowed $375 million, according to court records. Afterward, Blixseth paid himself, through a company he controlled, $209 million, Kirscher wrote in an earlier ruling.
After Yellowstone filed for bankruptcy in 2008, Credit Suisse tried to collect from Blixseth. A bankruptcy trustee sued Blixseth last year in an attempt to collect on behalf of Credit Suisse and other Yellowstone creditors.
Blixseth and his former wife, Edra, founded Yellowstone Club in 2000. Wealthy people flocked to the resort, paying $205 million for 72 properties in 2005 alone. The couple took cash out of the syndicated loan for personal use, Kirscher found. Finances at the club deteriorated thereafter, he wrote.
Edra Blixseth gained sole control after the couple’s divorce. She declared personal bankruptcy in March 2009, claiming her debt was $500 million to $1 billion and her assets were worth $100 million to $500 million.
The bankruptcy case is In re Yellowstone Mountain Club LLC, 08-61570, U.S. Bankruptcy Court, District of Montana (Butte). The lawsuit is Blixseth v. Kirschner, 09-00014, U.S. Bankruptcy Court, District of Montana (Butte).
Circuit City Wins Court Approval of Liquidation Plan
Circuit City Stores Inc., the bankrupt retailer of televisions and computers, won court approval of its amended liquidation plan.
U.S. Bankruptcy Judge Kevin Huennekens in Richmond, Virginia, today approved the liquidating plan that will pay unsecured creditors at least 10 percent on claims totaling from $1.8 billion to $2 billion. Most of the secured claims have been paid.
Circuit City sought bankruptcy protection in November 2008 after suppliers, concerned about declining sales at almost 1,500 U.S. and Canadian stores, cut off credit and demanded cash up- front for shipments.
Once a 721-store electronics retailer, Circuit City paid off all except about $5 million to $20 million in secured claims through proceeds from store liquidations.
The Chapter 11 petition filed in Richmond, where the company is based, listed assets of $3.4 billion and debt of $2.3 billion as of Aug. 31, 2008. The company originally said it owed $898 million to secured revolving credit lenders. Unsecured trade suppliers were owed another $650 million at the outset, the company said in a court filing.
The case is In Re Circuit City Stores Inc., 08-35653, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).
Chemtura Corp. Wins Dismissal of Some Claims Over Chemical
Chemtura Corp. won the dismissal of claims from five companies that sought contributions for liabilities tied to a butter flavor chemical sold by the bankrupt plastic-additives maker.
The claims will be expunged, except claims for defense costs, U.S. Bankruptcy Judge Robert Gerber said an order entered yesterday in Manhattan court. Chemtura was named in 28 lawsuits related to the flavoring chemical, diacetyl, before filing for Chapter 11 bankruptcy.
From 1982 to 2005, Chemtura’s Canadian unit made and shipped diacetyl to companies that resold it or put it into food products such as microwave popcorn. In 2001, tort plaintiffs began filing lawsuits, alleging that they were harmed by the chemical. To read Bloomberg coverage click here.
The case is In re Chemtura Corp., 09-11233, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Mexicana Has Two Potential Investors, Pilot Union Chief Says
Cia. Mexicana de Aviacion has two potential investors interested in saving the airline after a Mexico judge declared the company in bankruptcy, the pilots’ union chief said.
Fernando Perfecto, head of Mexicana’s pilots’ union, made the remarks in an interview on Radio Formula. He didn’t provide details on the investors.
A Mexico City-based judge declared the airline to be in bankruptcy this week, a month after the company filed for protection from creditors in Mexico and under Chapter 15 of the U.S. Bankruptcy Code.
U.K.’s Connaught Says It Has Appointed Joint Administrators
Connaught Plc, the U.K. public-housing maintenance company, announced the appointment of joint administrators after saying yesterday that the business as a whole had failed to secure “sufficient support” to trade as a going concern.
KPMG’s Richard Heis, Richard Hill and Richard Fleming have been appointed administrators to Exeter, England-based Connaught Plc, and Heis, Mark Firmin, Brian Green and David Costley-Wood are appointed joint administrators to Connaught Partnerships Ltd., the company said in a statement yesterday. Connaught Environmental and Connaught Compliance have not been placed into administration.
Initiatives to reach a “satisfactory conclusion” on additional funding and restructuring of its financing failed, Connaught said. On Aug. 6, the company said a review showed it will record a full-year “material loss” on earnings before interest, tax and amortization. In June, Connaught predicted sales would fall by about 80 million pounds ($124 million) for 2010, following the U.K. coalition government’s emergency budget.
Connaught has received “numerous expressions of interest” for the environmental and compliance businesses, which continue to trade normally, KPMG said. Jefferson County Sewer to Get Receiver, Bankruptcy Judge Says
An Alabama Circuit Court judge said he intends to appoint a receiver to manage Jefferson County’s insolvent sewer system, two years after the bondholders’ trustee sued to improve the system’s operation and boost fees to repay more than $3 billion of debt.
Judge Albert Johnson said in court yesterday in Birmingham that he will interview people for the position and decide on the receiver’s authority.
The Bank of New York Mellon Corp., the trustee for $3.2 billion of Jefferson County sewer bonds, sued the state’s most populous county two years ago, saying it was unable to manage the sewer system.
Jefferson County, which includes Birmingham and has more than 600,000 residents, has struggled to avoid the biggest U.S. municipal bankruptcy after a sewer refinancing arranged in 2002 and 2003 by JPMorgan Chase & Co. collapsed during the credit crisis.
Most of Jefferson County’s auction-rate securities are held by JPMorgan and Bank of America Corp., according to the county.
JPMorgan, Charlotte, North Carolina-based Bank of America and six other banks also hold about $850 million of Jefferson County’s floating-rate sewer bonds under agreements that required them to purchase the debt if other investors couldn’t be found.
The banks, which have the right to demand accelerated repayment on that debt, have given the county a reprieve while it negotiates to restructure the bonds.
The Gores Group Completes Purchase of National Envelope Assets
The Gores Group LLC announced that it completed its acquisition of substantially all the assets of National Envelope Corp., the largest closely held envelope maker in the U.S.
Gores, a Los Angeles-based private equity firm with about $2.9 billion of capital under management, won court approval from U.S. Bankruptcy Judge Peter J. Walsh on Aug. 23 to buy the assets for about $208 million, according to court documents.
“NEC is the market leader in the merchant/wholesale channel, with meaningful growth opportunities in the attractive consumer market,” Jordan W. Katz, Managing Director of Gores, said in a Sept. 7 statement.
Gores paid about $149.9 million in cash, the assumption of about $20 million in debt the company owes to International Paper Co. and a $37.7 million note, according to NEC lawyer Josef S. Athanas.
National Envelope filed for bankruptcy protection June 10, listing assets and debt of as much as $500 million each. The envelope maker has 14 factories across the U.S. and about 3,390 employees, according to court filings. The company, with 21 percent of the $3.7 billion North American envelope market in 2008, produces about 37 billion envelopes a year.
The lead case is In re NEC Holdings Corp., 10-11890, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Tribune Names Head of Restructuring Effort
Tribune Co. promoted Don Liebentritt, its general counsel, to chief restructuring officer as it attempts to lift itself out of bankruptcy protection, the Associated Press reported yesterday.
The publisher, which owns the Los Angeles Times and Chicago Tribune as well as other newspapers and TV stations, says Liebentritt will focus exclusively on the company’s negotiations with creditors.
A deal fell apart last month after a court-appointed examiner found that some of the negotiations leading up to a 2007 leveraged buyout that took Tribune private bordered on fraud. That deal would have brought Tribune out of bankruptcy under a reorganization plan that would have turned the company over to JPMorgan Chase and distressed-debt specialist Angelo, Gordon & Co.
Bondholders looking to get more of their money back have criticized the deal and the man who put it together, real estate mogul Sam Zell.
Tribune filed for bankruptcy protection in December 2008 after the buyout saddled it with more debt than it could handle as the recession hurt advertising revenue across the newspaper industry.
Dubai World May Postpone Reply Date for Creditors, Bayan Says
Dubai World may extend by several days the deadline given to creditors to reply to its debt restructuring proposal, set initially for today, because of the Eid Al-Fitr Muslim holiday, the newspaper al-Bayan said citing unidentified bankers.