BankUnited, Tribune, Blockbuster, Abitibi: Bankruptcy
BankUnited Financial Corp., the holding company whose bank was taken over and sold by regulators in May 2009, filed a Chapter 11 plan on Nov. 22 as the exclusive right to propose a reorganization was about to expire.
By filing the plan before exclusivity ended, BankUnited prohibited anyone else from filing a plan before Jan. 22, when the exclusive right to solicit votes expires.
No explanatory disclosure statement was filed along with the plan. The reorganization is based on cash to be supplied by a new investor, who in turn will receive 21 percent of the new common stock plus preferred stock. The plan is designed so that BankUnited’s considerable tax-loss carryforward won’t be lost by a so-called change in control.
The plan gives unsecured creditors and noteholders available cash, plus junior preferred stock and an interest in recoveries by a liquidating trust. Subordination provisions will be enforced and thus result in distributions going to noteholders that otherwise would go to subordinated noteholders.
Noteholders with the 90 largest claims have the option of taking new common stock in lieu of cash.
When the disputed claim of the Federal Deposit Insurance Corp. is resolved, the agency, too, will receive excess cash plus a sharing in the liquidating trust and preferred stock.
BankUnited is objecting to a $4.9 billion claim filed by the FDIC, as receiver for the failed bank subsidiary. The creditors’ committee is also suing the FDIC to determine who owns claims against former officers and directors
Without a disclosure statement, creditors don’t yet know how much to expect from the plan.
Some of the cash from the new investor is to make up part of the cash for distribution under the plan. The remainder of the investor’s cash will be used for working capital.
Although BankUnited listed only $21 million in assets, it has been saying that the largest asset could be a $3.6 billion net operating loss carryforward.
BankUnited has a lawsuit pending to decide whether it or the FDIC owns the NOLs. BankUnited has an unresolved $414 million claim in the bank’s receivership.
BankUnited’s formal lists of creditors show claims of $557 million owing to unsecured creditors. There are no secured claims.
The bank had deposits of $8.6 billion and $12.8 billion in assets. Debt of the Coral Gables, Florida-based holding company includes $120 million on convertible senior notes, $12.5 million of junior subordinated debentures, $184 million in mandatorily convertible senior notes known as HiMeds, and $237 million in trust preferred securities.
The case is In re BankUnited Financial Corp., 09-19940, U.S. Bankruptcy Court, Southern District of Florida (Miami).
Updates
Tribune Committee Aims to Sue Lawyers for Preferences
The Tribune Co. creditors’ committee is asking to enlarge the list of lawsuits it’s allowed to file.
The new targets are nine professional firms, including lawyers, who allegedly received $18 million in payments within three months of bankruptcy that can be recovered as preferences.
The two-year window for filing preference suits will close on Dec. 8. The committee wants the judge to permit the filing of preference suits against Tribune’s professionals before the deadline.
Depending on which of the four proposed Chapter 11 plans is eventually confirmed, the preference claims against professionals may be waived. That being the case, the committee doesn’t intend to pursue the suits once they are filed.
The committee previously was authorized to file a lawsuit aimed at setting aside fraudulent transfers included in the leveraged buyout in 2007. Although the committee filed the suit, it won’t be pursued at this time because the claims may be waived depending on which plan is confirmed. The committee also has been permitted to sue company insiders for preferences.
A preference is a payment received within 90 days of bankruptcy in satisfaction of an overdue debt. The professionals who stand to be sued may have defenses to some or all of the preference claims. A debt paid on time isn’t a preference.
For a discussion of the three plans filed by creditors, click here for the Nov. 1 Bloomberg bankruptcy report. For details of Tribune’s own plan, click here for the Oct. 25 Bloomberg bankruptcy report. The hearing to approve disclosure materials is set for Nov. 29.
The plans differ in how to deal with disputes arising from fraudulent transfer claims resulting from the $13.7 billion leveraged buyout in 2007 led by Sam Zell. For a summary of some of the examiner’s conclusions about possible defects and fraudulent transfers in the LBO, click here for the July 27 Bloomberg bankruptcy report.
Tribune, the second-largest newspaper publisher in the U.S., listed $13 billion in debt for borrowed money and assets of $7.6 billion in the Chapter 11 reorganization begun in December 2008. It owns the Chicago Tribune, Los Angeles Times, six other newspapers and 23 television stations.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District Delaware (Wilmington).
Blockbuster Committee May Investigate Plan Negotiations
The creditors’ committee for Blockbuster Inc. was given authority from the bankruptcy judge yesterday to investigate how the movie-rental chain reached agreement with secured lenders on a Chapter 11 plan that will give unsecured creditors practically nothing.
Under financing for the Chapter 11 case provided by the lenders, a challenge to the validity of the pre-bankruptcy debt must be filed by late December or the security interest will be deemed valid.
The committee says it will also investigate the refinancing of the secured credit completed in October 2009. The committee has the power to take testimony under oath from whomever it deems “appropriate.” Documents are to be produced by Blockbuster, the agent for the lenders, the so-called backstop lenders, and the indenture trustee for secured noteholders.
Those who may be investigated include Carl Icahn, who was both a noteholder and a shareholder.
Before the Chapter 11 filing on Sept. 23, Blockbuster negotiated a reorganization plan with holders of 80 percent of the $630 million in 11.75 percent senior-secured notes. The plan would give them the new stock. General unsecured creditors would have warrants for 3 percent of the stock. Holders of the $300 million in 9 percent subordinated notes would receive nothing.
Blockbuster, based in Dallas, has 5,600 stores, including 3,300 in the U.S., with the remainder abroad. Among the U.S. stores, 3,000 are owned and the rest are franchised.
The petition listed assets of $1.02 billion against debt of $1.47 billion. Blockbuster estimated it owes $57 million in accounts payable in addition to the secured and subordinated notes.
The case is In re Blockbuster Inc., 10-14997, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
C-Bass to Reject Contracts with Sanders and Williams
Credit-Based Asset Servicing & Securitization LLC, once an originator, issuer, servicer and securitizer of high-yield residential mortgages, filed a motion to terminate employment agreements with Saul Sanders and Bruce Williams, the founders and co-chief executive officers.
When C-Bass sold Litton Loan Servicing LP in December 2007 for $428 million, the buyer, an affiliate of Goldman Sachs Group Inc., agreed to pay the two executives’ salaries. By rejecting the employment contract, C-Bass will avoid paying benefits and the employer’s portion of withholding taxes.
The contract-rejection motion is on the calendar for a Dec. 16 hearing.
C-Bass, based in New York, filed formal lists showing assets of $23.7 million against liabilities totaling $2.16 billion. Liabilities include $195.8 million in secured debt. The remainder is unsecured.
C-Bass filed under Chapter 11 on Nov. 12 to liquidate. It said at the time that $170 million was owing on the senior credit facility with JPMorgan Chase Bank NA as agent. Other debt includes more than $800 million on repurchase agreements, more than $365 million on trust preferred securities, and almost $128 million on subordinated debt.
Before the Chapter 11 filing, the secured lenders agreed that C-Bass could use $8.2 million to operate in Chapter 11 and distribute to lower-ranking creditors under a reorganization plan. For other provisions that could be included in a Chapter 11 plan, click here for the Nov. 17 Bloomberg bankruptcy report.
C-Bass is 91 percent-owned by affiliates of MGIC Investment Corp. and Radian Group Inc.
The case is In re Credit-Based Asset Servicing & Securitization LLC, 10-16040, U.S. Bankruptcy Court, Southern District New York (Manhattan).
Lehman Trustee and SEC Claim Billions from Barclays
The trustee for the brokerage subsidiary of Lehman Brothers Holdings Inc. filed final papers explaining why he is entitled to recover $7 billion he says improperly went to Barclays Plc when the business was sold.
Barclays is making a $3 billion counterclaim against the trustee for property it claims the trustee failed to deliver as part of the sale. The trustee says it is customer property that should be distributed in the brokerage’s liquidation under the Securities Investor Protection Act.
The Securities and Exchange Commission weighed in with its own papers contending that transfers to Barclays amounting to $1.3 billion were in violation of securities laws. For Bloomberg coverage, click here.
The papers were filed as part of the trial that began in April where Lehman contends the bank took $11 billion more than it was entitled to receive when it purchased the brokerage business a week after the Chapter 11 filing in September 2008. Closing arguments were held in October. Post-trial briefs came in this week.
The Lehman holding company and its non-brokerage subsidiaries filed a revised Chapter 11 plan and disclosure statement in April. For details, click here and here for the April 15 and 16 Bloomberg bankruptcy reports. Lehman said it intends to amend the plan and have it approved in a confirmation order by March.
The Lehman holding company filed under Chapter 11 in New York on Sept. 15, 2008.
The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operation is Securities Investors Protection Corp. v. Lehman Brothers Inc., 08-01420, both in U.S. Bankruptcy Court, Southern District New York (Manhattan).
Boston Generating Wants Exclusivity Until March 18
Boston Generating LLC filed a first motion to extend the exclusive right to propose a Chapter 11 plan. If granted by the bankruptcy judge at a Dec. 7 hearing, the new deadline would be March 18.
The judge by this morning hadn’t yet approved the sale of the business for $1.1 billion to Constellation Energy Group Inc. Although creditors tried to cobble together a competing offer to be carried out through a Chapter 11 plan, there were no other qualified bids.
The sale must also be approved by the Federal Energy Regulatory Commission.
Boston Generating owns five electric generating plants in the Boston area.
The bankruptcy case is In re Boston Generating LLC, 10-14419, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Vitro Extends Exchange Offer Until Dec. 7
Vitro SAB, Mexico’s largest glassmaker, extended the deadline to Dec. 7 for bondholders to accept the exchange offer that is opposed by holders of more than $650 million of the debt. The company said it has sufficient acceptances from all creditors to implement the reorganization through a filing in the Mexican court. For Bloomberg coverage, click here.
Holders of $75 million of the bonds filed an involuntary Chapter 11 petition against Vitro’s U.S. subsidiaries on Nov. 17. They later filed papers where they in substance asked the bankruptcy judge in Fort Worth, Texas, to prevent the U.S. companies from being affected by the exchange offer.
The ad hoc bondholder committee previously said the exchange offer “undervalues the company” and “inappropriately redistributes value away from noteholders to Vitro’s shareholders and insiders.” Vitro said noteholders would recover as much as 73 percent by exchanging existing debt for cash, new debt or convertible bonds.
Vitro, based in Monterrey, Mexico, is attempting to restructure $1.2 billion in debt that has been in default since the company first missed interest payments on the notes in February 2009. The noteholders later accelerated the debt, making it all due and payable.
The bondholder who filed the involuntary petition are Lord Abbett Bond Debenture Fund, Davidson Kempner Distressed Opportunities Fund LP, Brookville Horizons Fund LP and Knighthead Master Fund LP.
The first-filed involuntary case is In re Vitro Asset Corp., 10-47470, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).
Schutt Has $25.1 Million Offer to Sell Helmet Business
Schutt Sports Inc., a football helmet manufacturer, will sell the business in December for $25.1 million unless a higher bid turns up. At auction, Kranos Intermediate Holding Corp. will submit the first bid.
The bankruptcy court in Delaware will hold a hearing on Nov. 29 to settle on auction and sale procedures. Schutt wants other bids by Dec. 10, followed by an auction the same day and a hearing on Dec. 15 for approval of the sale.
Schutt estimates that secured debt at the time of sale will be about $19.8 million, with administrative expenses representing as much as an additional $3.5 million.
When Schutt filed under Chapter 11 in September, $34.8 million was owed to secured lender Bank of America NA. Another $17.5 million was owing on a subordinated note to Windjammer Mezzanine & Equity Fund II LP. The pre-bankruptcy secured debt was replaced with a $34 million credit to finance the Chapter 11 effort.
Before settling on Kranos as having the best initial offer for auction, Schutt received five letters of intent. The financing required a sale.
Schutt was forced into Chapter 11 by a $29 million patent- infringement judgment in favor of competitor Riddell Inc.
Based in Litchfield, Illinois, Schutt said assets and debt each exceed $50 million.
The case is In re Schutt Sports Inc., 10-12795, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Orleans Homebuilders Aiming to Confirm Plan Today
Orleans Homebuilders Inc. is in Delaware bankruptcy court today angling for approval of the reorganization plan.
Orleans debunked objections contending that the plan isn’t feasible because the reorganized company won’t have enough cash or liquidity to operate. Objections to feasibility were lodged by the former investment banker and some of the insurance companies that provide surety bonds.
Orleans told the bankruptcy judge that it will leave bankruptcy with $30 million available under the exit financing, along with $6 million in cash. The funds will be enough, Orleans says, to procure required bonds going forward and to pay the banker $5 million even if the claim is valid.
This month the bankruptcy judge approved a commitment for $155 million in exit financing, to be provided by JPMorgan Chase Bank NA as administrative agent for lenders. The financing is composed of a $30 million revolving credit and a $125 million term loan.
For a summary of Orleans’s plan, click here for the Nov. 8 Bloomberg bankruptcy report.
The Bensalem, Pennsylvania-based company builds homes and condominiums in seven states. The Chapter 11 filing in March followed maturity of the revolving credit the prior month. About $325 million was owing to the banks at maturity, not including $15 million on letters of credit. The March 31 balance sheet listed assets of $591 million against total liabilities of $560 million.
The case is In re Orleans Homebuilders Inc., 10-10684, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Colorado Springs Wants Banning Lewis Venue Changed
The reorganization of the Banning Lewis Ranch master- planned community should be conducted in Colorado, where the property is located, the City of Colorado Springs said in a motion to move the case from Delaware.
Banning Lewis filed under Chapter 11 on Oct. 28 to restructure debt on the 21,000-acre project located northeast of Colorado Springs.
The city contends that the case doesn’t belong in Delaware because the property is in Colorado, the business is managed in Colorado, and most of the creditors in number are in Colorado.
The city wanted the bankruptcy judge to rule on the venue- transfer motion at a hearing today. The bankruptcy judge declined to accelerate the hearing.
The petition said the assets are worth more than $50 million while debt exceeds $100 million.
Greenfield BLR Partners LP and Farallon BLR Investor LLC hold $141 million in debt. Together, they also have 85 percent of the stock.
KeyBank NA is owed another $65 million on a bank loan, court papers say.
The case is In re Banning Lewis Ranch Co. LLC, 10-13445, U.S. Bankruptcy Court, District of Delaware (Wilmington).
AbitibiBowater Plan Confirmed in Delaware Court
AbitibiBowater Inc., the largest newsprint maker in North America, got the signature of the bankruptcy judge on a confirmation order approving the Chapter 11 plan. A court in Canada already approved the Canadian side of the reorganization.
The Pension Benefit Guaranty Corp. said confirmation was “good news” for 10,000 workers whose retirement benefits remain intact. It was also good news for the PBGC because termination of the pension plans would have saddled the pension insurer with liabilities from plans underfunded to the tune of $380 million.
For a summary of the Chapter 11 plan, which treated creditors differently at each of the 40 affiliated companies, click here for yesterday’s Bloomberg bankruptcy report.
The company was formed in October 2007 by 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).
Thompson Publishing Had October Loss of $1.25 Million
Thompson Publishing Holding Co., a publisher of newsletters and loose-leaf services, reported a $1.25 million net loss in October on revenue of $3.9 million. The loss would have been larger were it not for an almost $900,000 tax benefit. Interest expense in the month was $1.04 million.
Thompson was authorized earlier this month to sell the business to first-lien lenders in exchange for $42 million in secured debt.
Based in Washington, Thompson has 300 products and 70,000 subscribers producing an estimated $49 million in revenue this year. Debt includes $122.6 million owing on first-lien debt with PNC Bank NA serving as agent. Second-lien creditors, owed $43.5 million, have Ableco Finance LLC as agent.
Controlled by Avista Capital Partners LP, Thompson generated 74 percent of its income from subscriptions. The company also arranges conferences and employee-training events.
The case is In re Thompson Publishing Holding Co., 10-13070, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Downgrade
LNG Terminal Owner Sabine Pass Lowered to B3 Moody’s
Sabine Pass LNG LP, 90.6 percent-owned by Cheniere Energy Inc., was downgraded yesterday by Moody’s Investors Service in view of “debt put options and maturities at Cheniere and Sabine Pass over the next several years.” Sabine Pass owns a liquefied natural gas receiving terminal.
In August, lenders to Cheniere have the option of requiring repayment of a $247 million secured term loan. At Cheniere, a $298 million secured term loan and $205 million in convertible senior unsecured notes mature in 2012.
Moody’s downgraded Sabine Pass even though it isn’t liable on the parent’s debt. Moody’s lowered the senior unsecured notes due in 2013 and 2016 by one notch to B3. Moody’s said that Sabine Pass represents “most” of the companies’ consolidated cash flow.
Sabine Pass is facing the maturity of $550 million in senior secured notes in 2013 and $1.67 billion of senior secured notes in 2016.
Moody’s says the maturities are a “substantial challenge,” especially because Sabine Pass has an annual negative free cash flow of as much as $55 million.
If Houston-based Cheniere files in Chapter 11, Moody’s said there is a “strong incentive” to bring Sabine Pass into the proceeding.
Cheniere reported $8.2 million of net income for the nine months ended Sept. 30 on revenue of $216 million.
To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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