Catalyst Capital Group Inc. will buy the Advantage Rent A Car business, assuming there are no problems at the Dec. 17 sale-approval hearing.
Advantage filed for Chapter 11 reorganization on Nov. 5 in Jackson, Mississippi, intending for Catalyst to be the buyer in exchange for as much as $46 million in debt financing the bankruptcy effort.
At the Dec. 9 auction, Catalyst was challenged by Sixt SE. Catalyst came out on top by increasing the Chapter 11 financing.
In addition, Toronto-based Catalyst agreed to resume financing and overlook a default on the bankruptcy loan, according to a court filing.
Formally named Simply Wheelz LLC and based in Ridgeland, Mississippi, the business is owned by Franchise Services of North America NA, which acquired the Advantage business and 24,000 vehicles early this year from Hertz Global Holdings Inc. Hertz was forced by regulators to divest Advantage as a condition to antitrust clearance for buying the Dollar Thrifty business.
Advantage has 72 locations in 33 states. It is the fourth-largest rental car business in the U.S. The petition listed assets and debt both exceeding $100 million.
The case is In re Simply Wheelz LLC, 13-bk-03332, U.S. Bankruptcy Court, Southern District of Mississippi (Jackson).
Excel Maritime’s Confirmation Hearing Set for Jan. 27
Excel Maritime Carriers Ltd. (EXMCQ), the operator of 38 dry-bulk vessels, scheduled a Jan. 27 confirmation hearing for approval of the reorganization plan supported by the official committee of unsecured creditors and holders of 83 percent of the senior secured notes.
Yesterday, the bankruptcy court in White Plains, New York, approved disclosure materials allowing creditors to submit votes by Jan. 16. The company will publish a voting tally by Jan. 17, in advance of the plan-approval hearing 10 days later.
The version of the plan submitted last month replaced a reorganization proposal worked out before the Chapter 11 filing in July.
For $765 million in claims, senior lenders will receive a new $300 million five-year secured term loan and 83.3 percent of the new stock. The disclosure statement pegs the midpoint enterprise value of the reorganized company at $630 million, or less than senior secured debt.
From the negotiations, unsecured creditors with claims totaling $163.4 million are to receive 8 percent of the new stock along with the right to purchase 2.9 percent more for $10 million, at prices ranging from $16.25 to $17.25 a share.
Assuming unsecured creditors vote for the plan, senior lenders will waive their unsecured deficiency claim of almost $180 million. Consequently, the predicted recovery for other unsecured creditors is 15.9 percent. Unsecured claims are composed largely of $150 million in convertible notes.
Gabriel Panayotides, the company’s controlling shareholder, will continue to run the company. He, family members and related companies are to receive 7.1 percent to 10.1 percent of the new stock in return for an investment of $5 million to $15 million. In addition, Panayotides will allow the company to use $20 million held in escrow.
The original plan for the Athens-based company would have given ownership to secured lenders, although the lenders agreed to allow Panayotides to maintain control at least initially and buy back the company later. For details on the original plan click here for the July 17 Bloomberg bankruptcy report.
Excel’s balance sheet for December 2011 had assets of $2.72 billion and liabilities totaling $1.16 billion. Revenue of $356.9 million in 2011 resulted in a $161.5 million operating loss and a $211.6 million net loss. The operating loss included a $146.7 million asset-impairment charge.
The case is In re Excel Maritime Carriers Ltd., 13-bk-23060, U.S. Bankruptcy Court, Southern District of New York (White Plains).
Global Has $51 Million Loan From Intended Buyer Cerberus
Global Aviation Holdings Inc. (GBAHA), the largest air-charter service for the U.S. military, won final approval of a $51 million loan from Cerberus Business Finance LLC, as agent for first-lien lenders and intended buyer of the business.
Global filed for Chapter 11 protection on Nov. 12 after emerging from a prior bankruptcy reorganization in February. The bankruptcy court in Delaware granted final approval of the Cerberus loan on Dec. 9.
There will be a hearing on Dec. 20 for approval of auction and sale procedures. Global wants competing bids by Feb. 14.
Global is the parent of World Airways Inc. and North American Airlines Inc. Court papers show $165.2 million in secured debt, including $39 million owing to first-lien lenders, $85 million to second-lien creditors, and $41.2 million owing on a third-lien loan.
The second- and third-lien debt was created as part of the distribution to creditors in the first a bankruptcy. Holders of that debt also have about 66 percent of the stock, Global said in a court filing.
In the first bankruptcy, union workers took 25 percent of the stock plus warrants for another 15 percent in return for contract concessions.
Global was flying 14 aircraft and immediately took steps to terminate leases for six.
The new petition shows assets and debt both exceeding $500 million. In the first bankruptcy, Global listed $589.8 million in assets against debt totaling $493.2 million.
The new case is In re Global Aviation Holdings Inc., 13-bk-12945, U.S. Bankruptcy Court, District of Delaware (Wilmington). The prior case was In re Global Aviation Holdings Inc., 12-bk-40783, U.S. Bankruptcy Court, Eastern District of New York (Brooklyn).
AIG Objects to Sale of Hospitality Staffing to Lenders
Hospitality Staffing Solutions Group LLC, the largest U.S. provider of housekeeping personnel for hotels, will encounter opposition from AIG Property Casualty Inc. (AIG) at a hearing tomorrow in U.S. Bankruptcy Court in Delaware regarding a sale of the business in exchange for secured debt.
HSS filed for Chapter 11 protection on Oct. 24 and the next day submitted papers proposing to sell the business to lenders in exchange for the $22.9 million secured bank loan. An investor group acquired the bank loan on Oct. 11, according to court papers.
The investor group includes SG Distressed Debt Fund LP, LittleJohn Opportunities Master Fund LP and LJC Investment I LLC.
According to New York-based AIG, the lenders will take the business in exchange for the $22.9 million in secured debt, plus assumption of specified liabilities. The lenders are also providing a $7 million loan to finance the bankruptcy.
The problem with the sale, according to AIG, is that the lenders aren’t trading bankruptcy financing for ownership. As a result, the lenders will take ownership of the business and retain a so-called superpriority claim for the bankruptcy loan.
As a result, the lenders will take over lawsuits and preference claims that otherwise would be the only assets remaining for unsecured creditors.
At a minimum, AIG wants the bankruptcy judge to force the lenders to pay cash for the suits and claims.
Based in Atlanta and operating in 35 states, the company has more than 6,700 employees. It was acquired in September 2010.
In addition to the bank debt in default, $22.9 million was owing on unsecured subordinated notes held by Norwest Mezzanine Partners III LP, plus another $8.7 million on an unsecured note to the former owners and $3.8 million on an unsecured convertible note that is subordinated to the subordinated notes.
The company estimates trade suppliers are owed $2 million.
The petition lists the company as being valued at less than $50 million while debt is more than $50 million.
The case is HSS Holding LLC, 13-bk-12740, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Hokuli’a Project Near Kona Sets March 3 Confirmation
The reorganization plan for the 1,800-acre Hokuli’a development near Kona on the island of Hawaii will be up for approval at a hearing to be held March 3, under a schedule approved at a Dec. 9 hearing by a U.S. bankruptcy judge in Honolulu.
At this week’s hearing, the judge approved disclosure materials explaining the plan, according to court records. The delay for the confirmation hearing is designed to allow time for an investigation by creditors opposing the plan.
The judge rejected most objections to the disclosure statement, saying they are properly objections to plan approval at the confirmation hearing.
The resort originally received approval in October to solicit acceptances of a plan. Votes weren’t taken because lot owners started a lawsuit asking the court to subordinate the $627 million secured claim acquired from Bank of Scotland in December 2012 by Sun Kona Finance I LLC.
Before this week’s approval of the disclosure statement, the plan was revised to account for the suit. The reorganization proposal would give ownership to Sun Kona in exchange for debt.
The disclosure statement shows the property as being worth about $40 million. The county has a $20 million mortgage ahead of the Sun Kona debt. Sun Kona will waive the unsecured deficiency portion of its claim. The revised plan will pay off the county’s loan when it matures in March.
The plan provides that the property can’t be sold until the validity of Sun Kona’s claim is decided. In the meantime, there will be no payment toward the $33.7 million in unsecured claims, composed largely of $32 million sought by lot owners.
The plan deals with a $15.8 million mortgage held by Ackerman Ranch Inc. by giving the lender a deed to property estimated to be worth $8.5 million.
The project has 3.5 miles (5.6 kilometers) of waterfront on the Kona coast and was to have 730 residential units, a golf course, club and other amenities. It was originally developed by Lyle Anderson, who lost his interest in the property.
Debt is attributable partly to other Anderson projects in Arizona, New Mexico and Scotland.
When the bankruptcy began, the project’s owner said the properties were valued at $68.1 million.
The case is 1250 Oceanside Partners, 13-bk-00353, U.S. Bankruptcy Court, District of Hawaii (Honolulu).
Adayana Sells Business in Exchange for Secured Debt
Adayana Inc., the owner of two outsourced training providers, received authority from the bankruptcy court in Indianapolis to sell the business to the secured lender in exchange for debt.
The buyer AVX Learning Inc. also will pay the cost of curing defaults on contracts. The company, which filed for Chapter 11 protection in October, provides services to the automotive, agribusiness and health-care industries, as well as the federal government.
Official lists show assets with a value of $12 million and debt totaling $14.9 million, including $13.3 million in secured debt owing to ComVest Capital II LP.
The case is In re Adayana Inc., 13-bk-10919, U.S. Bankruptcy Court, Southern District of Indiana (Indianapolis).
Christian Brothers Sexual Abuse Plan Out for Vote
Christian Brothers’ Institute won approval of disclosure materials yesterday and scheduled a hearing on Jan. 9 for confirmation of a Chapter 11 plan dealing with sexual-abuse claims.
The institute filed for Chapter 11 protection in April 2011. If approved by creditors and the bankruptcy court, the plan would create a trust for abuse claimants initially funded with $13.4 million from the religious order and $3.2 million from Providence Washington Insurance Co. For details on the plan, click here for the Aug. 28 Bloomberg bankruptcy report.
The sexual-abuse claims arose from events occurring 30 to 50 years ago, according to court filings. The institute operates Catholic elementary and secondary schools throughout New York State.
The institute listed assets of $74 million, almost all representing real property. Aside from unknown liability on sexual-abuse claims, the institute said in 2011 there was $6.5 million in secured debt and a $1.8 million unsecured loan owing to the Christian Brothers Foundation.
Based in New Rochelle, New York, the nonprofit institute told the bankruptcy judge the claims mostly arose in Washington State and Newfoundland.
The case is In re Christian Brothers’ Institute, 11-bk-22820, U.S. Bankruptcy Court, Southern District of New York (White Plains).
Gulfstream Officers Pay $1.9 Million From Insurance to Settle
Former officers and directors of Gulfstream International Group Inc. (GIGIQ) will have their insurance carrier pay $1.9 million to settle seven lawsuits brought on behalf of the bankrupt airline’s creditors.
The regional airline sold the business in early 2011 to an affiliate of Chicago-based Victory Park Capital Advisors LLC. In August 2011, Gulfstream won bankruptcy court approval of a Chapter 11 plan that created a trust for filing suits.
Late last week, the trust announced a settlement with former officers and directors who will “use their best efforts” to cause the insurance company to pay the $1.9 million settlement. If the payment isn’t made, the settlement will be unwound.
Victory Park bought Gulfstream in return for financing it provided the Chapter 11 case. In addition, Victory Park paid Raytheon Aircraft Credit Co. (RTN) $18.7 million to buy the 21 Beechcraft 1900 D aircraft that Gulfstream operated.
Gulfstream filed for Chapter 11 reorganization on November 2010 in Fort Lauderdale, Florida, where it was based. It listed assets of $13.6 million and $26 million in total liabilities on the June 30 balance sheet.
The case is In re Gulfstream International Group Inc., 10-bk-44131, U.S. Bankruptcy Court, Southern District of Florida (Fort Lauderdale).
Deutsche Bank Buys Mantara Assets for $1.25 Million
Mantara Inc., a developer of trading and compliance software for the financial-services industry, finally won court approval for selling the intellectual property assets to Deutsche Bank Securities Inc. for $1.25 million.
The company filed a petition for Chapter 11 protection on Oct. 16 and was initially rebuffed by the bankruptcy judge in New York in asking for an immediate sale of the property. After further proceedings, the bankruptcy judge signed an order on Dec. 6 approving sale.
New York-based Mantara listed assets of $12.9 million and debt totaling $8.4 million. Liabilities include $1.2 million owing to a secured lender.
The case is In re Mantara Inc., 13-bk-13370, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Overpayment of Spousal Support Held Non-Dischargeable
A former spouse who received an overpayment of support will find the resulting debt not dischargeable in a Chapter 7 bankruptcy, according to a Dec. 9 opinion by the U.S. Court of Appeals in Denver.
In divorcing, the wife was awarded $2,500 a month in support for 10 years or until she remarried. After divorce, the husband went to the state matrimonial court saying the former wife was living with a man in a “marriage-like” arrangement.
The matrimonial court awarded him about $50,000 for overpayment of support. The former wife then filed bankruptcy.
The bankruptcy court ruled that the overpayment represented a debt not discharged under Section 523(a)(15) of the Bankruptcy Code. The lower court also ruled that the debt wasn’t discharged under Section 523(a)(5) as a “domestic support obligation.”
The Tenth Circuit in Denver upheld both conclusions.
The debt didn’t qualify as a support obligation because it wasn’t for support of the former husband.
On the other hand, the debt wasn’t discharged under subsection (a)(15) because it fell within the plain meaning of a debt to a former spouse as part of a divorce. The wife unsuccessfully argued that the plain meaning rule shouldn’t be invoked when the result was contrary to congressional intent.
The case is Taylor v. Taylor (In re Taylor), 12-2163, U.S. Tenth Circuit Court of Appeals (Denver).
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