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Bosque Power, Lehman, Tribune, Titlemax: Bankruptcy

Bosque Power Co., a U.S. electricity generator, and five affiliates filed for bankruptcy protection in Texas.

Bosque Power listed both assets and debt of $100 million to $500 million in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Waco, Texas. A reason wasn’t given for the filing.

The power-generating facility, located in Laguna Park, Texas, commenced operations as a natural-gas power plant in 2000. Bosque sells its energy and ancillary services in the Texas power market.

The 30 largest creditors without collateral backing their claims are owed more than $700,000, according to court documents.

Affiliate BosPower Development, BosPower Development Blocker I, BosPower Development Blocker II, BosPower Partners and Fulcrum Marketing and Trade also sought protection. Bosque Power Partners owns 100 percent of the membership interest in Bosque Power, court papers show.

The case is In re Bosque Power Co LLC, 10-60348, U.S. Bankruptcy Court, Western District of Texas (Waco).

For more, including ratings changes for the company in January and February 2009, click here.

Miles Road Seeks Chapter 11 Protection in Kentucky

Miles Road LLC, a developer of residential real estate in Kentucky, filed for protection from creditors yesterday after its bank foreclosed on its property. The Chapter 11 petition was a “bare-bones” filing without a full list of creditors.

Closely held Miles Road listed liabilities of $100 million to $500 million in its voluntary Chapter 11 petition filed in U.S. Bankruptcy Court in Lexington, Kentucky.

Miles Road, in an adversary case filed yesterday in which it requested an injunction on collection attempts, said Kentucky Bank secured a judgment of foreclosure on a residential development in Nicholasville, Kentucky, and is seeking judgments in state court against Miles Road principals to pay what’s owed on loans.

Gregory Dawson, a spokesman for Kentucky Bank, wasn’t immediately available for comment.

The case is Miles Road LLC, 10-50958, U.S. Bankruptcy Court, Eastern District of Kentucky (Lexington). The adversary case is Miles Road LLC v. Kentucky Bank, 10-05032, Eastern District of Kentucky (Lexington).

Other Updates

Soros Fund Buys $38 Million in Lehman Claims From Goldman Sachs

Soros Fund Management LLC bought $38 million in claims on bankrupt Lehman Brothers Holdings Inc. from Goldman Sachs Group Inc., according to court filings.

The claims consist of Lehman program securities, according to the filings yesterday. The purchase price wasn’t disclosed. Soros’s Quantum Partners Ltd. was the buyer.

Claims on Lehman, which outlined a liquidation plan on March 15 for the biggest U.S. bankruptcy in history, trade frequently between banks and short-term or long-term debt investors.

Separately, a unit of Denver-based Janus Capital Group Inc. sold a $153.5 million claim on bankrupt Lehman Brothers Holdings Inc. to Merrill Lynch & Co., according to a court filing yesterday. The purchase price wasn’t disclosed.

Shelley Peterson, a spokeswoman for Janus, and Michael Vachon, a spokesman for Soros, didn’t immediately respond to calls seeking comment yesterday.

For more about the Janus purchase, click here.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Dubai World Met With Creditors on $26 Billion Debt Plan in Dubai

Dubai World and its advisers yesterday completed its meeting with the company’s creditors to discuss proposals to restructure about $26 billion of debt.

The state-owned holding company’s chief restructuring officer Aidan Birkett met with the banks in Dubai yesterday.

More than 90 banks are owed money by Dubai World. Seven of its biggest creditors, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, Standard Chartered Plc, Bank of Tokyo-Mitsubishi UFJ Ltd., Emirates NBD PJSC and Abu Dhabi Commercial Bank PJSC, are negotiating with Dubai World on behalf of the lenders.

Dubai World, one of the emirate’s three main state-owned business groups, said Nov. 25 it would seek to delay repaying debt until at least May 30, sparking a plunge in developing-nation stocks and an increase in emerging-market bond yields.

April Showdown for Tribune LBO Banks and Sub Debt

The bankruptcy judge overseeing the reorganization of newspaper publisher Tribune Co., the second-largest newspaper publisher in the U.S., will decide at an April 13 hearing if the indenture trustee for $1.2 billion in exchangeable subordinated notes violated the so-called automatic stay by filing suit early this month against secured lenders who financed the $13.8 billion leveraged buyout led by Sam Zell in December 2007.

Tribune and the lenders, in response to the suit, contend the indenture trustee was automatically precluded from suing and should be held in contempt, and asked that the indenture trustee be punished for disclosing confidential information in the complaint. They also want the bankruptcy court to halt prosecution of the suit.

At a hearing this week, the bankruptcy judge told the lenders they could hold off answering the complaint until after the April 13 hearing. The Tribune case has been delayed by a dispute over whether the 2007 leveraged buyout was a fraudulent transfer on the theory that operating subsidiaries put liens on the assets to finance the Zell acquisition, while not receiving commensurate value in return. The bankruptcy judge was to decide in April whether there should be an examiner or lawsuits brought by the creditors’ committee on behalf of the company. The indenture trustee took matters into its own hands by filing the suit in March.

The exchangeable subordinated notes, known as Phones, were behind $4.1 billion of debt before the LBO. Afterward, according to the indenture trustee, there was $11.3 billion in senior debt. The indenture trustee contends in the complaint that the LBO was structured in a manner the banks “foresaw would render Tribune insolvent.”

The indenture trustee is using a theory known as equitable subordination. If the suit is successful, the lenders wouldn’t be paid until after the subordinated debt. The defendants in the suit include JPMorgan Chase Bank NA, Merrill Lynch Capital Corp., Citibank NA and Morgan Stanley & Co.

Before the suit was filed, Tribune said negotiations were at a delicate stage. The company was hoping to forestall litigation by forging agreement on a consensual Chapter 11 plan.

Tribune 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).

Station Casinos Owners to Keep Stake Under Proposal

Station Casinos Inc. filed a reorganization proposal that sells some of the bankrupt company’s casinos and allows members of the founding Fertitta family to retain a stake in others in exchange for a new, $85.6 million investment.

Under the plan, lenders owed at least $1.8 billion will split ownership of four Station properties with Frank Fertitta III and Lorenzo Fertitta. The Fertittas will operate the casinos and co-own a 50 percent stake in them, along with Colony Capital LLC, according to the proposed reorganization plan.

Details of the proposed sale will be made public in the future, the company said in court documents. The proposal must be voted on by creditors, who have split into competing groups. The vote will be taken into consideration by U.S. Bankruptcy Judge Gregg Zive.

The case is In Re Station Casinos Inc., 09-52477, U.S. Bankruptcy Court, District of Nevada (Reno).

For more, click here.

Titlemax Proposes Full-Payment Plan for All Creditors

Titlemax Holdings LLC, a lender providing loans to individuals secured by their lien-free automobiles, has a confirmation hearing on April 12 for approval of a plan paying all creditors in full.

Secured lender Merrill Lynch Mortgage Capital Inc., owed $149.5 million, will be paid off with a new, two-year note. Subordinated noteholders owed $4.7 million will receive new notes. General unsecured creditors with $2.5 million in claims likewise will be paid in full, with interest.

Titlemax filed for reorganization in April 2009 in its Savannah, Georgia, hometown.

The disclosure statement says the assets are $301 million against debt totaling $183 million. The company says on its Web site it’s one of the largest auto title lenders.

The case is Titlemax Holdings LLC, 09-40805, U.S. Bankruptcy Court, Southern District of Georgia (Savannah).

Canwest Wins Expedited Hearing on Goldman Appeal of Shaw Sale

Canwest Global Communications Corp., the insolvent Canadian media company, won a bid in an Ontario appeals court to speed up a hearing into Goldman Sachs Group Inc.’s challenge of its sale to Shaw Communications Inc.

Court of Appeal for Ontario Judge Harry Laforme yesterday granted Canwest’s request to expedite the appeal.

Goldman, based in New York, is attempting to annul Shaw’s C$95 million acquisition of a majority stake in Canwest, claiming it’s been unfairly shut out of Canwest’s restructuring process.

Ontario Superior Court Judge Sarah Pepall on Feb. 19 rejected a C$120 million offer for a stake in Canwest from a group of investors led by Toronto-based private-equity firm Catalyst Capital Group Inc. because it was filed too late. The Catalyst bid was supported by Goldman and Canwest’s founding Asper family.

The case is In the Matter of a Plan of Compromise or Arrangement of Canwest Global Communications Corp., M38600, Court of Appeal for Ontario (Toronto).

Quote of the Day

Author Vicky Ward, in an interview with Bloomberg’s Betty Liu, said the culture at Lehman Brothers Holdings Inc. was different from other Wall Street banks. “I think it was a bit of a cult,” Ward said. Ward is the author of “The Devil’s Casino: Friendship, Betrayal and the High Stakes Games Played Inside Lehman Brothers,” chronicling the collapse of Lehman Brothers.

To watch the interview, click here.


Private-Equity-Held Companies Seen With High Defaults, Recovery

Almost half of the U.S. companies that defaulted last year had private-equity backers, which tend to use more leverage than other owners, according to Moody’s Investors Service. In 2009, 163 U.S. non-financial companies defaulted, 77 of them backed by private-equity firms, Moody’s analysts led by Christina Padgett in New York wrote yesterday in a report.

For more, click here.

Briefly Noted

Cross Canyon Energy Corp. filed a prepackaged bankruptcy reorganization on Jan. 30, confirmed the plan on March 11, and implemented the reorganization on March 23. The plan gave a new $10 million secured loan, the senior preferred stock, and 95 percent of the new equity to the secured lender, a subsidiary of CIT Group Inc. The existing preferred shareholder, Alan D. Gaines, received new junior preferred equity. The plan gave existing shareholders 5 percent of stock. Formerly named Voyager Gas Corp., Cross Canyon has oil and natural gas leases on 13,700 net acres in the Horcones Field in Duval County, Texas. The petition listed assets of $20.8 million and $33.9 million in debt, including $33.5 million owing to New York-based CIT.

The case is The case is In re Cross Canyon Energy Corp., 10-30747, U.S. Bankruptcy Court, Southern District Texas (Houston).

360networks (USA) Inc. can’t claim a superior interest in five Andy Warhol artworks bought by Marc Dreier, the former lawyer now in prison for cheating hedge funds out of more than $400 million, a judge ruled. Steven J. Reisman, the post-confirmation representative of the 360networks bankruptcy estates, said Dreier bought the artwork in part with $50 million he stole when his law firm worked to recover money 360networks gave creditors before it filed for bankruptcy. New York-based Dreier LLP, now defunct, was hired by 360networks’s unsecured creditors. Reisman, a partner at Curtis, Mallet-Prevost, Colt & Mosle LLP in New York, didn’t immediately return a call for comment.

The case is U.S. v. Dreier, 09-cr-85, U.S. District Court, Southern District of New York (Manhattan).

For more, click here.

Buffets Holdings Inc., the U.S. restaurant chain that exited bankruptcy last April, is looking for lenders who will accept interest composed of cash with a company option to defer part of the payment until a later date. Eagan, Minnesota-based Buffets is seeking a $250 million first-lien term loan to replace exit borrowings and cut finance costs, according to people familiar with the request. Credit Suisse Group AG is arranging the loan. The company is offering to pay 8 percentage points more than the London interbank offered rate in cash and another 2 percentage points with a payment-in-kind option, said the people, who declined to be identified because the discussions are private. This means the borrower can issue more debt to make the interest payment if it doesn’t have the cash. Michael Freitag, a spokesman for Buffets, declined to comment.

For more, click here.

Midway Games Inc., the creator of “Mortal Kombat” and other video games that filed a liquidating Chapter 11 plan in February, 2009, has obtained an order of the U.S. Bankruptcy Court in Delaware approving its proposed disclosure statement, according to court files. The order, signed by U.S. Bankruptcy Court Judge Kevin Gross March 23, also established procedures for solicitation and tabulation of votes on accepting or rejecting the proposed joint Chapter 11 plan of liquidation. A hearing on confirmation of the plan and notice procedures is scheduled for 2:00 p.m. May 21. Objections to the plan must be filed no later than 4 p.m. May 7.

The case is In re Midway Games Inc., 09-10465, U.S. Bankruptcy Court, District of Delaware (Wilmington).

PNG Ventures Inc. said it emerged from Chapter 11 and changed its name to Applied Natural Gas Fuels Inc. The majority of the company’s senior credit facility was converted into approximately 66 percent of the common stock of the newly organized company with the balance settled for a combination of cash and a $9.8 million four-year term loan. PNG is a Dallas-based supplier of liquefied natural gas to operators of heavy-duty fleet vehicles. PNG has about 50 customers in California, Arizona, Nevada and northern Mexico.

The case is In re PNG Ventures Inc., 09-13162, U.S. Bankruptcy Court, District of Delaware (Wilmington).


Keystone Automotive Placed on CreditWatch, S&P Says

Keystone Automotive Operations had its ratings placed on CreditWatch with negative implications by Standard & Poor’s Ratings Services, according to a statement issued by the ratings company yesterday. Keystone’s ‘B-’ corporate credit rating was included in S&P’s action.

S&P expressed concern about Keystone’s “reduced liquidity, weaker-than-expected profitability, and imbalanced capital structure, particularly considering its January 2012 bank facility maturity,” the ratings company said in its statement.

Lion’s Gate’s Corporate Rating Placed on CreditWatch by S&P

Lions Gate Entertainment Corp., the entertainment company, had its ‘B-’ corporate credit rating placed on CreditWatch with negative implications by Standard & Poor’s Ratings Services, according to a statement issued by the ratings company.

In addition to the Santa Monica, Calif.-based Lions Gate Entertainment Corp., the ratings action applies to subsidiary Lions Gate Entertainment Inc. and all related issue-level ratings.

The CreditWatch listing is “in response to the announcement of an unsolicited tender offer from Carl Icahn to acquire all outstanding shares of Lions Gate’s common stock,” S&P credit analyst Deborah Kinzer said in the statement.

The CreditWatch listing reflects concern that the tender offer may distract management and that change of control could represent an event of default under the company’s credit agreements, S&P said in the statement.

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