Old GM, GSC Group, Innkeepers, Tronox: Bankruptcy

Old General Motors Corp., now formally named Motors Liquidation Co., filed a proposed liquidating Chapter 11 plan and disclosure statement last night.

The plan will create four trusts and in the process give unsecured creditors stock and warrants in new GM, formally named General Motors Co.

There will be separate trusts for environmental claims, unsecured creditors, asbestos claims, and litigation claims. Old GM said it hopes to have the plan approved by a confirmation order in the first quarter.

The disclosure statement says the environmental trust will fully pay an estimated $536 million in claims. The trust will have cash and title to unsold plants and equipment, and will perform environmental remediation so the plants can be sold. There are already discussions to sell 17.

The trust for unsecured creditors will distribute stock and warrants in new GM that resulted from the sale of the core business last year. The disclosure statement says it isn’t necessary to predict the percentage recovery for unsecured creditors given uncertainty about the value of new GM’s stock.

The disclosure statement likewise doesn’t predict the percentage recovery for asbestos claims on account of the variability of the value of new GM stock.

There are 70,000 claims against old GM, seeking $275 billion, the company said in a statement.

Old GM sold the core business to new GM and in return received 10 percent of the stock of the new company plus warrants for 15 percent. The warrants will have value if the new company is profitable enough to raise the company’s value to specified levels. New GM is 60.8 percent-owned by the U.S. government.

Old GM began the largest manufacturing reorganization in history by filing under Chapter 11 on June 1, 2009. The sale was completed on July 10, 2009. GM listed assets of $82.3 billion against debt totaling $172.8 billion.

The case is In re Motors Liquidation Co., 09-50026, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

New Filing

Fund Manager GSC Group Files in Manhattan to Sell

GSC Group Inc., which calls itself a “diversified alternative investment manager,” filed Chapter 11 petitions for itself yesterday and affiliates. It intends on selling the assets “shortly.” There is already an offer from the agent for secured lenders owed $206.6 million.

Originally named Greenwich Street Capital Partners Inc. when it was a subsidiary of Travelers Group Inc., GSC became independent in 1998 and at the peak had $28 billion of assets under management. With market reverses, termination of some funds, and withdrawal of customer’s investments, GSC now manages $8.4 billion in 28 investment funds.

Based in Florham Park, New Jersey, GSC listed assets of $119.8 million against debt totaling $313.6 million.

Black Diamond Capital Finance LLC is agent for the secured lenders. GSC is negotiating for Lake Forest, Illinois-based Black Diamond to buy the assets.

GSC also owes $10.2 million to Calyon New York Branch on an interest rate swap agreement. For other Bloomberg coverage of GSC’s filing, click here.

The case is In re GSC Group Inc., 10-14653, U.S. Bankruptcy Court, Southern District New York (Manhattan).


Papers Unsealed Opposing Innkeepers’ Reorganization Plan

Although Innkeepers USA Trust received approval yesterday from the bankruptcy judge for some financing, the court didn’t yet pass on the motion by the real estate investment trust to use cash representing collateral for secured lenders’ claims.

The main event occurs at a hearing continuing today when Innkeepers will seek the court’s approval for a so-called plan support agreement where the current owner, Apollo Investment Corp., would retain control along with a subsidiary of Lehman Brothers Holdings Inc., a secured creditor.

At yesterday’s hearing, the bankruptcy judge directed that papers previously filed under seal be placed on the public record. As a result, Midland Loan Services Inc., the servicer for the $825 million in mortgage debt, publicly filed papers it previously submitted in opposition to the plan support agreement. Midland at the time was required to file the papers under seal on account of information that was obtained under a confidentiality agreement.

Midland, which has liens on 45 of Innkeepers’ 72 properties, said it had been the intention of Innkeepers ever since April that Apollo end up sharing ownership with Lehman Ali Inc., to the exclusion of other possible buyers.

Midland points to evidence that Innkeepers’ investment banker was instructed not to search for another buyer or a higher offer. Midland quotes Innkeeper’ Chief Restructuring Officer Marc Beilinson as saying that “shopping” the company isn’t required; nor would it have been in the best interest of the “estate.”

Midland says that another potential purchaser, Five Mile Capital Partners LLC, was denied access to financial information, even under a confidentiality agreement.

Yesterday, Midland disclosed that it has a commitment from Five Mile to pay $236 million for all the new equity of Innkeepers under a competing Chapter 11 plan. Midland filed a motion seeking to terminate so-called exclusivity so it could file the competing plan. Click here for yesterday’s Bloomberg bankruptcy report for details on Midland’s competing plan and the Apollo-Lehman plan. Click here for Bloomberg coverage of yesterday’s hearing. The Lehman subsidiary has floating-rate mortgages on 20 of Innkeepers’ properties.

Midland contends that the plan proposed by Apollo and Lehman is opposed by creditors holding $1.2 billion in secured debt, all of the mezzanine lenders, and the holders of preferred stock. Midland says that its plan wouldn’t cram down on secured lenders while offering them a higher recovery. The Five Mile-sponsored plan has a recovery of about 73 percent for creditors other than Lehman Ali, compared with a maximum 66.3 percent recovery from the Innkeepers’ plan.

In total, Palm Beach, Florida-based Innkeepers has 72 extended-stay and limited-service properties with 10,000 rooms in 20 states. Apollo acquired the company in July 2007 in a $1.35 billion transaction. The Innkeepers petition listed assets of $1.5 billion against debt totaling $1.52 billion.

The case is In re Innkeepers USA Trust, 10-13800, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Tronox Equity Committee Filing Competing Reorganization Plan

The official shareholders’ committee for Tronox Inc. will submit a competing reorganization plan today or tomorrow, according to an agreement filed in bankruptcy court on Aug. 30 by the world’s third-largest producer of the white pigment titanium dioxide.

Tronox’s exclusive right to file a plan expired in July, when the company had been in Chapter 11 for 18 months. Tronox agreed that the committee could file its plan and explanatory disclosure statement without a courtroom fight over whether the committee could solicit acceptances of a competing plan before Tronox’s exclusive right to solicit votes expires on Sept. 13.

Court papers don’t explain how the equity holders’ plan will differ from the company’s.

Tronox announced on Aug. 30 that it reached agreement with “all key creditor stakeholders” on the “framework” for an amended reorganization plan giving stock to unsecured creditors. Tronox’s revised plan would give existing shareholders warrants for 5 percent of the new stock, if they vote for the plan. For details of Tronox’s new plan and the prior version, click here to read the Aug. 30 Bloomberg bankruptcy report.

Tronox is yet to file its new plan and accompanying disclosure statement.

The Chapter 11 petition by Tronox in January 2009 listed assets of $1.56 billion against debt totaling $1.22 billion. Debt includes $213 million on a secured term loan and revolving credit, $350 million in 9.5 percent senior notes, and a $40.7 million accounts receivable securitization facility. Tronox’s products are used in paints, coatings, plastics, paper and consumer products. The operations outside of the U.S. didn’t file.

The case is In re Tronox Inc., 09-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Tribune Has Board Committee to Formulate New Plan

Newspaper publisher Tribune Co. formed a special committee of the board of directors to oversee the formulation of a reorganization plan to supplant the version the company abandoned in August.

The existing plan went by the boards after the examiner issued a report concluding there was some likelihood that the second phase of the leveraged buyout in December 2007 could be attacked successfully as a constructively fraudulent transfer.

Tribune had been scheduled to confirm a plan yesterday. Nov. 8 now stands as the date for a plan confirmation hearing. To reach the stage of approving and confirming a plan, the bankruptcy court must first approve new disclosure materials before creditors vote again.

The board committee to oversee the plan consists of four members who weren’t on the board at the time of the 2007 leveraged buyout. The special board committee is to have the law firm Jones Day as its counsel. The bankruptcy court will hold a Sept. 15 hearing to consider approving expansion of the retention of Jones Day to assist the committee. The firm already serves as special antitrust counsel.

In addition to approving “any plan of reorganization,” the board committee has power, according to the company’s motion, to approve settlements and take other action to resolve fraudulent transfer claims. It is unclear from the motion whether the special committee by itself has the right to initiate lawsuits.

The special board committee was evidently created to avoid conflicts of interest because the examiner said some members of management may have been derelict in their duties in connection with the leveraged buyout.

The examiner, lawyer Kenneth N. Klee, was formally discharged last week. Although he must answer “reasonable written inquiries” from parties in the case, no one is allowed to take formal discovery from him. He is required to maintain the documents he collected for two years. He and his lawyers will be paid for their time in answering inquiries.

The examiner found less likelihood that the first phase of the transaction, in May 2007, could be unraveled as a fraudulent transfer. For a summary of some of the examiner’s conclusions, click here for the July 27 Bloomberg bankruptcy report.

Tribune’s plan would have settled claims that the $13.7 billion leveraged buyout led by Sam Zell contained fraudulent transfers. The plan was opposed by holders of $3.6 billion in debt. For details on the withdrawn plan, the proposed settlement and the parties’ arguments, click here for the April 13 Bloomberg bankruptcy report.

Tribune is the second-largest newspaper publisher in the U.S. It 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).

Circuit City Plan to Pay Up to 32% after Sept. 8

Circuit City Stores Inc. is scheduled for approval of a revised liquidating Chapter 11 plan at a Sept. 8 confirmation hearing. Unsecured creditors were told to expect a recovery between 10 percent and 30 percent on claims totaling from $1.8 billion to $2 billion.

When Circuit City received approval of the original disclosure statement last year, creditors were told not to expect more than 13.5 percent.

Eastman Kodak Co. is objecting to confirmation of the plan unless it’s modified so there is a definite date when the plan will be implemented. Without changes, Kodak says that implementation of the plan will be “controlled by one or more of the plan proponents or by parties outside of this court’s jurisdiction.”

Circuit City and the official creditors’ committee had been at loggerheads over details surrounding the plan until mediation broke the impasse. The revised plan took the place of the version originally filed in August 2009. The creditors’ committee filed a plan of its own in June.

The original plan was initially scheduled for a confirmation hearing in November.

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 filing was in November 2008, in the company’s Richmond, Virginia, hometown. The petition listed assets of $3.4 billion and debt totaling $2.3 billion as of Aug. 31, 2008. Papers originally listed $898 million owing to the 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).

ProtoStar Plan Goes for Vote after Global Settlement

ProtoStar Ltd., previously a provider of digital television and broadband service in Asia, will hold a confirmation hearing on Oct. 6 where the bankruptcy court, in addition to approving the liquidating Chapter 11 plan, is scheduled to approve a global settlement ending challenges to the validity of secured claims.

The bankruptcy court in Delaware signed an order yesterday approving the disclosure statement explaining the liquidating plan.

The official creditors’ committee sued secured lenders challenging the validity of their liens. The suit was settled, opening the door to approval of the disclosure statement. The settlement carves out some of the money from asset sales for benefit of unsecured creditors.

The disclosure statement says that creditors of the ProtoStar I satellite should receive about 64 percent on their claims totaling some $9.3 million. Unsecured creditors of the ProtoStar II satellite, with claims aggregating some $14.4 million, should see a recovery of about 29 percent, the disclosure statement says.

Unsecured creditors of the ProtoStar parent, with claims aggregating $5.7 million, are in line to receive a 2 percent to 9 percent recovery.

Holders of 12.5 percent and 18 percent secured notes, with liens on the ProtoStar I satellite, are to have an 83 percent recovery on $200 million in claims. Secured Credit Suisse lenders, secured by the Protostar II satellite, are to have a 66 percent dividend on claims aggregating $246 million.

The Protostar I satellite was sold for $210 million to an affiliate of Intelstat Holdings Ltd. The ProtoStar II satellite went for $185 million cash to an affiliate of SES SA. Sale proceeds are being held in escrow in light of the committee’s challenge to the liens. The committee says the lenders filed notices of the security interests in the wrong place. The money in escrow will be released to fund the plan when the plan is confirmed and the global settlement is approved.

Had the committee lost the lawsuit on the liens, unsecured creditors would have received nothing. A prior version of the disclosure statement said that secured creditors would have recovered 85 percent to 93 percent if their liens were valid. If the liens were invalid, unsecured creditors would have seen an 85 percent recovery.

Hamilton, Bermuda-based ProtoStar and five subsidiaries filed under Chapter 11 in July 2009, listing assets of $528 million and debt of $463 million as of Dec. 31. Debt includes $10 million on a first lien, plus $183 million in 12.5 percent and 18 percent secured notes and $242 million on the so-called Credit Suisse facility secured by all the assets. The satellites were launched in 2008 and 2009.

The case is In re ProtoStar Ltd., 09-12659, U.S. Bankruptcy Court, District of Delaware (Wilmington).

JPMorgan Seeks Dismissal of Lehman Complaint from May

JPMorgan Chase Bank NA filed a motion yesterday to dismiss the lawsuit filed in late May where Lehman Brothers Holdings Inc. contends that the New York-based bank “stripped a faltering Lehman Brothers of desperately needed cash” in the days and weeks before the commencement of Lehman’s bankruptcy in September 2008.

Although JPMorgan disputes the facts recited by Lehman, the bank says that the complaint must be dismissed even if Lehman’s version of the facts are taken for truth.

JPMorgan explains how it was Lehman’s primary clearing bank and was extending more than $100 billion in credit each day. The bank bases its motion to dismiss on provisions in bankruptcy law known as the “safe harbor.” The sections of the U.S. Bankruptcy Code preclude a bankruptcy judge from setting aside specified types of securities transactions. JPMorgan says that the transfers Lehman seeks to recover were all protected by the safe harbor.

The bank also argues that the complaint is deficient because it fails to plead any facts showing that the transactions weren’t covered by the safe harbor.

Likewise, JPMorgan says Lehman’s complaint pleads no facts with required specificity showing that the bank acted with actual intend to hinder, delay or defraud Lehman or its creditors.

For JPMorgan to succeed on its motion to dismiss, there must be no disputed issues of fact. The bank must show that federal law doesn’t allow a recovery even if the facts pleaded by Lehman are taken as true. For details on Lehman’s complaint, click here to see the May 27 Bloomberg bankruptcy report. For other Bloomberg coverage of the motion to dismiss, click here.

In the ongoing trial regarding the purchase of Lehman’s brokerage operation, a witness for Barclays Plc testified in bankruptcy court yesterday that Harvey Miller, the lead bankruptcy lawyer for Lehman, said in a meeting that changes in the sale contract approved by the bankruptcy judge didn’t need to be brought back to court for approval. Click here to read Bloomberg coverage of yesterday’s installment of the trial where Lehman contends the bank took $11 billion more than it was entitled to receive when it bought the brokerage business. Barclays began presenting its defense witnesses last week after a summer break. The trial began in May.

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. The Lehman holding company filed under Chapter 11 in New York on Sept. 15, 2008, and sold office buildings and the North American investment- banking business to London-based Barclays one week later. The Lehman brokerage operations went into liquidation on Sept. 19, 2008, in the same court. The brokerage is in the control of a trustee appointed under the Securities Investor Protection Act.

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).

Capmark Nears Settlement on $1.5 Billion Secured Loan

The reorganization of Capmark Financial Group Inc. may end up being another case like Washington Mutual Inc. and Tribune Co., where the bankrupt company tries to push through a settlement that some creditors oppose.

The official creditors’ committee filed a motion in August asking for authority to sue lenders for a $1.5 billion secured loan made 149 days before the Chapter 11 filing in October. The committee believes loan proceeds were used to pay off unsecured debt owing to practically the same lenders.

In papers filed yesterday opposing permission for the committee to sue, Capmark said it reached a settlement where the lenders will give up between $105 million and $135 million, heading off the lawsuit. The settlement represents 9 percent of the loan. Capmark said it expects to file a motion “shortly” to approve the settlement.

Because the loan was made more than 90 days before bankruptcy, it can’t be attacked as a preference. Consequently, the committee is alleging that the loan was a fraudulent transfer. Capmark says it wasn’t fraud because paying off existing debt is valid consideration.

The settlement motion presumably will counter other arguments that could be constructed to attack the loan where secured debt replaced unsecured debt shortly before bankruptcy.

Apart from the forthcoming settlement, Capmark says the committee isn’t entitled to sue because the company hasn’t refused. Rather, the company has chosen to keep its options open and hasn’t admitted the validity of the secured loan.

The committee’s motion for authority to sue is on the calendar for Sept. 15.

After filing in Chapter 11, Capmark completed three sales to generate more than $1 billion cash. Berkshire Hathaway Inc. and Leucadia National Corp. bought most of the business for $468 million.

Capmark previously said it intends to file a reorganization plan giving stock to unsecured creditors while reorganizing around its non-bankrupt bank subsidiary, which wasn’t sold. Based in Horsham, Pennsylvania, Capmark was called GMAC Commercial Holding Corp. before control was sold in 2006. It had been GMAC’s servicing and mortgage banking business.

KKR & Co., Goldman Sachs Group Inc., Dune Capital Management LP and Five Mile Capital Partners LLC owned 75.4 percent of Capmark following a 2006 acquisition from General Motors Corp. for $1.5 billion cash and repayment of $7.3 billion in debt. Capmark’s debt includes a $1.5 billion term loan secured by all assets except Capmark’s bank’s, $234 million remaining under a bridge loan, a $4.6 billion senior credit, $2.34 billion in notes, and a $250 million junior subordinated debt. The bank had assets of $11.1 billion and deposits of $8.39 billion, according to a court filing.

The case is In re Capmark Financial Group Inc., 09-13684, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Centaur to Auction Valley View Downs on October 20

Casino and racetrack operator Centaur LLC will hold an auction on Oct. 20 for a planned racetrack 55 miles from Pittsburgh named Valley View Downs and Casino. The sale would be completed as part of the confirmation of Centaur’s Chapter 11 plan.

Under procedures approved yesterday by the bankruptcy judge in Delaware, bids are due Oct. 4. No one as yet is under contract.

Centaur was authorized in August to sell the Fortune Valley Hotel & Casino 40 miles west of Denver to Luna Gaming Central City LLC for $7.5 million cash, plus a $2.5 million note.

Centaur’s plan is designed to provide an 83.3 percent recovery for holders of $405 million in first-lien debt by giving them a combination of mostly new stock and debt. Holders of $207 million in second-lien debt would realize a 1.4 percent recovery, according to the disclosure statement filed along with the plan.

For details of the plan, click here for the July 26 Bloomberg bankruptcy report.

Centaur LLC and 12 affiliates filed Chapter 11 petitions in March. Affiliates Centaur PA Land LP and Valley View Downs LP filed for bankruptcy reorganization in October to keep the Pennsylvania project alive. All the companies are subsidiaries of closely held Centaur Inc., which isn’t in bankruptcy.

The March filings listed assets of $584 million and debt of $681 million. The newer cases resulted from the failure to make payments due in October on a $382.5 million first-lien debt and a $192 million second-lien credit. The companies have horse racing and gambling facilities in five markets in Indiana and Colorado.

The companies own Hoosier Park, a casino and horse racetrack, in Anderson, Indiana, along with three offtrack betting parlors in Indiana. Fortune Valley Hotel & Casino in Central City, Colorado, was sold. The companies generated revenue of $277.5 million in 2009.

The newer case is Centaur LLC, 10-10799, and the first case was In re Centaur PA Land LP, 09-13760, U.S. Bankruptcy Court, District of Delaware (Wilmington).

InterContinental O’Hare Hotel Loses Exclusivity

River Road Hotel Partners LLC, the owner of the InterContinental Chicago O’Hare hotel near Chicago’s largest airport, no longer has the exclusive right to propose a Chapter 11 plan.

Granting a motion by the secured construction lender Longview Ultra Construction Loan Investment Fund, the bankruptcy court in Chicago terminated so-called exclusivity on Aug. 30. Longview is owed $161 million.

At the hearing where it lost exclusivity, River Road was hoping the judge would approve bidding procedures for a sale of the property that Longview was opposing.

Before a deadline in June, River Road filed a motion to set up auction procedures where the first bid of $42 million would come from an affiliate of Och-Ziff Real Estate Acquisitions LP. The sale was to have been part of a Chapter 11 plan where more than $2 million of cash on hand would have been used to pay expenses of the Chapter 11 case.

River Road filed under Chapter 11 in August 2009 in Chicago along with affiliate RadLAX Gateway Hotel LLC, the owner of the Radisson hotel at Los Angeles International Airport. Both are ultimately controlled by Harp Group. The O’Hare property, opened in September, listing $155 million in debt. The Radisson property listed debt of $120 million.

The case is In re River Road Hotel Partners LLC, 09-30029, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).

Garlock Asbestos Claimants Oppose Claims Process

Garlock Sealing Technologies LLC, a unit of EnPro Industries Inc., is encountering opposition from the official asbestos claimants’ committee to the proposal for developing a Chapter 11 plan.

The asbestos committee said in an Aug. 30 court filing that Garlock is wrong when it proposes deciding the validity of asbestos claims before estimating the total dollar amount of the claims. The committee said that trying individual claims would tie up a U.S. District Court for years.

Instead, the committee first wants a determination about the universe of asbestos claims. The best evidence, according to the committee, is what it calls “Garlock’s historical claims resolution database.” The committee wants access to the database.

The asbestos committee also wants a decision about the value of Garlock’s business.

In addition, the committee seeks to investigate whether pre-bankruptcy restructurings of Garlock’s business resulted in fraudulent transfers that the committee can attack. The committee says that the restructurings may have been designed to move assets beyond the reach of asbestos claimants.

The asbestos committee believes that the investigations can be completed in time for the formulation of a plan before Garlock’s exclusive right to propose a plan expires on April 1. The April 1 deadline could be extended.

The committee disputes Garlock’s argument that its remaining asbestos liability should be minimal, even though it already paid out more than $1 billion. The committee accuses Garlock of attempting to “rewrite applicable state tort law and ignore the teachings of medical science.”

Garlock, a Palmyra, New York-based gasket maker, filed under Chapter 11 in June to deal with the last 100,000 asbestos claims. Non-bankrupt affiliates are defendants on 30,000 claims. The company has been saying it intends to pay all asbestos claimants in full, although litigation may be necessary in the process. Garlock intends for the plan to use special provisions in bankruptcy law so that EnPro and all subsidiaries will have releases. There is $194 million of insurance remaining.

EnPro had assets of $1.08 billion and total liabilities of $634 million on the June 30 balance sheet. EnPro’s $144.2 million in net income for the first half of 2010 included $78.5 million of income from continuing operations.

EnPro makes engineered products, including diesel and natural-gas engines. It has 44 plants in the U.S. plus operations in 10 other countries.

The case is In re Garlock Sealing Technologies LLC, 10-31607, U.S. Bankruptcy Court, Western District of North Carolina (Charlotte).

Briefly Noted

Texas Rangers Reports $3.5 Million Net Income in July

The Texas Rangers baseball club reported net income of $3.5 million in July on revenue of $111 million. The gross profit in the month was $35.8 million.

The team emerged from reorganization in August with a confirmed Chapter 11 plan where the club was purchased for $385 million following an all-day auction. The purchasing group included team President Nolan Ryan and sports lawyer Chuck Greenberg.

The Rangers filed under Chapter 11 on May 24 with a sale contract and a plan that claimed to be paying all creditors in full. The original contract with the Ryan-Greenberg group had a cash price of $304 million.

The case is In re Texas Rangers Baseball Partners, 10-43400, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).

PTC Alliance Sale to Black Diamond Completed

PTC Alliance Corp. said yesterday that it completed the court-approved sale of the business to Black Diamond Capital Management LLC. PTC was in Chapter 11 a second time within four years. The bankruptcy court approved the sale in April. The purchased company will operate under the name PTC Alliance Holdings Corp. PTC valued the sale at $141.6 million. The price included $116.5 million by swapping a term loan and asset-backed loan, $500,000 cash, and the assumption of $24.6 million in debt.

The Wexford, Pennsylvania-based company said that debt exceeded assets by $64.7 million. On Dec. 31, 2008, assets were $274 million compared with debt totaling $294 million. PTC had $181 million in secured debt, mostly owing to Black Diamond.

The case is In re PTC Alliance Corp., 09-13395, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Professional Veterinary Selling Assets September 9

Professional Veterinary Products Ltd., a Nebraska-based veterinary supply distributor, filed under Chapter 11 on Aug. 20 and will sell assets at auction on Sept. 9. Bids are due Sept. 7 under procedures approved last week by the U.S. Bankruptcy Judge in Omaha.

The hearing for approval of the sale is set for Sept. 10.

The company’s formal lists of assets and debt show assets with a value of $42.8 million against $34.5 million in total liabilities, including $6.9 million in secured debt.

The case is In re Professional Veterinary Products Ltd., 10-82436, U.S. Bankruptcy Court, District of Nebraska (Omaha).

Bear Island Reports $774,400 Net Loss in July

Bear Island Paper Co. filed an operating report for July showing a $774,400 net loss on sales of $10.6 million. The gross profit was $360,000.

Bear Island and its Canadian parent White Birch Paper Co. filed for bankruptcy reorganization in February in Canada and the U.S. White Birch is the second-largest newsprint maker in North America. Secured liabilities include $438 million on a first-lien term loan, $104 million on a second-lien term loan, $50 million on an asset-backed revolving credit, and $51.5 million on swap agreements. Trade suppliers are owed $9.5 million. The companies had $667 million in sales during 2009, with $125 million attributable to Bear Island. White Birch has three pulp and paper mills in the province of Quebec. The Bear Island plant is in Ashland, Virginia. White Birch is controlled by Brant-Allen Industries, according to Bloomberg Data.

The case is In re Bear Island Paper Co. LLC, 10-31202, U.S. Bankruptcy Court, Eastern District Virginia (Richmond).

Visteon Confirms Chapter 11 Reorganization Plan

Auto-parts maker Visteon Corp. confirmed its Chapter 11 plan yesterday and said in a statement that it expects to implement the reorganization by Oct. 1. All creditor classes including shareholders voted in favor of the plan. To read Bloomberg coverage of the confirmation hearing where the plan was approved, click here. For details of the plan, click here for the June 15 Bloomberg bankruptcy report.

Visteon filed for reorganization in May 2009, listing assets of $4.6 billion against debt totaling $5.3 billion. Sales in 2008 were $9.5 billion, including $3.1 billion to Ford Motor Co. Visteon was spun off from Ford in 2000. Van Buren Township, Michigan-based Visteon at the outset owed $2.7 billion for borrowed money, including $1.5 billion on a secured term loan, $862 million on unsecured bonds, and $214 million on other debt obligations.

The case is In re Visteon Corp., 09-11786, U.S. Bankruptcy Court, District of Delaware (Wilmington).

U.S. Concrete Implements Prepacked Reorganization Plan

U.S. Concrete Inc., one of the 10 largest producers of ready-mixed concrete in the U.S., implemented the Chapter 11 reorganization plan that the bankruptcy court approved in a July 29 confirmation order, the company said in a statement yesterday. The sojourn in bankruptcy was four months.

The plan reduces debt by $285 million by swapping 8.325 percent subordinated notes for the new equity. Existing shareholders received warrants for 15 percent of the stock. For details of the plan, click here for the April 30 Bloomberg bankruptcy report.

The Chapter 11 petition filed in late April listed assets of $389 million and debt of $399 million. Liabilities include $40 million on a pre-bankruptcy secured credit facility where JPMorgan Chase Bank NA serves as agent. There was another $17.9 million on undrawn letters of credit. U.S. Concrete’s balance sheet on Dec. 31 listed assets of $392.4 million and liabilities totaling $402.5 million. It has 125 fixed and 11 portable plants serving markets in California, New Jersey, Texas and Michigan.

The case is In re U.S. Concrete Inc., 10-11407, U.S. Bankruptcy Court, District of Delaware (Wilmington).


Geokinetics’ International Revenue Fell 39% in First Half

Geokinetics Holdings Inc., the world’s second-largest provider of seismic data, has a “likelihood” of violating covenants on the revolving credit for the quarter ending Sept. 30, Moody’s Investors Service said yesterday. The covenants were amended effective June 30.

Moody’s lowered the corporate rating by one notch to B3. The $300 million in senior secured notes received a similar downgrade.

Revenue in international markets for the first half of 2010 was 39 percent less than in the year-earlier period, Moody’s said. Earnings and cash flow for the period were “well below” management’s projections made last year, Moody’s said.

The new Moody’s rating matches the action taken in June by Standard & Poor’s. At the time, S&P said that holders of the secured notes should have a recovery of as much as 50 percent in the event of default.

Geokinetics is based in Houston. The net loss for the first half of 2010 was $66.5 million on revenue of $225.3 million. Revenue in the first half was down 23 percent from the same period of 2009.

Daily Podcast

Competing Plans for Innkeepers, HSH Plan, Chicken: Audio

The competing plan for Innkeepers USA Trust, agreement on a plan for HSH Delaware GP LLC, and the filing by P&C Poultry Distributors Inc., a processor of chicken meat for fast-food chain, are covered in the bankruptcy podcast on the Bloomberg terminal and Bloomberglaw.com. To listen, click here.

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