Lyondell, Madoff, WaMu, Innkeepers, Black Crow, AMN Healthcare: Bankruptcy
The trial of a lawsuit by Lyondell Chemical Co. creditors against billionaire Len Blavatnik that claims a 2007 merger drove the company into bankruptcy is set to begin in New York next month.
Summonses were filed Aug. 4 in U.S. Bankruptcy Court in Manhattan listing Blavatnik and 41 other people and companies that allegedly played a role in Lyondell’s takeover by Luxembourg-based Basell AF SCA. The creditors claim the $22 billion leveraged buyout enriched advisers by about $1 billion and profited management, including Blavatnik, while leaving Lyondell with too much debt.
A pretrial conference is set for Sept. 13.
The amended complaint “adds nothing new,” Mike Sitrick, a spokesman for Blavatnik’s holding company, Access Industries Inc., said in an e-mailed statement today. “As before, the allegations are without any merit and twist the facts.”
“The trustee chose to ignore studies commissioned by” Lyondell’s parent company “that prove that the case has no merit and attempts to portray what was a legitimate business transaction as a conspiracy,” Sitrick said.
The bankruptcy case is In re Lyondell Chemical Co., 09- 10023, and the adversary case is Official Committee of Unsecured Creditors v. Citibank NA, 09-01375, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Madoff Trustee Wins $180 Million Vizcaya Judgment
The trustee for Bernard Madoff’s investment-advisory business won a $180 million default judgment against Vizcaya Partners Ltd. over claims the hedge fund profited from the conman’s fraud.
Vizcaya, based in the British Virgin Islands, failed to plead its case “or otherwise defend itself” against trustee Irving Picard’s allegations, according to an Aug. 3 ruling by U.S. Bankruptcy Judge Burton Lifland in Manhattan. The default applies to Vizcaya and its affiliates, Zeus, Siam and Asphalia. Recovery of damages from Vizcaya may hinge on a ruling by a Gibraltar court that holds $74 million on behalf of Vizcaya’s bank, which did not default and is challenging the claims.
Vizcaya’s lawyer, Anthony Paccione of Katten Muchin Rosenman LLP in New York, didn’t immediately return a call for comment.
Separately, Picard has hit roadblocks in negotiations to settle a lawsuit seeking $7.2 billion from the estate of investor Jeffry Picower, a lawyer said.
Disputes over the settlement cost and the ability of private investors to sue for more money have snagged the talks, said William Zabel, a lawyer for the estate of Picower, a Florida businessman who drowned last October.
Picard claims Picower should have known Madoff ran a Ponzi scheme before Madoff’s 2008 arrest. Picard claims that Picower and his charitable foundation withdrew $7.2 billion from Madoff’s firm over 20 years. Picower’s widow, Barbara, wants a global settlement barring suits by other parties, Zabel said.
The parties have not agreed on blocking third party claims or “the overall dollar figure,” which ranges between $2.4 billion and $7.2 billion, Zabel said in an interview.
The Vizcaya case is Picard v. Vizcaya Partners Ltd., 09- 01154, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Picower case is Picard v. Fox, 10-3114, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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WaMu Equity Security Holders Seek to Join Shareholders’ Case
The Official Committee of Secured Equity Holders of Washington Mutual Inc., which sued the bank March 10 seeking to compel an immediate annual shareholders’ meeting, wants permission to intervene in an adversary proceeding brought by WaMu shareholders that seeks “virtually identical relief,” the committee said in court papers.
Intervention “is necessary” for the committee to protect the interests of the equity holders, the committee said in a filing with the U.S. Bankruptcy Court in Wilmington, Delaware. It also asked that the two suits be consolidated.
Shareholders brought a suit April 26 in Tacoma, Washington, seeking to force WaMu to hold an annual meeting to nominate and elect a new board of directors. The case was transferred to the bankruptcy court in Delaware.
Seattle-based WaMu is negotiating a settlement of a court fight with the Federal Deposit Insurance Corp. and JPMorgan Chase & Co. over ownership of $4 billion in deposits and two tax refunds. Shareholders oppose the settlement because they would get nothing. WaMu is the bankrupt former parent of the biggest U.S. bank to fail.
The bankruptcy case is In Re Washington Mutual Inc., 08- 12229, U.S. Bankruptcy Court, District of Delaware (Wilmington). The financial dispute is Washington Mutual Inc. v. JPMorgan Chase Bank NA, 09-50934, U.S. Bankruptcy Court, District of Delaware (Wilmington). The adversary case is Willingham v. Washington Mutual, Inc., 10-25197, U.S. Bankruptcy Court, District of Delaware (Wilmington).
American Mortgage Acceptance Seeks Plan Retaining REIT Status
American Mortgage Acceptance Co., the bankrupt real estate investment trust, filed its first amended disclosure statement and amended plan of reorganization with the U.S. Bankruptcy Court in Manhattan. AMAC will seek confirmation of the plan under the so-called cramdown provisions of the U.S. Bankruptcy Code, which allow a debtor to gain approval of a plan when it isn’t accepted by all impaired creditors.
Under the proposed plan, the debtor will transfer bonds and $100,000 to unsecured creditor Taberna Preferred Funding I, Ltd., and old common stock of the debtor will be canceled and new stock issued to unsecured creditor C3 Initial Assets LLC. Equity holders “will receive no distribution” under the plan, AMAC said in court papers.
The company will retain its so-called REIT status, and will issue new shares to raise equity “going forward.”
A hearing to confirm the plan is scheduled for Sept. 10 at the U.S. Bankruptcy Court in Manhattan.
The company filed for protection under Chapter 11 of the U.S. Bankruptcy Code April 10.
The case is In re American Mortgage Acceptance Co., 10- 12196, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Bear Island’s Collateral Agent Opposes DIP Amendment
General Electric Capital Corp., the U.S. collateral and documentation agent for bankrupt newsprint maker Bear Island Paper Co., yesterday made a limited objection to a motion by the committee for unsecured creditors to amend the July 8 debtor-in- possession order.
The committee has identified three bank accounts which it says aren’t subject to prepetition liens, GECC said in a court filing. GECC claims the money is subject to a Jan. 10 block- account agreement and falls under a “properly perfected security interest” it holds. The finance company asked that any order granting the DIP motion should state that nothing in it “limits or alters the scope” of the prepetition liens.
Bear Island is a U.S. unit of Nova Scotia-based White Birch Paper Co., which filed for reorganization in February.
The case is In re Bear Island Paper Co. LLC, 10-31202, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).
Marriott International Inc., the worldwide hotel operator and franchisor, asked the U.S. Bankruptcy Court in Manhattan Aug. 4 to allow it, even though there is an automatic bankruptcy stay, to enforce a prepetition contract with a unit of Innkeepers USA Trust. Marriott wants the unit, Grand Prix Floating Lessee LLC, to stop using the Marriott name, a demand it says it is permitted to make under the contract. The franchisor has given notice to Grand Prix that the franchise will terminate Aug. 30, according to court papers. Marriott wants Grand Prix to remove all signs of the Marriott name and return “all Marriott property.” Failure to de-identify the hotel will be a violation of the Lanham Act, a federal law that governs trademark use, Marriott argued in court papers. Innkeepers and its unit have not yet responded to the motion.
The case is In re Innkeepers USA Trust, 10-13800, U.S. Bankruptcy Court, Southern District New York (Manhattan).
Compania Mexicana de Aviacion, Mexico’s biggest airline by passengers, hopes to resume ticket sales in the “coming days,” according to Chief Executive Officer Manuel Borja Chico.
Borja Chico made the comments yesterday in an interview on Radio Formula. Ticket sales stopped on Aug. 4 after the Air Transport Association suspended the company in the ticket clearing house, he said.
The company is in talks with labor unions after filing for protection from creditors on Aug. 3 in Mexico and the U.S. It said yesterday a Mexico City judge granted a temporary injunction to protect its assets from seizure.
The U.S. case is Compania Mexicana De Aviacion SA de CV, 10-14182, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
U.S. Bankruptcy Judge Paul M. Glenn yesterday named a mediator to oversee a dispute between bankrupt Black Crow Media Group LLC and General Electric Capital Corp. The companies requested the appointment of Catherine P. McEwen.
Black Crow, a closely held owner of 22 radio stations, won an extension of exclusivity until Nov. 8. In March, Black Crow beat back a motion by Stamford, Connecticut-based GECC to dismiss the case or allow foreclosure.
Black Crow filed for Chapter 11 protection in January, two days before a hearing in U.S. district court where GECC was seeking appointment of a receiver following default on the term loans and revolving credit.
The case is In re Black Crow Media Group LLC, 10-00172, U.S. Bankruptcy Court, Middle District of Florida (Jacksonville).
General Motors has added or recalled 6,900 workers since exiting bankruptcy, according to The Free Press. The new positions are in the U.S., and 1,000 are in Michigan, the paper said. GM’s second quarter report, expected at the end of August, will show a gain of $865 million profit for the first quarter that ended March 31, Vice Chairman Steve Grisky said yesterday, according to the newspaper. GM began the largest manufacturing reorganization in history by filing under Chapter 11 on June 1, 2009. Sale of the reorganized company was completed on July 10, 2009.
The case is In re Motors Liquidation Co., 09-50026, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
AMN Healthcare Downgraded by Moody’s, Ratings Company Says
AMN Healthcare, Inc.’s corporate family rating was downgraded by Moody’s Investors Service yesterday to Ba3 from Ba3, according to a statement issued by the ratings company.
The ratings action affects about $265 million in newly rated debt and “reflects an increase in financial leverage and a reduction in unrestricted cash,” Moody’s said in the statement.
Moody’s also assigned a Ba2 rating to the health-care staffing provider’s $215 million first lien credit facility under a proposed amend-and- extend transaction that “would upsize the existing term loan by $68 million,” Moody’s said. The AMN’s Ba3 probability of default rating was confirmed. AMN’s ratings outlook is “stable,” Moody’s said.
A B1 rating was assigned to a new $50 million second lien term loan. This ratings action “concludes the review for possible downgrade” that began July 30.