Loehmann’s, Cynergy, Wind Hellas, Ambac: Bankruptcy
Discount retailer Loehmann’s Inc. filed for Chapter 11 reorganization early yesterday morning and later in the day was given interim authority by the bankruptcy judge for $6 million in credit from a $45 million loan provided by Crystal Financial LLC, a pre-petition lender.
As submitted to the judge, the loan required filing the previously negotiated reorganization plan by Dec. 1 and obtaining approval of an explanatory disclosure statement by Jan. 7. The deadline for confirmation of the plan was Feb. 7.
U.S. Bankruptcy Judge Robert E. Gerber said the deadlines were too stringent and agreed to approve the interim loan only with a looser timetable. By early this morning, an order formally approving the loan wasn’t on the court’s docket.
For Bloomberg coverage of the Loehmann’s filing and the so- called first day hearings, click here.
Loehmann’s had an exchange offer in October that failed. It would have rolled over debt on existing secured notes into new notes with a different maturity. The Bronx-based company then negotiated a prepackaged reorganization plan financed in part with a new $25 million investment from the current owner Istithmar PJSC and Whippoorwill Associates Inc., the owner of 70 percent of the notes. The plan will exchange the $110 million in secured notes for the new equity. The $25 million purchases new convertible preferred stock. The plan would reduce debt by $115 million.
Other debt includes $30.5 million outstanding on a $45 million revolving credit with Crystal. Loehmann’s has 48 stores in 13 states and the District of Columbia. Eight locations are closing.
Trade suppliers are owed $15 million, a court paper says. The treatment of unsecured creditors under the plan is yet to be negotiated.
Loehmann’s emerged from a 14-month a Chapter 11 reorganization with a confirmed plan in September 2000. It was then operating 44 stores in 17 states. Loehmann’s was acquired by Istithmar in July 2006 in a $300 million transaction. Istithmar is an investment firm owned by the government of Dubai
The case is In re Loehmann’s Holdings Inc., 10-16077, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Cynergy Data Plan Going to Creditors for Voting
Former credit card processor Cynergy Data LLC, now formally named CD Liquidation Co. Plus LLC, scheduled a confirmation hearing for Dec. 21 when the bankruptcy judge approved the disclosure statement on Nov. 12 explaining the liquidating Chapter 11 plan filed in September.
The plan won’t pay anything aside from lawsuit recoveries to anyone except holders of first-lien debt. The maximum recovery by secured lenders is 5 percent, according to the disclosure statement. The plan is founded on a settlement with secured lenders.
In case the plan doesn’t fly in December, the bankruptcy judge extended the company’s exclusive right to propose a plan until Jan. 11. Cynergy sold the business to private-equity investor ComVest Group for $81 million, including $14 million in subordinated debt payable by the purchaser.
Long Island City, New York-based Cynergy processed $10 billion in credit charges annually for 80,000 merchants before the Chapter 11 filing in September 2009. The petition listed assets of $110 million against debt totaling $186 million, including $39.8 million on a first-lien credit and $80.1 million on a junior secured credit. There was also $9 million owing by an affiliate that Cynergy guaranteed.
The case is In re CD Liquidation Co. Plus LLC, 09-13038, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Precision Parts Committee Given Approval to Sue Creditors
The official creditors’ committee of Precision Parts International Services Corp. was given authorization by the bankruptcy judge on Nov. 12 to file lawsuits to recover preferences. As a result, the committee will be suing the creditors that it represents.
The committee can also sue to recover fraudulent transfers. Any suits brought by the committee will be taken over by a trust to be created under the proposed liquidating Chapter 11 plan. The hearing for approval of the disclosure statement is currently on the court’s calendar for Dec. 1.
A preference is a payment received within 90 days of the Chapter 11 filing in December 2008 that paid off an overdue debt. The committee cannot sue Gene Davis, the company’s last remaining director. PPI was an auto parts maker.
PPI’s disclosure statement tells unsecured creditors with $103 million in claims that they might recover 0.15 percent under the Chapter 11 plan. PPI filed for reorganization in December 2008 and sold the assets in March 2009, generating net proceeds of $16 million. Secured lenders received $9.8 million immediately.
The plan in part is the result of a settlement with secured lenders where $575,000 was carved out for creditors with lower priorities. In addition to $150,000 cash, unsecured creditors are to receive some recoveries from lawsuits, plus other excess cash, if any.
The Rochester Hills, Michigan-based company had six plants in North America making metal-formed components for the auto and aerospace industries. It owed more than $85 million on bank loans to Golub Capital and Norwest Mezzanine Partners II LP. Court papers listed other debts as including $184.5 million in secured and unsecured loan obligations plus $30 million owing to trade suppliers. The revolving credit and term loans were $89 million while there was an $88.5 million mezzanine loan. First Atlantic Capital Ltd. acquired control of the company in 2005.
The case is In re PPI Holdings Inc., 08-13289, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Capmark Creditors Want to Sue for Insider Preferences
The Capmark Financial Group Inc. creditors’ committee believes the bankruptcy judge may have inadvertently denied a motion by the panel for permission to sue insiders for preferences. For an insider, a company officer, or a person in control of a bankruptcy company, a preference is a payment received within a year of bankruptcy on account of an overdue debt.
The bankruptcy judge on Nov. 1 filed a 93-page opinion explaining why he approved a settlement with secured lenders. The creditors’ committee was opposed to the settlement and sought authority to sue the lenders.
By approving the settlement, U.S. Bankruptcy Judge Christopher Sontchi also denied the committee’s motion to sue insiders and lenders.
The committee, in its motion for reconsideration filed Nov. 12, pointed out to the judge how insider preference claims are not part of the settlement agreement that the judge approved. The committee therefore wants the judge to modify his prior ruling by allowing preference suits against insiders.
The settlement pays secured lenders 91 percent in cash on the $1.1 billion they’re still owed, plus interest and reimbursement of fees spent in the Chapter 11 case. For details on the settlement and Sontchi’s reasons for approving, click here for the Nov. 2 Bloomberg bankruptcy report.
Capmark previously said it intends on reorganizing around its non-bankrupt bank subsidiary by giving stock to unsecured creditors. 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 included a $1.5 billion term loan secured by all assets except Capmark’s bank’s assets, $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 $11.12 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).
Crystal Cathedral Predicts Positive Cash Flow
Crystal Cathedral Ministries, a mega-church in Garden Grove, California, founded by Robert H. Schuller, projected generating $13.5 million in contributions over the first six months ending in April following the Chapter 11 filing.
The cash flow forecast filed with the bankruptcy court predicts that cash will grow over the period by $306,000, ending at $1.03 million.
The largest expense items are $5 million in payroll and $3.2 million for “airtime” to broadcast the church’s Hour of Power television show.
The church filed under Chapter 11 in mid-October in Santa Ana, California, saying both assets and debt exceed $50 million.
Schuller retired from his role as senior pastor in 2006. His daughter Sheila Schuller Coleman has been senior pastor since July 2009. A court filing says contributions were down 24 percent in 2009, in part on account of “unsettled leadership.”
The case is In re Crystal Cathedral Ministries, 10-24771, U.S. Bankruptcy Court, Central District of California (Santa Ana).
AVP Pro Volleyball Tour Set for Dec. 2 Auction
AVP Pro Beach Volleyball Tour Inc., a producer of beach volleyball tournaments, will be sold in exchange for secured debt plus $200,000 cash unless another bid is submitted by the Nov. 29 deadline.
An auction and sale-approval hearing will be held at the same time on Dec. 2.
The initial offer comes from RJSM Partners LLC, the secured lender owed $5.4 million. RJSM’s initial offer is to exchange less than $2 million of the debt for ownership. RJSM is also the 72 percent owner.
Torrance, California-based AVP filed under Chapter 11 at the end of October in Los Angeles after canceling the last five events of a 12-event season.
AVP said it has more than 200 “top volleyball professionals under exclusive contracts.”
Unsecured debt is $5 million, according to court papers.
The petition says assets are less than $500,000 while debt exceeds $1 million.
The case is In re AVP Pro Beach Volleyball Tour Inc., 10-56761, U.S. Bankruptcy Court, Central District of California (Los Angeles).
Wind Hellas Finance Sub Files Chapter 15 in Delaware
Hellas Telecommunications (Luxembourg) V, a finance affiliate of Wind Hellas Telecommunications SA, filed a petition for Chapter 15 relief on Nov. 12 in the U.S. Bankruptcy Court in Delaware. The petition says assets are less than $1 billion while debt exceeds $1 billion.
Wind Hellas, a Greek mobile phone provider, is in its second restructuring in a year. The Chapter 15 case is designed to complement arrangement proceedings begun Nov. 4 in the High Court of Justice of England and Wales. For Bloomberg coverage of the High Court proceedings and the intended scheme of arrangement, click here for a Nov. 4 Bloomberg story.
The papers filed in the U.S. court carefully explain why the company and affiliates were entitled to file for reorganization in the U.K. as opposed to Luxembourg or Greece.
If the Chapter 15 petition is granted, the U.S. court will assist the U.K. proceedings and in substance require creditors to fight out any disputes in the court abroad.
The cases is In re Hellas Telecommunications (Luxembourg) V, 10-13651, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Hyperbaric Clinic Operator Files in Philadelphia
WJO Inc., the operator of six medical clinics in Pennsylvania, filed a Chapter 11 petition yesterday in Philadelphia.
Based in Bristol, Pennsylvania, the clinics are run by President William J. O’Brien III, its website says. The clinics use hyperbaric chambers to treat patients with pure oxygen for maladies such as diabetic wounds and crush injuries.
The petition says assets and debt both exceed $10 million.
The case is In re WJO Inc., 10-19894, U.S. Bankruptcy Court, Eastern District of Pennsylvania (Philadelphia).
David Stern’s DJSP Enterprises Defaults on Debt
DJSP Enterprises Inc. may be the first business associated with David J. Stern’s foreclosure mill to need bankruptcy protection. Stern is a Florida foreclosure lawyer under investigation by the state’s attorney general.
DJSP disclosed yesterday that it’s in default on a $12 million line of credit with Bank of America NA. DJSP provides processing services for the Law Offices of David J. Stern PA, which has been barred from providing services for Fannie Mae and Freddie Mac.
DJSP, based in Plantation, Florida, said that it has a forbearance agreement with the bank good through Nov. 26. The default on the credit line also caused a default on a separate $1.85 million equipment loan with a bank affiliate.
The bank used the default to bar DJSP from paying interest on subordinated debt.
DJSP also said that an affiliate didn’t pay November rent on the principal offices. The company said it fired 700 workers.
The DJSP stock closed yesterday at 47 cents, an all-time low. The high was $13.50 on April 23.
Cash of Factory Home Builder Palm Harbor Plunges
Homebuilder Palm Harbor Homes Inc. filed financial statements for the quarter ended Sept. 24 showing an operating loss of $7.3 million and a net loss of $10.9 million on sales of $66.3 million.
Sales declined 11.4 percent in the quarter compared with the same period the year before.
Palm Harbor ended the quarter with $9.5 million cash, a decline of 64.3 percent from March 26.
Palm Harbor is in default on secured financing from Textron Financial Corp. The company said that some proceeds from sales of homes were not paid to Textron that should have been. Textron has given limited waivers of defaults, the regulatory filing says.
The filing with the Securities and Exchange Commission says there are talks with third parties about financing or sale that may entail a Chapter 11 filing.
For the June 25 quarter, the net loss was $5.7 million on net sales of $84.3 million. The Sept. 24 balance sheet had assets of $324 million and total liabilities of $281 million.
National Coal to Default Absent Ranger Merger
National Coal Corp., a bituminous coal producer based in Knoxville, Tennessee, has a pending merger with Ranger Energy Investments LLC that’s scheduled for completion in early December. If it’s not completed, the company said in a regulatory filing yesterday that there will be a default on the 10.5 percent notes maturing Dec. 15.
National sold assets to Ranger earlier this year.
Ranger had a $2.2 million operating loss and a $3.7 million net loss in the Sept. 30 quarter on revenue of $9.7 million.
The balance sheet had assets of $34.1 million and total liabilities of $54.8 million.
The stock closed unchanged yesterday at 99 cents on the Nasdaq Stock Market. The Ranger merger will pay stockholders $1 a share.
No Competition for Constellation to Buy Boston Generating
Power producer Boston Generating LLC said yesterday that no acceptable bids were received to compete with the offer from Constellation Energy Group Inc. to buy the facilities for $1.1 billion. A hearing is scheduled in bankruptcy court tomorrow for approval of the sale.
The sale must also be approved by the Federal Energy Regulatory Commission. For other Bloomberg coverage, click here.
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).
Hearing Begins on Ambac Insurance Rehabilitation
The hearing for approval of the rehabilitation of insurance company Ambac Assurance Corp. began yesterday in state court in Wisconsin. The proposal is opposed by beneficiaries of some of the policies and by hedge funds. For Bloomberg coverage and background, click here.
The insurance company’s parent, Ambac Financial Group Inc., filed for Chapter 11 bankruptcy reorganization on Nov. 8 in Manhattan. Although insurance holding companies can reorganize in bankruptcy court, insurance companies themselves are prohibited from any type of filing in U.S. bankruptcy court.
The Chapter 11 petition by the Ambac parent listed liabilities on a non-consolidated basis of $1.69 billion, including $1.22 billion on six issues of senior unsecured notes and $400 million in subordinated notes. The insurance company stopped paying dividends to the parent in 2007 and stopped writing new business entirely in mid-2008.
The case is In re Ambac Financial Group Inc., 10-15973, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Trico to Auction Two Vessels on Nov.24
Trico Marine Services Inc., a provider of support vessels for the offshore oil and gas industry, will hold an auction on Nov. 24 to test if there is a higher offer for the vessels Trico Moon and Trico Mystic. If not, they will be sold for $13 million each to Tidewater Inc.
The creditors’ committee convinced Trico to arrange an auction when it said it was aware of higher offers. Under court- approved procedures, other bids are due Nov. 23, followed by the auction the next day and a hearing on Nov. 29 to approve the sale.
The Chapter 11 filing in August was the second by Woodlands, Texas-based Trico. It completed a so-called prepackaged reorganization in early 2005 by exchanging $250 million in debt for equity. Shareholders received warrants.
Other than a Cayman Islands holding company, none of the foreign subsidiaries are in bankruptcy this time. The consolidated balance sheet for June listed assets of $904 million against liabilities totaling $1.027 billion. The bankruptcy petition listed liabilities of $354 million for Trico Marine.
Liabilities include $202.8 million on secured convertible debentures and $150 million owing on unsecured convertible debentures. Non-bankrupt Trico Shipping owes $400 million on the 11.875 percent senior secured notes.
The case is In re Trico Marine Services Inc., 10-12653, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Workflow Management and Selling 50,000 Pounds of Steak: Audio
A possible cramdown effort by Workflow Management Inc. in Norfolk, Virginia, and an opportunity to buy 50,000 pounds of strip steak are covered in the bankruptcy podcast on the Bloomberg terminal and Bloomberglaw.com. To listen, click here.
To contact the editor responsible for this story: David E. Rovella at email@example.com.