Trump Entertainment Seeks Union Concessions: Bankruptcy

Sept. 30 (Bloomberg) -- Trump Entertainment Resorts Inc., the Atlantic City, New Jersey, casino operator, said it will soon file a reorganization plan for secured lenders to convert some of their $286 million in old debt into equity and new debt not requiring cash interest payments.

Assuming everyone else is on board, the lenders will provide $100 million in new capital, the casino operator said. First-lien lenders, including Icahn Partners LP and affiliated funds, were owed approximately $285.6 million plus $6.6 million in interest when the Chapter 11 reorganization began this month.

The proposal depends on concessions from the union, New Jersey and Atlantic City. The company filed papers on Sept 26 in U.S. Bankruptcy Court in Delaware seeking permission to modify the existing union contract.

Meanwhile, Donald Trump last week asked the judge to take his name off the company’s properties: the Trump Plaza Hotel and Casino and the Trump Taj Mahal Casino Resort.

The 906-room Trump Plaza closed this month. The Taj Mahal, with more than 2,000 rooms, previously told workers it will close around Nov. 13 absent labor concessions.

Without a loan to finance the Chapter 11 effort, the company said it will run out of cash by mid-December. Over the first two months in bankruptcy, which began Sept. 9, the company said the casinos could consume $12 million in cash.

Tax assessments, now at about $1.5 billion, must fall to $340 million for the plan to work, the company said. The tax rate should be frozen for five years and $25 million in tax credits and incentives granted, according to the company.

Trump Entertainment is seeking to terminate workers’ participation in a multiemployer pension plan, giving them 401(k) plans with matching employer contributions instead. Although the casino operator said it won’t reduce wages, it will seek work-rule changes to save money.

The company is also asking for court permission to end the existing health-insurance program for union workers, substituting participation in the Affordable Care Act. Each worker would get $2,000 a year to defray the cost of insurance.

After a meeting with labor leaders last week, the company said, the union responded by distributing flyers urging members to “fight back.”

A conference is set for today in bankruptcy court to discuss a schedule for litigation with the union over the proposed changes.

Since the casinos’ prior bankruptcy, Donald Trump said he’s had “virtually no involvement in operation and management.” Coming out of the previous Chapter 11 reorganization, the casinos got a license to use his name.

In August, before the most recent bankruptcy was filed, he sued in New Jersey state court for a declaration that the license was terminated because of the condition of the properties. In papers filed Sept. 24, he asked the bankruptcy judge to modify the so-called automatic stay so he can end the license.

The prior bankruptcy culminated in a confirmed Chapter 11 plan in 2010 when the existing first-lien debt was issued. Second-lien creditors became the primary shareholders, leaving Donald Trump with 5 percent of the stock, according to court papers.

The case is In re Trump Entertainment Resorts Inc., 14-bk-12103, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Updates

Coca-Cola, Kellogg Oppose AWI on Paying Supplier’s Claims

Coca-Cola Co. and cereal maker Kellogg Co. are among suppliers with $23.1 million in claims who oppose how Associated Wholesalers Inc. and its White Rose grocery distribution business propose to resolve claims of trade suppliers who provided goods within 20 days of bankruptcy on Sept. 9.

The Bankruptcy Code provides that the cost of goods supplied within 20 days before bankruptcy has the status of a debt incurred during bankruptcy and therefore must be paid in full if the company is to emerge from Chapter 11. Associated is seeking to preclude suppliers from taking any action other than filing claims with the aim of obtaining payment for goods supplied just before bankruptcy.

Kellogg and Coca-Cola say they are part of an ad hoc group of nine suppliers with $3.5 million in claims who oppose the company’s initiative. The U.S. Trustee is also in opposition.

The creditors and the Justice Department’s bankruptcy watchdog said the court would lose the ability to control the timing and payment of claims for recently supplied goods. A hearing is set for Oct. 3 in Delaware to review the company’s proposal.

Robesonia, Pennsylvania-based Associated came into Chapter 11 with a contract already in hand providing for sale of the business to C&S Wholesale Grocers Inc. The hearing for approval of sale procedures to flush out higher offers is set for Oct. 3.

Associated, a cooperative, is owned by 500 retail members who operate supermarkets. White Rose distributes food and non-food items, including its private-label offering, to about 495 customers.

The case is In re AWI Delaware Inc., 14-bk-12092, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Buccaneer Energy Seeks 30-Day Extension to File Modified Plan

Buccaneer Energy Ltd. said it needs 30 more days to propose a Chapter 11 plan incorporating a settlement with key stakeholders approved this month.

The new plan-filing deadline will be Oct. 28, pending the approval of a judge in Victoria, Texas, at a hearing set for Oct. 21.

Buccaneer didn’t solicit votes on a previously filed plan because it began settlement talks with largest shareholder Meridian Capital International Fund, proposed buyer and secured lender AIX Energy LLC, and the official creditors’ committee shortly after obtaining conditional approval of its explanatory disclosure statement, according to court papers filed Sept. 26.

The settlement, among other things, requires Buccaneer to use “all commercially reasonable efforts” to set aside $10 million in cash for unsecured creditors, according to the Sept. 2 approval order.

The company has been working with the other settling parties to formulate a modified plan that incorporates the settlement, according to court papers. While “significant” progress has been made, Buccaneer said, a brief extension of so-called exclusivity is necessary.

Buccaneer, AIX and key stakeholders are still working through details of a sale of almost all the company’s assets, according to court papers. The company said the talks will “clear the path” toward confirmation.

For details on the settlement, click here for the Sept. 4 Bloomberg bankruptcy report.

An Australian oil and gas exploration and production company, Buccaneer filed a petition for Chapter 11 protection on May 31 in Victoria, 125 miles (200 kilometers) southwest of Houston.

Although traded on the Australian Securities Exchange until trading was voluntarily suspended in February, the company is based in the U.S., according to court papers. Current operations are onshore and offshore in the Cook Inlet of Alaska, offshore in the Gulf of Mexico, and onshore in Texas and Louisiana, according to court papers.

Buccaneer’s assets include operations in Alaska’s Kenai Loop.

The case is In re Buccaneer Resources LLC, 14-bk-60041, U.S. Bankruptcy Court, Southern District of Texas (Victoria).

Ship Owner Nautilus Seeks Plan-Filing Rights Extension

Nautilus Holdings Ltd., the owner of 16 container ships, said it will file a Chapter 11 reorganization plan by Oct. 15.

Still, the Cyprus-based company is seeking a 50-day expansion of its exclusive right to propose a plan.

The company initiated a bankruptcy reorganization in late June to preclude lenders from seizing vessels. Since then, Nautilus said it has negotiated agreements to restructure two of the six bank credits covering the vessels.

The plan-filing deadline will be extended to Dec. 10, pending approval of a bankruptcy judge in White Plains, New York, at a hearing on Oct. 17.

Nautilus said it’s among the world’s 25 largest independent container ship owners. Its balance sheet listed assets of $1.04 billion and liabilities totaling $787.6 million. Debt includes $770 million in mortgages on the vessels.

Assets included $64 million in cash at the outset of bankruptcy. Before year-end, the company said, it expects to generate $19 million more in cash, before debt payments and expenses of reorganization.

The case is In re Nautilus Holdings Ltd., 14-bk-22885, U.S. Bankruptcy Court, Southern District of New York (White Plains).

Trial on Detroit’s Plan Resumed Yesterday

The trial picked up again yesterday on approval of Detroit’s debt-adjustment plan, with testimony from a financial adviser regarding risks the city will face after emerging from municipal bankruptcy.

The trial continues today.

The bankruptcy judge yesterday ruled that federal law governing municipal bankruptcy doesn’t give him power to bar the city from cutting off service to residents who don’t pay their water bills. For Bloomberg coverage of yesterday’s hearing, click here.

The case is In re City of Detroit, Michigan, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).

Simplexity Slammed with Second Conversion Request by Lender

Simplexity LLC, which beat back one attempt by lender Fifth Third Bank to convert its reorganization to a liquidation in Chapter 7, now faces a second such challenge.

At an Oct. 16 hearing to consider whether Simplexity will retain the exclusive right to file a Chapter 11 plan, the judge in Delaware will also hear Fifth Third’s second conversion request. The bank said a prompt conversion to Chapter 7 is required because the reorganization effort is “broken.”

Circumstances have changed since the judge denied the first conversion motion in June and the possibility of a plan is “even more remote” four months later, Fifth Third said in court papers filed Sept. 25.

The official creditors’ committee has had a “full and fair” opportunity to investigate and has identified no misconduct, the bank said.

As a potential target of litigation, the bank said it offered a “significant” sharing of sale proceeds to resolve any purported claims and avoid continued litigation, but the creditors’ committee “demands far more.”

By the time the second conversion request is heard, the bankruptcy will be almost seven months old and the company, having no operations or employees, will be five months past the sale of almost all its assets, according to the bank.

The company has moved even further away from plan confirmation, and there’s no realistic prospect of confirmation within a reasonable time, Fifth Third said.

Creditors would be better served if an objective, independent Chapter 7 trustee pursued the only remaining assets, which are lawsuits, according to Fifth Third.

Based in Reston, Virginia, Simplexity filed for Chapter 11 protection in March, days after shutting down and firing its workers. Once the largest independent online activator of mobile phones, it sold most assets for $10 million to Wal-Mart Stores Inc. during bankruptcy.

Simplexity is indirectly owned by affiliates of Versa Capital Management LLC, a Philadelphia-based private-equity firm.

The case is In re Simplexity LLC, 14-bk-10569, U.S. Bankruptcy Court, District of Delaware (Wilmington).

River Terrace’s Quick Plan Derailed in Indiana

When River Terrace Estates Inc. filed a Chapter 11 petition in late July, the non-profit senior living community in Bluffton, Indiana, sought quick approval of a reorganization plan by having the bankruptcy court in Fort Wayne, Indiana, hold a hearing on Aug. 26 for approval of disclosure materials explaining the plan.

The case hasn’t been going as planned. First, the bankruptcy judge declined to entertain the disclosure statement in August, setting the hearing for Oct. 8.

Last week, U.S. Bankruptcy Judge Robert E. Grant denied River Terrace’s proposal for procedures governing solicitation of votes on the plan.

Grant said there was no dispensation from rules requiring that all creditors be given notice of the procedures motion. He said River Terrace proposed deviating from the court’s usual procedures on plan voting, without giving a reason.

The proposed plan would have bondholders exchange their $14 million in existing debt for $7.5 million in new bonds, unless a buyer emerges who is willing to pay cash of at least $6 million plus specified costs.

For details on the plan worked out before the Chapter 11 filing, click here for the July 24 Bloomberg bankruptcy report.

The continuing-care and retirement community has about 120 senior citizen residents living in its 55 assisted-living units, 44 independent living apartments and eight independent-living cottages, according to a court filing. It generated annual revenue of about $5.8 million against operating expenses of about $5.2 million last year.

The petition listed assets of less than $10 million and liabilities of more than $10 million.

Bank of New York Mellon Trust Co. is the municipal bond trustee.

The case is In re River Terrace Estates Inc., 14-bk-11829, U.S. Bankruptcy Court, Northern District of Indiana (Fort Wayne).

Ericsson Gets Court Approval to Buy Ambient for $7.5 Million

Ambient Corp., a developer of “smart grid” technology, got formal approval from the Delaware bankruptcy court on Sept. 26 to sell its business to competitor Ericsson Inc. for $7.5 million, including the $2.5 million financing Ambient’s operations in bankruptcy.

An auction was canceled because there were no competing bids. When Newton, Massachusetts-based Ambient sought Chapter 11 protection in late July, the sale was already negotiated.

In fiscal 2013, Ambient had a pretax net loss of about $17.7 million on net sales of approximately $11.4 million. The petition listed assets and debt each less than $10 million.

Vicis Capital LLC, through its Vicis Capital Master Fund, owns about 57.8 percent of the company’s stock, according to court papers.

The case is In re Ambient Corporation, 14-bk-11791, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Pittsburgh Riverhounds Soccer Team Moves Toward Plan Approval

The Pittsburgh Riverhounds professional soccer team and its Highmark Stadium have an approved disclosure statement allowing creditors to vote on reorganization plans coming up for approval at a hearing on Nov. 7.

The plans, one each for the stadium owner and the team, call for new investments so current part-owner Terrance C. Shallenberger Jr. will own the reorganized company in return for contributing $600,000 toward payment of a second-lien claim, costs of the Chapter 11 effort, the cost to cure breaches of contracts and $50,000 in seed money for a creditors’ trust.

The reorganized stadium owner and team will take over $1.3 million owing on a first-lien loan from First National Bank of Pennsylvania.

The second lien is about $7.2 million owed on an urban development loan. The plan pays $600,000 toward the second lien, with the remainder becoming an unsecured claim.

Unsecured creditors will have whatever the trust recovers in lawsuits, including suits against Shallenberger and companies related to him. The disclosure statement doesn’t predict a percentage recovery.

Shallenberger will subordinate his claims of about $2.6 million by allowing unsecured creditors to have first recoveries.

The team and the stadium filed for Chapter 11 reorganization in Pittsburgh in March. The stadium seats 3,500.

The club plays in the National Division of the USL Professional Division. It’s the USL Pro affiliate of the Houston Dynamo of Major League Soccer.

The cases are In re Riverhounds Event Center LP, 14-bk-21180, and In re Riverhounds Acquisition Group LP, 14-bk-21181, U.S. Bankruptcy Court, Western District of Pennsylvania (Pittsburgh).

Triad Exploring Options Following Adverse Tax-Loss Ruling

Triad Guaranty Inc., the former owner of mortgage insurance provider Triad Guaranty Insurance Corp., is seeking more time to develop a Chapter 11 plan after an adverse bankruptcy court ruling in a lawsuit designed to preserve tax losses.

U.S. Bankruptcy Judge Mary F. Walrath in Delaware ruled that a decision by an Illinois state court in the rehabilitation of the insurance-company unit barred Triad from taking a worthless stock deduction or abandoning the TGIC stock, according to court papers.

In light of the court’s ruling, Triad said it’s now exploring options for resolving its Chapter 11 case, which was filed with a principal goal of protecting the value of its tax attributes. If it is to reorganize successfully, Triad said it needs more time.

The new plan-filing deadline will be Dec. 3, the maximum 18 months permitted by the Bankruptcy Code, if Walrath approves at a hearing scheduled for Oct. 23.

Birmingham, Alabama-based Triad filed for Chapter 11 protection in June 2013 with assets aside from tax losses limited to $800,000 cash. The insurance company that it owned had been taken over by Illinois regulators.

Triad’s stock was unchanged at 12 cents in over-the-counter trading yesterday.

The case is In re Triad Guaranty Inc., 13-bk-11452, U.S. Bankruptcy Court, District of Delaware (Wilmington).

New Filing

Truck Fuel-Cell Maker Vision Industries Files in Los Angeles

Vision Industries Corp., the developer of zero-emission fuel-cell technology to power trucks, filed a petition for Chapter 11 protection on Sept. 24 in Los Angeles.

The Long Beach, California-based company blamed bankruptcy on a controlling shareholder that wouldn’t consent to another round of financing.

Vision is also working on a hydrogen fueling system.

The June 30 balance sheet listed assets of $1.3 million and liabilities of $3.2 million.

The case is In re Vision Industries Corp., 14-28225, U.S. Bankruptcy Court, Central District of California (Los Angeles).

Watch List

For Gun Maker Colt Defense, S&P Matches Moody’s Downgrade

Colt Defense LLC, a manufacturer of M4 carbine and M16 rifles for the U.S. and foreign militaries, received a downgrade yesterday from Moody’s Investors Service to match the action taken Sept. 19 by Standard & Poor’s.

Moody’s lowered the corporate rating by one grade to Caa2 because operating results were “meaningfully weaker” over the first half of 2014. S&P had said that the Nov. 15 interest payment to bondholders is “vulnerable to nonpayment.”

Revenue in the first half declined by 20 percent to $99.7 million, Moody’s said. Revenue for the year ended in June was $243 million, according to Moody’s.

Hartford, Connecticut-based Colt may have difficulty refinancing when bonds mature in 2017, S&P said.

The $246.2 million in 8.75 percent senior unsecured note due November 2017 traded at 4:12 p.m. on Sept. 29 for 58.156 cents on the dollar, to yield 30.420 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Downgrades

Elizabeth Arden Downgraded After Loss in Fiscal Year

Elizabeth Arden Inc. was dealt a downgrade yesterday by Standard & Poor’s, which lowered the fragrance maker’s corporate rating one level to B+, matching the action taken in August by Moody’s Investors Service.

Moody’s downgraded just after the Miami-based company announced a $145.7 million net loss for the year ended June 30.

S&P attributed a weaker performance to “steep declines in the celebrity fragrances segment” and a “highly promotional environment.” S&P also downgraded the company’s senior unsecured notes to B+, estimating their holders won’t recover more than 50 percent following default.

Net sales for the year were $1.16 billion, a 13 percent decline from the prior fiscal year.

In addition to fragrances, Elizabeth Arden sells skin-care products and cosmetics under brands including Britney Spears, Elizabeth Taylor, Jennifer Aniston and Justin Bieber.

The shares plunged more than 23 percent to $15.05 in New York trading on Aug. 19, after the financial results were announced. The stock climbed 16 cents yesterday to $16.92.

Homebuilder MDC Holdings Demoted to Junk Status

MDC Holdings Inc., a mid-sized national homebuilder, lost investment-grade status yesterday when Moody’s Investors Service lowered the company’s senior unsecured rating by one level to Ba1, the highest junk grade.

After holding a net cash position for five years, MDC now has a net debt position that is likely to widen, largely because of increased spending on land, Moody’s said.

Without the “very strong” net cash position, Moody’s said the company won’t be able to restore most of its key credit metrics to investment-grade levels in the next two years.

Based in Denver, Colorado, MDC builds homes across the country under the Richmond American Homes name. For the year ended June 30, total revenue was about $1.6 billion and consolidated net income was $100 million, according to Moody’s.

The stock declined 26 cents yesterday, closing at $25.90 in New York trading. In the last three years, the high for the stock was $41.76 on Jan. 30, 2013. The low in the period was $15.39 on Oct. 3, 2011.

To contact the reporters on this story: Bill Rochelle in New York at wrochelle@bloomberg.net; Sherri Toub in New York at stoub@bloomberg.net

To contact the editors responsible for this story: Andrew Dunn at adunn8@bloomberg.net Joe Schneider

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