Category Archives: Bankruptcy

WILMINGTON, Del./NEW YORK (Reuters) - The global recall of Takata Corp's defective air bags widened last week and the number of confirmed deaths rose, but legal experts said the bigger worry for car companies caught in the fallout is playing out in a Delaware bankruptcy courtroom.

Earlier this month, people injured by the air bags, which degrade over time and can inflate with excessive force, were appointed to their own official committee in the Japanese company's U.S. bankruptcy, giving them a powerful voice in the proceedings.

This unusual committee, which includes people whose cars lost value due to the recall, will be pitted against Honda Motor Co, Toyota Motor Corp , and other automakers.

The car companies have been trying to use the bankruptcy to limit their liability for installing the faulty air bags, said Kevin Dean, a Motley Rice attorney who represents injured drivers on the committee.

Because the committee has official status, Takata must provide it with funds which can be used to investigate the automakers' liability or to challenge financial assumptions. Without a committee, plaintiffs' lawyers would typically have to pay for that themselves.

If I were a plaintiffs lawyer, this would be a golden goose for me, said John Pottow, a professor at the University of Michigan Law School, of the appointment of the special committee.

Takata, Honda, Toyota and General Motors Co declined to comment. Other carmakers did not return requests for comment.

Bankruptcies typically only have one official creditors committee. In the Takata case, the committee of injured drivers will sit alongside another made up of suppliers and vendors, who are likely more interested in the future of the business than compensation disputes, according to bankruptcy attorneys who are not involved in the case.

Both committees were appointed by the U.S. Trustee's Office, the arm of the U.S. Department of Justice that acts as a bankruptcy watchdog.

Seventeen fatalities, including one confirmed last week, and at least 180 injuries have been tied to Takata's air bags since at least 2009.

Last week, the National Highway Traffic Safety Administration widened a global recall of the airbags, which regulators expect to ultimately cover 69 million cars and 125 million inflators. Most defective air bags have not been replaced.

In January, Takata entered a settlement with the U.S. Department of Justice, setting aside $125 million to compensate consumers and $850 million in restitution for automakers.

Facing up to $50 billion in liability, Takata filed for bankruptcy in June in Japan and the United States with a plan to sell its non-air bag operations for $1.6 billion to Key Safety Systems, which is owned by China's Ningbo Joyson Electronic Corp. Its air bag business would continue to make replacements for the 125 million recalled inflators.

Takata said in its Chapter 11 filings that it will create a fund to compensate future injuries stemming from the air bags.

Companies that wind up bankrupt due to faulty products often set up such funds, and gather contributions from insurers and other potentially liable parties, who in return get shielded from ongoing litigation.

Similar funds were set up in and the 1985 bankruptcy of A.H. Robins Co, which sold Dalkon Shield contraceptive devices and the 1995 bankruptcy of Dow Corning, the maker of silicone breast implants.

A $161 million fund in the 2012 bankruptcy of Blitz U.S.A. Inc, which made red plastic gas containers, included $23 million from Wal-Mart Stores Inc. In return, the retailer was protected from lawsuits that alleged it knowingly sold defective gas cans.

Automakers would likely demand similar legal protections in return for contributing to a Takata fund, and the committee will likely hire experts to challenge those proposals, bankruptcy experts said.

The committee's lawyers will probably also want to investigate what car companies knew about the air bags to help determine their liability and their contributions, the experts said.

If I were an injured person, I wouldnt want Takata or the carmakers to decide on the size of the fund, said Steven Todd Brown, a professor at the University at Buffalo School of Law who specializes in compensation funds.

Some experts said they expected the parties to avoid protracted legal battles which have marred other product liability bankruptcies like those involving asbestos.

Pottow, at the University of Michigan Law School, cautioned that may not be so simple.

Were in pretty novel terrain here, given the amount of parties and the recall involved.

Reporting by Tom Hals in Wilmington, Delaware and Tina Bellon in New York; Editing by Noeleen Walder and Lisa Shumaker

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Takata's bankruptcy to pit automakers against air bag victims - Reuters

EDITORS NOTE: This article is the second in a two-part series featuring the business side of the Northern Arizona Suns and their first year in Prescott Valley. We also update the bankruptcy status of the Prescott Valley Event Center, and the efforts being made to return hockey to Prescott Valley. Part one: NAZ Suns ink 5-year deal after successful 1st season

After an hour-long session at the U.S. Bankruptcy Court in Phoenix on July 12, the Prescott Valley Event Center and all interested parties are one step closer to finally moving forward from Chapter 11 bankruptcy.

Despite objections raised by a few underwriters, federal bankruptcy Judge Madeleine C. Wanslee reviewed the case, suggested a few tweaks to the disclosure statement and ordered it be sent out to over 300 creditors for a vote, according Ivan Legler, attorney for the Town of Prescott Valley.

Nothing very earth shattering. The purpose of the hearing was to review the disclosure statement that goes along with the plan document to all the creditors, Legler said. [The judge] requests the creditors vote on the plan.

Legler continued, stating Judge Wanslee reviews the disclosure statement to make sure its adequate and sufficient in detail.

A typical disclosure statement in the state of Arizona for Chapter 11 bankruptcy proceedings requests debtors review the plan of reorganization, keeping in mind the proponent feels the plan is in the best interest of the creditors and is fair and equitable.

Then its up to the debtor to accept or reject the plan.

Legler expects the disclosure statement in the PVEC LLC case should receive enough votes to move forward, but added Judge Wanslee holds the final say.

In the end, the judge can approve the plan either way, whether people vote for or against it, Legler said. The judge has a lot of authority.

NAZ SUNS

Seen as a community asset by all parties involved, PVEC general manager Scott Norton believes with the Northern Arizona Suns as anchor tenants and Spectra using its connections to bring events back to Prescott Valley, PVEC is set up for success.

We feel theres a great upside to the facility. Its a great facility, great market. We feel we can program it with more activity, Norton said.

NAZ Suns president Chris Presson said recently the Suns organization is looking forward to the PVEC emerging from bankruptcy.

There are brighter days ahead, Presson said, adding Norton understands the business fully and the building is heading for great success.

Hes been really good to work with in the short time hes been there, Presson said of Norton. Hes a very good communicator, very willing to listen, tries to see things from your side and Ive enjoyed the time Ive spent with him.

SPECTRA

Norton, who works for Spectra, a Philadelphia-based arena management company, is currently operating under a consultant contract, but once the Town of Prescott Valley takes over arena business and bankruptcy proceedings run their course, that is expected to change.

We anticipate negotiating a long-term management deal, Norton said.

Spectra operates over 140 arenas nationwide, two of which host G League teams. The Iowa Wolves (Minnesota Timberwolves) play home games at Wells Fargo Arena in Des Moines, Iowa, and the Windy City Bulls (Chicago Bulls) host their contests at the Sears Centre in Hoffman Estates, Illinois.

The Des Moines facility is also home to the Iowa Wild, an AHL club affiliated with the NHLs Minnesota Wild.

Norton said PVEC just finalized a long-term deal with Pepsi and expects other sponsors will come on board shortly. They are also looking to sell naming rights to the arena, but theres been no movement on that front.

I like to think the Suns coming here was a catalyst to all of this, Norton said. Promotors like buildings to be busy, they like to have anchor tenants Quite frankly, we just need a little bit of a track record here for [promotors] to take a risk on the market again.

HOCKEY

With Nortons first job coming with the Hartford Whalers, hed certainly like to see hockey return to Prescott Valley.

For that to happen, Norton said two things need to occur. One, there needs to be a local ownership group willing to go the distance; and two, dates for two anchor tenants would need to be worked out.

In the minor leagues, everyone wants to play on the weekends, Norton said, adding he along with Spectra continue to talk to both the AHL and the ECHL about the possibility of a club in Prescott Valley.

At one point, Norton said, there was an effort to bring the Arizona Coyotes AHL Roadrunners club to PVEC, but they chose Tucson instead due to it being a bigger market overall.

A million people in Tucson versus 150,000 up here, Norton said.

Thats a situation where the NHL team is underwriting the cost, Norton said. Yes, they want to sell tickets and be profitable, but at the end of the day its probably not the most important thing. Whereas an ECHL team youre pretty much on your own to make it or break it.

JULY 20 MEETING

Next on the agenda for PVEC and bankruptcy proceedings is a meeting Thursday, July 20, involving the Prescott Valley Town Council, the Entertainment Center Community Facilities District and PVEC LLC.

The meeting is set for 5:30 p.m.

Brian M. Bergner Jr. is associate sports editor and a columnist for The Daily Courier. Follow him on Twitter, Instagram, Periscope and SoundCloud at @SportsWriter52, or on Facebook at @SportsAboveTheFold. Reach him at bbergner@prescottaz.com or 928-445-3333, ext. 1106.

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PVEC bankruptcy moving forward after hearing in Phoenix | The ... - Prescott Daily Courier

It shouldn't come as a surprise that the two largest Wall Street debt rating agencies have now classified Hartford's bonds as junk.

Downgrades of that sort are exactly what we should expect when the mayor signals he's about to open talks with bondholders, asking them to accept less money. And he's not just signaling it, he's shouting it.

The problem is not the downgrades, it's what comes next an ugly process that doesn't usually lead investors to give back money when cities attempt it, several experts said Wednesday.

Still, Mayor Luke Bronin will give it the old college try. As he sees it, investors who hold more than $700 million in city bonds must be "part of the solution." The New York law firm he hired last week has a specialty in precisely that restructuring municipal debt.

Bronin's hiring of Greenberg Traurig to assess the city's options appears to have been a catalyst that led Standard & Poor's to lower Hartford's bond rating to BB, from BBB- late Tuesday, landing the city in the purgatory of credit quality known as "non-investment grade," or speculative.

In plain English, junk bonds.

Moody's Investors Service reached the same conclusion last fall, and both agencies still have Hartford on a negative watch for even more downgrades.

That means the city for all practical purposes can't borrow money these days. Bronin said he had no plans to do so anyway, but he could find himself in a nasty bind if state money doesn't come through by fall.

JENNA CARLESSO

The chart below shows a year-by-year breakdown of the citys debt service payments. There is a drop in fiscal year 2015 that reflects the citys move to restructure its debt, which pushed payments into the future. Those payments begin to rise significantly in fiscal years 2017 and 2018. The chart...

The chart below shows a year-by-year breakdown of the citys debt service payments. There is a drop in fiscal year 2015 that reflects the citys move to restructure its debt, which pushed payments into the future. Those payments begin to rise significantly in fiscal years 2017 and 2018. The chart... (JENNA CARLESSO)

If these ratings had been in place two years ago, Hartford would not have been able to borrow $66 million to build Dunkin' Donuts Park for the Yard Goats, certainly not at the low rates the city paid. The stadium authority's bonds are rated even lower than general city bonds.

Other than more embarrassment, none of this is bad news for the city, at least not in the sense of a new blow. On the contrary, it reflects bad news we already knew because Bronin has been screaming it from the rooftops of every building in Hartford County: Without a combination of new state money, city spending cuts and union concessions, Hartford won't be able to pay its bills starting later this year.

Now, Bronin is adding bondholders to the list of people who have to give something back.

All of this could ultimately help Hartford homeowners, residents and businesses, if it leads to a stable city. It's more likely to lead to lower taxes than higher taxes if it results in a break in the $44 million in bond debt payments the city owes this year, rising to $75 million in four years.

And that's what has Wall Street nervous. Investors are real people, some of them middle-class holders of tax-free bond funds. If they don't chip in, Bronin will tell them, the city could end up in bankruptcy where no one wins.

The trouble is, extracting givebacks from bond investors is like herding cats, then asking those felines to agree to walk away from their food and go hungry a couple of days every week.

"When you have municipalities that reach out to their debt-holdersoftentimes what each party believes is fair and reasonable is very far apart," said Tim Heaney, senior portfolio manager for municipal bonds at Newfleet Asset Management in Hartford, an affiliate of Virtus Investment Partners with $12 billion under management.

"It's unlikely that bondholders are going to come to the table and say 'OK, we'll take a 25 percent haircut,'" said Heaney, who was speaking generally about bondholder talks, and whose company does not hold Hartford debt.

More likely: Everyone trudges into bankruptcy court if the only way to avoid it is a voluntary haircut by bondholders, Heaney and others said.

"The divide between what creditors would be willing to accept ... and what the municipality wants is often much too wide for any agreement to occur outside of the courts," Heaney said.

Consider that the list of bonds downgraded by S&P goes on for several pages, showing a total of 21 debt issues ranging from $6.5 million to $172 million, each with multiple tranches of maturity dates.

"Do you know how difficult it is to track the owners of bonds? I just don't know how they would do this," said one person familiar with municipal debt issues.

And if you could get everyone together, the person said, "How would you convince a bondholder to take a haircut if the unions aren't taking a haircut? Good luck with that ... You go into bankruptcy to have these discussions because then you have all the players at the table."

In or out of bankruptcy, Heaney said, "You need all sides of the table to come together."

That describes the challenge Bronin, city corporation counsel Howard Rifkin and Nancy Mitchell, the partner from Greenberg Traurig on the case, will face in the coming weeks. It explains why Bronin must extract concessions from the police and city hall unions, as he did from the firefighters.

"The absence of a state budget ... increases the urgency and the severity of what we face," Bronin said.

Even if Gov. Dannel P. Malloy and lawmakers come up with $40 million or $50 million in new money for Hartford, Bronin said Wednesday, "We will still have to have conversations with our bondholders ... There has to be some debt restructuring because our objective is not just to buy a year or two."

Mitchell is co-chairwoman of a restructuring practice at Greenberg Traurig that has worked on both sides of many public bond restructuring deals outside of bankruptcy, Bronin said. "They have extensive experience in bondholder negotiations."

So the team is assembled. The challenge of averting bankruptcy is steep. And with a possible default looming as soon as this year, the starting bell has rung.

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As Bronin Seeks Givebacks From Bondholders, Averting Bankruptcy ... - Hartford Courant

Kansas City Business Journal

Leader of Bryan Cave's bankruptcy group dies Kansas City Business Journal Mark Stingley, a partner and the global head of Bryan Cave LLP's Bankruptcy, Restructuring & Creditors' Rights Client Service Group, died Sunday at age 65. Stingley, a 40-year veteran of the practice, joined Bryan Cave in 1995 as a partner in the ...

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Leader of Bryan Cave's bankruptcy group dies - Kansas City Business Journal

By Fernando Ramirez, Chron.com / Houston Chronicle

Wedding panic

Brides across the nation are concerned about bridal shop Alfred Angelo's sudden bankruptcy.

Click through to seewedding trends happening in 2017.

@Tina_Braz: Was standing in my future wedding dress, tears in my eyes, saying yes, when I was told #AlfredAngelo has shut down & I can't order the dress

Wedding panic

Brides across the nation are concerned about bridal shop Alfred Angelo's sudden bankruptcy.

Click through to seewedding trends happening in 2017.

@Tina_Braz: Was standing in my future wedding

@DanielSurman: So @AlfredAngelo is declaring bankruptcy. In crappy fashion, they told employees this morning and close doors tomorrow.

@DanielSurman: So @AlfredAngelo is declaring bankruptcy. In crappy fashion, they told employees this morning and close doors tomorrow.

@xtinedanielle: We want & deserve answers, @AlfredAngelo!! Refunds or dresses! How do you just completely IGNORE your paid customers?! @AAngeloCustCare

@xtinedanielle: We want & deserve answers, @AlfredAngelo!! Refunds or dresses! How do you just completely IGNORE your paid customers?! @AAngeloCustCare

@xtinedanielle: One store location did answer the phone. Sales rep said "we're all basically screwed" & gave me Attorney's office to contact. #alfredangelo

@xtinedanielle: One store location did answer the phone. Sales rep said "we're all basically screwed" & gave me Attorney's office to contact. #alfredangelo

@cslade93: @AAngeloCustCare WHAT IS GOING ON. I AM A MONTH AWAY FROM MY WEDDING&STILL NEED 1 MORE BM DRESS. SOMEONE NEEDS TO GET IN TOUCH WITH ME NOW!

@cslade93: @AAngeloCustCare WHAT IS GOING ON. I AM A MONTH AWAY FROM MY WEDDING&STILL NEED 1 MORE BM DRESS. SOMEONE NEEDS TO GET IN TOUCH WITH ME NOW!

@jao5053: @AlfredAngelo seriously your closing and half my bridal party doesn't have their dresses. #banruptcy fml

@jao5053: @AlfredAngelo seriously your closing and half my bridal party doesn't have their dresses. #banruptcy fml

The brides show-off the latest in Whataburger swag. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

The brides show-off the latest in Whataburger swag. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Bridal fashion Tuesday, June 6, 2017 in Houston.

Bridal fashion Tuesday, June 6, 2017 in Houston.

Bridal fashion Tuesday, June 6, 2017 in Houston.

Bridal fashion Tuesday, June 6, 2017 in Houston.

Kirstin Drenon, Mari Trevino, and Kimberly Falgout. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kirstin Drenon, Mari Trevino, and Kimberly Falgout. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Mari Trevino models a Marchesa gown from Joan Pillow Bridal Salon. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Mari Trevino models a Marchesa gown from Joan Pillow Bridal Salon. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kimberly Falgout models a Pronovias gown from Mia Bridal. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kimberly Falgout models a Pronovias gown from Mia Bridal. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kirstin Drenon models a Vera Wang gown from Casa de Novia Bridal Couture. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kirstin Drenon models a Vera Wang gown from Casa de Novia Bridal Couture. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kirstin Drenon, Mari Trevino, and Kimberly Falgout. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kirstin Drenon, Mari Trevino, and Kimberly Falgout. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kimberly Falgout models a Pronovias gown from Casa de Novia Bridal Couture and an H-E-B flower crown. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Kimberly Falgout models a Pronovias gown from Casa de Novia Bridal Couture and an H-E-B flower crown. Tenenbaum Jewelers, Abrahams Oriental Rugs, and Mitchell Gold + Bob Williams furnishings shown throughout.

Whataburger WhatAWedding swag

Whataburger WhatAWedding swag

Whataburger WhatAWedding swag

Whataburger WhatAWedding swag

Wedding Cakes by Tammy Allen cupcakes

Wedding Cakes by Tammy Allen cupcakes

Bulgari "Diva Dreams" emerald necklace

Bulgari "Diva Dreams" emerald necklace

Tote ($70) and Bali tassel ($30) COLORES by Wed to White

Tote ($70) and Bali tassel ($30) COLORES by Wed to White

"Jeans Mrs." Edie Parker clutch ($1,125) at Tootsies

"Jeans Mrs." Edie Parker clutch ($1,125) at Tootsies

Bride's Cake and Groom's Cake Ice Cream by Blue Bell Ice Cream

Bride's Cake and Groom's Cake Ice Cream by Blue Bell Ice Cream

Conservatory at the Bryan Museum

Conservatory at the Bryan Museum

Eberjey "Kiss the Bride" bralet ($69) at Top Drawer Lingerie

Eberjey "Kiss the Bride" bralet ($69) at Top Drawer Lingerie

Eberjey "Kiss the Bride" ruffle thong ($36) at Top Drawer Lingerie

Eberjey "Kiss the Bride" ruffle thong ($36) at Top Drawer Lingerie

Rose gold wedding band ($495) Robbins Brothers

Rose gold wedding band ($495) Robbins Brothers

Floral archway by Richard Flowers

Floral archway by Richard Flowers

Wool tuxedo ($639) at Suit Supply

Wool tuxedo ($639) at Suit Supply

"Butterfly Garden" Versace setting at Kuhl-Linscomb

"Butterfly Garden" Versace setting at Kuhl-Linscomb

Vinglace cooler (from $79.95) at Bering's

Vinglace cooler (from $79.95) at Bering's

Nudistsong Sandal ($398) at Stuart Weitzman

Nudistsong Sandal ($398) at Stuart Weitzman

Limited-edition Yeti cooler ($299) at Kuhl-Linscomb

Limited-edition Yeti cooler ($299) at Kuhl-Linscomb

Dressless brides in Texas are freaking out about Alfred Angelo's sudden bankruptcy

Houston's fourAlfred Angelo bridal shops may soon be shutting down.

Dozens of locations around the nation have abruptly closed their doors amid reports of bankruptcy.

Hundreds of brides expecting orders from Alfred Angelo's 62 nationwide stores took to Twitter, voicing concerns about whether they would get their dresses from pending orders.

SMOOTH: Houston man proposes to girlfriend by creating romantic music video

Story continues below...

Many have pointed outAlfred Angelo's corporate silence or lack of official statement. According to the Palm Beach Post, employees were seen leaving the business's corporate headquarters "en masse" carrying personal belongings.

One Texas bride told theSan Antonio Express-News that an Alfred Angelo manager called to inform her that she needed to pick up her dress by the end of the night. Another bride told the paper that one location told her "we're all basically screwed."

SCOT-FREE: Houston man arrested for freeway proposal off probation

As of Thursday night,Alfred Angelo has not released a public statement concerning their reported, abrupt bankruptcy.

Click through above to see the wedding trends of 2017.

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Dressless brides in Texas are freaking out about Alfred Angelo's sudden bankruptcy - Chron.com

The number of Texas companies seeking to restructure their debt and reorganize under Chapter 11 of the U.S. Bankruptcy Code hit a record high during the first six months of 2017. So did the number of bankruptcy filings in Houston.

Bankruptcy data show that 649 businesses sought protection in Texas federal courts from creditors and lenders during the first half of 2017 - a 44 percent increase over the same period a year ago and 12 percent more than in 2009 when bankruptcies peaked during the Great Recession, according to new research conducted by Androvett Legal Media.

Federal bankruptcy courts in the Southern District of Texas, which includes Houston, saw a surge of new filings by small and midsized oil and gas service companies, pipeline owners and businesses involved in offshore drilling operations, including Azure Midstream, GenOn Energy, Vanguard Natural Resources and Allpoints Oilfield Services.

As a result, 314 companies filed for bankruptcy during the first six months of this year in the Southern District - a jump of 58 percent from 2016, which was the previous high, according to the Androvett data.

"A lot of these companies in the oil and gas sector took on a lot of debt when commodity prices were $80 to $100, and then they struggled to stay afloat when the price dropped during the past three years," says Jackson Walker bankruptcy partner Matt Cavenaugh in Houston.

To read this article in one of Houston's most-spoken languages, click on the button below.

"But now with prices mostly stabilized, these companies don't want to be caught over-leveraged because many of their competitors went through Chapter 11 during the past two years and are now leaner and meaner without all that debt," says Cavenaugh, whose law firm represented Houston-based Linn Energy and Oklahoma-based Midstates Petroleum in their restructurings.

Bankruptcy data show that companies in the health care and energy sectors comprise more than half of all the Chapter 11 restructurings filed in Texas so far this year and nearly two-thirds of all business bankruptcy filed in the Southern District.

"Many of these companies thought they saw light at the end of the tunnel when it came to oil prices, but the revenues just have not been there," says Thompson & Knight bankruptcy partner Randy Williams in Houston. "They are filing for bankruptcy now (because) they have exhausted all their other options."

Court records show that there also has been a significant increase in bankruptcy filings by retailers and restaurant chains, including Luke's Locker, Ben Hogan Golf Equipment Co., Joe's Crab Shack and Texas Land and Cattle.

Legal experts say the statistics can be somewhat deceiving because scores of the businesses that filed for bankruptcy this year in Dallas and Houston are related corporate entities whose cases likely will be consolidated by the courts.

"A handful of cases spawned several other filings," Williams says.

For example, Singapore-based offshore drilling engineering firm Emas Chiyoda Subsea filed for bankruptcy in Houston on Feb. 27. The same day, 14 of its affiliated companies also sought Chapter 11 protection.

Many oil and gas industry businesses knew they needed to file for bankruptcy in 2016 because of their crushing debt load, but they held off until oil prices climbed into the $40 to $50 range because it would give the companies more options in their efforts to restructure, says Jeremy Fielding, a bankruptcy litigator at Lynn Pinker Cox & Hurst in Dallas.

"Companies are in a much better position if they are cash-flow positive headed into bankruptcy, because then the whole issue is dealing with the crushing debt and not restructuring the entire operation," Fielding says. "If companies are losing money and have unbearable debt going into a bankruptcy, then the companies are at the total mercy of the banks and lenders.

"I think that is a big part of what we are seeing today," he says.

For a longer version of this article, please visit TexasLawbook.net.

Link:

Oil woes are still spilling into bankruptcy courts - Houston Chronicle

That system left India's Debt Recovery Tribunals vastly overstretched, with court buildings strewn with ever-rising pillars of dusty files, gumming up the flow of credit in the economy and discouraging new investment.

The World Bank estimated it took 4.3 years on average in India to resolve insolvency under the old laws, more than twice as long as in China. And average recoveries were just 25.7 cents on the dollar, one of the worst among similar sized economies.

The new regime aims to significantly boost recoveries and put a firm timeline around case resolution in the hope that this will help clean-up bank balance sheets and spur lending.

India's central bank, the Reserve Bank of India has already told banks to push 12 of the largest defaulters into insolvency, but experts worry the framework is largely untested and hampered by a shortage of experienced bankruptcy professionals.

"I completely understand why they want resolution for large defaulters quickly because the balance sheets have to be cleaned up," said Ashish Chhawchharia, a partner at accounting and consulting firm Grant Thornton. "You cannot really push too hard, however, because if things go wrong people will start losing faith in the new code."

FLOOD OF CASES

Defaulters identified by the RBI are already being taken to the National Company Law Tribunal (NCLT), the forum now empowered to rule on these cases. Only a few dozen cases have been taken on by the NCLT so far, but a deluge could be in the offing.

"We estimate at least 20,000 to 25,000 bankruptcy cases will come to the NCLT, if not more," said Nikhil Shah, a managing director at restructuring experts Alvarez & Marsal. "And at that point it would get crushed under the workload."

The new law mandates a 180-day deadline to resolve cases, but the Innoventive case, in which creditors are seeking to recover about $200 million, has already faced multiple delays.

Innoventive initially sought to block the matter under a six-decade old state law, and launched appeals in the High Court and an appellate tribunal, while creditors were divided on the terms of an interim financing deal, according to two sources close to the case.

The company could appeal all the way to the Supreme Court, forcing lenders to seek an extension and jeopardising the resolution deadline, the sources said.

Chandu Chavan, the main backer of Innoventive, could not be reached for comments despite repeated attempts.

With loan syndicates in India typically comprising a dozen or more state-run and private banks, forging agreement between creditors is not easy.

For Innoventive, it was harder to get the 21 lenders in the room to agree on an interim financing package for the firm to operate during the insolvency process than to find a party willing to actually provide the funds, one of the sources said.

Bankers often lack authority to take decisions on writedowns and have to revert to their boards for approval, causing further delays, the source added.

VALUE EROSION

Under the new system lenders are mandated to initiate liquidation proceedings if a case cannot be resolved within the 180-day deadline, with a 90-day extension granted only in exceptional circumstances.

Such an outcome could result not only in job losses at companies that were still going concerns, but also steep losses for banks that have to sell assets piecemeal.

"We've already been in touch with all possible suitors," said one senior banker, describing the situation lenders often found themselves in when they tried to offload assets from liquidated firms. "It's not like you have a lot people waiting for these assets."

Despite these concerns, M.S. Sahoo, chairman of the Insolvency and Bankruptcy Board of India, the government body set up to supervise the new code, said he was confident buyers would emerge under the new system.

"Nothing develops in a vacuum." said Sahoo. "Only when something is available will the market develop."

The NCLT would not be hit with a tsunami of cases, he added, as only large defaults will be handed to it.

Those involved in cases are also concerned by the lack of experienced insolvency resolution professionals - a domain in its infancy in India and dominated by mom-and-pop firms.

Dinkar Venkatasubramanian, a partner at EY, says a lack of professional indemnity insurance for insolvency professionals was a major deterrent for big accounting firms to take up the task.

"The risk is significant," he said. "There exists litigation and reputational risk and the indemnity for IPs in the code is very generic."

(Additional reporting by Aditya Kalra; Editing by Alex Richardson)

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First Test of India's New Bankruptcy Law Offers Cautionary Tale - New York Times

The owner of the Upper East Side Peter Elliot specialty shopswhichThe New York Timeshas called a temple of navy blazers and sherbet-colored sweaters,has filed a bankruptcy petition for his store at 1071 Madison Avenue, home to Peter Elliot Women, court documents indicate.

On July 7, Peter Elliot owner EliotRabin filed for Chapter 11 bankruptcy in the Southern District of New York for the store on Madison Avenue between East 80th and East 81st Streets, under company name Women by Peter Elliott, Ltd. He put his estimated number of creditors at over 50, with liabilities exceeding $1 million. The largest sum owed is $115,400 to family clothing stores business Belvest USA on East 57th Street. (According toNew York Magazine, Peter Elliot Women has done trunk shoes for Belvest.)

In addition to the 1071 Madison Avenue store, Rabin has shops at 1034A Lexington Avenue, home to Peter Elliot Blue Woman, and 996 Lexington Avenue, home to Peter Elliot Blue and Peter Elliot Blue Boys.

Rabins attorney, Lawrence Morrison of Morrison Tenenbaum, didnt respond to requests for comment. Rabin didnt respond to inquiries seeking comment, although someone who identified themselves as an accountant for Peter Elliotdenied there was a bankruptcy filing.

This isnt the first bankruptcy filing for Rabin this year. On April 27, he filed a Chapter 13 bankruptcy petition, but that was dismissed on June 6, court records indicate.

Adam D. Stein-Sapir of Pioneer Funding Group, which specializes in analyzing and investing in bankruptcy cases, and who is not involved in the case, speculated that three factors contributed to the filing: one, distraction and expenses caused by lawsuits, two, the difficult retail environment and three, operating stores in high-rent areas.

RFR Holdings, led by Aby Rosen, sued Rabin in 2015 for $1.3 million over space he leased for Peter Elliot Blue at the landlords 150 East 72nd Street at Lexington Avenue. RFR declined to comment via a spokeswoman, but the representative noted Rabin is not a tenant in the building.

Rosen bought the 4,000-square-foot ground-floor space and 900-square-foot basement space in February 2014 for $19.9 million and gave Rabin a 15-year lease.Former landlord Harry Macklowe sued Rabin that May forover $100,000for allegedly not paying four months of rent in the space, according toThe New York Postat the time.Rabin then filed a summons with notice charging that Macklowes workmen caused his store in excess of$600,000in damages, court documents indicate, but he never filed an actual suit. Macklowe couldnt be reached for comment, according to a spokeswoman.

The court ruled in Macklowes favor last August in terms of liability, and said Rabins counterclaim must be dismissed. A trial with respect to the damages is pending.

Retail bankruptcy filings have been cropping up at a fast clip as of late. More than 300 retailers have filed for bankruptcy so far this year, according to data from BankruptcyData.com cited by CNN Money last month, representing a31 percent uptick year-over-year. The bulk of this years filings have been for mom-and-pop-type retail operators.

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UES Retailer Peter Elliot's Madison Avenue Shop Heads Into Bankruptcy - Commercial Observer

Dallas Business Journal

Why Texas business bankruptcy filings have hit record levels Dallas Business Journal The number of Texas companies seeking to restructure their debt and reorganize under Chapter 11 of the U.S. Bankruptcy Code hit a record high during the first six months of 2017. So did the number of business bankruptcies filed in Dallas and Fort Worth.

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Why Texas business bankruptcy filings have hit record levels - Dallas Business Journal

One year has passed since a once-promising $1.9 billion taconite plant in Nashwauk folded into one of the most expensive and potentially-devastating bankruptcies on the Iron Range.

On July 8, 2016, the state of Minnesota notified Essar Steel Minnesota that it planned to terminate the companys state-owned mineral leases at 12:01 p.m. that day. But Essar effectively took a poison pill, filing for bankruptcy about a half hour before the termination would go into effect, further delaying the project and shrouding Range businesses and contractors in financial uncertainty.

In the time that has passed, the Nashwauk project underwent a mild rebranding effort under the name Mesabi Metallics, Essars ownership successor, and developed a reorganization plan to emerge from bankruptcy as Chippewa Capital Partners, led by billionaire Tom Clarke.

But optimism toward the project remains circumspect from Minnesota leaders. Clarke has no history in iron or taconite mining, and the states preferred choice to manage the project Cliffs Natural Resources announced plans to open a similar plant in Toledo, Ohio three days after Chippewa earned court approval to lead the Nashwauk effort.

Still, the project has a path forward if Chippewa can secure needed financing for the half-built plant, which stands to be the first new taconite operation in Minnesota in 40 years.

We have no reason to believe they wont be successful, said Minnesota Gov. Mark Dayton in a phone interview Friday. Well monitor closely, but we have every reason to be optimistic. They said in court that they were going to do this, and that goes beyond any kind of assurance that Essar provided before.

Officials from Essar and Mesabi Metallics did not return requests for comments and interviews for this story. Clarke, who a spokesperson said is traveling outside the country, could be not be reached for comment.

When Essar Steel Minnesota broke ground on the former Butler Taconite site in 2008, it was the darling of the Iron Range. The state, Itasca County and the Iron Range Resources and Rehabilitation Board invested dutifully into the endeavor, which was to host a steelmaking facility and taconite plant.

On the often-cyclical Range, Essar was slated to generate more than 700 construction jobs and 350 permanent jobs, when the national economy was itself headed into a downward spiral.

Stops and stalls eventually peppered the project, which in 2010 scrapped the steelmaking facility. At the time, the company was paying the state about $194,000 per year on the mineral leases, a payment plan that began in 2004.

But seven years in and the project had virtually gone nowhere.

By the end of 2015, Dayton was demanding the company pay back $65.9 million in infrastructure grants to Itasca County. Essar was missing payments to contractors and vendors on the Range, and company officials were seeking more financing from the parent company, Essar Global, to keep it afloat.

After a missed $10 million payment in 2016, despite assurances from the India-based company, Dayton moved to pull the plug.

We kept getting assurances from Essar that they were turning things around, Dayton said. Those discussions went on for virtually a year leading up to July of last year they led us on the way they led on a lot of people.

He added that the state stuck with Essar so many times because it was the only real option at the time, noting the company had the leases and ownership of the property in Nashwauk.

Dayton stopped short of saying the state should have terminated the leases sooner, calling the July notice the responsible and honorable thing to do, and slamming Essars decision to file for bankruptcy rather than relinquish the mineral leases.

Hindsight is perfect, Dayton said. Thats typical of the way they operated we just had a string of broken promises.

Gov. Mark Dayton talks about the state's role in trying to demand payment for venders from the now-bankrupt Essar Steel Minnesota project in Nashwauk during a public meeting Tuesday at Cloverdale Township Hall. (Mark Sauer/Mesabi Daily News)

Days after Essars filing, Dayton was joined at a table in Nashwauk by Congressman Rick Nolan, members of the Iron Range Delegation and most importantly Lourenco Goncalves, chairman, president and CEO of Cliffs Natural Resources. The intent of the public meeting was the state announcing its intent to hand Essars mineral leases over to Cliffs, the now-preferred company to take over operations of the project.

Cliffs had a tenuous history with Essar to that point.

Goncalves and Essar CEO Madhu Vuppuluri traded numerous barbs over time about taconite projects and contracts. Cliffs was skeptical of a potential competitor coming online, but by the time Essar was forced into bankruptcy, it had lost its lengthy pellet agreement with ArcelorMittal to Cliffs.

With the state behind him, Goncalves focused in on the project for Minnesotas first direct-reduced/hot-briquetted iron facility. It was meant to be the next step for the taconite industry on the Range and a pathway to the auto industry in Detroit, the industry current pellets do not reach.

They have two choices: Help me build an iron plant, or sell it for scrap, Goncalves said at the August press conference. Either way, Im going to get it.

The rivalry between Essar and Cliffs managed to spill into the bankruptcy proceedings.

Five days after the press conference, lawyers for Essar asked the court to allow an investigation into Cliffs. Essar claimed Goncalves interfered with its ArcelorMittal contract and colluded with the state for the mineral leases. U.S. Bankruptcy Judge Brendan Shannon eventually allowed an inquiry into communications between the state and Cliffs.

For much of the next year, Goncalves remained vocal about his desire to open a new Cliffs operation on the Iron Range, where his former competitor failed.

But as support for Cliffs wavered, the rhetoric ramped up.

Range lawmakers excluding Sen. Tom Bakk, DFL-Cook wrote a letter to DNR Commissioner Tom Landwehr backing the debtor in possession, Mesabi Metallics. They were happy with the plan Mesabi was putting forward, but the act signaled a change in tide from July, when the delegation helped promote the Cleveland-based company.

Goncalves, calling out legislators, warned Minnesota that a Cliffs-run HBI plant was the states to lose.

Dayton said he called Goncalves immediately after the Chippewa bid was accepted and said the CEO expressed disappointment in the outcome, but noted the relationship was on good terms.

He expressed a desire to undertake the project, but the only bid before the judge was the Clarke group, Dayton said. It really wasnt an option.

When Essar reported its liabilities in August, the number was astounding: $1.1 billion owed to creditors, compared to about $200 million in claimed assets. The filing also confirmed the grim outlook for its vendors: $74 million owed to contractors locally and out of state.

More than 300 creditors ranging from overseas banks to local businesses to employees owed bonuses and vacation pay made claims against the company. A list of local vendors read like a whos who of Range businesses, some teetering on the brink of insolvency without payment from Essar.

The state also joined in, launching an effort to pry the mineral leases from the company. By moving into bankruptcy, Essar was able to protect the leases under its Chapter 11 filing, despite attempts by Minnesota to convince a judge otherwise.

The judge denied the lease extraction in November, giving Essar an extension until February, and further delaying what the state felt was an open-shut case.

It was a much more lengthy process than I would have wished, Dayton reflected. It is what it is. Its frustrating, the amount the delays.

A $35 million bridge loan in the early part of the bankruptcy removed Essar Steel Minnesota from ownership of the Nashwauk project. The new owners, SPL Advisors LLC, replaced Vuppuluri as CEO with Matthew Stock, and removed Essar members from the board of directors.

This is a very, very important development for us, said Mitch Brunfelt, assistant general counsel and director of government and public relations for the company, in August when the action took place.

The company became known as Mesabi Metallics in December, and it had a mountain to climb to please the court: Work out a payment plan for contractors, and find about $800 million to finish the project, then estimated at nearly $2.6 billion to complete.

It started by suing Essar Global for $1.1 billion, claiming the parent company siphoned off money meant to help build the Nashwauk plant, instead putting it toward operations elsewhere around the world. The suit named Vuppuluri, which according to the filing, had direct knowledge of the parent companys use of funds for non-project-related purposes.

A month later, Mesabi Metallics released its reorganization plan that the state DNR referred to as a moon shot.

In March, the court allowed Mesabi Metallics to renew labor agreements through the Iron Range Building and Construction Trades for future construction work on the project, and the United Steelworkers for potential plant employees.

Still, efforts by Mesabi Metallics to secure the critical state mineral leases were blocked by Dayton and the DNR.

In this October 2015, photo, steel supports stretch into the distance on a half-completed building at the bankrupt Essar site in Nashwauk. Bankruptcy filings show the company is in debt more than $1.1 billion to creditors. It claimed $208 million in assets, and reportedly owes local contractors and vendors $74 million $49 million to local businesses.

When bidding opened on the project in April, the usual suspects were there. SPL made its bid, and Cliffs came in with a surprising $75 million cash offer, one the Mesabi Metallics team dismissed immediately.

But the real surprise was that a new bidder entered the fray: Chippewa Capital Partners.

Led by Clarke, the billionaire coal mine owner, Chippewa became the favorite and, eventually, the court approved owner of the former Essar/Mesabi Metallics operation.

It just seems to me that the United States needs to have a reliable, consistent source of iron, Clarke said in April after acquiring the site. And it just seems like Nashwauk is the perfect place to build one.

Chippewa plans to open the Ranges first hot-briquetted iron (HBI) at the ore-rich Nashwauk location, a key piece in the groups plan to jumpstart the project back into existence. The company says it will begin construction by September, finish work by the end of 2019 and ship at least 3 million tons of taconite in 2020.

Dayton and the state Executive Council voted 3-1 in June to transfer the coveted mineral leases to Chippewa, with conditions:

By Aug. 31, the group needs to show the state it has the money needed to reopen a mine and construct the iron-producing facility.

Thats about $625 million. If it fails, the state closes on the leases and collects $4 million through the DNR.

Dayton said Friday he was cautiously optimistic about Chippewa, adding that he spoke with Virginia Gov. Terry McAuliffe about Clarke, and received positive feedback about the businessman.

He is a new investor in this industry, and that always raises a question mark, Dayton said. They dont have a proven track record in the steel and taconite industry, but they have a very successful business track record in other sectors.

The states plan with Chippewa now is to wait until Aug. 31 and hope Clarkes Chippewa team is successful. Thats the best course of action, Dayton said, because the company hasnt given the state a reason to doubt them.

Clarke, the lead investor in ERP Iron Ore, closed on purchasing the former Magnetation operations in 2016. He announced plans to reopen Plant 4 in Grand Rapids and a pellet plant in Reynolds, Ind.

Earlier this week, as part of the Chippewa reorganization, Mesabi Metallics laid off about 25 of its 50 workers in preparation for the ownership change. Chippewa plans to use a contractor to complete construction and share some functions with ERP.

Dayton added if the first deadline isnt met, the state will quickly huddle up to formulate a response plan.

Whether that includes Cliffs is unknown, but for now the governor said the quickest path to opening operations and getting people back to work is through Chippewa.

I dont see any reason at this point to predict or prepare for something that theres no basis for right now, he continued. Were focused on success.

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Essar Bankruptcy: One Year Later - Mesabi Daily News