June 27 Fri Jun 27, 2014 5:34pm EDT
June 27 (Reuters) - LightSquared LP : * Reaches restructuring supported by all creditors except charles ergen's
investment vehicle - court mediator * Mediator says restructuring "should be confirmable" without ergen's support -
court documents * Mediator says ergen did not participate in Lightsquared mediation in good
June 27 Fri Jun 27, 2014 5:48pm EDT
June 27 (Reuters) - LightSquared has reached a mediated deal to bring the wireless communications company out of its Chapter 11 bankruptcy, according to report from the mediator who lashed out at Charles Ergen, a large creditor and satellite TV mogul.
"All of the parties to the mediation have agreed on the key business terms of a chapter 11 plan for the debtors that should be confirmable without the support of the one party, SPSO," wrote mediator Robert Drain in a court filing. SPSO is the investment vehicle of Ergen, who is chairman of Dish Network .
"SPSO/Charles Ergen have not participated in the mediation in good faith and have wasted the parties and the mediator's time and resources," wrote Drain, who is also a U.S. Bankruptcy Court Judge in New York. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Chris Reese)
Fri Jun 27, 2014 7:14pm EDT
(Recasts with mediator's comments; adds detail from mediator's report, background on LightSquared's dispute with Ergen)
By Nick Brown
NEW YORK, June 27 (Reuters) - Wireless venture LightSquared has reached a deal to end its Chapter 11 bankruptcy, but its largest creditor, satellite operator Charles Ergen, is not on board and "wasted the parties' time," according to a report from the court-appointed mediator.
The mediator, Judge Robert Drain, said he believed the plan would be confirmable by the Bankruptcy Court judge overseeing the case even without Ergen's support.
Drain's report, made in a court filing on Friday, did not give details on the deal.
LightSquared, which is owned by Phil Falcone's Harbinger Capital Partners, had accused Ergen of using underhanded methods to acquire his controlling stake of its debt. The dispute was sent to mediation after Judge Shelley Chapman rejected a restructuring proposed by LightSquared that would have pushed Ergen's repayment behind other creditors'.
Drain, a colleague of Chapman in U.S. Bankruptcy Court in New York, in his report said that Ergen and his investment vehicle "have not participated in the mediation in good faith and have wasted the parties' and the mediator's time and resources."
Ergen's lawyer, Rachel Strickland, did not return a call seeking comment.
According to Drain's report, Ergen sent his wife to one of the three mediation sessions held this month in New York and left another without Drain's permission. Drain called Ergen's behavior "unique," even "in a field where parties are known to assert their positions aggressively and sharp elbows ... are tolerated."
LightSquared earlier this month told Chapman it was mulling a deal premised on new financing from a third party. The company will appear in court on Tuesday to update Chapman on restructuring efforts.
LightSquared went bankrupt in 2012, after the Federal Communications Commission revoked its license to build a massive planned wireless network over fears of interference with GPS systems.
Harbinger, which held most of the company's equity, had hoped for a restructuring that would allow it to retain control. But Ergen slowly accumulated about $1 billion of its senior loan debt, essentially giving him veto power over any plan he disagreed with.
LightSquared accused him in a lawsuit of concealing his identity to get around a credit agreement that barred competitors like Dish from owning company debt. LightSquared said the debt buys were a scheme to wrest control of the company on Dish's behalf, which Ergen denied, insisting it was a personal investment.
Falcone and other Harbinger appointees resigned from LightSquared's board earlier this month.
LightSquared's long and litigious case has not had any heroes. During a trial in May over LightSquared's accusations, Chapman ruled that Ergen had indeed acted surreptitiously, citing his "troubling pattern of non-credible testimony." But Chapman also said that Harbinger's proposal to subordinate Ergen's debt was an illegitimate ploy to punish him rather than remediate damages.
"It is difficult to imagine discrimination that could be much more unfair than that contemplated" by Harbinger, she said. (Reporting by Nick Brown in New York and Tom Hals in Wilmington, Delaware; Editing by Leslie Adler)
June 27 Fri Jun 27, 2014 5:48pm EDT
June 27 (Reuters) - LightSquared has reached a mediated deal to bring the wireless communications company out of its Chapter 11 bankruptcy, according to report from the mediator who lashed out at Charles Ergen, a large creditor and satellite TV mogul.
"All of the parties to the mediation have agreed on the key business terms of a chapter 11 plan for the debtors that should be confirmable without the support of the one party, SPSO," wrote mediator Robert Drain in a court filing. SPSO is the investment vehicle of Ergen, who is chairman of Dish Network .
"SPSO/Charles Ergen have not participated in the mediation in good faith and have wasted the parties and the mediator's time and resources," wrote Drain, who is also a U.S. Bankruptcy Court Judge in New York. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Chris Reese)
June 27 Fri Jun 27, 2014 5:34pm EDT
June 27 (Reuters) - LightSquared LP : * Reaches restructuring supported by all creditors except charles ergen's
investment vehicle - court mediator * Mediator says restructuring "should be confirmable" without ergen's support -
court documents * Mediator says ergen did not participate in Lightsquared mediation in good
Fri Jun 27, 2014 7:14pm EDT
(Recasts with mediator's comments; adds detail from mediator's report, background on LightSquared's dispute with Ergen)
By Nick Brown
NEW YORK, June 27 (Reuters) - Wireless venture LightSquared has reached a deal to end its Chapter 11 bankruptcy, but its largest creditor, satellite operator Charles Ergen, is not on board and "wasted the parties' time," according to a report from the court-appointed mediator.
The mediator, Judge Robert Drain, said he believed the plan would be confirmable by the Bankruptcy Court judge overseeing the case even without Ergen's support.
Drain's report, made in a court filing on Friday, did not give details on the deal.
LightSquared, which is owned by Phil Falcone's Harbinger Capital Partners, had accused Ergen of using underhanded methods to acquire his controlling stake of its debt. The dispute was sent to mediation after Judge Shelley Chapman rejected a restructuring proposed by LightSquared that would have pushed Ergen's repayment behind other creditors'.
Drain, a colleague of Chapman in U.S. Bankruptcy Court in New York, in his report said that Ergen and his investment vehicle "have not participated in the mediation in good faith and have wasted the parties' and the mediator's time and resources."
Ergen's lawyer, Rachel Strickland, did not return a call seeking comment.
According to Drain's report, Ergen sent his wife to one of the three mediation sessions held this month in New York and left another without Drain's permission. Drain called Ergen's behavior "unique," even "in a field where parties are known to assert their positions aggressively and sharp elbows ... are tolerated."
LightSquared earlier this month told Chapman it was mulling a deal premised on new financing from a third party. The company will appear in court on Tuesday to update Chapman on restructuring efforts.
LightSquared went bankrupt in 2012, after the Federal Communications Commission revoked its license to build a massive planned wireless network over fears of interference with GPS systems.
Harbinger, which held most of the company's equity, had hoped for a restructuring that would allow it to retain control. But Ergen slowly accumulated about $1 billion of its senior loan debt, essentially giving him veto power over any plan he disagreed with.
LightSquared accused him in a lawsuit of concealing his identity to get around a credit agreement that barred competitors like Dish from owning company debt. LightSquared said the debt buys were a scheme to wrest control of the company on Dish's behalf, which Ergen denied, insisting it was a personal investment.
Falcone and other Harbinger appointees resigned from LightSquared's board earlier this month.
LightSquared's long and litigious case has not had any heroes. During a trial in May over LightSquared's accusations, Chapman ruled that Ergen had indeed acted surreptitiously, citing his "troubling pattern of non-credible testimony." But Chapman also said that Harbinger's proposal to subordinate Ergen's debt was an illegitimate ploy to punish him rather than remediate damages.
"It is difficult to imagine discrimination that could be much more unfair than that contemplated" by Harbinger, she said. (Reporting by Nick Brown in New York and Tom Hals in Wilmington, Delaware; Editing by Leslie Adler)
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Wed Jun 25, 2014 6:14pm EDT
(Adds Grant Thornton statement, paragraph 11)
By Jonathan Stempel
June 25 (Reuters) - A federal appeals court in Chicago said auditor Grant Thornton LLP must again face a lawsuit over its alleged role in the collapse of Italian dairy company Parmalat SpA, while lamenting that its decision puts the nearly 10-year-old case on the brink of starting anew.
Wednesday's decision by the 7th U.S. Circuit Court of Appeals overturned an April 2013 dismissal of the case by U.S. District Judge John Darrah in Chicago. The appeals court ordered that the case be moved to a state court in Cook County, which includes Chicago, where Grant Thornton is based.
Known for its long-shelf-life milk, Parmalat filed for insolvency protection in Italy in December 2003 after uncovering a 4 billion euro (US$5.45 billion) hole in its balance sheet. The Collecchio, Italy-based company was restructured in 2005, and is now controlled by France's Lactalis Group.
After the collapse, Parmalat's new management, led by foreign representative and onetime Chief Executive Enrico Bondi, sued dozens of banks and auditors, accusing them of enabling insiders to loot the company before it became insolvent.
In a lawsuit launched in August 2004 in Cook County and later moved to the Chicago federal court, Parmalat accused Grant Thornton of conducting fraudulent audits in violation of state law.
The case wound its way to New York, where U.S. District Judge Lewis Kaplan ruled in 2009 that the "new" Parmalat could not recover for the "old" Parmalat's wrongdoing.
But in 2012, the federal appeals court in New York returned the case to the Chicago federal court. Rather than send it to the Cook County court, as Parmalat requested, Darrah adopted Kaplan's findings and dismissed the case.
Writing for a three-judge 7th Circuit panel on Wednesday, Circuit Judge Richard Posner said "we can't be certain" that the law was "so clearly" in Grant Thornton's favor that dismissal was justified.
"If we knew that Judge Kaplan's opinion rejecting Parmalat's claim against Grant Thornton would persuade the Illinois courts, then affirming Judge Darrah would bring this litigation to a close before it had a chance to exceed the length of the Trojan War (10 years)," Posner wrote. "But we can't be certain what the Illinois courts will do."
Had the case been returned to Cook County two years ago, "the litigation might well be at an end rather than on the brim of restarting," Posner added.
In a statement, Grant Thornton said it is confident the state court will agree that Parmalat and its representatives "cannot sue based on their own wrongdoing."
Greg Taylor, a lawyer for Parmalat, wrote in an email that he is pleased with the decision.
"Had the court accepted Grant Thornton's arguments, auditing firms could essentially escape liability for their own malpractice in cases involving corporate fraud," he said.
The case is Parmalat Capital Finance Ltd v. Grant Thornton International et al, 7th U.S. Circuit Court of Appeals, No. 13-2245. (Reporting by Jonathan Stempel in New York; Editing by Howard Goller, Andre Grenon and Dan Grebler)
By Karen Pierog
June 26 Thu Jun 26, 2014 1:00am EDT
June 26 (Reuters) - Bond insurer Syncora Guarantee Inc has emerged as Detroit's chief nemesis in the city's historic bankruptcy case and is fighting as if its financial life depends on a decent recovery on its $400 million exposure to the city.
Since Detroit filed the biggest municipal bankruptcy in U.S. history last July, Syncora has objected to the city's moves nearly every step of the way - from an early agreement with investment banks over interest rate swaps to the more recent "grand bargain" designed to save the Detroit Institute of Arts.
The company's latest pleading, set for argument Thursday in a federal courtroom, demands information on the current assets and income of all Detroit's retired workers - some 20,000 of them.
Syncora has issued past warnings to investors that it might go out of business, and it cautioned in a recent financial report that investment in Syncora Holdings common shares is "likely to result in a loss of substantially all of their investment."
In the financial statement, Syncora warned of a "liquidity mismatch" in which claims might exceed recoveries from the claims, and noted that reserves for losses "are modest" when compared with estimated future claims.
With so much at stake, Syncora has filed a steady stream of objections to Detroit emergency manager Kevyn Orr's carefully synchronized effort to emerge from bankruptcy this fall.
The bond insurer has raised questions about the bankruptcy court's conduct. It has sent subpoenas to Michigan Attorney General Bill Schuette; Roger Penske, chief executive of Penske Automotive Group Inc., and Daniel Gilbert, the co-founder of Detroit-based Quicken Loans.
It also has objected to the "grand bargain" in which philanthropic foundations and the state of Michigan have pledged millions of dollars to ease pension cuts on city retirees and protect parts of the Detroit Institute of Arts' collection from being sold.
Judge Steven Rhodes, who is overseeing the Detroit bankruptcy case, will hear motions to block several Syncora demands, including the request for retirees' financial information.
"The only possible explanation for this outrageous request is that Syncora is attempting to gain a litigation advantage by harassing, oppressing and embarrassing the city and its retirees," the city stated in its motion urging the judge to deny Syncora's demand.
James H.M. Sprayregen, a partner at Kirkland & Ellis who represents Syncora, said Syncora's request is reasonable given the city is citing the greater economic harm to retirees versus financial creditors for justifying the disparate treatment of those creditor groups. He added that Detroit's plan will not win confirmation from Judge Rhodes because it does not meet a standard under Chapter 9 bankruptcy law that all similarly situated creditors must be treated fairly.
"We think (Detroit) proposed a patently unconfirmable plan," Sprayregen said.
In a filing Monday, Syncora accused Detroit of playing politics in its bankruptcy case.
"Chapter 9 bankruptcies are a tempting place to break out the torches and pitchforks and pursue the city's lenders through the streets," Syncora's filing said. "It is a time-honored and politically-popular approach. But the bankruptcy code deplores - and forbids - a city from favoring one class while showing animus and unfairness to another."
Syncora's beef with Detroit centers on the company's insurance policy on some of the city's $1.4 billion of taxable city pension debt, as well as swaps deals Detroit used to hedge interest-rate risk. Guarantees offered by XL Capital Assurance, Syncora's predecessor company, enabled Detroit to sell its debt with a stellar triple-A-rating to investors, including European banks.
When Detroit defaulted on the debt in June 2013, it left Syncora and another insurer, Financial Guaranty Insurance Co, to pay bondholders. Syncora and FGIC both have seen their financial conditions crumble since the 2008 financial crisis.
Like other bond insurers, Syncora had exposure to mortgage-backed securities, a market that collapsed. Standard & Poor's in 2010 stopped rating the company and Moody's Investors Service followed suit in 2012.
In addition to Detroit, Syncora in its financial filings lists "significant exposure" to Puerto Rico, an ailing muni issuer, and Syncora also insured some debt issued by Jefferson County, Alabama - the biggest-ever Chapter 9 case prior to Detroit's.
Regulators in 24 states have yanked Syncora's license to insure debt, and the last time Syncora insured new muni debt was in 2008, according to Thomson Reuters data.
Sprayregen said Syncora is facing a near-total loss on its Detroit exposure, a circumstance that motivates its hard fight.
"Our recovery is virtually nothing, so anybody who portrays what we're doing as irrational isn't really understanding the situation," Sprayregen said. "If you're offered nothing, what choice do you have but to object?"
Stephen Selbst, a bankruptcy attorney with Herrick, Feinstein in New York, said Syncora may be seeking to maneuver Detroit toward settlement.
"If you're a holdout creditor, doing everything you can to make everyone else miserable is an old-fashioned strategy and the core of that is make it so uncomfortable for the debtor that they want to come to the table and settle," he said. (Reporting By Karen Pierog, additional reporting by Tom Hals and Lisa Lambert, Editing by David Greising and Ken Wills)
Tue Jun 24, 2014 4:37pm EDT
(Adds details of both proposals)
By Tom Hals
June 24 (Reuters) - Energy Future Holdings rejected an unsolicited $2.3 billion restructuring plan by NextEra Energy Inc that would have given the alternative energy group a large stake in Energy Future's power lines unit, according to court filings.
The proposal, which was revealed in court filings late Monday, was developed by NextEra and a group of investors that hold second-lien notes issued by Energy Future's EFIH unit, which in turn controls the Oncor power distribution business.
EFIH, or Energy Future Intermediate Holding, rejected the proposal in favor of a plan already advanced by a group of investors who hold the unit's unsecured bonds, according to filings with the U.S. Bankruptcy Court in Wilmington, Delaware.
Both proposals take the form of a loan to refinance EFIH's high-yielding second-lien notes, which would cut interest costs. Rather than repay the loan, when EFIH emerges from bankruptcy the financing would convert into an equity stake of a little more than 60 percent of the company.
Shares of NextEra, the largest U.S. generator of renewable energy, closed up 1.1 percent at $100.73, near a 52-week high, on the New York Stock Exchange. The company is based in Juno Beach, Florida and a company spokeswoman said NextEra does not comment on potential transactions.
Court filings reveal a flurry of last-minute changes to the two loan proposals as each group jockeyed to win over a meeting of the board of managers of EFIH on Sunday.
In its final proposal, NextEra planned to contribute $1.6 billion to the package, according to court filings.
Backers of the proposed NextEra loan said in court papers their proposal carried a lower interest rate, offered more money to unsecured creditors and would pay second-lien noteholders an early redemption payment, ending litigation on the issue.
The company's board opted on Sunday to stick with the loan proposed by its unsecured bondholders, in part because the NextEra loan did allow the company to pursue other deals, according to court filings.
NextEra and its second-lien noteholder partners could still get their loan approved. They asked Judge Christopher Sontchi to reject the unsecured creditors loan proposal when he hears the issue on June 30.
Energy Future filed one of the largest U.S. bankruptcies in April and seeks to restructure more than $40 billion in debt as it was squeezed by falling natural gas prices.
Energy Future also plans to spin off the unit that owns the TXU Energy retail utility and the power generating business known as Luminant to holders of $24.4 billion in secured debt. That part of its restructuring would not be affected by NextEra's proposal.
The case is In Re: Energy Future Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 14-10979 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Bernard Orr)
June 24 Tue Jun 24, 2014 5:48pm EDT
June 24 (Reuters) - As if it's not bad enough that Detroit acknowledges it owes its creditors $18 billion, another batch of would-be creditors says the city owes them much more, for garbage trucks worth $150 million to nuclear research materials valued at an alleged $1 trillion.
The city disputes those claims - along with several others scheduled for a hearing on Wednesday before U.S. Judge Steven Rhodes, who is presiding over Detroit's bankruptcy.
The biggest municipal bankruptcy case in U.S. history is chock full of more customary creditors: city unions and pension funds, bondholders and businesses. But on Wednesday, Detroit's attorneys will ask Judge Rhodes to disallow claims from creditors who have not provided evidence to back up their demands.
For example, Albert O'Rourke of Oceanside, California, in February filed the claim for $1 trillion. He claimed the city had lost or destroyed "Manhattan Project" nuclear research materials housed in property he owns in Detroit. The amount is based on the price tag for building various nuclear weapons and devices related to the missing materials, O'Rourke's filing stated.
City lawyers have no choice but to take such claims at face value and respond in sober, lawyerly prose.
"Based on the information in the claim and response, the city cannot even determine what the materials are, whether they exist, where they are located and if they exist, who owns them," Detroit said in a June 20 court filing objecting to O'Rourke's claim.
A claim filed by Rickie Allen Holt on behalf of the Aboriginal Indigenous Peoples wants $7 billion in damages because Detroit failed to secure the peoples' "expressed permission" to file for Chapter 9 municipal bankruptcy in July 2013.
Detroit resident Lucinda Darrah in February claimed the city owes her $150 million for the purchase of garbage trucks so residents can manage their own trash disposal. In a hand-written response earlier this month to the city's objection to her claim, Darrah increased the demand to $450 million, to compensate her for harmful pollution from a city incinerator.
Not all of the claims run to the hundreds of millions of dollars and beyond. One filed by Detroit resident Edward Gildyard seeks a tidy $2 million for "services performed," without elaboration.
Adam Woodberry wants $1 million because the "city took real property without paying just compensation."
Wednesday's hearing comes as Detroit's case heads toward the Aug. 14 start of hearing during which the city will defend the fairness and feasibility of its plan to exit bankruptcy after adjusting $18 billion of debt.
Or perhaps considerably more than that amount, depending on how Judge Rhodes rules. (Reporting by Karen Pierog; Editing by David Greising and Dan Grebler)
By Nick Brown
NEW YORK, June 24 Tue Jun 24, 2014 5:49pm EDT
NEW YORK, June 24 (Reuters) - Lawyers for bankrupt Genco Shipping & Trading Ltd on Tuesday insisted the dry bulk shipper is not being undervalued during the closing of a trial pitting the company against angry shareholders who wanted better treatment in the restructuring.
The four-day trial in U.S. Bankruptcy Court in Manhattan posed the question of how to value a shipping company. The answer will determine what is left for Genco shareholders after its lenders and other creditors are repaid.
Financial advisers at Blackstone, which was retained by Genco to value the company, argued the shipper was worth between $1.36 billion and $1.44 billion based on the market value of its ships and other assets. Shareholders put the value at $1.91 billion based on financial performance and other factors.
"The issue ... is not how a ship would be valued if it was sold, because no such sale is taking place," Steven Bierman, a lawyer for the shareholders, said in closing arguments.
Since Genco's Chapter 11 filing in April, shareholders have found themselves at odds with the company and just about all its creditors. They are the only opponents to a restructuring that would reduce debt by $1.2 billion, split most of the company's equity among more senior creditors and give existing shareholders $30 million in warrants.
Judge Sean Lane gave no indication how he may rule, but said he would issue a decision by July 2.
Far from mom-and-pop investors, the shareholders are hedge funds that routinely invest in distressed assets and litigate in hopes of boosting their recoveries. An official committee to vouch for the shareholders includes Aurelius Capital Management, Och-Ziff Capital Management and Mohawk Capital.
Genco and its lenders painted the shareholder complaints as sour grapes, saying they are getting warrants only because Genco convinced reluctant lenders to provide some payout.
"Equity is not entitled to any recovery," Dennis Dunne, a lawyer for the lenders, said on Tuesday. "And yet they have some."
Under Genco's valuation, the company is worth around $80 million less than what it owes creditors; under the shareholders' valuation, it is worth at least $95 million more than its debts.
Blackstone's Tim Coleman said his firm looked to net asset value - or assets minus liabilities - as the only sensible methodology for a shipper.
If Blackstone's valuation was low, "we'd have a line out the door like at a Starbucks" of potential investors, Coleman said.
The shareholder group's valuation was done by Rothschild's Neil Augustine, who looked to earnings and discounted cash flow. Bierman said that shippers routinely consider various factors in their own forecasts.
Genco, controlled by its chairman, the shipping magnate Peter Georgiopoulos, is the latest in a line of shippers to file for bankruptcy amid a glut of vessels. Nautilus Holdings Ltd filed for bankruptcy in White Plains, New York, on Monday, while Excel Maritime Carriers, Overseas Shipholding Group and Georgiopoulos' own General Maritime have filed in recent years. (Reporting by Nick Brown in New York; Editing by Tom Hals and Leslie Adler)
By Tom Hals
June 23 Mon Jun 23, 2014 2:26pm EDT
June 23 (Reuters) - Creditors of Energy Future Holdings, Texas's largest power company, are turning on each other in court over the bankrupt power company's proposed refinancing plan.
A lawsuit filed Friday by senior noteholders of a unit known as Energy Future Intermediate Holding, or EFIH, asks the U.S. Bankruptcy Court in Wilmington, Delaware, to enforce an agreement among creditors to parcel out debt payments in a way that is at odds with the company's plans.
The lawsuit is the latest to take aim at the plan by EFIH, which controls the Oncor power line business, to refinance $6.2 billion in high-yielding notes.
EFIH plans to borrow $7.3 billion through two loans and use the proceeds to refinance first-lien notes and second-lien notes. The company said the move would save millions of dollars in monthly interest costs.
Some noteholders oppose the plan because they believe EFIH is skirting its obligation to pay hundreds of millions of dollars in early redemption payments, known as a make-whole payments.
The company said when it entered bankruptcy it was prepared to litigate over the early redemption payment, and the trustees for both sets of notes have already filed lawsuits, known in bankruptcy as an adversary proceeding.
The lawsuit on Friday by the trustee for first-lien noteholders seeks to enforce an agreement among creditors that the trustee says requires the entire first-lien early redemption payment before other noteholders get anything.
The first-lien trustee wants Judge Christopher Sontchi to issue an injunction directing the trustee for the second-lien notes to reroute any payments received until the first-lien noteholders are paid in full.
If the payments aren't rerouted, then the first-lien trustee, CSC Trust Co of Delaware, will seek damages against Computershare Trust Co, the trustee for the second-lien notes, of at least $432 million.
A lawyer who represents Computershare, Stephanie Wickouski of law firm Bryan Cave, did not immediately respond to a request for comment.
Energy Future filed one of the largest U.S. bankruptcies in April and seeks to restructure more than $40 billion in debt.
Energy Future also plans to spin off the unit that owns the TXU Energy retail utility and the power generating business known as Luminant to holders of $24.4 billion in secured debt.
Energy Future took on much of its debt in 2007, when it was formed with the record buyout of TXU Corp, led by KKR & Co , TPG Capital Management and the private equity arm of Goldman Sachs.
The deal turned out to be an ill-timed bet on natural gas prices, which soon began to plummet.
The private equity sponsors of the buyout are likely to lose almost their entire investments in the bankruptcy.
The case is In Re: CSC Trust Co of Delaware v Computershare Trust Co, U.S. Bankruptcy Court, District of Delaware, No. 14-50410 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Jeffrey Benkoe)
Mon Jun 23, 2014 8:35pm EDT
(Fixes spelling of officer in fifth paragraph)
By Casey Sullivan
June 23 (Reuters) - Retailer Brookstone Inc announced on Monday that a federal bankruptcy court judge in Delaware has approved its sale to a consortium of Chinese investors that will run its 240 stores after exiting bankruptcy.
Sailing Innovation Inc will acquire Brookstone for $135.7 million, net of cash and assumed liabilities, as the New Hampshire company expects to emerge from bankruptcy by early July, according to a Brookstone announcement.
The deal was approved by U.S. Bankruptcy Court Judge Brendan Shannon in Wilmington three months after Brookstone filed for Chapter 11 bankruptcy protection when it saw sales fall as shoppers cut discretionary spending.
Brookstone sells products ranging from massage chairs to bathroom slippers through stores in malls and airports across the United States and Puerto Rico.
Jim Speltz, Brookstone's president and chief executive officer, said in a statement that Brookstone had restructured its balance sheet, improved its capital structure and "found a strategic partner who shares our vision and is committed to our growth."
James Liu, president and CEO of Sailing, said in a statement that Sailing was committed to strengthening Brookstone's operations in the United States and believes Brookstone is well positioned to expand outside the United States.
"As the first step, Sailing will muster and lead global resources to assist Brookstone in penetrating markets in China and the UK," said Liu.
Brookstone's legal advisor for the restructuring is K&L Gates and its financial advisor is Deloitte CRG, while the legal advisor for Sailing is Gibson Dunn & Crutcher and the financial advisor is Houlihan Lokey. Jefferies LLC is the company's investment banker. (Reporting by Casey Sullivan in New York; Editing by Lisa Shumaker)
MOSCOW, June 24 Tue Jun 24, 2014 2:53am EDT
MOSCOW, June 24 (Reuters) - Russian bank VTB's investment unit VTB Capital said it does not have any plans to provide liquidity or capital resources to Bulgaria's Corporate Commercial Bank (Corpbank), which was taken over by the country's central bank on Friday after a run on the bank.
VTB Capital owns around 9.1 percent of Corpbank's shares and bought the shares as part of a structured finance transaction, it said in a statement. Its exposure to Corpbank did not exceed 10 million euros from the outset, the bank said, adding that the amount was subsequently fully hedged.
"VTB Group does not have any liquidity commitments and does not have any plans to provide any liquidity or capital resources to (Corpbank)," it said in the statement.
June 18 Wed Jun 18, 2014 5:48pm EDT
June 18 (Reuters) - Detroit's emergency manager laid out plans on Wednesday for changes to the city's two retirement systems even as bankruptcy proceedings continue.
Kevyn Orr, who was tapped by Michigan's governor in March 2013 to run Detroit, said all current and new city workers will be subject to the changes effective July 1. The changes maintain a defined benefit system, but require new deductions from workers' paychecks for pensions and matching contributions from the city.
"The city and its labor partners have come up with what we think is the best option to strengthen employee pensions so we can continue to meet future obligations in a financially responsible and sustainable manner,"� Orr said in a statement.
He added that the changes resulted from months of "intense negotiation" with city unions and retirees.
Accrued benefits will be frozen as of June 30 and no new employees will be allowed to earn benefits under prior General Retirement System and Police and Fire Retirement System benefit formulas.
Detroit's pension systems are a major contributor to the $18 billion in debt and other obligations that led to the city's historic municipal bankruptcy filing in July 2013. Detroit has about 22,000 retirees who currently receive pensions, but only about 9,000 active employees supporting the funds, according to Orr's office.
While Detroit has reached settlements with several major creditors, voting by thousands of creditors, including city workers and retirees, on a proposed debt adjustment plan will not be completed until July 11. Federal Judge Steven Rhodes, who is overseeing the bankruptcy case, has scheduled an Aug. 14 start date for a hearing to determine if the plan is fair and feasible.
The debt adjustment plan includes a reduction or elimination of annual cost of living adjustments and pension cuts for some retirees. Money pledged by foundations, the Detroit Institute of Arts and the state of Michigan would be tapped to ease the cuts. (Reporting by Karen Pierog; Editing by Eric Walsh)
June 18 Wed Jun 18, 2014 1:50pm EDT
June 18 (Reuters) - A group of holdout creditors is asking the federal judge overseeing Detroit historic bankruptcy case to unseal an unusual secret mediation order made last week so that they can understand the terms of mediation.
The "supplemental order regarding mediation confidentiality" was filed June 12 under seal, meaning its contents were not publicly disclosed.
Syncora Guarantee Inc and Financial Guaranty Insurance Co (FGIC), which insured Detroit bonds, and European banks that own Detroit pension debt said in a court filing late on Tuesday that they have a right, as mediating creditors, to view the order.
They noted that some parties in the case, including the city, have asserted "mediation privilege" in answer to the creditors' subpoenas and document requests.
"To understand whether any claimed privilege is valid and applicable and to determine how to respond, the creditors must first understand the parameters of, and the terms governing, the mediation," the filing stated.
Mediation ordered by U.S. Judge Steven Rhodes has led to several major settlements between creditors and Detroit, a city sinking under $18 billion of debt and other obligations.
But Syncora, FGIC and the European banks have been fighting Detroit over its plan to void $1.4 billion of pension debt sold in 2005 and 2006 as well as Detroit's settlement with two investment banks over interest-rate swaps associated with the debt. FGIC guaranteed payments on about $1 billion of the debt, which Detroit defaulted on last year. Syncora insured some pension debt and the swaps.
Melissa Jacoby, a professor at the University of North Carolina School of Law, said the fact that the mediation order was sealed is surprising, adding it seems improbable that "such an experienced and responsible judge" would have something in the sealed order that would compromise the rights of the excluded parties. As for the holdout creditors, they may be laying the foundation for appeals in the case, she said.
"Whether or not they are taking the optimal strategic path, I do think some of the financial creditors are positioning themselves for an appeal, and/or imposing more pressure to get a better settlement. It is not too late for the latter," Jacoby said.
Last week, Syncora, which faces more than $400 million in losses in the case, lashed out in court filings against judicial action and inaction, including recent public comments by a federal judge acting as a mediator in the case.
Judge Rhodes will preside over a hearing that starts in August to decide whether Detroit's plan to adjust its debts and exit the biggest municipal bankruptcy in U.S. history is feasible and fair to its creditors.
The European banks asking for the order to be unsealed were Hypothekenbank Frankfurt AG, Hypothekenbank Frankfurt International S.A., Erste Europäische Pfandbrief- und Kommunalkreditbank Aktiengesellschaft in Luxemburg S.A. (Reporting By Karen Pierog and Tom Hals; Editing by Peter Galloway)
Wed Jun 18, 2014 4:45pm EDT
(Adds S&P rating, Fitch rationale for BBB-plus rating, bond sale details)
June 18 (Reuters) - Fitch Ratings on Wednesday rated $185.7 million of revenue bonds for Detroit's new public lighting authority BBB-plus with a stable outlook.
The rating was a notch lower than the A-minus rating Standard and Poor's Ratings Services assigned to the bonds on June 11. The bonds are secured by a first lien on Detroit's 5 percent tax on electric, gas and local telephone utility services.
While Fitch has rated most of Detroit's outstanding debt below investment grade or D in the case of defaults, the new bonds were given an investment grade rating, despite the city's ongoing bankruptcy case.
"The BBB-plus rating reflects Fitch's belief that the pledged revenues required for debt service belong to the (public lighting authority) and are therefore not at risk of being considered property of the city of Detroit. The bankruptcy court overseeing the city's current Chapter 9 proceeding issued a ruling supporting this position," the credit rating agency said in a statement.
The bonds, which will be issued through the Michigan Finance Authority, are expected to be priced by lead underwriter Citigroup next week.
Some of the proceeds from the deal will be used to take out $60 million of floating rate bonds the city privately placed with Citibank in December to jump start improvements to the city's ailing public lighting infrastructure.
A federal judge has set an Aug. 14 start date for a hearing to determine if Detroit's plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history is fair and feasible. (Reporting by Karen Pierog. Editing by Andre Grenon)
Mon Jun 16, 2014 5:19pm EDT
(Adds reason for ratings withdrawal, second paragraph, background)
June 16 (Reuters) - Fitch Ratings said on Monday it has withdrawn the D ratings on about $2.1 billion of defaulted Detroit bonds.
Amy Laskey, a Fitch managing director, said it was the credit rating agency's policy to withdraw ratings on defaulted issues.
Detroit, which filed the biggest municipal bankruptcy in U.S. history in July 2013, skipped payments on bonds it considered to be unsecured debt, resulting in the defaults.
The affected bonds are about $1.5 billion of pension certificates of participation sold in 2005 and 2006, $411 million of unlimited-tax general obligation bonds and nearly $203 million of limited-tax GO bonds, according to Fitch.
The rating agency said it will continue to monitor the city's bankruptcy proceedings and provide market commentary as appropriate. (link.reuters.com/nap22w)
Laskey said Fitch continues to rate Detroit's water and sewer bonds, which have not be subject to a default. Those bonds are rated BB-plus and BB and are on a watch list for a possible downgrade, she added. (Reporting by Tanvi Mehta in Bangalore and Karen Pierog in Chicago; Editing by Dan Grebler)
TORONTO, June 16 Mon Jun 16, 2014 2:48pm EDT
TORONTO, June 16 (Reuters) - The Quebec government said on Monday it was seeking some C$409 million ($377 million) from Montreal, Maine and Atlantic, the insolvent rail operator at the center of the rail disaster in the town of Lac Megantic last year.
The claim is the latest in a growing list against the rail operator and other companies involved in the train shipment of oil from the Bakken fields that derailed and exploded, killing 47 people in the small town of Quebec and flattening the center of the town.
The government, which filed its claim with court officials handling the claims process, said C$126 million was for funds already spend, while the remainder was for expenses it expected to incur.
The government said the size of its claim may be revised upward, once all its expenses were determined. ($1 = 1.0853 Canadian dollars) (Reporting by Euan Rocha; Editing by Jeffrey Benkoe)
BRASILIA, June 16 Mon Jun 16, 2014 7:31pm EDT
BRASILIA, June 16 (Reuters) - OSX Brasil SA, the bankrupt shipbuilder controlled by former Brazilian billionaire Eike Batista, posted a net loss of 2.42 billion reais ($1.08 billion) in the first quarter, the company said in a securities filing on Monday.
OSX reported a net loss of 17.9 million reais in the same period last year.
June 13 Fri Jun 13, 2014 4:11pm EDT
June 13 (Reuters) - A settlement over the treatment of outstanding limited-tax general obligation bonds in Detroit's historic bankruptcy case has been reached, U.S. Bankruptcy Court mediators announced on Friday.
Details of the settlement, reached between the city and two unnamed parties that either own or insure "a large majority" of the bonds, are in "the final documentation process" and were not disclosed, according to the mediators' statement. (Reporting By Karen Pierog; Editing by Meredith Mazzilli)
Fri Jun 13, 2014 6:44pm EDT
(Recasts; adds details on completion of collection bargaining agreements with union)
June 13 (Reuters) - A settlement has been reached in Detroit's historic bankruptcy case over the treatment of unsecured limited-tax general obligation bonds, U.S. Bankruptcy Court mediators announced on Friday.
Details of the settlement, reached between the city and two unnamed parties that either own or insure "a large majority" of the bonds, are in "the final documentation process," and were not disclosed, according to the mediators' statement.
In its latest debt adjustment plan, Detroit said creditors would only recover an estimated 10 percent to 13 percent on about $163.5 million of limited-tax GO bonds the city had labeled as being unsecured. Payment on most of the debt was guaranteed by Ambac Assurance Corp, according to city documents.
Earlier this month, Ambac and mutual fund Black Rock Financial Management were ordered into a mediation session with the city that was to take place on Thursday.
"The settlement recognizes the unique status and niche of (limited-tax GO bonds) in the municipal finance market," the mediators' statement said, adding that the unnamed insurer will honor "its insurance commitments on the existing policies."
The mediators added that a few but significant disputes remain in the case. On Aug. 14 a key court hearing will begin to determine if Detroit's plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history is fair and feasible.
Those disputes mostly involve bond insurers Syncora Guarantee Inc and Financial Guaranty Insurance Co , which have been pushing for the city to sell pieces at the Detroit Institute of Arts to raise money for creditors.
The so-called grand bargain in the city's plan was crafted to tap $466 million in funds pledged by philanthropic foundations and the art museum and $195 million from the state of Michigan to ease pension cuts for retired city workers and prevent a sale of art work.
Kevyn Orr, the city's state-appointed emergency manager, has reeled in settlements in recent months over the treatment of voter-approved unlimited-tax GO bonds and with various retiree groups and others.
On Friday, the American Federation of State, County and Municipal Employees Council 25 - Detroit's biggest labor union - urged city workers and retirees to vote in favor of Detroit's debt adjustment plan, according to a statement released by the bankruptcy court, which has set a July 11 voting deadline.
The statement said that tentative deals reached in April giving union members protections under a comprehensive collective bargaining agreement have been completed. Terms of the deals were not disclosed ahead of a member ratification vote and state approval that must be completed by June 30.
Council 25 President Al Garrett said in the statement while the union remains "severely concerned with the way this bankruptcy has been handled from its inception," the agreements are the best path forward for workers and retirees.
"They simply cannot risk the further serious reductions in pension, pay and job security if the plan, and our collective bargaining agreements, are not approved," Garrett said. (Reporting by Karen Pierog; editing by G Crosse and James Dalgleish)
RIO DE JANEIRO, June 13 Fri Jun 13, 2014 8:12pm EDT
RIO DE JANEIRO, June 13 (Reuters) - A judge approved a restructuring plan for Oleo e Gas Participacoes SA, the oil company controlled by Brazilian tycoon Eike Batista, according to a statement by the Rio de Janeiro court that heard the bankruptcy proceedings.
The court's approval grants a quick and expected resolution to the largest bankruptcy in Latin America's history.
Creditors of the company, formerly known as OGX Petroleo e Gas Participacoes SA, approved the plan on June 3. Holders of 90 percent of the Rio de Janeiro-based company's nearly 12 billion reais ($5.4 billion) in debt agreed to the plan.
In the statement released Friday, Judge Gilberto Clovis Faria Mattos said quick resolution to the case was vital because thousands of jobs at the company were at stake.
Under the terms of the plan, creditors will swap debts for about 90 percent of Oleo e Gas stock.
Creditors include Newport Beach, California-based Pacific Investment Management Co, or PIMCO, one of the world's largest bond investment companies; Batista's shipbuilding company, OSX Brasil SA OSXB3.SA, and suppliers such as oil services company Schlumberger NV SLB.N.
The approval comes seven months after Oleo e Gas filed for bankruptcy court protection.
The stake controlled by Batista, at present about 51 percent of Oleo e Gas stock, will drop to about 5 percent. Ownership transfer from Batista and other shareholders to creditors is expected to occur by September or October.
Batista and other shareholders will get warrants to buy about 15 percent of new Oleo e Gas stock.
The plan makes Oleo e Gas debt free, easing efforts to increase output from offshore oil wells near Rio.
$1 = 2.22 Brazilian reais (Reporting by Juliana Schincariol and Jeb Blount; Editing by David Gregorio)
RIO DE JANEIRO, June 13 Fri Jun 13, 2014 8:12pm EDT
RIO DE JANEIRO, June 13 (Reuters) - A judge approved a restructuring plan for Oleo e Gas Participacoes SA, the oil company controlled by Brazilian tycoon Eike Batista, according to a statement by the Rio de Janeiro court that heard the bankruptcy proceedings.
The court's approval grants a quick and expected resolution to the largest bankruptcy in Latin America's history.
Creditors of the company, formerly known as OGX Petroleo e Gas Participacoes SA, approved the plan on June 3. Holders of 90 percent of the Rio de Janeiro-based company's nearly 12 billion reais ($5.4 billion) in debt agreed to the plan.
In the statement released Friday, Judge Gilberto Clovis Faria Mattos said quick resolution to the case was vital because thousands of jobs at the company were at stake.
Under the terms of the plan, creditors will swap debts for about 90 percent of Oleo e Gas stock.
Creditors include Newport Beach, California-based Pacific Investment Management Co, or PIMCO, one of the world's largest bond investment companies; Batista's shipbuilding company, OSX Brasil SA OSXB3.SA, and suppliers such as oil services company Schlumberger NV SLB.N.
The approval comes seven months after Oleo e Gas filed for bankruptcy court protection.
The stake controlled by Batista, at present about 51 percent of Oleo e Gas stock, will drop to about 5 percent. Ownership transfer from Batista and other shareholders to creditors is expected to occur by September or October.
Batista and other shareholders will get warrants to buy about 15 percent of new Oleo e Gas stock.
The plan makes Oleo e Gas debt free, easing efforts to increase output from offshore oil wells near Rio.
$1 = 2.22 Brazilian reais (Reporting by Juliana Schincariol and Jeb Blount; Editing by David Gregorio)
June 13 Fri Jun 13, 2014 4:11pm EDT
June 13 (Reuters) - A settlement over the treatment of outstanding limited-tax general obligation bonds in Detroit's historic bankruptcy case has been reached, U.S. Bankruptcy Court mediators announced on Friday.
Details of the settlement, reached between the city and two unnamed parties that either own or insure "a large majority" of the bonds, are in "the final documentation process" and were not disclosed, according to the mediators' statement. (Reporting By Karen Pierog; Editing by Meredith Mazzilli)
Fri Jun 13, 2014 6:44pm EDT
(Recasts; adds details on completion of collection bargaining agreements with union)
June 13 (Reuters) - A settlement has been reached in Detroit's historic bankruptcy case over the treatment of unsecured limited-tax general obligation bonds, U.S. Bankruptcy Court mediators announced on Friday.
Details of the settlement, reached between the city and two unnamed parties that either own or insure "a large majority" of the bonds, are in "the final documentation process," and were not disclosed, according to the mediators' statement.
In its latest debt adjustment plan, Detroit said creditors would only recover an estimated 10 percent to 13 percent on about $163.5 million of limited-tax GO bonds the city had labeled as being unsecured. Payment on most of the debt was guaranteed by Ambac Assurance Corp, according to city documents.
Earlier this month, Ambac and mutual fund Black Rock Financial Management were ordered into a mediation session with the city that was to take place on Thursday.
"The settlement recognizes the unique status and niche of (limited-tax GO bonds) in the municipal finance market," the mediators' statement said, adding that the unnamed insurer will honor "its insurance commitments on the existing policies."
The mediators added that a few but significant disputes remain in the case. On Aug. 14 a key court hearing will begin to determine if Detroit's plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history is fair and feasible.
Those disputes mostly involve bond insurers Syncora Guarantee Inc and Financial Guaranty Insurance Co , which have been pushing for the city to sell pieces at the Detroit Institute of Arts to raise money for creditors.
The so-called grand bargain in the city's plan was crafted to tap $466 million in funds pledged by philanthropic foundations and the art museum and $195 million from the state of Michigan to ease pension cuts for retired city workers and prevent a sale of art work.
Kevyn Orr, the city's state-appointed emergency manager, has reeled in settlements in recent months over the treatment of voter-approved unlimited-tax GO bonds and with various retiree groups and others.
On Friday, the American Federation of State, County and Municipal Employees Council 25 - Detroit's biggest labor union - urged city workers and retirees to vote in favor of Detroit's debt adjustment plan, according to a statement released by the bankruptcy court, which has set a July 11 voting deadline.
The statement said that tentative deals reached in April giving union members protections under a comprehensive collective bargaining agreement have been completed. Terms of the deals were not disclosed ahead of a member ratification vote and state approval that must be completed by June 30.
Council 25 President Al Garrett said in the statement while the union remains "severely concerned with the way this bankruptcy has been handled from its inception," the agreements are the best path forward for workers and retirees.
"They simply cannot risk the further serious reductions in pension, pay and job security if the plan, and our collective bargaining agreements, are not approved," Garrett said. (Reporting by Karen Pierog; editing by G Crosse and James Dalgleish)
June 13 Fri Jun 13, 2014 4:11pm EDT
June 13 (Reuters) - A settlement over the treatment of outstanding limited-tax general obligation bonds in Detroit's historic bankruptcy case has been reached, U.S. Bankruptcy Court mediators announced on Friday.
Details of the settlement, reached between the city and two unnamed parties that either own or insure "a large majority" of the bonds, are in "the final documentation process" and were not disclosed, according to the mediators' statement. (Reporting By Karen Pierog; Editing by Meredith Mazzilli)
Fri Jun 13, 2014 6:44pm EDT
(Recasts; adds details on completion of collection bargaining agreements with union)
June 13 (Reuters) - A settlement has been reached in Detroit's historic bankruptcy case over the treatment of unsecured limited-tax general obligation bonds, U.S. Bankruptcy Court mediators announced on Friday.
Details of the settlement, reached between the city and two unnamed parties that either own or insure "a large majority" of the bonds, are in "the final documentation process," and were not disclosed, according to the mediators' statement.
In its latest debt adjustment plan, Detroit said creditors would only recover an estimated 10 percent to 13 percent on about $163.5 million of limited-tax GO bonds the city had labeled as being unsecured. Payment on most of the debt was guaranteed by Ambac Assurance Corp, according to city documents.
Earlier this month, Ambac and mutual fund Black Rock Financial Management were ordered into a mediation session with the city that was to take place on Thursday.
"The settlement recognizes the unique status and niche of (limited-tax GO bonds) in the municipal finance market," the mediators' statement said, adding that the unnamed insurer will honor "its insurance commitments on the existing policies."
The mediators added that a few but significant disputes remain in the case. On Aug. 14 a key court hearing will begin to determine if Detroit's plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history is fair and feasible.
Those disputes mostly involve bond insurers Syncora Guarantee Inc and Financial Guaranty Insurance Co , which have been pushing for the city to sell pieces at the Detroit Institute of Arts to raise money for creditors.
The so-called grand bargain in the city's plan was crafted to tap $466 million in funds pledged by philanthropic foundations and the art museum and $195 million from the state of Michigan to ease pension cuts for retired city workers and prevent a sale of art work.
Kevyn Orr, the city's state-appointed emergency manager, has reeled in settlements in recent months over the treatment of voter-approved unlimited-tax GO bonds and with various retiree groups and others.
On Friday, the American Federation of State, County and Municipal Employees Council 25 - Detroit's biggest labor union - urged city workers and retirees to vote in favor of Detroit's debt adjustment plan, according to a statement released by the bankruptcy court, which has set a July 11 voting deadline.
The statement said that tentative deals reached in April giving union members protections under a comprehensive collective bargaining agreement have been completed. Terms of the deals were not disclosed ahead of a member ratification vote and state approval that must be completed by June 30.
Council 25 President Al Garrett said in the statement while the union remains "severely concerned with the way this bankruptcy has been handled from its inception," the agreements are the best path forward for workers and retirees.
"They simply cannot risk the further serious reductions in pension, pay and job security if the plan, and our collective bargaining agreements, are not approved," Garrett said. (Reporting by Karen Pierog; editing by G Crosse and James Dalgleish)
RIO DE JANEIRO, June 13 Fri Jun 13, 2014 8:12pm EDT
RIO DE JANEIRO, June 13 (Reuters) - A judge approved a restructuring plan for Oleo e Gas Participacoes SA, the oil company controlled by Brazilian tycoon Eike Batista, according to a statement by the Rio de Janeiro court that heard the bankruptcy proceedings.
The court's approval grants a quick and expected resolution to the largest bankruptcy in Latin America's history.
Creditors of the company, formerly known as OGX Petroleo e Gas Participacoes SA, approved the plan on June 3. Holders of 90 percent of the Rio de Janeiro-based company's nearly 12 billion reais ($5.4 billion) in debt agreed to the plan.
In the statement released Friday, Judge Gilberto Clovis Faria Mattos said quick resolution to the case was vital because thousands of jobs at the company were at stake.
Under the terms of the plan, creditors will swap debts for about 90 percent of Oleo e Gas stock.
Creditors include Newport Beach, California-based Pacific Investment Management Co, or PIMCO, one of the world's largest bond investment companies; Batista's shipbuilding company, OSX Brasil SA OSXB3.SA, and suppliers such as oil services company Schlumberger NV SLB.N.
The approval comes seven months after Oleo e Gas filed for bankruptcy court protection.
The stake controlled by Batista, at present about 51 percent of Oleo e Gas stock, will drop to about 5 percent. Ownership transfer from Batista and other shareholders to creditors is expected to occur by September or October.
Batista and other shareholders will get warrants to buy about 15 percent of new Oleo e Gas stock.
The plan makes Oleo e Gas debt free, easing efforts to increase output from offshore oil wells near Rio.
$1 = 2.22 Brazilian reais (Reporting by Juliana Schincariol and Jeb Blount; Editing by David Gregorio)
By Nick Brown
NEW YORK, June 12 Thu Jun 12, 2014 3:06pm EDT
NEW YORK, June 12 (Reuters) - Genco Shipping & Trading on Thursday defended its proposed plan to exit bankruptcy on the first day of a trial over accusations by shareholders that it is undervaluing its assets.
At a hearing in federal bankruptcy court in Manhattan, a lawyer for Genco, a dry bulk shipper that filed for Chapter 11 in April, said the plan protects all stakeholders, equity included.
"Equity wants to have their cake and eat it too," Bradley O'Neill, the lawyer, told Judge Sean Lane.
Shareholders have panned the plan because of what they see as a paltry payout, about $30 million in warrants. The federal government as well has objected to the plan on unrelated grounds.
The equity holders include Aurelius Capital Management and other sophisticated hedge funds known for buying distressed debt and litigating to boost their payouts.
Decreased charter rates and general volatility in the shipping market pushed Genco into bankruptcy with about $1.3 billion in debt. Under a restructuring supported by its creditors, Genco would give secured lenders 81 percent of its post-bankruptcy ownership. Convertible noteholders would get 8.4 percent of the equity and a chance to participate in a rights offering that would raise $100 million in new capital for Genco.
Shareholders said in court papers last week that Genco "engineered an unreasonably low valuation" in a ploy to enable management and creditors control the company.
Genco board member Harry Perrin was one of three witnesses to testify on Thursday, though questioning lasted only two hours and the bulk of evidence is expected to come from testimony later this month from valuation experts.
The trial is scheduled for Thursday and Friday, as well as June 23 and 24.
There is no love lost between the shareholder committee and Genco. The company last month asked its bankruptcy judge to abolish the committee altogether, although he has not ruled yet.
Genco at the time argued the committee, whose professional fees are paid by Genco, was essentially forcing the company to subsidize litigation against it. The company has said equity holders should be pleased to recover anything because most corporate bankruptcies wipe out common shareholdings.
The federal government, through the Department of Justice's bankruptcy regulatory arm, objected to Genco's restructuring plan over perks it would provide to supporting creditors, namely payment of legal fees and releases from legal claims. (Reporting by Nick Brown; Editing by Steve Orlofsky)
Thu Jun 12, 2014 1:38pm EDT
(Adds expert commentary; adds no-comment from Clarks' lawyer)
By Nick Brown
June 12 (Reuters) - The U.S. Supreme Court on Thursday said inherited individual retirement accounts are not protected from creditors in bankruptcy, in a ruling that impacts one of the most popular ways to save for retirement.
In a unanimous opinion, the nation's highest court held that IRAs inherited by someone other than a spouse cannot be considered retirement funds, because beneficiaries cannot invest additional money or delay distributions until retirement.
The treatment of inherited IRAs in bankruptcy is gaining relevance as Baby Boomers die and leave assets to their children.
A set of 2005 bankruptcy law amendments protect retirement accounts from the reach of creditors. The Supreme Court was asked to decide if Congress intended those protections to extend to inherited IRAs in Clark v. Rameker, a dispute over the bankruptcy of a small-town pizza shop owner in Soughton, Wisc.
Heidi Heffron-Clark and her husband, Brandon Clark, declared bankruptcy in 2010 after the shop closed. The Clarks' main asset was about $300,000 in an IRA inherited from Heffron-Clark's mother. William Rameker, the trustee administering the Clarks' estate, wanted to get his hands on the money for the benefit of landlords and other creditors owed about $700,000.
After conflicting rulings through multiple appeals, the Supreme Court heard arguments in March in an effort to clear up inconsistencies on the issue in different courts.
In an opinion penned by Justice Sonia Sotomayor, the high court said the bankruptcy code is designed to strike a balance between ensuring creditor recoveries while protecting a debtor's "essential needs."
The justices determined an inherited IRA did not fall within the scope of an essential need the way retirement security did.
"Nothing about the inherited IRA's legal characteristics would prevent (or even discourage) the individual from using the entire balance of the account on a vacation home or sports car immediately after her bankruptcy proceedings are complete," the ruling said.
A lawyer for the Clarks declined to comment. Attorneys for Rameker did not respond to a request for comment.
Audrey Young, a director at tax and consulting firm McGladrey, said the ruling creates a disincentive for people to save money using IRAs.
Young, who has written on the case and believes inherited IRAs should be protected, said she believes state legislatures will be "inundated" with bills seeking to protect inherited IRAs, a step seven states have already taken.
In the meantime, she said, people should put retirement money in trusts. "We need to quickly get the word out to IRA owners to designate spendthrift trusts as the beneficiaries of their retirement plans," she said.
During arguments in March, Justice Elena Kagan stressed the importance of the outcome, saying "tons and tons of people have IRAs, and they die every day."
The ruling affirms a decision last year authored by Frank Easterbrook, the economic scholar and chief judge for the 7th U.S. Circuit Court of Appeals. Easterbrook's ruling was at the time contrary to prevailing case law in other circuits. (Reporting by Nick Brown; editing by Andrew Hay)
Fri Jun 13, 2014 2:11am EDT
(The following statement was released by the rating agency) BANGKOK/SINGAPORE, June 13 (Fitch) Fitch Ratings has assigned an expected 'BBB-(EXP)' rating to Krung Thai Bank Public Company Limited's (KTB; BBB/Stable) proposed US dollar-denominated Basel III-compliant Tier 2 subordinated notes under the bank's USD2.5bn euro medium-term note (MTN) programme. The notes will be issued out of KTB's Cayman Islands branch, and are the first publicly-transacted US dollar-denominated Basel III-compliant Tier 2 subordinated notes out of Thailand. The final rating is subject to the receipt of final documentation conforming to information already received. KEY RATING DRIVERS Fitch's typical anchor rating for Basel III Tier 2 securities is the issuer's Viability Rating, which does not factor in any extraordinary state support for this type of instrument. However, the anchor that is used could be a support-driven Issuer Default Rating (IDR) if Fitch views that there would be an extremely strong likelihood of state action to prevent non-viability, In this case, Fitch views that there would be pre-emptive equity injections by the Thai government to maintain KTB as a going concern, without triggering non-viability. Hence its support-driven IDR at 'BBB' is the rating that best reflects the risk of the bank becoming non-viable, and is used as the anchor for the Basel III Tier 2 notes. KTB is 55%-held by the Thai government's Financial Institutions Development Fund. It is the only state-owned commercial bank, with no prospects of any significant changes in the shareholding structure. KTB has close operational links with the Finance Ministry, and acts as the main payments and cash management provider to the government. The bank has also previously played a quasi-policy role to support government initiatives and activities, and although KTB has become increasingly commercial in its focus, we expect the bank to be called upon to perform policy functions in future, if necessary. The Basel III Tier 2 notes are rated one notch below the anchor rating to reflect their higher loss-severity risk relative to senior unsecured instruments arising from their subordinated status. Key terms of the notes include a non-viability trigger (defined as emergency capital assistance from the central bank or other empowered government agency), with a partial rather than mandatory full write-down feature. The Tier 2 notes would be written down after any outstanding Additional Tier 1 securities with loss-absorption features have been fully written off or converted to equity, and on a pari passu basis with all other Tier 2 loss absorbing instruments of the issuer. RATING SENSITIVITIES Any change in KTB's IDR would have an impact on the rating of these notes. KTB's IDR is driven by its Support Rating Floor, and any material shift in the ability or propensity of the Thai government to support KTB would have an impact on the IDR. Any reduction in the strategic importance of KTB to the Thai authorities could lead to a lower rating on the IDR and on the notes. The other ratings of KTB are unaffected and are as follows: Long-term IDR: 'BBB'; Outlook Stable Short-term IDR: 'F3' Viability Rating: 'bbb-' Support Rating: '2' Support Rating Floor: 'BBB' National Long-Term Rating: 'AA+(tha)'; Outlook Stable National Short-Term Rating: 'F1+(tha)' Senior unsecured USD 2.5bn EMTN programme: 'BBB' Long-term foreign currency senior unsecured notes: 'BBB' International rating for hybrid Tier 1 securities: 'B' National THB 30bn Short-Term Debenture Programme: 'F1+(tha)' National long-term subordinated debt: 'AA(tha)' National rating for hybrid Tier 1 securities: 'BBB(tha)' Contacts: Primary Analyst Ambreesh Srivastava Senior Director +65 6796 7218 Fitch Ratings Singapore PTE Ltd 6 Temasek Boulevard #35-05 Suntec Tower Four Singapore 038986 Secondary Analyst Parson Singha, CFA Senior Director +662 108 0151 Committee Chairperson Jonathan Cornish Managing Director +852 2263 9901 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, "Global Financial Institutions Rating Criteria", dated 31 January 2014, and "Assessing and Rating Bank Subordinated and Hybrid Securities", dated 31 January 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Mon Jun 9, 2014 11:39am EDT
(Adds GM comment)
By Jessica Dye
NEW YORK, June 9 (Reuters) - A federal judicial panel ruled on Monday that lawsuits against General Motors Co from customers who say they suffered economic damages from a recall over faulty ignition switches will be heard in New York.
The cases will be sent to U.S. District Judge Jesse Furman in the Southern District of New York, according to the ruling from the U.S. Judicial Panel on Multidistrict Litigation, which considers requests to consolidate related lawsuits in U.S. federal courts.
More than 80 lawsuits have been filed by customers who allege that their cars lost value as a result of the recall, which began in February. GM had asked that the cases be consolidated and transferred to New York, the same district in which it filed for bankruptcy and emerged from it in 2009.
GM is asking the federal bankruptcy court in Manhattan to determine whether claims brought by plaintiffs over the recall are blocked by the terms of its bankruptcy sale order, which created "new GM" and largely barred liability against the new company for the pre-bankruptcy conduct of "old GM."
The order does not affect lawsuits over personal injuries or deaths alleged to have been caused by the vehicles.
Plaintiffs' lawyers suing the company had also asked that the cases be consolidated but disagreed on where. The forums they suggested were Los Angeles - where litigation against Toyota Motor Corp over acceleration issues was transferred - as well as Miami, New Orleans, San Francisco and Texas.
In its order on Monday, the panel said that the Manhattan district was the most appropriate choice, since it was the same district that handled GM's bankruptcy, as well as the bankruptcy of Delphi Automotive Plc, a GM supplier that made the switch at issue. Delphi has been named a defendant in some of the cases.
Several judges in New York, including Furman, "have some familiarity with the common defendant and its prior bankruptcy proceedings," the panel wrote.
The panel, which travels around the country, heard oral arguments on the request in Chicago.
Greg Martin, a GM spokesman, said via email that the order affirmed the company's belief that the New York court is the most appropriate venue for the cases.
An attorney for some of the plaintiffs, Steve Berman, said in an email that he was "happy to be (in New York), as we hear this judge is terrific."
A representative for Delphi did not immediately respond to requests by email for comment. (Editing by Ted Botha, Jonathan Oatis and Matthew Lewis)
June 9 Mon Jun 9, 2014 1:35pm EDT
June 9 (Reuters) - Detroit's three automakers said on Monday they had committed $26 million toward $100 million pledged by the city's art museum to save its collection from being tapped to raise cash for Detroit's historic bankruptcy.
Under a so-called grand bargain, the Detroit Institute of Arts (DIA) would contribute $100 million to ease pension cuts on the city's retirees and avoid a sale of art works to pay city creditors. Philanthropic foundations have pledged about $366 million and the state of Michigan would make a lump sum payment of $195 million.
The $26 million from the automakers consists of $10 million from Ford Motor Company Fund, $5 million from General Motors Co, $5 million from General Motors Foundation and $6 million from Chrysler Group LLC.
As part of the grand bargain, ownership of the DIA's collection and assets would be transferred from the city to the private nonprofit corporation that currently operates the museum. The Detroit City Council on Thursday unanimously voted to support the transfer.
Detroit's workers and retirees must still vote on the city's plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history.
Shirley Lightsey, president of the Detroit Retired City Employees Association, spoke at the DIA event announcing the car makers' commitment, urging retirees to vote "yes" on the ballots they need to send back by July 11.
"You cannot eat principle," she said.
City unions and the Michigan attorney general have contended that the state constitution prohibits the impairment of pension benefits for public sector workers. But city and state officials have warned that if members of Detroit's general and police and fire retirement systems reject the plan, the money from the grand bargain would go away and retirees would face bigger pension cuts.
Starting on July 24, U.S. Bankruptcy Judge Steven Rhodes will conduct a confirmation hearing on the plan to determine if it is fair and feasible. (Reporting by Karen Pierog, additional reporting by Ben Klayman in Detroit; Editing by Tom Brown)
June 9 Mon Jun 9, 2014 4:38pm EDT
June 9 (Reuters) - The federal judge overseeing Detroit's bankruptcy delayed, by three weeks, the start of a hearing to confirm the city's debt adjustment plan, raising the possibility that the case could drag on beyond the term of Detroit's emergency manager.
Judge Steven Rhodes on Monday released the case's fifth revised schedule, pushing back the start of the hearing until Aug. 14 from July 24. The schedule listed as many as 28 hearing days that could stretch until Sept. 23.
That means the bankruptcy case the city filed in July 2013 could drag on beyond Kevyn Orr's 18-month term as the city's state-appointed emergency manager. Under Michigan law, Detroit's elected officials could opt to remove Orr in late September. Orr has indicated he expects to leave the job at that time.
Michigan Governor Rick Snyder told reporters on a conference call last Wednesday that he hoped the confirmation trial would be over by the end of September, leaving at the most several weeks until the plan's effective date.
"We'll be prepared with appropriate contingencies," he said, declining to discuss options.
Orr and his team of consultants had originally pushed for a speedy schedule to wrap up the biggest municipal bankruptcy in U.S. history. But the complex case has taken longer than expected. The city's plan to adjust $18 billion of debt and other obligations was first filed with the court on Feb. 21 and has been revised several times as Detroit reached new settlements with creditors.
Last week, a group of so-called objecting creditors that includes bond insurers, banks and unions proposed moving the confirmation hearing's start to Sept. 18, contending the city's tardiness in producing documents does not afford them enough time to prepare for the proceeding.
The city countered on Thursday that a two-month delay was not warranted as it has already produced "tens of thousands of documents that the objectors have requested." Instead, Detroit's attorneys suggested changing the trial's start to Aug. 11 with its conclusion targeted for Sept. 12.
Rhodes, who must determine if Detroit's plan is fair and feasible, has also delayed until July 16 and 17 a hearing on legal issues in the case that had been set for June 24. But his timetable continues to call for thousands of Detroit creditors to complete voting on the debt adjustment plan by July 11.
James Spiotto, managing director of Chapman Strategic Advisors and an expert on municipal bankruptcy, cautioned that moving the case along too quickly could give ammunition to creditors who choose to appeal the outcome of the case.
"As much as you want to stay on track you want to make sure people have time. It's the notion of due process," he said in an interview on Friday, adding that creditors could claim abuse of discretion or denial of due process in their appeals.
Still, he said, most Chapter 9 municipal bankruptcies end in settlements and do not result in appeals.
(Reporting By Karen Pierog; Additional reporting by Tom Hals and Lisa Lambert; Editing by Steve Orlofsky)
