Atwater, California may avoid bankruptcy with union deals

Fri Oct 19, 2012 4:23pm EDT

* Monday city council to hear about concessions

* Atwater's non-safety payroll expenses to be cut by $610,000

* More saving from police officers

By Jim Christie

SAN FRANCISCO, Oct 19 (Reuters) - Pay cuts and other concessions by employees of Atwater, California may help the city balance its budget and avoid bankruptcy, i ts mayor said on Friday.

"We hope to be able to balance our budget," Mayor Joan Faul told Reuters by telephone. "We can't thank our unions enough."

Atwater, a city of about 28,000 residents in California's Central Valley, faces a budget gap of more than $3 million and is a candidate to become the fourth city in California this year to seek protection from creditors under Chapter 9 after it declared a fiscal emergency this month.

Three other cities in the most populous U.S. state this year have filed for Chapter 9 protection from their creditors, prompting some concern in the $3.7 trillion U.S. municipal bond market of more filings. They can be used to try to break contracts, including those with bondholders.

On Monday, Atwater's staff will brief Faul and other city council members on concessions agreed to by its work force.

They are expected to considerably bolster the city's finances, said Nancy Vinson, a business agent for the American Federation of State, County and Municipal Employees (AFSCME). The union represents Atwater's non-safety workers.

"I'm very hopeful," Vinson said. "They're doing what they can to fix it and if they follow through with the things they've identified to me, it looks good."

Vinson said the city will cut 8 positions from its 35-employee non-safety payroll and that its remaining members will accept a 5 percent wage cut and pay more toward their pension accounts and health care.

Also, furloughs imposed last year will remain in effect so that Atwater's AFSCME members will see their overall compensation cut by between $500 and $650 a month, which will cut their combined payroll expense by 24 percent from last year Vinson said.

The concessions should cut Atwater's non-safety payroll expenses by $610,000 this fiscal year, Vinson said, adding that the city's police officers, which she does not represent, have agreed to steep compensation cuts in line with those affecting her union's members.

Faul said police officers will see a 22 percent cut in overall compensation, adding that details on Atwater's labor agreements would be unveiled on Monday.

Other financial measures Atwater is pressing include negotiating a new contract for garbage services and moving forward with plans for raising 10-year-old rates for garbage services and 20-year-old rates for water services. The rate plans would need to be put to voters, Faul said.

Faul declined to comment on how the city council may follow up on its fiscal emergency declaration. By declaring such emergencies, California cities can fast-track plans for Chapter 9 filings.

The city council of San Bernardino in July authorized a bankruptcy filing after declaring a fiscal emergency. The city of 210,000 residents 65 miles (104 km) east of Los Angeles filed for bankruptcy on Aug. 1.

By contrast, Stockton, a city of 300,000 about 62 miles (100 km) northwest of Atwater, filed for Chapter 9 protection in June after 90 days of inconclusive mediation with its creditors.

Mammoth Lakes, a resort town of about 8,000 in California's Sierra Nevada Mountains, filed for Chapter 9 protection on the heels of Stockton's filing because it could not afford to pay a $43 million legal judgment against it. That dispute has since been settled and Mammoth Lakes is moving to have its bankruptcy case dismissed.

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UPDATE 2-Nationstar, Ocwen and Walter fight over ResCap-sources

Fri Oct 19, 2012 7:49pm EDT

* Auction next week for mortgage business, loans

* Nationstar is opening bidder for mortgage business

* Berkshire bidding for loan portfolio

By Jessica Toonkel and Rick Rothacker

Oct 19 (Reuters) - Ocwen Financial Corp and Walter Investment Management Corp have teamed up to top Nationstar Mortgage Holdings Inc's starting bid for Residential Capital LLC's mortgage business, ensuring a bankruptcy auction goes ahead next week, two sources familiar with the matter said on Friday.

The consortium offered to buy the mortgage business for $40 million more than Nationstar's $2.45 billion opening bid, one source said. Nationstar was expected to make an updated bid, another source said.

Several other potential buyers that had shown interest in the business, including private equity firm Blackstone Group and technology company IBM Corp, were not expected to submit offers, one of the sources said, potentially leaving Nationstar and the Ocwen-Walter group as the main contenders.

ResCap, the mortgage unit of auto lender Ally Financial Inc, filed for bankruptcy in May in an effort to wipe out legal liabilities from mortgage-backed securities it sold during the housing boom.

Ally, which is 74 percent owned by the U.S. government after a series of bailouts, is looking to focus on U.S. auto lending and banking after taking huge losses on ResCap's mortgages. It is also selling international businesses to help pay back taxpayers.

Residential Capital and Ocwen declined to comment. Spokespeople for Nationstar, Walter, Blackstone and IBM could not be immediately reached.

Bids were due by the end of business on Friday for ResCap's mortgage platform, as well as a portfolio of loans. The private auction begins on Tuesday at a New York hotel.

Warren Buffett's Berkshire Hathaway Inc has set the low bid for the loan package at $1.44 billion, topping Ally, which had said it would buy the loans if no one else did.

Berkshire also argued in bankruptcy court for the right to be the opening bidder for the mortgage business, but failed to unseat Nationstar. It did get Nationstar, majority owned by Fortress Investment Group LLC, to increase the opening bid by $125 million.

It was not clear whether Berkshire planned to submit another bid. Two other sources familiar with the auction, but not close to Buffett said they did not expect Berkshire to enter the fray for the mortgage business.

Berkshire "does not normally discuss our activities other than when we're legally required to do so," said Buffett's assistant, Debbie Bosanek.

The ResCap sale is expected to raise at least $4 billion, which will then become part of a pool of money used to pay back Ally and other investors, including those who bought mortgage-backed securities tied to ResCap home loans that went bad.

Nationstar, Ocwen and Walter have been building up their mortgage servicing businesses by buying assets shed by larger banks such as Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp. Ocwen also agreed this month to buy Homeward Residential Holdings from private-equity firm WL Ross & Co LLC for $750 million in cash and stock.

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Hong Kong Sept bankruptcy petitions down 17.5 pct from August

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Owner of Hickey Freeman, Hart Schaffner Marx files for bankruptcy

Fri Oct 19, 2012 2:14pm EDT

Oct 19 (Reuters) - HMX Acquisition Corp, the firm behind clothing brands Hickey Freeman and Coppley, filed for Chapter 11 bankruptcy protection on Friday in a Manhattan court.

The company, best known for tailoring suits under the Hart Schaffner Marx brand for U.S. Presidents, also sought court approval for a 'stalking horse bid' from Authentic Brands Group LLC.

A stalking horse bid gives the bidder first preference over a bankrupt company's assets and sets a minimum threshold for further bids.

HMX listed assets of less than $50,000 and liabilities of between $50 million to $100 million in the filing. It listed Pacificways Ltd, Conde Nast and others among its largest unsecured creditors.

The company's brands, which include Christopher Blue and Sansabelt, are sold at well-known retailers like Dillard's Inc and Nordstrom Inc.

HMX said its existing lender, Salus Capital, would provide it with a $65 million debtor-in-possession facility to continue operating its business during the bankruptcy.

The Canadian affiliates of the company have not sought bankruptcy protection, HMX said.

The case is In re: HMX Acquisition Corp, U.S. Bankruptcy Court, Southern District of New York, No:12-14300.

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Atwater, California may avoid bankruptcy with union deals

Fri Oct 19, 2012 4:23pm EDT

* Monday city council to hear about concessions

* Atwater's non-safety payroll expenses to be cut by $610,000

* More saving from police officers

By Jim Christie

SAN FRANCISCO, Oct 19 (Reuters) - Pay cuts and other concessions by employees of Atwater, California may help the city balance its budget and avoid bankruptcy, i ts mayor said on Friday.

"We hope to be able to balance our budget," Mayor Joan Faul told Reuters by telephone. "We can't thank our unions enough."

Atwater, a city of about 28,000 residents in California's Central Valley, faces a budget gap of more than $3 million and is a candidate to become the fourth city in California this year to seek protection from creditors under Chapter 9 after it declared a fiscal emergency this month.

Three other cities in the most populous U.S. state this year have filed for Chapter 9 protection from their creditors, prompting some concern in the $3.7 trillion U.S. municipal bond market of more filings. They can be used to try to break contracts, including those with bondholders.

On Monday, Atwater's staff will brief Faul and other city council members on concessions agreed to by its work force.

They are expected to considerably bolster the city's finances, said Nancy Vinson, a business agent for the American Federation of State, County and Municipal Employees (AFSCME). The union represents Atwater's non-safety workers.

"I'm very hopeful," Vinson said. "They're doing what they can to fix it and if they follow through with the things they've identified to me, it looks good."

Vinson said the city will cut 8 positions from its 35-employee non-safety payroll and that its remaining members will accept a 5 percent wage cut and pay more toward their pension accounts and health care.

Also, furloughs imposed last year will remain in effect so that Atwater's AFSCME members will see their overall compensation cut by between $500 and $650 a month, which will cut their combined payroll expense by 24 percent from last year Vinson said.

The concessions should cut Atwater's non-safety payroll expenses by $610,000 this fiscal year, Vinson said, adding that the city's police officers, which she does not represent, have agreed to steep compensation cuts in line with those affecting her union's members.

Faul said police officers will see a 22 percent cut in overall compensation, adding that details on Atwater's labor agreements would be unveiled on Monday.

Other financial measures Atwater is pressing include negotiating a new contract for garbage services and moving forward with plans for raising 10-year-old rates for garbage services and 20-year-old rates for water services. The rate plans would need to be put to voters, Faul said.

Faul declined to comment on how the city council may follow up on its fiscal emergency declaration. By declaring such emergencies, California cities can fast-track plans for Chapter 9 filings.

The city council of San Bernardino in July authorized a bankruptcy filing after declaring a fiscal emergency. The city of 210,000 residents 65 miles (104 km) east of Los Angeles filed for bankruptcy on Aug. 1.

By contrast, Stockton, a city of 300,000 about 62 miles (100 km) northwest of Atwater, filed for Chapter 9 protection in June after 90 days of inconclusive mediation with its creditors.

Mammoth Lakes, a resort town of about 8,000 in California's Sierra Nevada Mountains, filed for Chapter 9 protection on the heels of Stockton's filing because it could not afford to pay a $43 million legal judgment against it. That dispute has since been settled and Mammoth Lakes is moving to have its bankruptcy case dismissed.

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UPDATE 2-Nationstar, Ocwen and Walter fight over ResCap-sources

Fri Oct 19, 2012 7:49pm EDT

* Auction next week for mortgage business, loans

* Nationstar is opening bidder for mortgage business

* Berkshire bidding for loan portfolio

By Jessica Toonkel and Rick Rothacker

Oct 19 (Reuters) - Ocwen Financial Corp and Walter Investment Management Corp have teamed up to top Nationstar Mortgage Holdings Inc's starting bid for Residential Capital LLC's mortgage business, ensuring a bankruptcy auction goes ahead next week, two sources familiar with the matter said on Friday.

The consortium offered to buy the mortgage business for $40 million more than Nationstar's $2.45 billion opening bid, one source said. Nationstar was expected to make an updated bid, another source said.

Several other potential buyers that had shown interest in the business, including private equity firm Blackstone Group and technology company IBM Corp, were not expected to submit offers, one of the sources said, potentially leaving Nationstar and the Ocwen-Walter group as the main contenders.

ResCap, the mortgage unit of auto lender Ally Financial Inc, filed for bankruptcy in May in an effort to wipe out legal liabilities from mortgage-backed securities it sold during the housing boom.

Ally, which is 74 percent owned by the U.S. government after a series of bailouts, is looking to focus on U.S. auto lending and banking after taking huge losses on ResCap's mortgages. It is also selling international businesses to help pay back taxpayers.

Residential Capital and Ocwen declined to comment. Spokespeople for Nationstar, Walter, Blackstone and IBM could not be immediately reached.

Bids were due by the end of business on Friday for ResCap's mortgage platform, as well as a portfolio of loans. The private auction begins on Tuesday at a New York hotel.

Warren Buffett's Berkshire Hathaway Inc has set the low bid for the loan package at $1.44 billion, topping Ally, which had said it would buy the loans if no one else did.

Berkshire also argued in bankruptcy court for the right to be the opening bidder for the mortgage business, but failed to unseat Nationstar. It did get Nationstar, majority owned by Fortress Investment Group LLC, to increase the opening bid by $125 million.

It was not clear whether Berkshire planned to submit another bid. Two other sources familiar with the auction, but not close to Buffett said they did not expect Berkshire to enter the fray for the mortgage business.

Berkshire "does not normally discuss our activities other than when we're legally required to do so," said Buffett's assistant, Debbie Bosanek.

The ResCap sale is expected to raise at least $4 billion, which will then become part of a pool of money used to pay back Ally and other investors, including those who bought mortgage-backed securities tied to ResCap home loans that went bad.

Nationstar, Ocwen and Walter have been building up their mortgage servicing businesses by buying assets shed by larger banks such as Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp. Ocwen also agreed this month to buy Homeward Residential Holdings from private-equity firm WL Ross & Co LLC for $750 million in cash and stock.

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Owner of Hickey Freeman, Hart Schaffner Marx files for bankruptcy

Fri Oct 19, 2012 2:14pm EDT

Oct 19 (Reuters) - HMX Acquisition Corp, the firm behind clothing brands Hickey Freeman and Coppley, filed for Chapter 11 bankruptcy protection on Friday in a Manhattan court.

The company, best known for tailoring suits under the Hart Schaffner Marx brand for U.S. Presidents, also sought court approval for a 'stalking horse bid' from Authentic Brands Group LLC.

A stalking horse bid gives the bidder first preference over a bankrupt company's assets and sets a minimum threshold for further bids.

HMX listed assets of less than $50,000 and liabilities of between $50 million to $100 million in the filing. It listed Pacificways Ltd, Conde Nast and others among its largest unsecured creditors.

The company's brands, which include Christopher Blue and Sansabelt, are sold at well-known retailers like Dillard's Inc and Nordstrom Inc.

HMX said its existing lender, Salus Capital, would provide it with a $65 million debtor-in-possession facility to continue operating its business during the bankruptcy.

The Canadian affiliates of the company have not sought bankruptcy protection, HMX said.

The case is In re: HMX Acquisition Corp, U.S. Bankruptcy Court, Southern District of New York, No:12-14300.

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Atwater, California may avoid bankruptcy with union deals

Fri Oct 19, 2012 4:23pm EDT

* Monday city council to hear about concessions

* Atwater's non-safety payroll expenses to be cut by $610,000

* More saving from police officers

By Jim Christie

SAN FRANCISCO, Oct 19 (Reuters) - Pay cuts and other concessions by employees of Atwater, California may help the city balance its budget and avoid bankruptcy, i ts mayor said on Friday.

"We hope to be able to balance our budget," Mayor Joan Faul told Reuters by telephone. "We can't thank our unions enough."

Atwater, a city of about 28,000 residents in California's Central Valley, faces a budget gap of more than $3 million and is a candidate to become the fourth city in California this year to seek protection from creditors under Chapter 9 after it declared a fiscal emergency this month.

Three other cities in the most populous U.S. state this year have filed for Chapter 9 protection from their creditors, prompting some concern in the $3.7 trillion U.S. municipal bond market of more filings. They can be used to try to break contracts, including those with bondholders.

On Monday, Atwater's staff will brief Faul and other city council members on concessions agreed to by its work force.

They are expected to considerably bolster the city's finances, said Nancy Vinson, a business agent for the American Federation of State, County and Municipal Employees (AFSCME). The union represents Atwater's non-safety workers.

"I'm very hopeful," Vinson said. "They're doing what they can to fix it and if they follow through with the things they've identified to me, it looks good."

Vinson said the city will cut 8 positions from its 35-employee non-safety payroll and that its remaining members will accept a 5 percent wage cut and pay more toward their pension accounts and health care.

Also, furloughs imposed last year will remain in effect so that Atwater's AFSCME members will see their overall compensation cut by between $500 and $650 a month, which will cut their combined payroll expense by 24 percent from last year Vinson said.

The concessions should cut Atwater's non-safety payroll expenses by $610,000 this fiscal year, Vinson said, adding that the city's police officers, which she does not represent, have agreed to steep compensation cuts in line with those affecting her union's members.

Faul said police officers will see a 22 percent cut in overall compensation, adding that details on Atwater's labor agreements would be unveiled on Monday.

Other financial measures Atwater is pressing include negotiating a new contract for garbage services and moving forward with plans for raising 10-year-old rates for garbage services and 20-year-old rates for water services. The rate plans would need to be put to voters, Faul said.

Faul declined to comment on how the city council may follow up on its fiscal emergency declaration. By declaring such emergencies, California cities can fast-track plans for Chapter 9 filings.

The city council of San Bernardino in July authorized a bankruptcy filing after declaring a fiscal emergency. The city of 210,000 residents 65 miles (104 km) east of Los Angeles filed for bankruptcy on Aug. 1.

By contrast, Stockton, a city of 300,000 about 62 miles (100 km) northwest of Atwater, filed for Chapter 9 protection in June after 90 days of inconclusive mediation with its creditors.

Mammoth Lakes, a resort town of about 8,000 in California's Sierra Nevada Mountains, filed for Chapter 9 protection on the heels of Stockton's filing because it could not afford to pay a $43 million legal judgment against it. That dispute has since been settled and Mammoth Lakes is moving to have its bankruptcy case dismissed.

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UPDATE 2-Nationstar, Ocwen and Walter fight over ResCap-sources

Fri Oct 19, 2012 7:49pm EDT

* Auction next week for mortgage business, loans

* Nationstar is opening bidder for mortgage business

* Berkshire bidding for loan portfolio

By Jessica Toonkel and Rick Rothacker

Oct 19 (Reuters) - Ocwen Financial Corp and Walter Investment Management Corp have teamed up to top Nationstar Mortgage Holdings Inc's starting bid for Residential Capital LLC's mortgage business, ensuring a bankruptcy auction goes ahead next week, two sources familiar with the matter said on Friday.

The consortium offered to buy the mortgage business for $40 million more than Nationstar's $2.45 billion opening bid, one source said. Nationstar was expected to make an updated bid, another source said.

Several other potential buyers that had shown interest in the business, including private equity firm Blackstone Group and technology company IBM Corp, were not expected to submit offers, one of the sources said, potentially leaving Nationstar and the Ocwen-Walter group as the main contenders.

ResCap, the mortgage unit of auto lender Ally Financial Inc, filed for bankruptcy in May in an effort to wipe out legal liabilities from mortgage-backed securities it sold during the housing boom.

Ally, which is 74 percent owned by the U.S. government after a series of bailouts, is looking to focus on U.S. auto lending and banking after taking huge losses on ResCap's mortgages. It is also selling international businesses to help pay back taxpayers.

Residential Capital and Ocwen declined to comment. Spokespeople for Nationstar, Walter, Blackstone and IBM could not be immediately reached.

Bids were due by the end of business on Friday for ResCap's mortgage platform, as well as a portfolio of loans. The private auction begins on Tuesday at a New York hotel.

Warren Buffett's Berkshire Hathaway Inc has set the low bid for the loan package at $1.44 billion, topping Ally, which had said it would buy the loans if no one else did.

Berkshire also argued in bankruptcy court for the right to be the opening bidder for the mortgage business, but failed to unseat Nationstar. It did get Nationstar, majority owned by Fortress Investment Group LLC, to increase the opening bid by $125 million.

It was not clear whether Berkshire planned to submit another bid. Two other sources familiar with the auction, but not close to Buffett said they did not expect Berkshire to enter the fray for the mortgage business.

Berkshire "does not normally discuss our activities other than when we're legally required to do so," said Buffett's assistant, Debbie Bosanek.

The ResCap sale is expected to raise at least $4 billion, which will then become part of a pool of money used to pay back Ally and other investors, including those who bought mortgage-backed securities tied to ResCap home loans that went bad.

Nationstar, Ocwen and Walter have been building up their mortgage servicing businesses by buying assets shed by larger banks such as Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp. Ocwen also agreed this month to buy Homeward Residential Holdings from private-equity firm WL Ross & Co LLC for $750 million in cash and stock.

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Bankrupt San Bernardino halts payments to Calpers

By Tim Reid and Jim Christie

Thu Oct 18, 2012 8:51pm EDT

Oct 18 (Reuters) - San Bernardino, California, has failed to make more than $6 million in payments to the state's powerful public employee pension fund, heightening speculation of a high-stakes showdown between the fund and other creditors as the city seeks eligibility for bankruptcy protection.

Since July 31, the day before San Bernardino declared bankruptcy, the city has failed to make six biweekly employer contribution payments of more than $1 million to the California Public Employees' Retirement System (Calpers), a city spokesperson said.

The action taken by San Bernardino is in stark contrast with two other California cities - Vallejo, which emerged from bankruptcy in 2011, and Stockton, which is seeking bankruptcy protection. Both cities decided to keep current on all payments to the pension fund.

How San Bernardino deals with its future obligations to Calpers remains to be decided, but even opening the door to negotiating payments to Calpers is significant, said Karol Denniston, a San Francisco lawyer who helped draft California's bankruptcy process law.

Calpers is the largest pension system in the United States and serves many Californian cities and counties. It has long argued that pension contributions cannot be touched, even in bankruptcy.

"This is a David and Goliath approach of taking it head on," Denniston said, referring to the halted payments. "San Bernardino has taken on Calpers without even filing a motion," she added.

Vallejo asked other creditors to renegotiate or reduce their claims, while leaving Calpers untouched. Wall Street bondholders and insurers are already challenging Stockton's eligibility to file for Chapter 9 bankruptcy because it has avoided any potential clash with Calpers when it filed for bankruptcy.

Wall Street has also signaled that it intends to fight Calpers' historical primacy as a creditor in the San Bernardino case, with bond underwriters gearing up to file challenges to the bankruptcy next week.

A Calpers official confirmed the missed payments. Of the unpaid portion, $1.2 of that has been deemed delinquent because of the amount of time that has elapsed since that payment came due, the official added.

A spokesperson for San Bernardino said the failed payments to C alp ers a re "one of a number of obligations that the city has deferred due to our dire cashflow situation in order to keep making payroll to our employees and to keep paying for those materials and services that are most critical to our continued operations while the city works through its financial crisis."

"Those deferred payments will then become one of the obligations we will have to deal with later," the spokesperson added.

The city says it hopes to make the deferred payments part of a negotiated plan with Calpers that "can be added to future payments over an agreed-upon number of years."

San Bernardino is the third California city to seek bankruptcy protection this year, following Stockton and Mammoth Lakes.

The city of 210,000, 60 miles east of Los Angeles, lists Calpers as its biggest creditor, with unfunded pension obligations totaling $143.3 million. Calpers says it uses a different calculation method and pegs the debt at $319.5 million.

Its late payments to Calpers was first reported by Debtwire.

The outcome of how Calpers and bondholders are treated as creditors in Stockton and San Bernardino's bankruptcies, and whether Calpers receives preferential treatment, will have broad implications for local governments around the country that are struggling to balance their budgets amid soaring employee retirement costs.

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