U.S. judge says $178 mln Detroit bankruptcy fee tab 'reasonable'

Thu Feb 12, 2015 2:42pm EST

Feb 12 (Reuters) - The U.S. federal court judge who oversaw Detroit's historic bankruptcy case ruled on Thursday that the nearly $178 million charged to the city by law firms and consultants for fees and expenses was "reasonable."

Judge Steven Rhodes said he based his decision mainly on the complexity of the bankruptcy case filed in July 2013 as well as "substantial reductions" that the firms agreed to make to their bills. (Reporting by Karen Pierog, editing by G Crosse)

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UPDATE 1-U.S. judge says $178 mln Detroit bankruptcy fee tab 'reasonable'

Thu Feb 12, 2015 3:36pm EST

(Adds details of costs and reductions, background on bankruptcy)

Feb 12 (Reuters) - The federal judge who oversaw Detroit's historic bankruptcy case ruled on Thursday that the nearly $178 million charged to the city by law firms and consultants for fees and expenses was reasonable.

U.S. Bankruptcy Court Judge Steven Rhodes said he based his decision mainly on the complexity of the bankruptcy case filed in July 2013 as well as substantial reductions that the firms agreed to make in their bills.

"The city is now on a path to success precisely because of the expertise, skill, commitment, endurance, personal sacrifice, civility and proficiency of all of the professionals in the case, including most certainly those whose fees are subject to review in this opinion," the judge wrote.

The biggest bill in the biggest-ever U.S. municipal bankruptcy came from law firm Jones Day, which had employed Kevyn Orr before he was tapped by Michigan Governor Rick Snyder as Detroit's emergency manager in March 2013. For its role as the city's lead attorney in the case, Jones Day charged $57.9 million. It shaved about $17.7 million off its fees and expenses, according to the judge's order.

Financial advisory firm Miller Buckfire dropped its fee for work on the city's debt restructuring to $22 million from $29.1 million, the order added. Fees from dozens of other firms covered legal, actuarial, consulting and art appraisal services, as well as mediation and court-appointed experts.

Detroit exited bankruptcy on Dec. 10 with a court-approved plan to shed about $7 billion of its $18 billion of debt and obligations.

Rhodes said that the case involved numerous parties and drafts of the debt adjustment plan, a myriad of legal and factual issues, appeals and court-ordered mediation. His order noted that actual fees and expenses totaled $183.2 million and that amount was reduced to $178 million after the state of Michigan covered $5.29 million of the costs. (Reporting by Karen Pierog; Editing by G Crosse and Jonathan Oatis)

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Brazil's Eneva proposes up to 65 pct debt haircut in bankruptcy plan

SAO PAULO Thu Feb 12, 2015 4:08pm EST

SAO PAULO Feb 12 (Reuters) - Creditors of Eneva SA stand to lose as much as 65 percent of their investment in the Brazilian power producer as part of a bankruptcy protection plan unveiled on Thursday.

Rio de Janeiro-based Eneva, which in December filed for protection from creditors after failing to honor part of 2.33 billion reais ($822 million) in debt, offered a lump sum of 250,000 reais to each unsecured creditor, according to a securities filing.

Creditors who accept the largest discounts will be given top priority when it comes to repayments, the filing said.

The plan, which Eneva's board approved and was presented to a bankruptcy court in Rio for future discussion, includes a so-called debt haircut between 40 percent and 65 percent of the value of credits. The company declined to elaborate on the specifics of the proposal.

Creditor approval is key to ensure Eneva, which is jointly controlled by Germany's E.ON SE and former billionaire Eike Batista, stays afloat amid surging energy costs in Latin America's largest economy. Under terms of the plan, the company will seek a 3 billion reais capital increase through a placement of shares at 0.15 reais each.

The company, formerly MPX Energia SA, filled for bankruptcy protection on Dec. 10, after failing to refinance its debt. Eneva operates several thermal power plants in Brazil with a total installed capacity of 2.9 GW. The company also has interests in gas exploration fields in the country.

($1 = 2.833 Brazilian reais) (Reporting by Marcelo Teixeira; Editing by Guillermo Parra-Bernal and Tom Brown)

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Bankrupt San Bernardino, Calif. bondholders, clash in court over pension debt

By Tim Reid

RIVERSIDE, Calif. Wed Feb 11, 2015 7:47pm EST

RIVERSIDE, Calif. Feb 11 (Reuters) - Lawyers for bankrupt San Bernardino, California, and the city's creditors clashed in federal bankruptcy court on Wednesday, with a major bondholder accusing the city of stoking "Main Street versus Wall Street fires."

San Bernardino, now in its third year of bankruptcy, accused the bondholder and its bond insurer allies of trying to overwhelm the city with litigation and derail its efforts to produce a viable exit plan.

At the same time, a major bondholder claimed it should be treated on equal terms to that of the city's biggest creditor, Calpers, California's public pension fund.

The growing tension between the city and some of its biggest creditors come after the Luxembourg-based bank Europäische Pfandbrief-und Kommunalkreditbank AG (EEPK), which holds $50 million in pension obligation bonds, filed a lawsuit against San Bernardino in January.

Also suing the city in the same lawsuit are Ambac Assurance Corp., which insures a portion of those bonds, and Wells Fargo Bank, the bond trustee and flagship bank of Wells Fargo & Co.

Paul Glassman, an attorney representing San Bernardino, on Wednesday told the judge overseeing the case that EEPK is concerned that it will not be paid in full and is trying "to block confirmation of the city's plan any way they can."

Glassman said EEPK is trying to "cause chaos."

Meanwhile, Vincent J. Marriott, an attorney for EEPK, said the city had misinterpreted the bank's lawsuit, accusing it of trying to "stoke Main Street versus Wall Street fires."

San Bernardino struck a deal last year with Calpers, agreeing to pay the pension fund in full in its bankruptcy exit plan, which it must produce by May 30.

Since then city officials have confirmed to Reuters that San Bernardino intends to pay significantly less than the full amount it owes to EEPK, Ambac and Wells Fargo, and that it views bondholder obligations as less important than its obligations to Calpers.

San Bernardino, a city of 205,000, 65 miles east of Los Angeles, declared bankruptcy in July 2012 with a $45 million deficit. It is one of a handful of bankruptcies that has been closely watched by the $3.6 trillion municipal bond market.

Bondholders and public employees want to understand how distressed cities handle their debts to Wall Street, compared with other creditors such as Calpers.

In recent bankruptcies of Detroit and Stockton, California, pensioners have emerged relatively unscathed compared to Wall Street creditors.

U.S. federal bankruptcy Judge Meredith Jury in federal bankruptcy court in Riverside, California is overseeing San Bernardino's bankruptcy. (Reporting by Tim Reid; Editing by Diane Craft)

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Trump Taj Mahal casino settles U.S. money laundering claims

By Jonathan Stempel

Wed Feb 11, 2015 4:33pm EST

Feb 11 (Reuters) - The parent of Trump Taj Mahal, one of Atlantic City, New Jersey's struggling casinos, has settled U.S. government charges that it violated federal laws designed to thwart money laundering, court filings show.

Trump Taj Mahal Associates LLC agreed to the assessment of a $10 million civil penalty by the Treasury Department's Financial Crimes Enforcement Network, according to a proposed consent order filed on Tuesday with the U.S. Bankruptcy Court in Wilmington, Delaware.

The penalty will take the form of a general unsecured claim in Trump Taj Mahal's bankruptcy.

In exchange, Trump Taj Mahal admitted to have willfully violated reporting and record-keeping requirements under the federal Bank Secrecy Act from 2010 to 2012.

These violations included many that had been previously revealed by the U.S. Internal Revenue Service as far back as 2003.

The settlement requires court approval.

Any payout to the government may be less than $50,000, because unsecured creditors are expected to receive only a small fraction of sums owed, court papers show.

A lawyer for Trump Taj Mahal, whose parent Trump Entertainment Resorts Inc is also in Chapter 11, did not immediately respond on Wednesday to a request for comment.

The Bank Secrecy Act requires casinos to report suspicious transactions of $5,000 or larger.

Trump Taj Mahal failed to file about half of the required suspicious activity reports during periods covered by two recent IRS reviews, the consent order said.

Several Atlantic City casinos have closed or gone bankrupt in the last year, after competition from nearby states ended the city's former dominance of gaming in the eastern United States.

Trump Entertainment's bankruptcy reorganization calls for Trump Taj Mahal, which has 2,248 hotel rooms and 18 restaurants, to remain open, court papers show.

The case is In re: Trump Entertainment Resorts Inc et al U.S. Bankruptcy Court, District of Delaware, No. 14-12103. (Reporting by Jonathan Stempel in New York; Editing by Tom Brown)

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Kazakh central bank aims to slash inflation to 3-4 pct by 2020

ALMATY Thu Feb 12, 2015 12:03am EST

ALMATY Feb 12 (Reuters) - Kazakhstan's central bank aims to slash annual inflation to 3-4 percent by 2020 from 7.4 pct in 2014, National Bank Governor Kairat Kelimbetov said on Thursday.

The central bank also expects the credit portfolio of local banks to rise more than 10 percent this year after a 7 percent rise in 2014, Kelimbetov told a news conference. (Reporting by Dmitry Solovyov; Editing by Mariya Gordeyeva)

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UPDATE 2-Revel Casino seeks to end planned sale to Florida developer

Tue Feb 10, 2015 7:40pm EST

(Adds quote from potential buyer Straub)

WILMINGTON, Del. Feb 10 (Reuters) - The Revel Casino Hotel in Atlantic City, New Jersey, asked a U.S. bankruptcy judge to end its agreement to sell the gambling complex to Florida developer Glenn Straub for $95.4 million, according to a Tuesday court filing.

The hotel's legal team also asked Judge Gloria Burns in Camden, New Jersey, for permission to keep Straub's $10 million deposit. The Revel asked Burns to hold a hearing on Wednesday to consider its requests.

The sale to Straub became embroiled in disputes with owners of the casino's $160 million power plant, and with a group of restaurants and nightclubs that once operated in the casino, which closed in September.

The restaurants feared that they could lose millions in construction costs if the sale to Straub proceeded and they were stripped of their leases.

But under a stay of the sale issued by U.S. District Judge Jerome Simandle, it remained unclear if those businesses were included in the $95.4 million purchase price from Straub.

The move to terminate the deal was not unexpected. A lawyer for Straub said on Monday that his client would miss the midnight deadline because it was unclear what they were buying.

Straub lawyer Stuart Moskovitz vowed to fight any attempt to keep his client's deposit.

"We'll end up fighting this out for months," Moskovitz said at Monday's hearing.

Straub told Reuters on Tuesday he would appear in court Wednesday for the hearing over whether to terminate the sale.

Revel's attempts to kill the deal run contrary to U.S. bankruptcy and New Jersey case law, he said.

"They cannot terminate the contract," Straub said in an interview.

Straub has asked the bankruptcy judge to extend the sale date to Feb. 28. Revel AC opposes that request, which will also be heard at Wednesday's hearing.

If the motion to terminate the sale is approved, it will mark the second time a deal to buy the casino has fallen through after a dispute over the power plant.

Brookfield Asset Management, which won a $110 million bid in October, backed away from the deal in November after failing to reach an agreement with the Revel power plant's owners, ACR Energy Partners.

It is unclear what comes next for the casino, the newest built in the financially struggling gambling hub. Opened two years ago at a cost of $2.4 billion, it has never turned a profit and is in its second bankruptcy. (Reporting by Daniel Kelley in Philadelphia and Tom Hals in Wilmington, Delaware; Editing by Lisa Von Ahn, David Gregorio and Cynthia Osterman)

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PRESS DIGEST - Wall Street Journal - Feb 11

Wed Feb 11, 2015 12:59am EST

Feb 11 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy.

* The U.S. oil boom is slowing down as drillers cut back in response to lower crude prices, according to new data set to be released on Wednesday. Companies drilled 28 percent fewer oil wells in January across the continental United States than they did last June, before oil prices started falling from more than $100 a barrel to about $50 today, according to the study by Rice University's Baker Institute for Public Policy. (on.wsj.com/1uCPilx)

* The Federal Bureau of Investigation has opened a probe to determine whether a computer data breach led to the filing of false tax returns through TurboTax software, according to a person familiar with the case. The move comes as states try to contain a wave of bogus state tax filings through TurboTax amid signs that the fraud may also involve federal returns, according to some security specialists and taxpayers. (on.wsj.com/1z5SBOP)

* NBC suspended "Nightly News" anchor Brian Williams for six months without pay for telling a false war story repeatedly, putting a major blemish on the career of one of America's star newscasters. (on.wsj.com/1CTrhtf)

* Jeb Bush faces a unique dilemma as he builds a Republican presidential campaign, whether to follow in the foreign-policy footsteps of his father or his brother. One early indication suggests he is leaning toward his father's more pragmatic and restrained philosophy. (on.wsj.com/1DDxpFe)

* As the Federal Reserve prepares to begin raising interest rates later this year, it is readying for what may be another big challenge in 2015: the shift to a Republican-controlled Congress. (on.wsj.com/1EX7r0V)

* An architect of General Motors Co's 2009 bailout who fought those calling for its demise now has emerged as one of its chief antagonists, urging the auto maker to return more cash to shareholders and boost its flagging stock price. Harry J. Wilson, a former hedge fund executive who helped usher GM through a government-led restructuring that ultimately cost taxpayers about $10 billion, said GM needs to be "more attentive to its cash balance and its operating performance." (on.wsj.com/1z6nKl2)

* Billionaires David Koch and Charles Koch are helping launch an investment fund aimed at financing small leveraged buyouts, the latest entrant in the potentially lucrative market. Koch Industries Inc, the brothers' closely held conglomerate with $115 billion in annual sales, has contributed $100 million to a new fund raised by Eaglehill Capital Partners LP, according to Koch Industries Chief Financial Officer Steve Feilmeier. (on.wsj.com/1MbrTNK)

* U.S. businesses in China have voiced increased concerns over what they see as rising anti-foreign sentiment and increasingly difficult operating conditions as the economy posts slower growth. (on.wsj.com/1zurw6S)

* RadioShack Corp is looking for bankruptcy-court approval to pay up to $3 million in bonuses to key employees as it races to liquidate half its stores and turn over the rest to the highest bidder at a coming auction. Eight executives and up to 30 other employees are in line for the payouts, which the company says are essential to maximizing the sale price of the beleaguered company and to keeping people from leaving during the bankruptcy process. (on.wsj.com/17bC84S) (Compiled by Supriya Kurane in Bengaluru)

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BRIEF-Bank of Russia appoints DIA as provisional administration to manage Bank Tavricheskiy

Wed Feb 11, 2015 2:27am EST

* Bank of Russia appoints Deposit Insurance Agency (DIA) as provisional administration to manage Bank Tavricheskiy

* For the period of provisional administration powers of Bank Tavricheskiy shareholders and management are suspended to enable DIA to take operational control of bank's assets

* The goal of provisional administration of Bank Tavricheskiy is to conduct survey of bank's financial situation Source text: bit.ly/1ydazxe Further company coverage: (Gdynia Newsroom)

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Atlantic City Revel casino buyer to miss sale deadline -lawyer

By Daniel Kelley

CAMDEN, N.J. Mon Feb 9, 2015 7:13pm EST

CAMDEN, N.J. Feb 9 (Reuters) - A lawyer representing the buyer of the bankrupt Revel Casino in Atlantic City said his client would miss a midnight Monday deadline to complete the purchase, amid concerns over precisely what his client is buying.

His statement came in a court hearing over the fate of several businesses operating within the casino - including restaurants, a nightclub and the $160 million power plant that serves the building. Those businesses say they could lose millions if the sale proceeds.

Florida developer Glen Straub wanted to buy the casino without any obligation to existing leases held by the bars, clubs and restaurants that operated inside the hotel, according to court papers.

But under a stay of the sale issued by U.S. District Judge Jerome Simandle, it remains unclear if those businesses are included in the $95.4 million purchase price from Straub.

"We're not closing by midnight tonight. That I can guarantee," said Stuart Moskovitz, Straub's attorney.

Michael Viscount, representing Revel AC told reporters after the hearing that they would move to terminate the sale to Straub "at 12:01" and keep his $10 million deposit.

"There are no contingencies for this sale going forward," Viscount said.

The hearing before Judge Simandle follows a weekend of intense legal wrangling over the fate of the casino.

The Third U.S. Circuit Court of Appeals on Friday reversed a lower court decision against one of those tenants, IDEA Boardwalk LLC, which had sought to block the sale while it appealed to protect its property rights. Then, the other businesses, including the power plant, filed emergency motions to be treated similarly to IDEA Boardwalk's.

Simandle on Monday set a March date for a hearing on whether the sale should include the businesses.

It's unclear if Revel has a backup plan if the deal falls through. Wells Fargo currently provides about $8 million to $12 million per month in financing, a figure that does not include utility payments.

If the deal does not go through, it would mark the second time a sale of the building in bankruptcy has done so. Brookfield Asset Management, which won a $110 million bid in October, backed away from the deal in November 2014 after failing to reach an agreement with the Revel power plant's owners.

Viscount says there is no plan to convert the case to Chapter 7 liquidation.

"We need to come up with Plan C really quickly," Viscount said. (Editing by Barbara Goldberg)

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