Bankruptcy
Power producer Calpine Corp. formally
emerged from a 25-month reorganization yesterday when it carried
out the Chapter 11 plan approved by the bankruptcy court in a
Dec. 19 confirmation order.
Completing the reorganization included closing a
$7.3 billion exit-financing package. The financing includes a
$300 million bridge loan Calpine expects to pay off by the end of
the first quarter.
To pay creditors, Calpine will issue 485 million new common
shares the company expects will begin trading the “regular way
on the New York Stock Exchange “on or about Feb. 5. The stock
has been trading on a when-issued basis.
Initially, Calpine will distribute 423 million shares to
unsecured creditors, holding back 62 million for disputed claims.
In addition to the stock for creditors, Calpine is reserving
15 million shares for the management incentive plan.
In place of the old equity thats being extinguished,
existing stockholders will receive warrants to buy 48.5 million
shares. The exercise price of $23.88 is calculated so the
warrants will be “in the money only if the new stock trades
high enough that unsecured creditors will have been paid in full
with interest.
The warrants expire Aug. 25.
Based upon the $18.95 billion enterprise value for the
reorganized company, Calpine says unsecured creditors ultimately
will recover 99.9 percent through the new stock they receive. The
initial stock distribution, to occur “on or before Feb. 10,
will represent 84.8 percent of unsecured creditors claims based
on an “imputed value of $17.36 a share, Calpine says.
Calpine will make additional distributions of stock as
disputed claims are resolved.
To read other Bloomberg coverage, click here.
Separately, Calpine received formal authority to sell the
uncompleted 707-megawatt combined-cycle natural-gas-fired
electric generating plant in Fremont, Ohio, for $253.6 million to
a unit of FirstEnergy Corp. The price rose 105 percent at
auction.
The new stock closed yesterday at $16.90, down 5 cents in
when-issued trading on the New York Stock Exchange. The high and
low closing prices since the stock began trading on a when-issued
basis are $18.50 and $15.
Calpines Chapter 11 filing in December 2005 was the largest
in 2005 measured by assets.
When the 11 reorganization began, Calpine had 92 power
plants in 21 states producing 26,500 megawatts, or enough
electricity for 20 million homes. Since then, Calpine has sold or
closed 20 percent of the plants. The petition listed assets of
$26.6 billion, before Calpine wrote down the assets by
$7.1 billion.
The case is In re Calpine Corp., 05-60200, U.S. Bankruptcy
Court, Southern District of New York (Manhattan).
Other Updates
Dana Consummates Reorganization Plan, Closes New Financing
Dana Corp., the axle and frame maker whose reorganization
was approved by the bankruptcy court in a Dec. 26 confirmation
order, issued a statement this morning saying it is formally
emerging from Chapter 11 today.
Creditors with $3 billion in claims are projected to recover
between 72 percent and 86 percent through distribution of new
common stock under the plan. In addition to $2 billion in secured
financing, the plan is supported by a rights offering for
$790 million in convertible preferred stock.
Dana said the new stock begins trading today on the New York
Stock Exchange.
Dana used Chapter 11 to realize up to $475 million in annual
cost savings and revenue improvements.
Creditors projected recovery is based on an assumption the
new stock has a midpoint estimated value of $22.03 a share.
Toledo, Ohio-based Dana filed under Chapter 11 in March
2006, listing assets of $7.9 billion and $6.8 billion in debt.
Dana has 35,000 employees working in 26 countries to generate
$8.5 billion in revenue last year.
The case is In re Dana Corp., 06-10354, U.S. Bankruptcy
Court, Southern District of New York (Manhattan).
Bayou Creditors Approved to Investigate Goldman Sachs
The creditors committee of Bayou Group LLC, the hedge fund
that turned out to be a Ponzi scheme, was given permission this
week by the bankruptcy judge to investigate a unit of Goldman
Sachs Group Inc.
The unit is Goldman Sachs Execution %26amp; Clearing LP,
previously known as Spear Leeds %26amp; Kellogg LP. The U.S. bankruptcy
judge in White Plains, New York, gave the committee the right to
investigate money Goldman received from Bayou, how it maintained
margin accounts, and its knowledge of Bayous “financial
condition.
The committee characterized the Goldman unit as Bayous
prime broker, providing clearing, brokerage and account services.
The committee is looking for grounds to file lawsuits against
Goldman that could recover money for Bayous customers.
The bankruptcy judge decided in December that he wont yet
approve a disclosure statement allowing creditors to vote on a
liquidating Chapter 11 plan.
Bayous exclusive right to file a plan has expired.
A federal district judge in White Plains appointed a
receiver for Bayou in April 2006, after evidence surfaced
indicating Bayou was being operated as a Ponzi scheme. The
receiver put Bayou in Chapter 11 the next month and later sued
investors who were able to take out their investments before the
fraud surfaced.
The Bayou fraud resulted in three guilty pleas. Daniel
Marino, the head of finance, was sentence to a 20-year prison
term despite his cooperation with prosecutors. James Marquez, a
Bayou co-founder, was sentenced to four years and three months in
prison and told to pay $6.2 million in restitution. Another
founder, Samuel Israel III, is yet to be sentenced following his
guilty plea in September 2005.
The Chapter 11 case is In re Bayou Group LLC, 06-22306, U.S.
Bankruptcy Court, Southern District New York (White Plains).
Bank of America Given OK to Foreclose Eight Levitt Projects
Bank of America was given permission this week by the
bankruptcy court in Fort Lauderdale, Florida, to foreclose the
eight housing projects it was financing when homebuilder Levitt %26amp;
Sons LLC filed under Chapter 11 in November.
The unit of Charlotte, North Carolina-based Bank of America
Corp. loaned $103 million against the eight projects.
Levitt decided in November that the properties were worth
less than the debt. The bank was not interested in making new
loans so Levitt could build out the projects.
The bankruptcy court at the time allowed Levitt to walk away
from the projects and simultaneously allowed Bank of America to
foreclose the real estate but not personal property. The
permission granted this week allows the bank to foreclose
everything except deposits customers made to buy homes under
contract.
The Chapter 11 filing by Fort Lauderdale, Florida-based
Levitt listed $340 million in debt. The parent Levitt Corp. did
not file. Nor did affiliate Core Communities LLC, a developer of
master planned communities.
The case is In re Levitt %26amp; Sons LLC, 07-19845, U.S.
Bankruptcy Court, Southern District Florida (Fort Lauderdale).
Davenport Diocese Files Plan to Pay Sexual Abuse Claims
The Roman Catholic Diocese of Davenport, Iowa, and the
official creditors committee filed a reorganization plan
yesterday together with the disclosure statement explaining the
plan.
When the bankruptcy court approves the plan after a vote of
creditors, the Davenport diocese will be the fifth and last Roman
Catholic diocese to use Chapter 11 successfully for settling
sexual abuse claims.
The underpinning for the plan is a $19.5 million settlement
with insurance carriers. The plan puts into effect a settlement
reached in late November after mediation between the abuse
claimants and the diocese.
All of the Catholic entities in the diocese are covered by
the $37 million settlement, so they will be given protection by
the bankruptcy court from future claims even though they didnt
file under Chapter 11.
Five Roman Catholic dioceses filed Chapter 11 petitions to
settle sexual abuse claims. Spokane, Washington; Portland,
Oregon; and Tucson, Arizona, previously emerged from Chapter 11.
The Chapter 11 case of the diocese in San Diego will be dismissed
to complete a settlement out-of-court.
The Davenport diocese filed under Chapter 11 in October
2006, just after a September 2006 jury verdict awarding $1.5
million on a sexual abuse claim.
The case is In re Diocese of Davenport, No. 06-02229, U.S.
Bankruptcy Court, Southern District Iowa (Davenport).
Peoples Choice Asking for More Time to File Liquidating Plan
Peoples Choice Financial Corp., a former subprime mortgage
originator, told the bankruptcy court on Jan. 29 its “in the
process of negotiating key provisions of a liquidating Chapter
11 plan with the creditors committee.
The company wants the exclusive right to file a plan
extended until March 31. So-called exclusivity otherwise would
have expired yesterday.
The official committee is entitled to file a plan under a
previous agreement with the company.
Peoples Choice sold the assets and generated $45 million in
gross proceeds.
Irvine, California-based Peoples Choice originated $5.5
billion in mortgage loans during calendar 2006 from 19 offices
around the U.S. After the Chapter 11 filing last March, the
company sold loan servicing rights, residual interests, and the
loan servicing and loan origination platforms.
The case is In re Peoples Choice Home Loan Inc. 07-10765,
U.S. Bankruptcy Court, Central District of California (Santa
Ana).
Two Plans Filed to Compete with Scotia/Palcos Reorganization
Two Chapter 11 plans were filed to compete with the
reorganization proposed by timberland owner Scotia Pacific Co.
and affiliate Pacific Lumber Co.
One competing plan, calling for an auction, was filed by the
indenture trustee for the holders of $800 million in notes
secured by Scotias 210,000 acres of redwood timberland in
Humboldt County, California.
The second competing plan comes from a secured creditor,
Marathon Structured Finance Fund LP. Marathon is teamed up with
Mendocino Redwood Co., a family-owned operator of a sawmill and
230,000 acres of nearby redwood forests. Marathon is the
administrative agent for the companies term loan and revolving
credit.
To read Bloomberg coverage describing the competing plans,
click here.
Scotia and Palco already have a plan on file promising to
pay creditors in full. The noteholders object to how the plan, if
approved by the bankruptcy court, would take away their first
lien and substitute a second lien behind $350 million in new
secured debt.
Palco and Scotia in December gave up the exclusive right to
file a plan. A hearing to approve a disclosure statement
explaining the plans is set for Feb. 28. The confirmation hearing
for approval of one of the competing plans was scheduled for
April 1.
The two companies and four affiliates filed Chapter 11
petitions in January when a $27 million payment was coming due to
the timber noteholders. Headed by Texan Charles Hurwitz, Maxxam
Inc. acquired the companies in a 1986 leveraged buyout.
The case is Scotia Pacific Co. LLC, 07-20027, Bankruptcy
Court, Southern District Texas (Corpus Christi).
Logistics Provider Summit Plans on Selling to Insiders
Summit Global Logistics Inc. filed papers proposing to sell
assets to insiders in return for the assumption of debt owing to
the pre-bankruptcy secured lender. The court filing doesnt
identify anything to be left from the sale for unsecured
creditors.
The supply chain manager and global logistics provider said
it was unable to find a buyer willing to offer enough so the
secured lender would be paid the $51.7 million owed when the
Chapter 11 petition was filed Jan. 30.
The proposed sale provides for the buyer to assume the
existing secured debt, plus up to $5 million the lender will
advance to finance the Chapter 11 case.
Proposed sale procedures suggest requiring the submission of
other bids at an unspecified time in March, followed by an
auction on a date not yet selected.
The date has not yet been set for the U.S. Bankruptcy Court
in Newark, New Jersey, to hold a hearing to decide on sale
procedures.
East Rutherford, New Jersey-based Summit operates in the
U.S., China, Hong Kong, Southeast Asia, the Eastern
Mediterranean, the Middle East, India and Russia.
A filing with the Securities and Exchange Commission listed
assets of $209 million and $192 million in debt on Sept. 30.
The case is In re Summit Global Logistics Inc., 08-11566,
U.S. Bankruptcy Court, District of New Jersey (Newark)
New York Teachers Object to New Century Document Destruction
New York State Teachers Retirement System says New Century
Financial Corp. shouldnt be permitted to discard left-over
marketing materials.
The retirement system is the lead plaintiff in investors
class action suits based on what it calls New Centurys
“accounting fraud. The system says some of the marketing
materials destined for destruction could be relevant in the
lawsuit.
The retirement system, based in Albany, New York, is asking
the U.S. Bankruptcy Court in Delaware to allow destruction of the
documents only if interested parties are able to examine the them
in advance. The retirement system also wants the court to require
New Century to maintain samples and drafts of the materials.
The bankruptcy judge will sort out the issues at a Feb. 6
hearing.
Before the filing last April to liquidate in Chapter 11, the
Irvine, California-based company was responsible for $60 billion
in home loans in 2006. It generated $220 billion in loans since
inception.
The case is In re New Century TRS Holdings, Inc., 07-10416,
U.S. Bankruptcy Court, District of Delaware (Wilmington).
New Filing
Alabama Condo Developer Files under Chapter 11 in Mobile
Condominium developer TP Emerald Shores Development LLC, an
affiliate of Triad Properties, a privately-owned real-estate
investor, filed a Chapter 11 petition on Jan. 30 in Mobile,
Alabama.
The filing listed debt of $30.3 million and assets of $16.6
million.
To read Bloomberg coverage, click here.
The case is In re TP Emerald Shores Development, LLC, 08-
10294, U.S. Bankruptcy Court, Southern District of Alabama
(Mobile).
Briefly Noted
Arizona copper miner Asarco LLC reported net income of $11.5
million in December. Since the beginning of the Chapter 11
reorganization, net income has totaled $864 million. Asarco filed
for court protection in August 2005 to deal with asbestos claims.
The Chapter 11 case is In re Asarco LLC, 05-21207, U.S.
Bankruptcy Court, Southern District of Texas (Corpus Christi).
Buffets Holdings Inc. has an official creditors committee,
with seven members appointed this week by the U.S. Trustee in
Delaware. The members include Kimco Realty Corp. and Coca-Cola
Co. The second-largest family restaurant operator in the U.S.
filed in Chapter 11 last week. Eagan, Minnesota-based Buffets
operates under the names Old Country Buffet, HomeTown Buffet,
Ryans and Fire Mountain. Twelve-month revenue was $1.55 billion.
The filing listed $964 million in assets against debt of $1.16
billion. The case is In re Buffets Holdings Inc., 08-10141, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Solutia Inc., the specialty chemical manufacturer whose
reorganization plan was approved in a Nov. 29 confirmation order,
has agreed to settle a $9.8 million environmental claim related
to a site in St. Louis. If approved by the U.S. bankruptcy judge
in New York, federal environmental regulators will have an
approved unsecured claim of $3.6 million under Solutias plan.
Solutia said in a statement last week it couldnt emerge from
Chapter 11 on Jan. 25 as planned because Citigroup Global Markets
Inc., Goldman Sachs Credit Partners LP, Deutsche Bank Trust Co.
Americas and Deutsche Bank Securities Inc. were unable to
syndicate new financing. The lenders contend there has been a
material adverse change in the credit market, letting them out of
their commitment. Solutia disagrees. The commitment, if still
valid, expires Feb. 29 if Solutia hasnt emerged from
reorganization. Solutia, based in St. Louis, filed its Chapter 11
reorganization petition in December 2003, listing assets of $2.85
billion against debt totaling $3.22 billion. The case is In re
Solutia Inc., No. 03-17949, U.S. Bankruptcy Court, Southern
District New York (Manhattan).
Radnor Holdings Corp. should not have another extension of
the exclusive right to propose a liquidating Chapter 11 plan,
according to Tennenbaum Capital Partners LLC, the secured lender
that purchased the cup manufacturers assets in late 2006.
Tennenbaum says “no progress has been made in the case since
the last time so-called exclusivity was extended for Radnor.
Radnor filed a plan last April without a guarantee that unsecured
creditors would receive any payment on their claims. Radnor filed
under Chapter 11 in Aug. 2006 intending for a quick sale to Los
Angeles-based Tennenbaum. The sale produced little cash because
most of the purchase price represented secured claims held by
Tennenbaum or other assumed secured debt. Radnor, a manufacturer
of disposable foam cups, containers, and expandable polystyrene,
listed assets of $361 million and debt totaling $325 million.
Radnors trade names included WinCup and StyroChem. The case is
In re Radnor Holdings Corp., No. 06-10894, U.S. Bankruptcy Court,
District of Delaware (Wilmington).
After promising he would at a Jan. 16 confirmation hearing,
the bankruptcy judge signed a confirmation order on Jan. 30
approving the Chapter 11 plan of pharmaceutical developer Arriva
Pharmaceuticals Inc. The plan stops what the company called
“endless, vexatious litigation with an individual named John
Lezdey. Last month the U.S. Bankruptcy Court in Oakland,
California, threw out Lezdeys claim entirely because he missed
the cutoff for filing claims. The plan was predicted by the
company to pay unsecured creditors in full or “something
close. The plan is funded with $6 million to continue drug
development until June 2008, when new financing will be required.
Arriva raised $66 million in financing since founding in 1997.
The case is Arriva Pharmaceuticals Inc. 07-42767, U.S. District
Court, Northern District of California (Oakland).
The Chapter 11 trustee for 1031 Tax Group LLC worked out a
settlement with the secured creditor so he can complete the
previously approved sale of the 132-foot motor yacht that
belonged to the companys former Chief Executive Officer Edward
Okun. From the sale price of $9 million, the trustee will pay
Wachovia Corp. $8.2 million and waive any claims for expenses the
trustee incurred in maintaining the yacht. The trustee previously
said he spent $350,000 on upkeep and insurance. To read Bloomberg
coverage, click here. The company was a “qualified
intermediary helping individuals avoid capital gains taxes by
holding proceeds from the sale of property until a replacement
property was purchased. Customers contend Okun caused 1031
improperly to loan $130 million to other companies he controlled.
The Chapter 11 filing in May by Richmond, Virginia-based 1031
listed assets of $154.6 million. The case is In re The 1031 Tax
Group LLC, No. 07-11448, U.S. Bankruptcy Court, Southern District
New York (Manhattan).
Downgrade
Plastic Auto-Parts Maker Plastech Downgraded Again by S%26amp;P
Plastech Engineered Products Inc., a manufacturer of plastic
parts for autos, received its second downgrade in two weeks from
Standard %26amp; Poors.
S%26amp;P has concern that Plastech may be unable to resolve its
financial difficulties without “resort to a financial
restructuring. The credit-rating company said the restructuring
might occur outside bankruptcy court.
Although the new corporate peg from S%26amp;P is CCC+, the rating
is two clicks higher than the ding issued earlier this month by
Moodys Investors Service.
S%26amp;P reported privately-held Plastech as having $488 million
in debt on Sept. 30.
Plastech is based in Dearborn, Michigan.
Canada News
Beverage Dispenser Maker Icefloe Makes Creditor Assignment
Icefloe Technologies Inc., a developer of systems to chill
beverages and dispense “ice cold draft beer without excessive
foam loss, filed an assignment for the benefit of creditors
under Canadas Bankruptcy and Insolvency Act.
Mississauga, Ontario-based Icefloe missed a Jan. 24 interest
payment to its secured lenders.
A balance sheet for Sept. 30 listed assets of $2.4 million
and debt of $4.2 million.
