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WSJ.com: Bankruptcy Beat (73)

Playtime Is Over for Florida Collector

Posted: July 31st, 2009, 2:46pm PDT

Getty Images

All that glitters is not gold in mid-Florida. Mark Yaffe, avid coin collector and co-founder of National Gold Exchange, faces losing his enterprise’s inventory as well as his personal property. Sovereign Bank has demanded immediate repayment of its more than $35 million loan amid doubts of the store’s viability and a tip from a Florida attorney accusing Yaffe of using assets belonging to his business to complete the construction of his home.

According to an article in the St. Petersburg Times, Yaffe designed his 29,000-square-foot dream house in part to display his vast and varied collection of all things shiny. Yaffe, 49, has a collection valued at more than $5 million that includes coins, music boxes, pianos, organs and antique automata dolls (one of the dolls is nearly 250 years old).

Sovereign Bank won court permission in late July to recover the collateral that secures its loan to National Gold. National Gold, the world’s largest gold wholesaler, filed for Chapter 11 protection shortly thereafter. The filing was too late to protect it from the sheriff who was sent to claim property and witnessed coins being moved from the store into waiting cars. After a review of the inventory and books, Sovereign is crying fraud. It’s asking the court for permission to hold onto the collateral it has already seized.

National Gold is now saying the bank plans to seize property from Yaffe’s mock 17th century English country manor located in the swank Tampa community of Avila. It is the very location for which lawyer-turned-tipster claims Yaffe sold $12 million to $15 million of inventory.

Detroit School System Eyes California Case

Posted: July 31st, 2009, 1:49pm PDT

A California judge’s decision earlier this year could open the door for the Detroit Public Schools to shed its union contracts should the troubled district seek bankruptcy protection, according to The Detroit News.

The school district, which faces a $259 million deficit and has seen its enrollment and related stated funding shrink dramatically in recent years, is openly contemplating filing for Chapter 9 municipal bankruptcy.

The Detroit schools could be looking closely at a March ruling by U.S. Bankruptcy Judge Michael McManus that allowed the City of Vallejo, Calif., to break its existing union contracts while it reorganized under Chapter 9.

McManus found that laws which protect unions from outright rejection of their contracts in bankruptcy court only apply to businesses operating under Chapter 11 protection. In Chapter 11, a judge will typically only allow for rejection of a collective bargaining agreement after the two sides have made a serious attempt to negotiate a deal.

Using the Vallejo precedent, Detroit schools have a powerful barging chip when seeking concessions from teachers and other unions.

Retired U.S. Bankruptcy Judge Ray Reynolds Graves, who is advising the school system, told the newspaper that labor contracts and bond obligations are district’s greatest “financial burdens.”

“Failure of the constituents to make sacrifices will make Chapter 9 inevitable. If people don’t want to make deals, then (the district will) have to file,” he said.

The Detroit Federation of Teachers, however, is asking the district to seek out other options than the rarely used municipal bankruptcy. (Check out Bankruptcy Beat’s earlier coverage of municipal bankruptcy here, here and here.)

“Filing bankruptcy sends the wrong message to the community,” Keith Johnson, president of the teachers union, told the paper. “It says, ‘We are broke and we can’t afford to educate your children.’”

Blixseth Battle Rages On

Posted: July 31st, 2009, 9:53am PDT

Associated Press

Breaking up is hard, especially when major assets are involved. But imagine if your ex sought – and won – a federal court order allowing him to depose your current flame and read all the emails and texts you’ve exchanged over the past three-and-a-half years?

Well, that’s exactly what happened to Edra Blixseth, the former owner of Yellowstone Mountain Club LLC. Blixseth, who recently sold the exclusive resort community out of Chapter 11 protection, is going through her own bankruptcy proceeding in which her ex-husband and Yellowstone Club founder, Timothy Blixseth has been a vocal participant, filing various motions and objections. This Wednesday, the U.S. Bankruptcy Court in Butte, Mont., granted Timothy Blixseth’s latest request to investigate his ex-wife’s boyfriend, Jack Scalia, and his business and personal relationships with Edra Blixseth. The court order allows Timothy Blixseth’s attorneys to interview Scalia near his Rancho Mirage, Calif., home at his convenience and also requires Scalia to turn over a host of documents, like all emails and text messages that Scalia and Edra Blixseth have exchanged since Jan. 1, 2006.

Scalia, who’s stood by his woman in the bankruptcy courtroom, happens to be a model and actor who says he got his start as the “Jordache Jeans Man” and was nominated for an eventually won an Emmy for playing opposite Susan Lucci on the daytime soap “All My Children.” Among the other gems on the Brooklyn, N.Y., native’s resume, we must note, is taking on the “controversial” role of Joey Buttafuoco in the made-for-TV film, “Casualty of Love: The Long Island Lolita Story.”

The Daily Docket: Court Clears Delphi Sale

Posted: July 31st, 2009, 6:51am PDT

Delphi Corp. won court approval Thursday to sell its assets to its lenders and General Motors Co., a deal that clears the way for the auto supplier to end its four-year stay in bankruptcy. Read the Daily Bankruptcy Review story here.

Southwest Airlines Co. is preparing a $113.6 million bid to buy Frontier Airline Holdings Inc., an offer that could thwart Republic Airways Holdings Inc.’s bid for the regional carrier, The Wall Street Journal reports.

Auto-parts supplier Lear Corp. on Thursday won approval to tap a $500 million bankruptcy loan. Read the Dow Jones Newswires story here.

The Pension Benefit Guaranty Corp. is planning to take over a pension plan covering about 11,000 workers from auto supplier Metaldyne Corp., WSJ reports.

Debtor-in-possession financing, used to fund companies restructuring in Chapter 11, has become harder to obtain and more expensive, according to Bloomberg.

A Michigan businessman plans to bid $450 million to buy Detroit’s Greektown Casino out of bankruptcy, the Detroit News reports.

Phoenix Coyotes owner Jerry Moyes is challenging Jerry Reinsdorf’s bid to buy the hockey team out of Chapter 11, according to the Associated Press.

Germany Wants Crash Info From ‘Old’ GM

Posted: July 30th, 2009, 2:06pm PDT

Associated Press

The government of Germany wants information from the “old” General Motors about an accident involving a German solider who was seriously injured while riding in a GM truck.

The German government is asking the U.S. Bankruptcy Court in Manhattan to force the parts of GM that are still operating under Chapter 11 protection to produce documents related to its insurance coverage and make certain company officials available for interviews.

German officials wish “to investigate the acts, conduct, property, liabilities, and financial condition” of old GM, and assess the still bankrupt entity’s product liability insurance coverage pertaining to the Alabama incident, according to court papers. Messages left with the old GM were not immediately returned Thursday.

According to court papers, German Army Officer Florian Hinrichs was paralyzed when an uninsured drunk motorist rammed the GM truck he was riding in while stationed at Alabama’s Fort Rucker in Alabama in 2007.

Hinrichs sued GM for millions, saying the truck’s roof and seatbelt system were defective. The German government has paid Hinrichs’ medical bills and wants to receive a portion of any compensation he gets from GM.

Old GM, which refers to itself at Motors Liquidation Co., is the part of the business that remains in bankruptcy after General Motors Co. emerged from Chapter 11 protection earlier this month under the control of the U.S. government.

Frontier Airlines – Emmy Winner?

Posted: July 30th, 2009, 8:40am PDT

Frontier Airlines

It’s no episode of “30 Rock,” but an ad boasting the upgraded planes in Frontier Airlines’ fleets has won an Emmy.

The Denver-based carrier, which has been under Chapter 11 protection since last year, said its “leather seats” television spot won the Heartland Regional Emmy from the National Academy of Television Arts and Sciences (the same organization that hands out Emmy awards to television shows and actors every September).

The ad, which first aired in May 2008, trumpets the refurbishing of Frontier’s fleet of Airbus aircraft to include leather seats. But here’s the twist – the ad relies on Frontier’s “spokesanimals,” the brainchild of ad agency Grey NYC. Pictures of the animals – which include Foxy the fox and Grizwald the bear – adorn the tails of Frontier’s plane. You can meet them – and learn about their “pet peeves” – here. (Because, let’s be real, who doesn’t need to know that Jim, Joe, Jay and Gary the penguins enjoy gazpacho?)

In the award-winning ad (see for yourself here, but if talking animals creep you out, keep reading), Jack the Rabbit asks Larry the Lynx what leather is made of. Jack, upon hearing that leather comes from cows, asks Larry if that’s why there aren’t any pictures of cows on the tails of Frontier’s planes. “It would be creepy,” Larry sniffs. The two observe a miniscule “moment of silence” for the cows before agreeing to “grab a burger.”

The Daily Docket: CIT Investors Cry Foul

Posted: July 30th, 2009, 6:59am PDT

Some CIT Group Inc. investors are complaining that their offer for up to $6 billion in alternative financing was “largely ignored” by the company, according to The Wall Street Journal.

Avaya Inc.’s $475 million offer for Nortel Networks Corp.’s office telephone system business could fall apart if antitrust regulators crack down, and it’s Nortel that would pay the price, a big creditor of the equipment maker says. Read the Daily Bankruptcy Review story here.

Chrysler’s summer shut down could cost Michigan’s already struggling unemployment trust about $10 million, according to the Detroit Free Press.

Oklahoma Attorney General Drew Edmondson wants the state Supreme Court, instead of the bankruptcy court, to decide on a dispute in over what SemGroup LP owes oil and gas producers, the Tulsa World reports.

The court-appointed official in charge of recovering money for Bernard Madoff’s investors is suing his wife, Ruth, for at least $44.8 million, claiming she lived a “life of splendor” on the gains from the fraud perpetrated by her husband, WSJ reports.

Michael Vick’s bankruptcy lawyers are asking a judge to approve fees of $1.5 million, more than $1 million less than they originally sought, according to the Associated Press.

Backstreet’s Back (In Court)

Posted: July 29th, 2009, 1:24pm PDT

PRNewsFoto/Jive Records

The Backstreet Boys are back, all right, and not just on the radio waves. The same day the bubblegum pop sensation of the late ‘90s announced it would release a new album this fall, one of the group’s members was busy with his own new release – bankruptcy court papers.

Howie Dorough (not the blond one that all the girls crushed on, nor the wholesome lead singer or the older one, and certainly not the bad boy) filed an objection Tuesday in the Chapter 11 proceeding of Lou Pearlman, the boy band mogul who spawned the Backstreet Boys and their rival for pre-teen hearts, ‘NSync. Pearlman, you’ll recall, gained even more notoriety last year when he was sentenced to 25 years behind bars for running a $300-million-plus Ponzi scheme. As Bankruptcy Beat previously reported, the trustee in charge of Pearlman’s bankruptcy estate is suing hundreds of investors in Pearlman’s schemes – like Dorough – to recover payments that Pearlman and his related businesses made in the four years before their bankruptcy proceedings began.

While a group of investors who were bilked by Pearlman’s scheme have already objected to the lawsuits, Dorough, who was sued for more than $73,000, filed his own objection. We won’t bore you with all the bankruptcy jargon but suffice it to say, the Backstreet Boy (can a 35-year-old man who’s a new father still really be called that?) isn’t happy that the trustee’s lawsuits would preclude him (or rather, his lawyers) from launching an investigation to help defend himself. Dorough denies that he was “unjustly enriched” by the payment and says he had no knowledge of Pearlman’s Ponzi scheme as the boy band mogul was carrying it out. We don’t doubt that last part – after all, learning slick choreographed dance moves, carefully gelling your hair and schmoozing with female fans doesn’t leave much time for due diligence.

Adding Insult to Injury

Posted: July 29th, 2009, 11:48am PDT

Associated Press

When Hartmarx Corp. filed for bankruptcy protection in January, it listed falling consumer spending and shifting clothing trends among the reasons for its ailing finances. Little did it know it would soon be able to throw “embezzlement” into that category.

Vivian K. Williams of Allentown, Pa., allegedly sucked more than $1.6 million from International Women’s Apparel, a division of Hartmarx, over almost a decade, according to Allentown’s Morning Call.

Williams was hired by the company in 1997 and held roles including administrative assistant to the president and director of human resources and merchandising – both of which allowed her to get her hands on orders, invoices and checks for under $75,000. By 1999, Williams apparently decided she wanted a piece of the pie, the paper reported. Court papers say she created a fake business that had a catchy name, The Copy Connection, but little else in the way of actual operations. Instead, Williams allegedly used the Copy Connection to file fake invoices and eventually drain $1,663,129 from Hartmarx’s coffers.

Williams allegedly neglected to report some of her “earnings” in her 2004-2007 tax returns, leading her to be charged with four counts of filing false federal income tax returns. She’s also charged with four counts of mail fraud. Williams could face a 92-year prison sentence and fines of $2 million if convicted.

Balsillie, NHL to Face Off in Chicago

Posted: July 29th, 2009, 8:06am PDT

The National Hockey League and BlackBerry mogul Jim Balsillie have battled in court, online and in the press for months over the fate of the Phoenix Coyotes. On Wednesday, the two sides will meet face-to-face.

Balsillie, who is seeking to buy the Coyotes out of bankruptcy, will sit down with the NHL’s executive committee in Chicago to discuss his interest in acquiring the team.

The NHL is already setting ground rules for the meeting that pits two parties that have had a cantankerous relationship in recent years. “The interview relates solely to the ownership transfer application…and is not intended to and will not address the relocation application,” NHL attorneys said in papers filed with U.S. Bankruptcy Court in Phoenix.

Avoiding talk of relocation may be difficult, as Balsillie’s $212.5 million offer for the Coyotes is contingent on moving the team to Hamilton, Ont. The league has worked feverishly to block Balsillie from buying and moving the team since the Coyotes filed for bankruptcy in May, with plans to sell to a Balsillie-led group. The league first attempted to get the case tossed out and then courted Chicago White Sox owner Jerry Reisdorf’s bid, which would keep the Coyotes in Arizona.

The Coyotes are the third team the NHL has actively worked to stop Balsillie from buying. It successfully prevented him from acquired the Pittsburgh Penguins and Nashville Predators. In both of those deals, Balsillie said a move to Canada was an option.

Balsillie has been critical of the league’s support for teams that struggle to fill seats in the U.S. and launched a national campaign in Canada to bring a seventh NHL team to the hockey-hungry country. But NHL Commissioner Gary Bettman said the league won’t “run out” of Phoenix and expressed concerns about the impact a Hamilton team would have on the nearby Toronto Maple Leafs and Buffalo Sabers.

Another potential Coyotes bidder, Ice Edge Holdings LLC, is also expected to meet with NHL brass Wednesday, the Toronto Star reports. That group will likely discuss its idea to have the Coyotes play five “home” games in a Canadian outpost, such as Saskatoon, Sask.

The Daily Docket: Station Casinos Enters Chapter 11

Posted: July 29th, 2009, 6:47am PDT

Las Vegas-based Station Casinos Inc. filed for Chapter 11 bankruptcy protection Tuesday after talks with its creditors collapsed, The Wall Street Journal reports.

Judges in the U.S. and Canada Tuesday signed off on Telefon AB L.M. Ericsson’s $1.13 billion purchase of the bulk of Nortel Networks Corp.’s North American wireless business, approving the results of a 13-hour auction Friday. Read the Daily Bankruptcy Review story here.

General Motors Co. and GMAC Inc. are planning to return to the auto-leasing market by Aug. 1, according to WSJ.

DBR chats with David Ritz, the chief executive of Ritz Camera Centers Inc. who bought the company his family founded out of bankruptcy last week, saving it from liquidation.

The Securities and Exchange Commission has sued four individuals in connection with an alleged fraud used to help fund Phoenix-based Mortgages Ltd., a mortgage-lender that filed for bankruptcy protection in June 2008, WSJ reports.

Bank of America Corp. has agreed to pay about $100 million to Parmalat SpA and its affiliates to settle lawsuits over the Italian dairy company’s 2003 bankruptcy, according to the Associated Press.

In a jailhouse interview, Bernie Madoff told a San Francisco lawyer Tuesday that he got away with his $65 billion scam because regulators weren’t paying attention, the New York Post reports.

CIT, Heal Thyself

Posted: July 28th, 2009, 11:58am PDT

Associated Press

A new ranking of bankruptcy financiers places CIT Group Inc. among the top debtor-in-possession lenders, even as the company itself faces a possible Chapter 11 filing. According to The Deal, CIT lent nearly $189 million to nine companies in bankruptcy protection during the first half of 2009, making it the fourth-largest DIP lender by number of transactions. CIT falls just shy of General Electric Co.’s 15 commitments, which total more than $1.7 billion, but ahead of Citigroup Inc.’s six commitments totaling $2.1 billion.

CIT is a major lender to small and mid-sized businesses and has become a significant bankruptcy financier in recent years. Its customers in bankruptcy protection include Eddie Bauer Holdings and Dunkin’ Donuts franchisee Kainos Partners Holding Company. Check out Daily Bankruptcy Review’s earlier coverage of CIT’s DIP lending.

CIT itself recently staved off its own bankruptcy filing with a $3 billion rescue deal with bondholders, who stepped up after the U.S. government declined to provide the lender with fresh federal assistance. The lender, however, isn’t out of the woods. If it can’t get 90% of a group of bondholders owed $1 billion to tender their bonds, it may have to file for Chapter 11 protection.

The Deal also ranked the top bankruptcy financiers by volume. Not surprisingly, the U.S. Treasury Department and Export Development Canada shot to the top of the list, thanks to their roles as DIP lenders to General Motors and Chrysler during their bankruptcy cases. The United States came in at No. 1 with its commitments worth $29.269 billion, while Canada took the No. 2 position with its $10.166 billion in commitments.

Retailer’s Chapter 11 Hits ‘Duck Stamp Program’

Posted: July 28th, 2009, 8:17am PDT

Chapter 11 seems to have sent Sportsman’s Warehouse’s charitable inclinations to the birds, and we don’t mean that literally.

The chain of sporting goods stores collected donations as part of the U.S. Department of Interior’s “duck stamp program,” which raises money for migratory bird conservation. Founded in 1934, the program claims to have acquired more than 5.2 million acres of habitat for our avian friends over the years, according to its Web site.

But Sportsman’s Warehouse is throwing a wrench into this longtime fundraiser. According to the Department of Interior, the company is refusing to turn over $629,415 it raised through the sale of federal duck hunting licenses. As a result, the department is objecting to the company’s plan of reorganization, urging a judge to reject the plan until it makes it clear that the money will end up in the talons of the Migratory Bird Fund and not the company or its creditors.

Birds aren’t the first group in need to get the short end of the stick as a result of a bankruptcy filing. Just a few months ago, the Glenwood Autism and Behavioral Health Center found itself out $103,000 after its second-annual pecan fundraiser became entangled in the Chapter 11 case of Bruno’s Supermarkets. The company pocketed funds it collected from customers who thought they were donating their money to the local autism organization.

A judge is set to consider Sportsman’s Warehouse’s reorganization plan and review the Department of the Interior’s objection at a hearing Thursday.

The Daily Docket: Lenders Win Delphi Auction

Posted: July 28th, 2009, 7:16am PDT

Delphi Corp.’s bankruptcy lenders won a bankruptcy auction for the company’s assets and are set to take control of auto-parts supplier, according to The Wall Street Journal.

General Motors Co. Treasurer Walter Borst expects the auto maker to get billions in fresh funding from the Energy Department now that the auto maker is “viable,” WSJ reports.

RHJ International SA has dropped its bid to buy auto-parts maker Metaldyne Corp. out of bankruptcy, according to WSJ.

Mexican mining company Grupo Mexico SAB is making a renewed push to win support for its plan to wrest back control of subsidiary Asarco LLC and take it out of bankruptcy protection. Read the Daily Bankruptcy Review story here.

Three publishers have moved up release dates of books about Bernard Madoff and his massive Ponzi scheme, WSJ reports.

New Bidder Seeks to Take Coyotes to Saskatoon

Posted: July 27th, 2009, 2:13pm PDT

Hockey legend Wayne Gretzky could be coaching the Phoenix Coyotes in chilly Saskatoon, Sask., if an 11th-hour bid can wrest the financially struggling National Hockey League team away from more prominent suitors.

A Nova Scotia group calling itself Ice Edge Holdings LLC said it would pay $150 million to buy the Coyotes out of bankruptcy. BlackBerry mogul Jim Balsillie and Chicago White Sox owner Jerry Reinsdorf are also vying for the team.

Ice Edge seeks to lure Gretzky, the NHL’s all-time leading scorer and currently the Coyotes coach and minority owner, to join its effort. Ice Edge also said it will seek the NHL’s permission to allow the Coyotes to play five regular season games in a “Canadian sister city.” The leading candidate for that role appears to be Saskatoon, a prairie community of 218,000 that doesn’t even have a top-level minor league team.

The Coyotes will continue to play the majority of their home games in suburban Phoenix, under Ice Edge’s plan. Ice Edge is led by Keith McCullough, the chief executive of Research Edge LLC, a financial research firm.

The group says it must iron out details with the league, Gretzky and the city of Glendale, Ariz., which owns the Coyotes arena, before it can turn the letter of intent it submitted just before Friday’s bid deadline into a formal offer. Research Edge officials have been negotiating with Glendale, according to documents the city was ordered to release last week.

Ice Edge may need to hurry. A court-supervised auction open to bidders seeking to keep the Coyotes in Arizona is scheduled for Thursday Aug. 5. At this point, Reinsdorf’s $148 million offer for the team is the only bid.

Reinsdorf’s proposal has drawn criticism because he is seeking to renegotiate the team’s lease at Jobing.com Arena.

If no offer from that auction is deemed qualified, then bidding will be opened to buyers seeking to move the team, including Balsillie, who offered $212.5 million for the club. Balsillie’s bid is contingent on moving the Coyotes to the comparative Canadian metropolis of Hamilton, Ont.

Tropicana Entertainment’s $100,000 Check

Posted: July 27th, 2009, 1:17pm PDT

Associated Press

Last year, when Tropicana Entertainment started the process of persuading New Jersey gaming regulators it had severed all ties with ex-chief William J. Yung III, it did so with an application accompanied by a $100,000 check, which was signed by William J. Yung III.

It was a major oops for a gambling company that lost its New Jersey license and its Atlantic City casino and was pushed into bankruptcy and split in two, all as a result of Yung getting on the wrong side of the state’s Casino Control Commission, at least in the view of bondholders.

Scott Butera, chief executive of Tropicana Entertainment, put the Oct. 30, 2008, check-signing glitch down to a matter of electronic embarrassment, as the company’s bank accounts were reshuffled and automatic signature templates caught up.

“He was authorized at that time,” Butera admitted under questioning Monday before the New Jersey Casino Control Commission about Yung’s check-signing powers.

Butera took the witness stand to convince New Jersey regulators “the Yung group will have no continuing relationship of any sort with reorganized Tropicana Entertainment,” according to company attorney Gilbert Brooks of Duane Morris.

The check arrived at the headquarters of wary regulators a week after Tropicana Entertainment issued a press release saying that Yung wasn’t running the company anymore.

Tropicana Entertainment’s check-signing gaffe will likely not be fatal to the battered gambling company’s bid to reclaim the Tropicana Atlantic City casino.

After all, a lending group led by Carl Icahn owns both Tropicana Entertainment and the Atlantic City Casino, and nobody would seriously argue that hotelier Yung is in any position to push Icahn around.

But it added hours to the regulatory hearings that began Monday, which are aimed at deciding whether Icahn and other investors have to set up a separate company for Tropicana Atlantic City or can bring it back into the Tropicana Entertainment corporate house.

There’s not much left in Tropicana Entertainment’s house now, after regulators took the Atlantic City casino and a group of lenders carted off its Las Vegas holdings.

Yung agreed under intense pressure to release his grip on his gambling empire after the company filed for bankruptcy protection. His equity stake turned to nothing in bankruptcy.

Butera told regulators Monday he believed Yung walked away from his massive investment in the Tropicana Entertainment gambling enterprise so he could hold his head high as a successful hotel operator.

Yung’s foray into gambling drew slams from New Jersey regulators who found him unworthy to hold a license. Butera cited the “attack on his personal character, which I think had an effect on him,” in explaining Yung’s willingness to retreat.

Yung owns nearly $36 million worth of Tropicana Entertainment debt. Under the recovery ratio in the company’s Chapter 11 plan, that’s worth about $50,000 to $100,000 – or barely enough to cover pay the application fee for a New Jersey gaming license.

GM and Chrysler, Revisited

Posted: July 27th, 2009, 12:53pm PDT

Stephen J. Lubben, a professor at Seton Hall University School of Law in Newark, N.J., and Credit Slips blogger, says he’s “confused” by the vilification of the General Motors and Chrysler bankruptcy cases.

In an op-ed posted on Forbes.com Sunday, Lubben explains why the auto makers’ Chapter 11 cases weren’t out of the ordinary (as bankruptcy cases go) and didn’t constitute a “corruption of the bankruptcy process.”

You’ll recall that criticism of the bankruptcy filings, particularly the treatment received by lenders and bondholders, was intense, especially during Chrysler’s Chapter 11 case, which came about a month before GM filed for bankruptcy protection. Holders of Chrysler’s top-ranking debt that didn’t sign on to their treatment in the auto maker’s bankruptcy cried foul, claiming their rights were being trampled on and unsecured creditors – namely, workers – were getting better treatment. A similar argument was made by GM bondholders.

Lubben defends the use of bankruptcy law to restructure GM and Chrysler, saying the “popular criticism of the automotive bankruptcy cases does not stand up to careful scrutiny.”

Lubben’s op-ed came ahead of his testimony Monday before the Congressional Oversight Panel on the auto-industry bailout. The hearing, held at Wayne State University Law School in Detroit, also featured Ron Bloom, the head of the Obama administration’s auto task force. You can listen to a recording of the hearing here.

The Daily Docket: Ericsson Nabs Nortel Assets

Posted: July 27th, 2009, 7:08am PDT

Telefon AB L.M. Ericsson won an auction for Nortel Networks Corp.’s wireless network assets with a $1.13 billion bid, according to The Wall Street Journal.

Meanwhile, BlackBerry maker Research In Motion Ltd. is still interested in the Nortel assets and says the Canadian government has “the authority and responsibility to get involved to protect vital Canadian interests,” WSJ reports.

Chrysler Group LLC’s all-new board of directors will kick off a three-day meeting money to discuss key rebuilding issues, according to WSJ.

DealBook chats with John J. Rapisardi and Stephen Karotkin, two of the lead lawyers on the General Motors bankruptcy.

J.P. Morgan Chase is hosting representatives of leading financial institutions at a Tuesday Chicago Cubs game in a bid to syndicate $450 million in loans that JPM, Citigroup and Bank of America are underwriting as part of financier Tom Ricketts’ efforts to buy the Cubs from Tribune Co., which filed for Chapter 11 bankruptcy protection last year, according to WSJ.

General Growth Properties Inc. is facing opposition to its bid to keep control of its bankruptcy case until early next year from lenders and investors who sunk billions of dollars into the company’s malls. Read the Daily Bankruptcy Review story here.

Bankruptcy Is Dykstra’s Weapon of Choice

Posted: July 24th, 2009, 2:28pm PDT

Associated Press

Former baseball star Lenny Dykstra told radio host Dan Patrick that his financial woes are the result of bogus lawsuits, and he plans to use Chapter 11 to seek his revenge.

“People pile on, that’s why I did the 11,” Dykstra said. “It makes people stop…it’s probably one of the best weapons known to man for situations such as this.”

Dykstra claims he’s been victimized by former employees and business associates. He said he plans to use the courts to his advantage now.

“Chapter 11 is like putting a sniper on top of the roof to gun down all those people that are piling on,” he told Patrick. “It’s the last man standing that wins.” Dykstra said his bankruptcy filing will allow him to pay his legitimate debts while dispatching of the “bull.”

“You pay your debtors (sic) off and you come right out of it,” he said. “People piling on, just trying to get free money, they’re going to come to court and get crucified.”

In the interview, Dykstra said he still owns the house he bought from hockey great Wayne Gretzky for $17.5 million in 2007, and a plane.

Those statements seem to contradict Dykstra’s court filings, which listed less than $50,000 in assets and between $10 million and $50 million in debts. Dykstra filed for Chapter 11 protection in California on July 7.

Dykstra gave hints in the interview about how he plans to turn around his finances. The centerfield known as “Nails” said he is relaunching his Players Club magazine and plans to do a reality show, based on “reality.”

A post-bankruptcy comeback would mirror Dykstra’s playing career, during which he went from 13th round pick to New York Mets playoff hero and Philadelphia Phillies all-star.

“I was a guy that was never supposed to make it, same thing goes with this business stuff,” Dykstra said. “I’ve been ripping people’s hearts out for 20 years, and I haven’t finished.”

All That Glitters…

Posted: July 24th, 2009, 1:16pm PDT

The Golden Bear doesn’t seem to have the same golden touch in his business endeavors as he did on the golf course.

The developer of an exclusive ski and golf resort in central Utah, Mount Holly Partners LLC, filed for Chapter 11 protection earlier this month, according to the Salt Lake Tribune. It’s the third luxury resort with a Jack Nicklaus-designed golf course that’s found itself under Chapter 11 protection. Among Mount Holly’s roster of creditors is the Nicklaus Children’s Healthcare Foundation, the legendary golfer’s not-for-profit organization that provides funding for kids who need inpatient or outpatient treatments. Nicklaus has also been entangled in the bankruptcy proceedings of clothing maker Hartmarx Corp., which licensed the right to produce Nicklaus’ Golden Bear branded sportswear.

Mount Holly’s bankruptcy filing follows another recent blow to Nicklaus that came when luxury resort Lake Las Vegas announced last month that it would close the Reflection Bay Golf Club that Nicklaus’ company designed. Apparently, the course was worth less than the $29 million that Lake Las Vegas owed its senior lender. In addition to Mount Holly and Lake Las Vegas, resort Promontory Club was the third resort with a Nicklaus course to file for bankruptcy; unlike the others, the resort has completed its restructuring and emerged from bankruptcy.

As for Nicklaus’ Golden Bear line with Hartmarx, when Bankruptcy Beat last checked in, he was asking the bankruptcy court to break off the licensing agreement thanks to the uncertainty that surrounded the apparel maker’s future. Nicklaus was concerned by news that Hartmarx was searching for a buyer and the possibility that Hartmarx or a new apparel maker wouldn’t be able to fill its orders for clothing. Hartmarx countered that Nicklaus didn’t have any grounds for concern since Hartmarx had always kept up its end of the licensing agreements. The court, which had postponed a hearing on the dispute several times, is slated to take up the matter at an Aug. 20 hearing.

Phil Mickelson Won’t Waffle on This Bid

Posted: July 24th, 2009, 12:26pm PDT

Reuters

It may not be par for the course, but golfing champ Phil Mickelson isn’t wavering on his bid to own a Waffle House franchise in the Southeast.

GS Acquisitions LLC - a partnership among Mickelson, his agent Steve Loy and former Big Idea Inc. executive Terry Pefanis – is frying up a $20.2 million bid to buy SouthEast Waffles out of bankruptcy, according to documents filed Tuesday with U.S. Bankruptcy Court in Nashville.

According to the Tennessean, the newly created group sought to buy the 105-store franchise because “all three men enjoy eating at Waffle House.” Though none of the men has restaurant experience, the group says it saw a good business opportunity and will hire an operator with “‘significant’ Waffle House restaurant experience.”

“We think in these economic times, they will fare well,” Pefanis told the Tennessean, noting that Waffle house offers “an excellent value proposition to the customer for a modest price for (food) with high-quality ingredients.”

SouthEast and GS Acquisitions will seek court approval of the plan, which seeks to pay $4.8 million cash up front and the rest over time, at a to-be-determined date. Court documents show that SouthEast thinks GS Acquisitions “can easily provide adequate assurance of future performance of future obligations….[Mickelson, Loy and Pefanis have] been successful, and each is willing to personally guarantee GS Acquisitions’ on-going obligations under the franchise agreement.”

GS Acquisitions’ plan follows a competing plan filed by SouthEast’s parent earlier this month, but Waffle House Inc. seeks to bid just $19.2 million for its second-largest franchisee. And according to court documents, SouthEast estimates that its own proposed reorganization plan will yield a 10% greater return on unsecured claims than would its parent’s plan, which is scheduled to go for court approval Aug. 11.

The Daily Docket: Nortel Bidders Line Up

Posted: July 24th, 2009, 6:49am PDT

Nortel Networks Corp.’s wireless network assets go on the bankruptcy auction block today. Nokia Siemens Networks, the stalking-horse bidder, will open the auction with a $650 million offer. Swedish telecommunications equipment vendor L.M. Ericsson Telephone Co. and private equity firm MatlinPatterson have said they’ll bid on the unit, according to The Wall Street Journal, and BlackBerry maker Research in Motion is still clamoring to participate.

Berkshire Hathaway Inc. and Leucadia National Corp. made a bid to buy parts of CIT Group Inc. but were rebuffed, according to WSJ.

Senate Banking Committee Chairman Christopher Dodd said the U.S. government shouldn’t necessarily reject aid requests from CIT, which is still working to avoid bankruptcy, Bloomberg reports.

A group of Delphi Corp.’s salaried retirees are asking the Obama administration’s auto task force for help figuring out what’s going to happen with their pensions, according to WSJ.

Tribune Co. is seeking a bankruptcy court’s permission to hand out up to $56 million in management bonuses as its cash continues to ebb away in bankruptcy. Read the Daily Bankruptcy Story here.

Clothing manufacturer Kellwood Co. has reached a deal with its lenders that will allow it to avoid bankruptcy, the St. Louis Business Journal reports.

Mortgage Cramdown Redux

Posted: July 23rd, 2009, 11:14am PDT

Despite a busy agenda this summer (Supreme Court nomination, huge health care overhaul), a few Senate Judiciary Committee members – and we repeat, just a few – found time this week to reconsider a failed proposal to help struggling mortgage borrowers stay in their homes.

The two top dogs of the Judiciary subcommittee with bankruptcy jurisdiction, Sen. Sheldon Whitehouse, D-R.I., and Sen. Jeff Sessions, R-Ala., spent two hours on Thursday debating whether cramdown, in which bankruptcy judges could alter the terms of mortgages for borrowers in Chapter 13 bankruptcy, is the best way to help Americans avoid foreclosure. Judges already hold this power for pretty much any type of secured debt, like auto loans or vacation homes, but not for most borrowers’ primary residences.

Earlier this year, opponents of cramdown successfully shot down legislation that would have allowed it. The mortgage and banking industry has argued that allowing cramdown will motivate lenders to drive up their interest rates, punishing future borrowers with more expensive loans. As Sessions said, “there’s no free lunch. Somebody will pay for this cramdown. It will show up somewhere in the future against somebody that’s likely to be a good payer.”

Cramdown supporters, however, argue that it’s the best tool to help stem the rising tide of foreclosures, which slash home values and beget more foreclosures. They say various federal programs and doing enough. And amid customer complaints that they can’t hammer out a solution with their lenders, let alone get them on the phone, Whitehouse suggested that “perhaps the bankruptcy stick would get their attention.”

One Is the Loneliest Number

Posted: July 23rd, 2009, 8:53am PDT

Associated Press

A Senate Judiciary subcommittee hearing on a proposal to allow bankruptcy judges to modify the mortgages of troubled borrowers kicked off Thursday with just one senator in attendance - the subcommittee chairman, Sen. Sheldon Whitehouse, D-R.I., who was leading the hearing.

Whitehouse asked those gathered to excuse his colleagues’ absence, warning the witnesses there to offer their views on the proposal not to take the empty chairs personally.

“The Senate is extremely busy right now and I expect that my colleagues will be in and out during the course of the hearing. No meaning is intended by either their arrivals or departures so take no offense if they get up and leave while you’re speaking,” Whitehouse said.

But the Senator wasn’t alone for long. Once Whitehouse launched into his opening remarks, the subcommittee’s ranking member, Sen. Jeff Sessions, R-Ala., arrived, soon followed by Wisconsin Democrat Russ Feingold (who quickly ducked out again) and cramdown’s main champion in the Senate, Illinois Democrat Richard Durbin.

City Must Reveal Incentives For Coyotes Bidders

Posted: July 23rd, 2009, 8:42am PDT

The city of Glendale, Ariz., has until Friday to make public what incentives it offered to entice potential Phoenix Coyotes bidders to buy the hockey team and keep it playing in the Phoenix suburb.

A Maricopa County Superior Court judge ruled this week that the city could not keep secret promises it made to potential Coyotes suitors, including Chicago White Sox owner Jerry Reinsdorf, the Arizona Republic reported.

Glendale has lobbied hard to keep the financially struggling National Hockey League team playing at city-owned Jobing.com Arena. The Coyotes filed for Chapter 11 protection in May with a deal to sell the team to Blackberry mogul Jim Balsillie, who wants to move the franchise to Canada.

Glendale has worked alongside the NHL to find rival bidders that would allow the Coyotes to remain in Arizona. So far, the city has negotiated with Reinsdorf and second group headed by Daryl Jones of Connecticut investment-research company Research Edge LLC, the paper reported.

The order to unveil the incentive offers came as a result of lawsuit filed by the Goldwater Institute, a conservative watchdog group based in Phoenix.

The institute is against using tax payer dollars to benefit private businesses.

“This ruling lets taxpayers finally see what incentives their elected officials are offering to a potential buyer of the team. And since taxpayers will pick up the tab, that’s only fair,” Goldwater Institute attorney Carrie Ann Sitren said in a statement.

While the city has not fully disclosed what it offered Coyotes bidders, officials said they are not looking to offer tax breaks but want to help the Coyotes with efforts such as ticket fees or cost-saving measures.

While a bankruptcy judge hasn’t ruled out Balsillie’s offer, he is giving local bidders the first opportunity to buy the team.

An Aug. 5 auction is planned to find a buyer that would keep the team in Arizona. If a suitable purchaser is not found, a second auction will be held Sept. 10 that will be open to Balsillie and other bidders looking to move the team.

The Daily Docket: CIT Bondholders Push Bankruptcy

Posted: July 23rd, 2009, 6:46am PDT

Advisers to CIT Group Inc.’s bondholders want the lender to restructure in bankruptcy court, according to Bloomberg.

General Motors Co. and the German government are at odds over who should buy the auto maker’s Adam Opel GmbH unit, The Wall Street Journal reports.

A Chrysler executive told Congress Wednesday that legislation to reopen 789 shuttered dealerships could put the auto maker out of business, the New York Times reports.

GM is set to name vehicle designer Bryan Nesbitt to head its Cadillac unit, according to WSJ.

Creditors are preparing to sue Canadian mogul Frank Stronach on grounds he allegedly looted his horse-racing operation while putting on a show of trying to save it. Read the Daily Bankruptcy Review story here.

Eddie Bauer Holdings Inc. received permission to sell its assets to Golden Gate Capital for $286 million, proving that the third time’s the charm for the San Francisco-based private-equity firm. Read the DBR Small Cap story here.

Spansion Inc. plans exit bankruptcy by the end of the year with little or no debt and half the revenue it had a year ago, the Austin American-Statesman reports.

Brand Loyalty in the Courtroom

Posted: July 22nd, 2009, 12:29pm PDT

Associated Press

You can take the boy out of Eddie Bauer, but you can’t take the Eddie Bauer out of the boy.

Bankruptcy Beat caught up with Neil Fiske, CEO of the retailer, in the Wilmington, Del., bankruptcy court this morning. He almost succeeded in blending in with the crowd of dark-suited, briefcase-carrying attorneys and financial advisors – but his green-and-gray Eddie Bauer backpack gave him away.

While he wouldn’t comment on Eddie Bauer’s recently-approved sale to San Francisco private equity firm Golden Gate Capital, he did confirm that he’s more likely to be spotted in a pair of Eddie Bauer khakis than the pin-striped suit he donned for Wednesday’s hearing.

“All the time,” he said, when asked how often he uses his retailer’s products. Except, he added, when making an appearance in bankruptcy court.

Fortunately, the Eddie Bauer backpack he slung over his shoulder (we’re pretty sure it was the “Adventurer” model) can take him from the corner office to the courtroom. If you’re looking for color suggestions, Fiske went with the green, which looked quite strapping against the courtroom’s dark wood benches.

Return of the Airline Bankruptcy?

Posted: July 22nd, 2009, 11:03am PDT

Associated Press

Those of us who’ve been on the bankruptcy beat for a while will remember that before autos, it was airlines. Now, after a recession that’s pummeled the travel industry, some are asking if we’ll see the next round of airline bankruptcies this fall.

WSJ.com Middle Seat blogger Scott McCartney nicely sums up a Monday research report from J.P. Morgan’s Jamie Baker, who “handicapped prospects for the most precariously positioned airlines.” Baker, McCartney says, thinks the availability of capital will help determine what will happen to the industry over the next year.

Baker says American Airlines parent AMR Corp., United parent UAL Corp. and US Airways Group Inc. will all need more money. (United emerged from bankruptcy protection a couple of years ago, and US Air made two trips through bankruptcy court before teaming up with America West in 2005.)

Baker says the airlines have been pretty good at raising money, so it would be a mistake to count anyone out. A liquidation of one big airline, however, could prop up the others. “One thing is certain, on our minds: the size and share of the industry may radically change over six-12 months, with leaner winter months witnessing the greatest potential upheaval,’’ Baker wrote.

Read the full Middle Seat post here.

The Daily Docket: CIT To Shrink

Posted: July 22nd, 2009, 7:06am PDT

CIT Group Inc. plans to get much smaller as part of a restructuring intended to keep the lender out of bankruptcy, The Wall Street Journal reports.

Delphi Corp. intends to pursue a plan to sell its assets to former parent General Motors Co. and private-equity firm Platinum Equity even though most of the auto supplier’s creditors voted to reject the deal, according to a person familiar with the situation. Read the Daily Bankruptcy Review story here.

The Pension Benefit Guaranty Corp. will assume responsibility for 70,000 Delphi pensions, according to WSJ.

Charter Communications Inc. was in talks to sell itself to a private equity firm before it filed for Chapter 11 protection, the company’s chief executive told a bankruptcy judge Tuesday, Reuters reports.

The new owners the Tropicana in Las Vegas are suing the casino’s former parent, saying they shouldn’t have to pay for rights to use the Tropicana name, the Associated Press reports. The casino recently emerged from bankruptcy protection.

A judge in the British Virgin Islands has approved the liquidation of a feeder fund to Bernard L. Madoff’s investment firm, according to the New York Times.

Mortgage, Taxes Push Stephen Baldwin Into Bankruptcy

Posted: July 21st, 2009, 9:18am PDT

Associated Press

Stephen Baldwin and wife Kennya have filed for Chapter 11 protection, proof that even star status and a tattoo of Hannah Montana’s initials on your left shoulder are no shield against the ravages of a wrecked economy.

Early papers filed in the U.S. Bankruptcy Court in New York show no sign Baldwin will be using the “I’m a Celebrity, Get Me Out of Here” argument to untangle his affairs. The reality TV show features famous humans living in tough conditions – which could be Baldwin’s reality soon, if court papers are any indication.

His bankruptcy petition says his Upper Grandview, N.Y., home is worth $1.1 million, but he owes $1.19 million on two mortgages. Big income tax troubles are also evident from the court filing, with $749,974 owed to the IRS on taxes as far back as 1999 and a $139,288 debt for unpaid withholding taxes, as well as $194,527 in unpaid state income taxes.

The youngest of the acting Baldwin brothers also has more than $70,000 in credit card debt to shake, according to court documents.

The filing lists no assets, other than the mortgaged-to-the rooftop house. Even Baldwin’s “HM” tattoo, which he agreed to get in a deal that allowed him to appear on Miley Cyrus’s show, is not listed as an asset.

Court papers are also silent on the born-again Baldwin’s ventures in Christian ministry, which began, according to Wikipedia, after the terrorist attacks of Sept. 11, 2001, and were supposed somehow to make money.

New Owner Brings Gambling To Greenbrier

Posted: July 21st, 2009, 8:32am PDT

The Greenbrier

The Greenbrier resort is finally getting its subterranean casino – but don’t get your hopes up about playing blackjack in an abandoned Congressional bunker any time soon.

Jim Justice, who purchased the historic West Virginia hotel out of bankruptcy in a surprise stock transaction in May, recently announced plans to build an underground gambling facility beneath the resort’s front lawn. The casino’s projected April 1, 2010, debut will mark the end of a decade-long battle between local opponents who had warned of the dangers of gambling and Greenbrier officials eager for a financial lifeline to prop up the struggling resort, which found itself in Chapter 11 just months ago.

Years ago, Greenbrier officials had proposed placing the casino in a once-secret bunker built to house Congress in the case of a nuclear attack, but Justice apparently was not a fan of the “slot machine meets Armageddon retreat” theme.

“He has a completely different vision for the location,” Greenbrier spokeswoman Lynn Swann said in an interview Friday.

Instead, the casino will be built near the resort’s front entrance and reached via descending staircases and elevators. The gambling facilities will be flanked by restaurants and shops, according to a story in USA Today.

Above all else, Justice wants to makes sure you know this will be a classy affair. His newly dubbed casino team – comprised of architects, interior designers and a vice president of casino operations – used words like “elegance,” “integrity,” “luxury” and “tasteful” to describe the project.

“You just wait and see,” Justice told USA Today.

And you won’t even have to wait very long. A temporary gaming space, complete with slot and table games, is to be set up in a lounge in the hotel’s “Virginia Wing” over the next few weeks. It’s slated to open Sept. 15.

The Daily Docket: CIT Isn’t Out Of The Woods

Posted: July 21st, 2009, 6:53am PDT

CIT Group Inc. bought some time with a $3 billion rescue deal with its bondholders, but its fate may still rest with regulators and creditors, according to The Wall Street Journal.

According to the Birmingham News, Alabama-based hardware and tool distributor Moore-Handley Inc. is blaming its Chapter 11 filing on CIT Group, which recently averted its own bankruptcy filing.

Nortel Networks Corp. has reached a deal to sell its unit that makes phone systems for offices to Avaya Inc. for $475 million, subject to higher offers at a bankruptcy auction, according to WSJ.

Meanwhile, BlackBerry maker Research In Motion Ltd. says it can’t bid on some Nortel assets at a Friday auction because it wouldn’t agree to refrain from making offers for other Nortel units, MarketWatch reports.

Lehman Brothers Holdings Inc. is seeking bankruptcy-court approval to pump up to $950 million into its struggling Delaware banking subsidiary so it can pay off more than a half-billion dollars worth of brokered certificates of deposit set to come due next month. Read the Daily Bankruptcy Review story here.

A U.S. Bankruptcy Court judge in Delaware has confirmed a bankruptcy-exit plan for LandSource Communities Development LLC, according to the Associated Press. The developer will emerge from Chapter 11 as Newhall Land Development LLC.

Pearlman Trustee Wants It That Way

Posted: July 20th, 2009, 1:36pm PDT

A battle involving former bubblegum pop manager Lou Pearlman is heating up this week, and it’s not a battle of the boy bands. The man responsible for creating the Backstreet Boys and ‘N Sync, currently behind bars after bilking investors out of more than $300 million, is back in the spotlight thanks to new lawsuits that have investors as worked up as the teen girls that the bands sent into a tizzy in the late ‘90s.

Let’s quickly recap: Pearlman was forced into Chapter 11 protection in 2007 by angry creditors. The following year, he was sentenced to 25 years in prison after pleading guilty to conspiring to commit an offense against the U.S. and money laundering. A federal judge also ordered him to pay a total of $310.1 million in restitution to investors and lenders.

Now, the trustee in charge of Pearlman’s bankruptcy estate is suing to recover payments that Pearlman or his related business entities transferred in the four years before the bankruptcy. Most of the 700 lawsuits, court papers show, were filed against the investors bilked by the Ponzi scheme and seek to recover all transferred funds - whether those funds are fictitious profits, interest or invested principal - on the grounds that the investors knew or should have known it was a Ponzi scheme. Recovered funds will be distributed to Pearlman’s creditors.

Such a move is common in bankruptcy proceedings. The official tasked with getting cash into the hands of victims of Bernard Madoff’s fraudulent scheme has filed a dozen such lawsuits, including a recent effort to recover nearly $3 billion from three hedge funds and HSBC Holdings Plc.

But try telling that to Pearlman’s investors, who claim the trustee has forgotten that they are the victims here. “For most, if not all of these victim defendants, the Pearlman fraud caused them to lose their entire life savings,” the defendants’ lawyers said in court papers last week. “As if their lives were not devastated enough, the trustee has now sued the same victim defendants to collect any returned principal and any allegedly [sic] profits received.”

According to the Orlando Sentinel, the bankruptcy judge will referee the dispute at a hearing this Wednesday. And as for Pearlman, the disgraced boy band mogul is no doubt still adjusting to life behind bars, where he’s traded the company of 20-year-olds singing sugary pop ballads for a 20-year-old who’s reportedly confided in Pearlman about the young man’s alleged role in the shooting of a policeman that landed him behind bars.

Circuit City Puts Brand-Bashing Sites On The Block

Posted: July 20th, 2009, 12:19pm PDT

Associated Press

Defunct electronics retailer Circuit City is now attempting to sell off dozens of Web sites that it once held to shield itself from Internet critics.

Circuit City is planning a bankruptcy auction for hundreds of trademarks, logos and other pieces of intellectual property – including some obscure Web addresses associated with the retailer’s computer repair team, Firedog, and its store brands: ESA, Liquid Video and Verge.

While most of the sites were intended to promote the services and products, some appear to have been reserved to prevent bashing of the Circuit City brands. But now they’re all up for sale.

For example, those still angry about that jammed DVD player can buy “IHateESA.com.” Unhappy Firedog’s customers can pick up more than 20 Web sites featuring “Firedog” and a certain offensive word.

The complete list of sites for sale can be found in this court filing.

The sale of the intellectual property is part of Circuit City’s effort to liquidate its remaining assets in an attempt to pay back creditors. The company held going-out-of-business sales at its stores earlier this year.

Also on the auction block: Circuit City’s slogan, “Just What I Needed,” and in Spanish, “Justo Lo Que Necesitas;” its extended-warranty promise “Total Protection;” and Firedog’s jumping canine logo registered with five countries and the European Union.

The former retailer already sold the Circuit City name and its flagship Web site CircuitCity.com to Systemax Inc. for $14 million. Systemax relaunched the site as an online-only retailer in May.

The Daily Docket: CIT Averts Bankruptcy

Posted: July 20th, 2009, 6:53am PDT

Struggling lender CIT Group Inc. has apparently reached a deal for $3 billion in rescue financing to keep it out of bankruptcy court, according to The Wall Street Journal.

The Michigan Department of Environmental Quality is worried that Delphi Corp.’s bankruptcy-exit plan may leave the state holding the bag to fund the cleanup of the company’s polluted properties, the Associated Press reports.

A bankruptcy judge Thursday rejected Visteon Corp.’s $114 million severance pay program, finding it ran afoul of restrictions on enhanced pay to insiders of failed companies. Read the Daily Bankruptcy Review story here.

Former employees of BearingPoint Inc. are awaiting a judge’s decision on whether they’ll get $30 million in paid time-off they’re due, according to the Washington Business Journal.

Investors bilked out of $300 million by boy band mogul Lou Pearlman are facing lawsuits to collect money they were paid out of the scheme, the Orlando Business Journal reports.

U.S. banks have been charging off bad commercial mortgages at the fastest pace in 20 year, according to an analysis by WSJ.

The Dog Ate My Court Papers

Posted: July 17th, 2009, 2:37pm PDT

Like a cranky college professor who’s heard every excuse in the book why an assignment isn’t ready on time, a bankruptcy judge has refused to wipe out the millions of dollars in debt owed by Matthew R. Crocker, a Montana developer and the son of former Yellowstone Club owner Edra Blixseth.

That’s because Crocker, who sought Chapter 7 protection in February, hasn’t complied with repeated requests to file the paperwork that’s required under bankruptcy law. Such paperwork – which discloses an individual’s or company’s assets, debts, creditors and other financial information – is needed to help bankruptcy officials propose a game plan describing how everyone can get paid. In court papers filed back in April, bankruptcy Judge Ralph B. Kirscher describes how Crocker “admitted that he has devoted very little time to this bankruptcy proceeding” and how Crocker “has demonstrated a cavalier indifference to the bankruptcy process.” The judge further called Crocker’s excuses as to why he needed more time – including the fact that he owns several businesses – “flimsy.” And in hearings held around that time, Kirscher said he found “it bizarre and almost ridiculous that you haven’t gotten this stuff filed. As a businessman, you should be on top of this stuff, and maybe that’s why we’re at where we’re at now.”

According to a federal bankruptcy watchdog, nothing’s changed since April. Last month, he asked Kirscher to deny a discharge of Crocker’s debts – a perk of a Chapter 7 filing that releases individuals from personal liability for most debts and blocks creditors from collecting on those debts. According to the federal court system, individuals’ debts are discharged in “more than 99 percent of Chapter 7 cases.” Crocker, Kirscher recently ruled, would be part of that small minority, a decision he reached after Crocker failed to respond or otherwise defend himself from the watchdog’s motion.

With creditors to pay off, Crocker’s assets will be sold. The court recently cleared the sale of his artwork, including these gems demonstrating the developer’s varying tastes: a picture entitled “Dancing Bears,” a cowhide foot stool and a fake human skull with silver eyes.

You Probably Think This Post Is About You

Posted: July 17th, 2009, 1:31pm PDT

Associated Press

Don’t call them divos. Just consider actor Warren Beatty and hockey great Wayne Gretzky average citizens who are concerned about their privacy.

Beatty, known for roles in movie hits such as Bonnie and Clyde and Dick Tracy, and Gretzky, widely considered the best hockey player in history, agreed this week to provide information in the bankruptcy proceedings of Tribune Co. and the Phoenix Coyotes – that is, if their demands are met.

Attorneys for Beatty said in court papers Thursday that the actor is willing to be available for a deposition regarding his battle with Tribune over rights associated with comic strip detective Dick Tracy. He doesn’t, however, want to be videotaped during the session.

Although Tribune has offered to negotiate a protective order restricting the dissemination of the tape, Beatty’s attorneys claim that won’t be enough protect his privacy.

“As the court knows, Mr. Beatty is a famous actor and public figure and must take extra precautions to protect his privacy,” the lawyers said. If a videotape of his deposition somehow gets out, they said it would be in high demand and could potentially be used in a way that is harmful to the actor.

In an effort to ensure a videotape never gets spread across the Internet or into the hands of celebrity gossip shows, the lawyers are urging the court overseeing Tribune’s bankruptcy case to issue a protective order preventing the media company from videotaping the deposition at all.

Meanwhile, Gretzky has agreed to give a deposition in the bankruptcy court battle over who will own the Phoenix Coyotes after striking an agreement about what documents he would share.

Lawyers for Gretzky fought the City of Glendale’s request to review his income tax returns, arguing that he is a California resident and is entitled to that state’s privacy protections, the Associated Press reported.

They also argued that the personal finances of Gretzky, who coaches the Phoenix Coyotes, aren’t relevant to the complicated legal battle over the team’s sale.

To ensure victory, Gretzky’s defensemen also reminded everyone of who he is:

“Mr. Gretzky is a public figure; in fact, he is one of the most recognizable sports figures in the history of the United States,” Gretzky’s lawyers said in court papers. “Mr. Gretzky has a clear interest in maintaining the privacy of his financial records, and his privacy interest is one that outweighs (Glendale’s) need for disclosure of Mr. Gretzky’s personal tax records.”

Under the agreement with the City of Glendale, Gretzky will provide documents that only apply to the Coyotes. And Gretzky’s deposition and documents can be kept confidential.

Bankruptcy Beat Snapshot: Aram Ordubegian

Posted: July 17th, 2009, 12:17pm PDT

Arent Fox

When young boxer Victor Ortiz was up against the ropes, he turned to restructuring attorney Aram Ordubegian.

Last year, Ortiz sought Chapter 11 bankruptcy protection to get out of a contract with his existing promoter so he could sign with Oscar de la Hoya’s Golden Boy Promotions. Trouble is, Ortiz’s promoter wouldn’t let him throw in the towel.

Enter Ordubegian, who this summer joined Arent Fox LLP as a partner in its Los Angeles office. He argued that not only was the company’s failure to release Ortiz from the contract a violation of the 13th Amendment’s ban on involuntary servitude, but also that Ortiz’s request was in line with the purpose of a Chapter 11 proceeding. “The bankruptcy has to give some sort of fresh start,” he said. “Otherwise, why would the rejection be allowed?”

Ordubegian’s creative arguments packed a punch with the bankruptcy court, ensuring an Ortiz victory after several rounds of legal brawling. That’s a typical day’s work for the attorney, who, given his West Coast location, encounters a lot of high net-worth individuals in need of financial advice. And while the individuals and middle-market companies that he often represents can’t afford the huge fees that East Coast lawyers charge, Ordubegian has his own set of perks, like a fourth-row seat at a recent Ortiz fight at the Staples Center. Not too shabby.

French Workers Use Explosive Tactics

Posted: July 17th, 2009, 4:27am PDT

AFP/Getty Images

How do you say “Kaboom!” in French? Two companies may be about to find out.

Disgruntled French workers have threatened to bid adieu to auto-parts factory New Fabris and a plant belonging to the French arm of telecommunications-equipment manufacturer Nortel Networks Corp. by blowing them up.

You read that right. Workers Thursday renewed a threat to blow up New Fabris after failing to win a pay-off from carmaker Renault SA, a key former client, Agence France-Presse reported. Dozens of workers have been occupying the plant in western Chatellerault since their employer was declared bankrupt June 16. Now, they are threatening to blow up a string of gas canisters July 31 unless Renault and Peugeot SA, which accounted for 90% of its business, pay EUR30,000 to each of the 366 laid-off workers. But officials don’t seem to be convinced the workers will follow through on their threat, claiming they are bluffing with depressurized gas bottles.

Bluffing seemed to work for workers of the French arm of Nortel. They placed gas cylinders and a sign saying “boom” in front of a plant in Chateaufort, near Paris, after provisional management canceled a planned meeting on Monday, Reuters reported. The gas canisters were later found to be empty. Nevertheless, their threat apparently worked. Local authorities say management agreed to enter into talks over layoff terms. A total of 480 jobs are set to be axed at the plant after bankruptcy proceedings. With their demands met, workers have agreed to remove the gas cylinders from the plant.

The Daily Docket: CIT’s Troubles Spread

Posted: July 17th, 2009, 4:26am PDT

Concerns about a possible CIT Group Inc. bankruptcy are causing companies to stop shipments to retail and manufacturing business amid worries they’ll face a cash crunch if the troubled lender fails, The Wall Street Journal reports.

Delphi Corp.’s lenders say they will bid for the auto-parts supplier this week and try to defeat a government-orchestrated sale to General Motors Co. and a private-equity firm. Read the Daily Bankruptcy Review story here.

Meanwhile, a group of Delphi retirees are suing to get an independent administrator to help block the auto supplier from terminating a pension plan for salaried employees, according to WSJ.

The U.S. House of Representatives approved a measure Thursday that seeks to reverse the closing of 789 Chrysler dealers and the planned closing of more than 2,000 General Motors dealers, WSJ reports.

Charter Communications Inc. has sweetened its offer to bondholders as the St. Louis cable company looks to obtain court approval of its bankruptcy-exit plan. Read the DBR story here.

Wayne Gretzky has agreed to give a deposition in the fight in bankruptcy court over who will own the Phoenix Coyotes hockey team and where it will play, according to the Associated Press.

Agriprocessors: The Play

Posted: July 16th, 2009, 10:11am PDT

Associated Press

First there was the raid on the slaughterhouse, then the bankruptcy filing, then the trials. And now, the play.

Agriprocessors, the kosher meat processing plant in Postville, Iowa, that’s entangled in a slew of legal disputes stemming from its alleged mistreatment of immigrant workers, has now inspired action of the artistic variety. Seven Mexican and Guatemalan men who were arrested in the May 2008 raid have embraced their thespian sides and written a play about the experience. They performed “La Historia de Nuestras Vida,” (The Story of Our Lives) at the Holy Trinity Lutheran Church in Minneapolis last Friday night, bringing all the drama of the ill-fated chicken and beef producer to life before an enthralled audience.

“They told a very compelling story,” Stephanie Bates, a program coordinator for one of the organizations that sponsored the play, said in an interview Thursday. They “created a visible representation of how broken our immigration system is.”

Bates’ group, Resources Center for the Americas, is a human rights organization that has come to the defense of the workers, who they believe were “violated” during their time at the plant. She said the seven-part play, which begins with the men’s arrival in Postville and explores the raid and their time in detention centers, helped to give audience members a fresh perspective on immigration issues.

“I think that it’s really unique for these men to tell a story that’s deeply personal and relate to an audience who probably has no idea what it would be like to go through that situation,” she said.

A lack of personal experience with immigration raids might not have been the only thing infringing on viewers’ ability to understand the performance. It was also presented entirely in Spanish, according to the Associated Press, although the audience was presented with an English translation in their playbooks.

Still, by Bates’ account, the language barrier had little impact on the audience’s ability to connect with the performers and enjoy the play.

“The men got a standing ovation,” she said. “Everyone was on their feet.”

The Daily Docket: CIT Nears Bankruptcy

Posted: July 16th, 2009, 4:25am PDT

CIT Group Inc. said Wednesday “there is no appreciable likelihood” it will receive new assistance from the U.S. government in the near future, raising the chances that the struggling business lender will file for bankruptcy protection, The Wall Street Journal reports.

A federal judge Wednesday blocked a bid by a group of hedge funds to take control of Lehman Brothers Holdings Inc.’s bankruptcy case. Read the Daily Bankruptcy Review story here.

New York-based Iconix, which licenses the Danskin, London Fog and Rocawear brands, may be interested in bidding to buy Eddie Bauer out of bankruptcy, according to the Seattle Times. Liquidators Hilco Consumer Capital and Gordon Brothers Group have also made a bid for the retailer.

Senior lenders of Young Broadcasting Inc., a television station owner that filed for bankruptcy earlier this year, are buying the company’s 10 stations in return for canceling $200 million in debt. Read the DBR story here.

Bernard L. Madoff’s accountant, David G. Friehling, agreed to waive an indictment, signaling that he may be plead guilty, Bloomberg reports (via the New York Times).

Former hedge fund manager Samuel Israel III had two years added to his 20-year prison term for fraud for faking his own suicide to avoid going to prison, the Associated Press reports (via the New York Times).

Visteon Becomes GE Landlord

Posted: July 15th, 2009, 2:14pm PDT

Visteon Corp., which has been unable to nail down a bankruptcy loan from its customers and has seen revenue plunge as the auto industry implodes, found a new source of cash this week: rent.

The troubled auto supplier obtained bankruptcy court approval Tuesday to lease space near its Van Buren Township, Mich., headquarters to General Electric Co. GE plans to create a $100 million research-and-development center on the site, which is known as Visteon Village.

Visteon said in court documents that it expects to collect $10.5 million in rent over the 13-year term of the lease.

GE will rent about 236,000-square feet of space from Visteon and has committed to building 100,000-square-foot building on the site. GE is planning to open an “Advanced Manufacturing and Software Technology Center” that will employ 1,200 scientists and researchers.

Michigan Gov. Jennifer Granholm touted the GE center as bringing “tech-driven jobs” to a state hard hit by the auto industry’s woes.

Visteon could be a poster child for those problems. The company that only a decade ago was seen as a high-tech spinout of Ford Motor Co. has deeply cut its work force in recent years. It filed for Chapter 11 bankruptcy protection on May 28.

NASCAR Stars Lose GM Sponsorships

Posted: July 15th, 2009, 8:43am PDT

The judge overseeing General Motors’ bankruptcy case waved the black flag at a trio of NASCAR racers, allowing the auto maker to sever sponsorship deals with current and former drivers.

GM obtained court permission Monday to end 56 promotional contracts. Caught in the pile up were 2008 Daytona 500 winner Ryan Newman, 2007 Nationwide Series co-champion Jeff Burton and NASCAR legend Rusty Wallace.

The sponsorships were among the contracts left with the “old” GM to be wound down in bankruptcy. The auto maker, which emerged from bankruptcy protection last week, used its spin around the Chapter 11 track to eliminate hundreds of costly contracts, including dozens of sponsorship deals.

With the cancelation of Burton’s “personal service” contract, the driver will no longer make personal appearances and perform other duties on behalf of GM, but he will continue to drive a Chevrolet in NASCAR events, said David Hart, spokesman for Richard Childress Racing, Burton’s team.

The two other teams did not responded to requests for comment.

GM canceled its “motorsport sponsorship agreement” with Wallace’s RWI Racing LLC and its “sponsorship services agreement” with Ryan Newman Motorsports Inc. but did not detail the nature of those deals.

Newman is driving the “U.S. Army” No. 39 Chevrolet Impala SS this season, after winning Daytona last year in a Dodge.

Former Winston Cup champion Wallace has traded his jumpsuit for a microphone as an ESPN racing analyst, but he still operates a NASCAR team that features his son, Steve Wallace.

GM also scraped deals with five race tracks, including Daytona International Speedway and Charlotte Motor Speedway, where the auto maker gave up suites, pit passes and parking permits.

Other contracts GM eliminated Monday included: the naming rights to Oldsmobile Park, a minor league baseball stadium in Lansing, Mich., sponsorship of The Arnold Palmer Invitational golf tournament and promotional agreements with the National Football League’s Oakland Raiders and University of Southern California’s athletic department.

The Daily Docket: Lehman Unit To Return $13B

Posted: July 15th, 2009, 6:58am PDT

Administrators representing Lehman Brothers Holdings Inc.’s main European unit have developed a plan to return about $13 billion in client funds, according to The Wall Street Journal.

CIT Group Inc. and the U.S. government were working on details of an aid package for the struggling lender Tuesday night, WSJ reports.

TV station owner Sinclair Broadcasting Group Inc. warned investors that it may have to file for bankruptcy protection if it can’t restructure its debt, according to WSJ.

The court-appointed official in charge of recovering money for Bernard Madoff’s investors sued HSBC Holdings Plc and an investment fund on Tuesday to recover about $600 million. Read the Daily Bankruptcy Review story here.

Former General Motors Corp. Chairman Rick Wagoner will officially retire on Aug. 1 with a compensation package worth $8.2 million, according to the Detroit Free Press.

Chrysler’s Detroit engineers are studying a Fiat plant in Poland, looking for the “secret to small-car success,” the New York Times reports.

Sitting Pretty In Bankruptcy

Posted: July 14th, 2009, 1:45pm PDT

While it doesn’t quite carry the allure of Paris, bankruptcy is getting to be a fashionable destination these days. In the past year, we’ve seen couture designer Christian Lacroix, celebrity jeweler Fred Leighton and luxury handbag maker Lambertson Truex make the voyage to court. Joining their ranks is high-end fashion designer Charles Chang-Lima’s eponymous design studio, whose flirty cocktail dresses and sleek floor-length gowns are carried at department stores like Neiman Marcus and Nordstrom.

Chang-Lima Design Studio Ltd. sought Chapter 11 protection in Manhattan Monday, blaming its cash troubles on increasing operating costs and sales that have declined as a result of the recession. The studio, which produces the Charles Chang-Lima women’s sportswear collection and the REDUX Charles Chang-Lima line of “gamine and feminine” dresses and gowns, brought in $3.7 million in gross sales revenue last year. This year-to-date, gross sales revenues total $1.1 million.

Some pieces in Chang-Lima’s REDUX line look like something that “Sex and the City” columnist/fashionista Carrie Bradshaw would choose for a night out (in particular, check out the seventh Spring 2009 dress on the REDUX Website). And in fact, Bradshaw’s portrayer, Sarah Jessica Parker, has donned Chang-Lima’s clothes, along with such other celebs as Julianne Moore and Oprah Winfrey.

But perhaps one Chang-Lima’s most famous fans isn’t an actress or TV personality; in fact, she’s not even a real person at all! It’s Barbie, whose 50th anniversary inspired Chang-Lima and a host of other designers to create outfits for the legendary doll during New York’s Fashion Week.

The Studio Warner Brothers Left Behind

Posted: July 14th, 2009, 9:59am PDT

Video-game fans eagerly awaiting the release of “Total Non-Stop Action Impact 2” could be in store for some disappointment.

Although Midway Games, which is developing the follow-up, recently successfully sold its assets to Warner Brothers Entertainment Inc., the transaction didn’t include the company’s San Diego studio. And that’s where a development team was working on the professional wrestling game, according to a recent story from the San Diego Union-Tribune.

“It’s unclear whether they will finish before the studio closes,” the article notes, undoubtedly striking fear into the hearts of teenage boys everywhere.

Another game is also likely to be scrapped, according to a recent filing by Midway with the Securities and Exchange Commission. But the company would not specify which game that was, once again striking fear into the hearts of teenage boys everywhere. As a result of the aborted project, Midway will post a $4 million write-down of “related capitalized product development costs, according to the filing.

The 100 employees who work at the studio represent 20% of the company’s total work force. Midway said it was giving the employees 60 days notice of its plan to shut down the facility.

The Daily Docket: U.S., CIT In Talks

Posted: July 14th, 2009, 7:11am PDT

U.S. officials are in advanced talks about providing aid to struggling CIT Group Inc., one of the country’s primary lenders to small and midsize businesses, The Wall Street Journal reports.

General Motors moved closer Monday to buying its former parts unit Delphi Corp. when a bankruptcy judge said GM could take steps to complete the deal. Read the Daily Bankruptcy Review story here.

The Department of Justice has opened an investigation into credit derivatives, according to a provider of data for the market, according to WSJ.

Steven Rattner, the chief of the U.S. auto task force, is leaving the Obama administration just days after GM exited bankruptcy protection, WSJ reports.

Private Equity Beat has updated its list of bankruptcy filings by buyout-backed companies.

Bernard L. Madoff, who was sentenced to 150 years in prison for orchestrating a massive Ponzi scheme, was transferred to a federal prison in Atlanta from Manhattan, according to DealBook.

Belt-Tightening Hurts Gyms

Posted: July 13th, 2009, 12:54pm PDT

We know people are tightening their belts amid the recession, but it looks like it’s only in the figurative sense. Peak Fitness, a chain of 17 gyms in North and South Carolina, is the latest health-club chain to seek Chapter 11 protection, following in the footsteps of Bally Total Fitness and Crunch.

For Crunch, it was operating losses, deficient membership sales and a failure to slough off unprofitable locations with “overpriced” leases that pushed it into bankruptcy. For Bally, it was a crushing debt load that couldn’t be refinanced amid a global credit crunch. And for Peak, whose parent company, Fitness Management Group Inc., just filed its Chapter 11 petition Friday, it was partially the result of leases negotiated at the real estate market’s peak, when property values were much higher than they are today. Peak also blamed the recession in general as well as its acquisition of unprofitable gyms in the Raleigh, N.C., area.

Like the 30-club chain Crunch, Peak Fitness is now seeking to put its gyms on the block. It has a stalking-horse bid lined up from Fuzion Investment Capital LLC of Nevada. (A company spokeswoman declined to provide any further information about Fuzion.) New ownership, the company said in a statement, will allow the gyms to continue operating “on a far stronger and more competitive footing.”

New Chrysler Dumping Viper? Not So Fast

Posted: July 13th, 2009, 9:30am PDT

Chrysler Group LLC

Chrysler Group LLC said Friday that it will burn rubber out of bankruptcy with its fastest vehicle: the Dodge Viper hotrod.

The troubled auto maker had contemplated selling off the Viper brand and the Detroit factory where it’s assembled while it reorganized under Chapter 11 protection. But Friday, Chrysler said it would abandon plans to sell the assets and would keep the 600-horsepower muscle car in its stable.

The 2009 Dodge Viper SRT10 boasts an 8.4-liter, V-10 engine that can hit 60 miles per hour off a stoplight in less than four seconds.

“We’re extremely proud that the ultimate American-built sports car with its world-class performance will live on as the iconic image leader for the Dodge brand,” Dodge brand President Mike Accavitti said in a statement.

Prior to filing for bankruptcy, Chrysler leaders said that the Auburn Hills, Mich., auto maker needed to cut the number of models that it sells. But in its first months sharing a chief executive with Fiat SpA, Chrysler has revived two models previously thought to be on the scrap heap.

In addition to the speedy Viper, the auto maker said it would hold on to the retro-styled Chrysler PT Cruiser hatchback.

The Daily Docket: Cubs May Slide Into Bankruptcy

Posted: July 13th, 2009, 7:00am PDT

Tribune Co. is considering placing the Chicago Cubs into bankruptcy to speed up the sale process, the Biz of Baseball reports.

U.S. apparel manufacturer Kellwood Co. could end up filing for bankruptcy protection after failing to reach agreements with bondholders, The Wall Street Journal reports.

The law firm that’s liquidating Bernard Madoff’s investment securities firm and tracking assets for fraud victims asked a bankruptcy judge to approve more than $15 million in fees, according to WSJ.

According to WSJ, the slumping economy and bad lending environment are hurting U.S. airlines, which could eventually lead to bankruptcies in a few months if conditions don’t improve.

CIT Group Inc. has been working to construct a plan to help persuade customers that it can emerge from a liquidity crunch, according to WSJ.

As Michigan keeps losing auto jobs due to bankruptcies and other financial troubles, the state’s crashing economy is dragging down its health-care system, WSJ reports.

A Picture’s Worth A Thousand (Weird) Words

Posted: July 10th, 2009, 1:36pm PDT

Reuters

If you aren’t supposed to judge a book by its cover, then maybe you shouldn’t judge paintings by their titles, either?

At least, that’s what we’re hoping after taking a peek at the art inventory of the Fontainebleau Las Vegas, the $2.9 billion casino-resort project that was stopped in its tracks last month after its lenders cut off $800 million in funding. It filed for Chapter 11 protection in Miami shortly thereafter.

The Fontainebleau Las Vegas recently filed schedules listing some of its assets, among them nearly $5.2 million in books, pictures and other art. The artists are not listed, and a spokesperson was not immediately able to provide them, but judging by the titles, the curator has some “unique” taste.

There are paintings that go by names like “Magical Space Forms,” “Chakra,” “Good and Bad Government” and last, but certainly not least, “Double Orange Coney Island Vodou.” The sculptures have titles that are just as trippy and are even more pricey, like a $1.3 million set known as Venus Bleau (perhaps commissioned especially for the hotel) and “A Gift From The Earth,” which is valued at $1 million.

The Fontainebleau Las Vegas project was headed up by developer Jeffrey Soffer, who bought the hotel’s Miami namesake in 2005 and began construction on the Las Vegas strip version in 2007, according to a recent article from the Miami Herald. The project was ambitious from the start, with Soffer setting out to match the glitz and glamor of other upscale hotels on the Las Vegas Strip.

According to Lance Ignon, a spokesman for the Fontainebleau Las Vegas, that means investing in some pricey paintings.

“It is common for high-end casinos to have artwork of this caliber,” he said in an interview Friday.

Psystar Takes Fruit Metaphor To New Level

Posted: July 10th, 2009, 9:11am PDT

When life gives you lemons, you’re supposed to make lemonade. But what if life hands over apples?

“When life gives you apples, make applesauce,” Psystar Corp. concluded in a recent newsletter to customers.

The company makes computers capable of running Apple Inc.’s Macintosh operating system, much to the chagrin of Apple, which even slapped Psystar with a copyright lawsuit in April 2008 that accused the company of violating the software-license agreement protecting the “Leopard” version of its operating system. Psystar denied the allegations and eventually shuffled into bankruptcy protection in late May, remaining tight-lipped about the relationship between its filing and the litigation.

Chapter 11 protection shields businesses from lawsuits and foreclosure, so companies sometimes use it to seek shelter from ongoing court battles or attempts to seize their property. But the protection only holds true when the “automatic stay” is in effect. Apple requested that the stay be lifted, a judge agreed, and, with the lawsuit coming into view once again, Psystar abruptly decided to wave goodbye to Chapter 11. “Although [the bankruptcy filing] was critical to our continued daily operations, we now are ready to emerge and again battle Goliath,” the company said in the note.

We’re going to assume that Goliath reference is a symbol for a certain forbidden fruit.

The Daily Docket: GM Motors Out Of Bankruptcy

Posted: July 10th, 2009, 6:49am PDT

According to The Wall Street Journal, media reports say that the new General Motors Corp. emerged from bankruptcy protection after only 40 days in Chapter 11.

GM’s ousted chief executive, Rick Wagoner, will soon learn when he’ll be released from the company and how much he’ll be compensated, according to WSJ.

Seat maker Lear Corp. won interim court approval to pay up to $38.15 million to its suppliers, a move the auto-parts maker said is critical to continuing operations while it attempts to reorganize under bankruptcy protection. Read the Daily Bankruptcy Review story here.

American International Group Inc. is asking the Obama administration if it can pay agreed-to retention bonuses, including $235 million for employees at the financial product unit, WSJ reports.

Bankruptcy may be starting to look pretty good for Barneys New York, whose owners may be close to losing control of the company to its largest debt holder, the New York Post reports.

Experts say Detroit Public Schools may have no choice but to file for Chapter 9 bankruptcy protection, the Detroit Free Press reports.

Slugger Dykstra Says Bankruptcy A Step To Success

Posted: July 9th, 2009, 2:45pm PDT

Associated Press

Bankruptcy is just a stepping stone to greatness, according to financially troubled former slugger Lenny Dykstra.

The one-time Philadelphia Phillies and New York Mets outfielder filed for Chapter 11 protection Wednesday, but Dykstra said the bankruptcy will be just a speed bump on his path to success, in a letter to readers of his financial newsletter. (Hat tip to Philly.com, which first published the note.)

In the letter, Dykstra compared himself to Abraham Lincoln, Henry Ford and Walt Disney as other great Americans who filed, or whose businesses filed, for bankruptcy. “Although I am saddened and a bit embarrassed that I had no choice but to resort to this action, at least I am in good company,” he said. “Two of our greatest presidents, Thomas Jefferson (filed several times) and Abraham Lincoln, were able to restructure their lives through bankruptcy and went on to do great things such as helping to establish the University of Virginia and abolishing slavery.”

The former centerfielder once known as “Nails” said in court documents that he has less than $50,000 in assets and between $10 million and $50 million in debts. The bankruptcy filing comes on the heals of several lawsuits related to his entrepreneurial endeavors, including “The Players Club,” a magazine aimed at professional athletes.

After his retirement from baseball, Dykstra became a celebrity investor, dispensing options-trading advice on Jim Cramer’s website, TheStreet.com. Dykstra’s profile remains on the site, although he no longer writes for it.

In his letter, Dykstra said his personal financial woes won’t stop him from sharing his advice, which you can now find on his personal website, NailsInvestments.com. He promises improvements “within a week or so.”

“Just like when we analyze a solid ‘though (sic) as nails’ stock and choose to buy in when it is down, I hope that you will similarly stand behind this ‘Nails’ - your most humbled servant,” Dykstra asks his readers.

Boat Maker On The Hook For Fishing Tournament Fees

Posted: July 9th, 2009, 12:18pm PDT

Good news, Ranger Boat owners – you can still reel in thousands of dollars in customer incentives and fishing tournament awards, thanks to a recent bankruptcy court ruling that the boat maker remain on the hook for such payments.

Genmar Holdings Inc., the parent company of Ranger Boat manufacturer Wood Manufacturing Co., this week won court permission to pay out nearly $1 million in pre-bankruptcy claims it racked up while promoting the Ranger brand of fishing boats. A good chunk of that is related to the company’s annual Ranger Cup fishing tournaments, in which Ranger Boat owners grab a rod and reel for bass or walleye fishing competitions and the chance to win thousands of dollars in cash awards or credit toward the purchase of a new boat.

Although bankruptcy law generally frowns upon paying off a certain type of debt while leaving other creditors floundering, Genmar wrangled its way out of that conundrum by arguing that these promotional programs are essential to the continued success of Ranger Boat and the customer loyalty it’s built up since founder Forrest Wood began making fishing boats in the late 1960s. And despite the carping of several creditors, the bankruptcy court bought it hook, line and sinker.

The Daily Docket: Lehman Advisers Win Big

Posted: July 9th, 2009, 6:47am PDT

The New York Times reports that the army of advisers for Lehman Brothers Holdings Inc. has been paid $262.6 million, according to a filing with the Securities and Exchange Commission.

General Motors Corp. and the Obama administration are expected to launch the “new GM” as a four-brand showcase, but GM’s outcome will mainly rely on Chevrolet, The Wall Street Journal reports.

The head of GM’s German unit said investor interest is strengthening its ability to negotiate, but it mustn’t delay the sale process, according to WSJ.

CCS Medical Inc., a medical supply company owned by private-equity firm Warburg Pincus, filed for bankruptcy Wednesday after reaching a deal that will slash its debt and hand ownership of the company to its first-lien lenders. Read the Daily Bankruptcy Review story here.

A court judge will likely make the decision whether the Goldwater Institute can sneak a peak at Glendale, Ariz.’s talks with Phoenix Coyotes suitor Jerry Reinsdorf, the Phoenix Business Journal reports.

Journal Register Co. gained court approval of a Chapter 11 plan, putting the newspaper publisher on track to emerge from bankruptcy in the hands of its secured lenders. Read the DBR story here.

Drag-Racing Teams Eat GM’s Bankruptcy Dust

Posted: July 8th, 2009, 1:12pm PDT

Associated Press

General Motors Corp.’s bankruptcy appears ready to leave four drag-racing teams in the rear-view mirror.

The Detroit auto maker filed papers with the U.S. Bankruptcy Court in Manhattan Tuesday asking to reject 30 contracts, including four “team agreements” with the National Hot Rod Association, the country’s premier drag-racing circuit.

GM is seeking to cut ties with Cagnazzi Racing, KB Racing LLC, Kurt Racing and Pedregon Racing by July 22, meaning some of sport’s top teams could lose their association with the maker of American muscle cars.

KB Racing features Greg Anderson, who won three straight Full Throttle Series championships from 2003 to 2005, and Jason Line, who earned the title in 2006. Both drivers race Pontiac GXP pro stock cars.

The racing sponsorships were among numerous contracts that GM isn’t selling to the new, government-backed entity, leaving those deals to be wound down in bankruptcy.
A spokesman for GM declined to comment on why the drag-racing contracts were among those rejected.

The auto maker also sought to sever several other promotional contracts, including deals with five-time British Open champion Tom Watson and famed golf coach David Leadbetter, as well as sponsorship of St. Louis Cardinals catcher-turned-broadcaster Tim McCarver’s radio show.

Celebs’ Thumbs Up Couldn’t Save Time-Share Owner

Posted: July 8th, 2009, 11:27am PDT

Despite boasting endorsements from television stars and a stand-up comic, Consolidated Resorts Inc. took the plunge into Chapter 7 bankruptcy liquidation this week.

The owner of time shares in Hawaii, Orlando and Las Vegas boasted a thumbs up from such celebs as Alan Thicke (AKA Dr. Jason Seaver from the TV show “Growing Pains”), David Faustino (AKA Bud Bundy from the sitcom “Married…With Children”) and stand-up comic George Wallace. Thicke even serves as vice president of creative development for an affiliate of Consolidated Resorts, a role in which he extols the resorts’ locations “in the most desirable vacation destinations in the world” as well as the “unique relationship” the company has with its 200,000-plus owner families.

But now, Consolidated Resorts is closing up shop, seeking bankruptcy protection to sell off its assets to pay its creditors. It seems that not even lining up real A-list talent to endorse its resorts would have helped the company, which told The Wall Street Journal two weeks ago that a bankruptcy filing was imminent because the current lending environment “has made it impossible to continue this company.”

Customers Get Refunded For Tainted Toys

Posted: July 8th, 2009, 8:57am PDT

Customers who purchased asbestos-laden toys based on the television show “CSI: Crime Scene Investigation” are now eligible for refunds, but the company that developed the products won’t be footing the bill.

That company, Planet Toys Inc., sought bankruptcy protection in March, committing right off the bat to liquidate its assets under Chapter 7. At the time, an attorney for Planet Toys told us that the economy was the main reason behind the filing, but Planet Toys also had a skeleton in its closet: namely a class-action lawsuit initiated in May 2008.

The lawsuit was brought by parents who thought their kids were just learning about science while blowing on the special fingerprint powder included in the CSI: Crime Scene Investigation Fingerprint Examination Kit and the CSI: Crime Scene Investigation Forensic Lab Kit. Tests eventually revealed that the toys weren’t just dishing up a dose of learning; they were also dishing up a dose of asbestos, a mineral known to cause health problems.

Planet Toys had been taking part in negotiations regarding a possible settlement to the lawsuit, but once its Chapter 7 protection kicked in, it abandoned its place at the bargaining table. The bankruptcy code’s automatic stay shields companies from lawsuits.

Instead, the retailers who distributed the toys are taking the fall, agreeing to provide cash refunds for the product. The toys sold for about $30 apiece, attorney Victoria Ni said, but she couldn’t provide any estimate as to how many toys are out there.

Ni, who is with public interest law firm Public Justice, represented the Asbestos Disease Awareness Organization in the case. The ADAO commissioned the original study that identified asbestos in the toys.

“We were really concerned when we learned about it,” she said of the contamination in an interview Tuesday. “This a popular toy….People know about the CSI trade name, and they’re buying these toys thinking it’s an educational toy.”

Under the settlement, retailers including Toys ‘R Us, CBS Broadcasting Inc. and Kmart will pay for the costs of the claims administration and will hand over $30,000 to the ADAO. Customers are eligible for refunds and can also send back the toys free of charge.

“It’s important that they get these toys out of their house,” Ni said. But only time will tell whether the products caused any lasting health problems.

“Asbestos-related diseases do not manifest themselves for decades,” she said. “So there’s no way of knowing.”

The Daily Docket: Opus West Drills Into Bankruptcy

Posted: July 8th, 2009, 6:53am PDT

Design-build developer Opus West Corp. is the latest Opus Group company to file for bankruptcy, seeking Chapter 11 protection in Texas on Monday to address the challenges it has faced as a result of the real estate market’s downturn. Read the Daily Bankruptcy Review story here.

General Motors Corp. asked a bankruptcy court judge to cancel 38 dealer contracts, which would abolish the last holdouts in GM’s push to close as many as 2,400 U.S. outlets by next year, The Wall Street Journal reports.

WSJ also reports that because of the upheaval of the auto industry due to the bankruptcies of GM and Chrysler, as many as 6 million car owners are seen as up for grabs.

The California Senate will debate regulating the state’s municipalities’ access to bankruptcy at a hearing Monday, the Times-Herald reports.

Few company figureheads are honored after entering bankruptcy protection, but that wasn’t the case with French designer Christian Lacroix’s latest fashion show, according to WSJ.

Court Severs Sheldon Good & Co. Founder’s Ties To Firm

Posted: July 7th, 2009, 1:17pm PDT

Eight years after Sheldon F. Good sold his eponymous real estate auction and brokerage firm to his late son, and several months after that firm filed for bankruptcy, a bankruptcy court cut the realtor’s last remaining tie with the company he founded in 1965.

At the request of Sheldon Good & Co., the U.S. Bankruptcy Court recently threw out the contract that awarded Good an annual salary of $158,000 and other benefits as the firm’s chairman emeritus. Sheldon Good & Co. had argued that the contract didn’t provide any value to its estate and was an “undue burden.” In a statement last week, Good said that he’s “relieved” to have cut ties with the firm, which has sold more than 40,000 properties for more than $9 billion throughout North and South America, and is now looking forward to pursuing other business opportunities.

The company has faced a rocky road in recent months, beginning with the January suicide of owner Steven L. Good, who purchased the company from his father in May 2001 (at which time Sheldon Good became chairman emeritus). After Steven Good’s death, it was discovered that he had, without authority, withdrawn “substantial monies” from the company’s operating accounts, the company alleged in bankruptcy court papers. These withdrawals left the firm without the cash reserves it needed to address the economic downturn and plummeting property values, leading to its Chapter 11 bankruptcy filing in April.

As Sheldon Good moves on, the company is gearing up for a July 20 auction, at which leading bidder Cuticelli Capital LLC is offering at least $75,000 in cash and $1 million in liabilities to acquire the firm’s assets.

The Daily Docket: Lear Drives Into Chapter 11

Posted: July 7th, 2009, 6:48am PDT

After almost a week of waiting and uncertainty, auto-parts supplier Lear Corp. entered Chapter 11 protection, The Wall Street Journal reports.

General Motors Cop. is set to leave Chapter 11 protection in an economy that will severely challenge the troubled auto maker as well as the U.S. government, WSJ reports.

The New York Times reports that the swift actions of Chysler and GM in bankruptcy has shocked experts. In less than two months, both GM and Chrysler bounced through bankruptcy-court sales to the U.S. government.

Tribune Co.’s pact to sell Major League Baseball’s Chicago Cubs to the Rickettses has made another step toward home, as both sides shared drafts of the deal with the MLB, according to WSJ.

Dunkin’ Donuts franchisee Kainos Partners Holding Company LLC, along with 88 affiliates, filed for bankruptcy protection Monday. Read the Daily Bankruptcy Review story here.

A committee representing Asarco LLC’s unsecured creditors in its bankruptcy case is throwing its support behind Vedanta PLC’s plan to buy the copper mining company, claiming a federal judge “may not confirm” Grupo Mexico SAB’s rival plan. Read the DBR story here.

Going Once, Going Twice…Sold!

Posted: July 6th, 2009, 1:47pm PDT

Bloomberg News
Marc Dreier

Amid an economic downturn that’s spawned the term “staycation,” homes in the Hamptons are still hot properties, even the former beachfront getaway of Marc S. Dreier.

Dreier, as you may recall, has agreed to plead guilty to money laundering and other charges related to his alleged scheme to sell $700 million in bogus promissory notes. He faces sentencing next Monday.

A bankruptcy judge last week signed off on the sale of the disgraced attorney’s two neighboring properties on Dune Road in East Quoque, N.Y., for $10.4 million (not terrible, considering the properties’ total value was pegged around $12 million). At a public auction on June 17, Dune Road 109 EQ LLC picked up a 3,100-square-foot, four-bedroom, five-bath home for $3.8 million, while the neighboring 7,000-plus-square-foot, eight-bedroom, eight-bath home next door went for $6.6 million to 111 East Quogue LLC.

If you’re kicking yourself for missing the chance to pick up some property with some interesting history, take heart, because another public auction is coming up. And this one is for Dreier’s Upper East Side apartment, where he’s been confined on house arrest while he awaits his sentencing. Unit 34C at the Beacon Court Condominium goes on the block July 21 at the U.S. Bankruptcy Court in Bowling Green, N.Y.

¡Vive Tortillas!

Posted: July 6th, 2009, 12:14pm PDT

Tammy Young

Taco lovers, listen up. The future of the Tampa company that says it makes the “best tortillas you’ve ever tasted” is uncertain. Tammy Young, chief executive of La Bonita Olé, is fighting to retain ownership of the tortilla company she founded 17 years ago.

The tortilla maker filed for Chapter 11 bankruptcy in July 2008, dragged down by cost overruns related to the construction of its own production facility and a drop in sales.

As La Bonita faces a permanent shift in management, Young is working to create a grassroots campaign called “Save The Tortillas.” The campaign is relying heavily on social media outlets such as YouTube, Twitter and Facebook to talk about La Bonita’s plight.

“I think our situation is the face of mid-sized companies in America today,” said Young, who employs some 40 workers at La Bonita. “What is happening with us is relevant because you see how the economy affects everyone.”

Young is asking fans of “comida Mexicana” to visit the Save The Tortillas website by the end of the month to sign the “Save The Tortillas” petition.

One problem: SunTrust Bank says La Bonita owes it $5.7 million, and the bank has filed its own reorganization plan to bring the company out of bankruptcy. It says Young’s website contained “false and misleading” claims about its plan for the tortilla maker. The bank recently won a court order forcing Young to revise the language on the site.

But Young and her supporters aren’t backing down.

“This is an American entrepreneurial story,” said social media strategist Julia Gorzka, who’s helping Young get the word out about La Bonita. “People [online] have been talking about how they want to support small local businesses.”

Luxe Kids’ Clothing Store Bids Adieu To Greenwich

Posted: July 6th, 2009, 10:10am PDT

Don’t feel like spending $278 on a dress for your 2-year-old these days? You’re not alone. The drop in luxury spending has forced a slew of companies into bankruptcy court, from high-end purse designer Lambertson Truex, to jeweler-to-the-stars Henry Dunay Designs Inc. Now you can add one more: pricy children’s clothing retailer Best & Co.

The retailer – which once had stores in hedge-fund mecca Greenwich, Conn., posh vacation destination Nantucket, Mass., and even in a Bergdorf Goodman department store – dished up petite clothes at not-so-petite prices before seeking Chapter 7 protection and ceasing operations. According to the Connecticut Post, items like a cashmere baby’s blanket retailed for $375.

Despite the hefty price tags, Best & Co. attracted a following for 12 years, occupying a slice of prime real estate on Greenwich Avenue. There were signs of trouble, though – the Nantucket store was eventually shuttered and plans to expand the company into “other high-income areas such as Chicago, Palm Beach and Boston,” never came to fruition, the Post said.

Best & Co. was actually a reincarnation of a classic U.S. brand, which sold clothes in the eastern U.S. for nearly a century. It ceased operations in 1971, only to eventually be revived by Susie Hilfiger, a Greenwich resident and, yes, you guessed, it ex-wife of designer Tommy Hilfiger. But, like so many other businesses, its celebrity connection was apparently not enough to keep the enterprise out of bankruptcy court.

The Daily Docket: GM Set For Sale

Posted: July 6th, 2009, 6:37am PDT

Judge Robert Gerber approved the sale of General Motors Corp.’s assets to a new company run by the U.S. government, The Wall Street Journal reports.

GM is tapping a facility in Orion, Mich., to be the building site of its new compact car, saying that the first two criteria for a site were how it would affect unemployment and what kind of “carbon footprint” it would make, according to WSJ.

WSJ reports that Chrysler Group LLC has finalized the nine-member panel of its new board of directors, which will have its first meeting at the end of July.

Lehman Brothers Holdings Inc. is seeking to hold onto exclusive control of its bankruptcy case until March 15, 2010, saying it needs more time to wind down what was the world’s fourth-largest investment bank. Read the Daily Bankruptcy Review story here.

According to The Associated Press, states that let debt collectors seize consumers’ wages have much higher bankruptcy rates than states that do not practice such wage seizures, and by going after wages, credit card companies risk pushing consumers into bankruptcy.

If Miller Is In The Ring, It’s Not A Small Bankruptcy Case

Posted: July 2nd, 2009, 1:59pm PDT

Harvey Miller, the heavyweight champ of bankruptcy lawyers, has been defending his title this week in court, urging a federal judge to OK the sale of his client General Motors Corp. to a company led by the U.S. government.

But his performance in an earlier, much smaller, bankruptcy case demonstrates why Miller is the person big companies want to have in their corner. Not long after Miller re-entered the legal arena after a stint in investment banking, Inyx USA filed for Chapter 11 protection, with Westernbank Puerto Rico hot on its heels.

Long time Bankruptcy Beat readers may remember Inyx USA, a pharmaceutical outfit run by Jack Kachkar. A man who has run a number of pharmaceutical enterprises, Kachkar had the misfortune of squaring off against Miller after he returned to ring in 2007.

Two years later, the trustee running Inyx USA’s Chapter 11 case sued Kachkar and other former leaders of the company, seeking money to cover the unpaid bills. This week’s trustee suit is tame compared to the bare-knuckles bankruptcy tactics Miller used in Inyx’s case.

Maybe Miller was just well rested, or maybe he was charged up by the scent of blood in the water from Kachkar’s fight with Westernbank Puerto Rico. But the 70-something attorney did battle like little Inyx’s case was that of, say, Lehman Brothers or General Motors Corp.

To recap: Miller client Westernbank Puerto Rico suspected that Kachkar had duped the bank into making $140 million worth of loans Inyx could never repay. Kachkar has always denied wrongdoing.

Miller railed against the alleged fraud perpetrated on Westernbank. He offered Inyx dirt-cheap bankruptcy financing on the sole condition Kachkar be banished. He ran search-and-seizure operations in Canada and Puerto Rico, dispatching bank auditors to grab computers, lock up offices and poke through shrink-wrapped piles of goods in search of hidden documents.

It was a far cry from the “let’s make a deal” climate then prevalent in Chapter 11. Inyx attorney Samuel Israel, whose specialty is courtroom brawling, Thursday recalled it as “knock-down drag-out litigation.” He is with the firm of Fox Rothschild.

Miller even engineered a mid-Chapter 11 corporate coup premised on the possession of a single share of stock. Then he ousted Kachkar and the rest of Inyx’s board of directors. “Inyx USA was a one-share company, and we have the one share,” Miller told Judge Kevin Gross during a courtroom debate.

All that was just the first month(!) of action after Inyx filed for “protection” from creditors, like Westernbank, for example. It was all legal, accomplished under the shield of court orders or permissible because of the involvement of company units that were not under Chapter 11 protection, Miller said. No one ever proved anything different.

Financial Woes Have Coyotes Signing Discount Players

Posted: July 2nd, 2009, 12:32pm PDT

The National Hockey League’s free-agent signing frenzy began this week, and the big-market Chicago Blackhawks and New York Rangers are throwing eight-figure contracts at superstars Marian Hossa and Marian Gaborik.

Meanwhile, the Phoenix Coyotes, who are operating under Chapter 11 bankruptcy protection, are shopping in the discount section.

Among the Coyotes’ significant signings is goalie Jason LaBarbera, who won just eight of 24 games last season for the Los Angeles Kings and Vancouver Canucks. The team also netted aging journeyman defenseman Adrian Aucoin.

Although terms were not disclosed, neither signing is expected to stretch the Coyotes’ budget too much. Last year, the money-losing team spent about $43 million on its roster, more than $10 million below the maximum NHL teams are allowed to spend.

Finances this year may be even more closely scrutinized as a battle over who will own the team, and where the Coyotes will play, happens in bankruptcy court.

Coyotes General Manager Don Maloney conceded he’d like to have the same money to spend as the league’s more prosperous team, but at this point, he’s limited.

“We’re not going to be able to go out and grab that scorer who is an All-Star,” Maloney told The Associated Press this week. But, “there’s enough room in this budget to put a good team on the ice, and to continue to get better.”

The Coyotes, who have never turned a profit since moving to Arizona from Winnipeg, filed for bankruptcy in May after majority owner Jerry Moyes refused to backstop the team’s losses.

Moyes sought to sell the team to BlackBerry mogul Jim Balsillie, who would move the Coyotes to Canada, but the NHL is backing a rival bid that would keep the team in suburban Phoenix.

The Daily Docket: Lear To Enter Chapter 11

Posted: July 2nd, 2009, 7:08am PDT

Automotive seat maker Lear Corp. has reached a restructuring deal with its lenders and plans to enter Chapter 11 protection soon, The Wall Street Journal reports.

The Big Three auto makers had the smallest decline in monthly auto sales this year, WSJ reports.

According to WSJ, General Motors Corp. will file an initial public offering of stock shares in 2010.

Crabtree & Evelyn Ltd., which sells perfumed soaps, lotions and other personal-care products at 126 stores across the country, sought bankruptcy protection Wednesday with plans to shutter some of its underperforming locations. Read the Daily Bankruptcy Review story here.

A bankruptcy judge on Wednesday rejected Delphi Corp.’s request to reimburse up to $30 million of its proposed buyer’s expenses should another bidder acquire the auto parts maker’s assets. Read the DBR story here.

Alex Yemenidjian, the new owner of the Tropicana Las Vegas, has vowed to return the hotel and casino to its former glory, according to the Las Vegas Review Journal.

When You Wish Upon A Star

Posted: July 1st, 2009, 1:02pm PDT

Jim Justice, the new owner of the Greenbrier resort, is reaching for the stars – five, to be exact.

Justice, who took control of the historic West Virginia hotel in a May stock purchase, is on a mission to regain the coveted five-star Mobil Travel Guide rating the resort once enjoyed. And he means business. According to the Associated Press, Justice has brought in the big guns – Mobil Travel Guide’s own consulting team – to “help identify the resort’s strengths and weaknesses.”

“It’s a prep course before the test,” Mobil Travel Guide Chief Executive Shane O’Flaherty told the AP.

Justice is also hoping to get in some extra cramming in the form of super-motivated employees. They’re likely to be devoted to the cause, considering Justice promised them a 10% bonus if they make the grade.

This isn’t Greenbrier’s first attempt to regain five-star status. After losing its fifth star in 2000, the Greenbrier embarked on a $48 million renovation campaign designed to help it recapture the honor. But the substantial capital expenditures failed to net the hotel its desired prize and instead helped to plunge the company’s finances into disarray.

“While these efforts were essential to maintain the status of the Greenbrier as a world class resort, they proved untimely given the unforeseen credit and financial crisis,” Greenbrier said in court documents accompanying its original bankruptcy petition.

Mobil hand-picks its five-star hotels by sending out “Incognito Hotel Inspectors” who judge the locales based on 550 criteria. This year, 44 hotels in the U.S. received five stars, while 137 others obtained four stars. The five-star hotels boast amenities like personal butlers, doggie-bed turndown service and pillow menus featuring 14 different kinds of pillows.

Custody Of Jackson Children May Be Marred By Bankruptcy Filing

Posted: July 1st, 2009, 10:01am PDT

Associated Press

Things may not go as easy as 1-2-3 for the mother of late pop icon Michael Jackson, whose will is reportedly said to leave custody of his children to his mother.

According to the Associated Press (via the Morning Call), Jackson’s will was to be filed in Los Angeles on Wednesday, and a person with knowledge about the document said it gives custody of Jackson’s three children to his mother. But trying to gain final custody may not be a thriller, because Katherine and Joe Jackson filed for bankruptcy protection in 1999.

Experts say Jackson’s parents’ personal bankruptcy could work against Katherine Jackson getting control over her son’s children and estate in the long run. According to court documents, the Jacksons entered Chapter 7 protection listing almost $24 million in debts. RadarOnline reported that the Jacksons owed more than $34,000 on a 1994 Mercedes, more than $60,000 on a 1998 Land Rover and more than $36,000 on a Land Rover Discovery. They also owed about $150,000 in income taxes to the state of California and the IRS, and they owed more than $20 million in two lawsuit judgments. The bankruptcy ended in March 2007.

Beth Kaufman, a Washington attorney who deals with estate tax issues, told the AP that the bankruptcy filing may hurt Katherine Jackson’s attempt to gain final custody. “I think it would be a negative factor but not necessarily a disqualifier,” she said. “It could indicate that she is not capable of sound financial management.”

On Monday, Katherine Jackson was granted temporary custody of her son’s children by Judge Mitchell Beckloff as a response to documents by the Jackson family saying Michael Jackson died without a valid will. Beckloff also gave her temporary guardianship over her son’s personal property.

GM Seeks To Sell Itself To U.S.

Posted: July 1st, 2009, 7:07am PDT

According to The Wall Street Journal, General Motors Corp. went to court Tuesday to try to persuade a judge to give it the OK to sell itself to the U.S. government, which can walk away if the deal isn’t approved by July 10.

Lear Corp. may enter Chapter 11 protection as soon as Wednesday, the Detroit News reported.

Ruth Madoff, the wife of Bernard Madoff, won’t get prosecuted for the Ponzi scheme that got her husband sentenced to 150 years in prison, the New York Post reported.

Private-equity firm Apollo Management LP got court approval to reorganize plastic packaging maker Pliant Corp. over the company’s opposition, Bloomberg reported.

Visteon Corp., which moved last week to cut off retiree health-care benefits, has asked a bankruptcy judge to authorize up to $80 million in management and insider bonuses. Read the Daily Bankruptcy Review story here.

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