ABI Bankruptcy Blog Exchange » WSJ.com: Bankruptcy Beat » July 2, 2009

WSJ.com: Bankruptcy Beat: If Miller Is In The Ring, It’s Not A Small Bankruptcy Case

Thu, 02 Jul 2009 13:59:31 -0700

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.

WSJ.com: Bankruptcy Beat: Financial Woes Have Coyotes Signing Discount Players

Thu, 02 Jul 2009 12:32:40 -0700

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.

WSJ.com: Bankruptcy Beat: The Daily Docket: Lear To Enter Chapter 11

Thu, 02 Jul 2009 07:08:47 -0700

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.