Commercial Bankruptcies: “Publicly Held”

The items below are excerpted from the Business Bankruptcy News Bulletin. A full issue contains information on dozens of troubled companies, as well as informational and analysis highlights. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

Under a rule in the U.S. Bankruptcy Code, a publicly-held company or corporation is one whose securities are listed on a stock exchange of which are subject to quotations collected and reported by the National Association of Securities Dealers Automated Quotation System. The purpose of the rule is to assist each of the judges in determining when a recusal is appropriate under the code. The statute requires recusal of a judge who has any financial interest in a matter or whose family has any financial interest in any matter before the judge.

Disqualifying Bankruptcy Judges

A U.S. Bankruptcy Court judge can be disqualified from presiding in a bankruptcy case if there is a conflict of interest. One example was in the Delaware court when the judge in the case was disqualified in three of five then-pending asbestos bankruptcy cases he was presiding over. The Third Circuit Court ordered the disqualification because of an alleged conflict of interest with two of the judge’s five court-appointed consultants.

The Need for Bankrupt Debtors to Maintain Insurance

When a debtor is thinking about making a bankruptcy filing, it is important that the debtor maintain insurance. Whether in Chapter 11 or Chapter 7, a debtor’s responsibility is to conserve assets for the benefit of creditors, and uninsured losses will reduce the value of the assets. Also, under bankruptcy, compulsory insurance requirements still stand. Even in bankruptcy, a debtor is not relieved of state or federal insurance or financial responsibility requirements, including things like workers’-compensation and automobile-liability insurance. And contracts with lenders and suppliers and others often require insurance.

Affiliated Media Inc. has seen a 3/4 confirmation hearing scheduled in its Chapter 11 case. For further information contact the U.S. Bankruptcy Court in Wilmington, De. at 302-252-2560 and refer to case number 10-10202.

Cooper-Standard Automotive Inc., the bankrupt Novi, Mi. auto supplier, has filed a reorganization plan that has the approval of its unsecured creditors committee. Under the plan, the company would emerge from Chapter 11 protection with $245 million in financing from its bondholders, who would have the option to take control of the firm. The plan would reduce Cooper’s debt by nearly 60%–to $425 million. A hearing on the matter has been scheduled for 3/9.  For more information call the court at 302-252-2560.

Crescent Resources, the Charlotte, N.C. real estate developer, along with certain of its subsidiaries, has submitted a reorganization plan with the U.S. Bankruptcy Court. The plan would reduce its debt by nearly $1 billion–to $460 million. The company, which filed last June along with more than 115 of its subsidiaries and which expects to emerge from Chapter 11 protection by 6/30, is soliciting proposals for an exit financing package valued at nearly $150 million.

Hollywood Entertainment Corp., Wilsonville, Or., filed Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Virginia. The firm listed assets of between $100 million and $500 million and liabilities of between $500 million and $1 billion. The filing was under case number 10-30695. For more information contact the court at 800-326-5879.

Pacific Panorama LLC, Las Vegas, Nv., filed Chapter 11 in the U.S. Bankruptcy Court in Nevada. The firm listed assets of between $10 million and $50 million and liabilities of between $1 million and $10 million. The filing was under case number 10-11464. For more information contact the court at 800-314-3436.

Stallion Oilfield Services Ltd., the Houston, Tx. firm which filed Chapter 11 last October with its lenders agreeing to reduce its debt by more than $500 million, has emerged from bankruptcy protection after paying its vendors in-full.