Business Bankruptcy News Bulletin Summary for Week of August 2

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 and an examination of business bankruptcy matters. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

A Brief Look at Schedule D In a Chapter 11 Bankruptcy Proceeding

There are many schedules used in a bankruptcy case.  As an example, schedule D, in a Chapter 11 bankruptcy case, identifies the secured claims, even if they are only partially secured. In the case of partially secured claims, Schedule D must also identify the amount of the “deficiency” claim if it exists. Although the deficiency claim is a general unsecured claim, the debtor should not identify the deficiency claim on Schedule F too, which would be redundant. Often, a debtor has no basis to calculate the amount of the deficiency claim because the value of the underlying asset hasn’t been determined.  In such cases, the entry is marked “unliquidated” to reflect the uncertainty of the secured claim. Also, if the debtor is party to a secured financing arrangement but treated as a lease for reporting purposes under GAAP, the liability can be reflected on Schedule D and the related real property assets can be identified on Schedule A.

Regarding the value of collateral securing claims on Schedule D, before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), debtors had to state the market value of the asset. Like Schedule A, the word “market” was deleted from the column that requires the debtor to state the value of the collateral to ensure that there are no inferences concerning the applicable valuation standard.

BANKRUPT COMPANIES

American Safety Razor Company LLC, Cedar Knolls, N.J., filed Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. 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 10-12351. Also filing were American Safety Razor Corp. under case number 10-12352, American Safety Razor Holdings Inc. under case number 10-12353 as well as a number of other affiliates. For more information contact the court at 302-252-2560.

Cozumel Caribe SA, a Mexican tourism-services company, filed Chapter 15 in the U.S. Bankruptcy Court. The company reportedly has assets of more than $10 million and liabilities of more than $100 million. For further information contact the court in Manhattan, N.Y. at 212-668-2780.

Extended Stay Inc. received approval from the U.S. Bankruptcy Court for its Chapter 11 reorganization plan, which calls for a group including Centerbridge Partners, Blackstone Group LP and others to take over the firm for $3.9 billion. The firm now expects to emerge from bankruptcy protection in September. For further information contact the U.S. Bankruptcy Court in Manhattan, N.Y. at 212-668-2780 and refer to case number 09-13764.

Midwest Oil of Minnesota LLC, St. Paul, Mn., filed Chapter 11 in the U.S. Bankruptcy Court for the District of Minnesota. The firm listed assets and liabilities of between $1 million and $10 million each. The filing was under case number 10-35450. For more information contact the court at 866-222-8029, then enter 6.

Nexity Financial Corp., a Birmingham, Al. online banking concern, filed Chapter 11. The firm, which reached a restructuring arrangement with most of its debtholders, earlier said that it would make a prepackaged Chapter 11 filing in an effort to restructure and recapitalize. The filing, in the U.S. Bankruptcy Court in Delaware, listed assets and liabilities of up to $50 million each. For more information contact the court at 302-252-2560 and refer to case number 10-12293.

W.R. Grace & Co., the bankrupt Columbia, Md. chemicals firm, reported its second quarter earnings surged 164%–to $51 million, thanks partly to reduced costs. Revenue slipped 4%–to $685 million.