Business Bankruptcy News Bulletin Summary for Week of July 12

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.

Fiduciary Duty of Creditors’ Committee Members

Members of a creditors’ committee have a fiduciary duty to the class of creditors that the committee was appointed to represent. This was evidenced in the Westmoreland Human Opportunities Inc. v. Walsh case. That fiduciary responsibility is owed to all of committee’s constituents regardless of whether a group of constituents has a seat on the creditors’ committee. When exercising its fiduciary responsibilities, the committee must guide its actions so as to safeguard as much as possible the rights of minority as well as majority creditors. This was evidenced in the Shaw & Levine vs Gulf & Western Industries case. It should be noted, however, that creditors’ committee members do not have a fiduciary duty to any particular creditor.

BANKRUPT COMPANIES

AbitibiBowater Inc., the giant newsprint manufacturer, has seen an 8/26 meeting scheduled regarding its restructuring plan, which would provide unsecured creditors with up to 48% of their claims through an equity conversion.

Desert Best Enterprises LLC, Yuma, Az., filed Chapter 11 in the U.S. Bankruptcy Court for the District of Arizona. The firm listed assets and liabilities of between $10 million and $50 million each. The filing was under case number 10-20763. For more information contact the court at 888-549-5336.

Holly wood Hills Development Inc., Jacksonville, Fl., filed Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Florida. The firm listed assets and liabilities of between $1 million and $10 million each. The filing was under case number 10-05863. For more information contact the court at 866-879-1286.

National Envelope Corp.’s suitor, printing and envelope company Cenveo Corp., requested that the U.S. Bankruptcy Court require National Envelope to release a copy of a reported agreement between it and some private-equity investors that blocks National Envelope from considering competing buyout offers. National Envelope a month ago entered into a letter of intent to be purchased by Gores Group LLC, but Cenveo wants its $140 million buyout bid to be considered. In its June bankruptcy filing, National Envelope, Uniondale, N.Y., listed assets and liabilities of up to $500 million each. The bankruptcy filing included more than two dozen affiliates.

Philadelphia Newspapers LLC’s plans for exiting bankruptcy protection were objected to by a pension fund for company employees, which is seeking to block the publisher’s exit from Chapter 11 through a sale of the company to a lending group for nearly $140 million. The lenders that have agreed to purchase the newspaper publisher have said that they don’t intend on keeping the pension plan once they gain control of the company. As of now, a 7/8 hearing is scheduled to consider the debtor’s reorganization plan. For more information contact the U.S. Bankruptcy Court for the Eastern District of Pennsylvania at 215-597-2244 and refer to case number 09-11204.

Uno Restaurant Corp., the Boston, Ma.-based pizza restaurant firm, received approval from the U.S. Bankruptcy Court for is reorganization plan. According to the plan the restaurant operator and franchiser would lower its debt from about $176 million to $40 million, in exchange for 100% of the shares in the reorganized firm. Unsecured creditors are getting about 13 cents on the dollar for their claims. For further information contact the U.S. Bankruptcy Court in Manhattan, N.Y. at 212-668-2780 and refer to case number 10-19209.