Bankruptcy Lawyer Sacramento

Dewey to consider bankruptcy filing: source – Chicago Tribune

Lawyer — Sat, 19 May 2012 08:17:57 +0000

A man moves boxes out of the offices of Dewey & LeBoeuf in New York
(EDUARDO MUNOZ, REUTERS / May 11, 2012)

BANKRUPTCY WEEK AHEAD: Hostess, 10 Unions Face Trial Over Labor Deals – Wall Street Journal

Lawyer — Fri, 18 May 2012 20:12:47 +0000

Dewey & LeBoeuf LLP Readies Bankruptcy Filing – Wall Street Journal (blog)

Lawyer — Fri, 18 May 2012 20:12:47 +0000

: Ramin Talaie for The Wall Street Journal

By Mike Spector and Jennifer Smith

New York law firm Dewey & LeBoeuf LLP is readying a possible bankruptcy-protection filing for sometime in the next several weeks, said people familiar with the matter, a move that would initiate official liquidation of the beleaguered institution.

Dewey within the last week brought aboard an operational turnaround and restructuring firm to help the law firm collect receivables and attempt to return money to lenders and other creditors, according to the people familiar with the matter. Dewey’s remaining lawyers and outside advisers are working to be ready to file for bankruptcy protection by the end of next week, though the actual filing could come well after, these people said.

Most of Dewey’s partners, including its crisis leadership team, have left the firm over the past five months, as disputes over compensation and towering debts brought the 1,000-lawyer law firm to its knees. Many of Dewey’s U.S. offices were closed or nearly empty in the past week, with 433 people laid off in New York alone, according to a notice filed with the state Labor Department.

Exactly how Dewey officially ceases operations remains under discussion and no final decisions have been made, the people said. Dewey lawyers have said recently that they planned to wind down without going through a bankruptcy court.

But a bankruptcy filing has become an increasingly likely option as Dewey’s remaining employees and advisers huddle to chart Dewey’s end game, one of the people said. Dewey will have to negotiate with landlords who could at some point move to seize office equipment in lieu of rent payments unless the law firm seeks bankruptcy protection, this person said. Dewey needs computers and access to offices to wind down, the person said.

A Dewey spokesman had no immediate comment.

Dewey tapped restructuring firm Zolfo Cooper in the past week for additional help winding down the law firm’s operations. Joff Mitchell, a senior managing director at Zolfo, is now serving as Dewey’s chief restructuring officer, said people familiar with the matter. Albert Togut, a bankruptcy lawyer at Togut, Segal & Segal LLP, would handle the bankruptcy filing, one of the people said.

Zolfo Cooper, meanwhile, usually helps companies restructure their operations, sometimes offering advisers to take interim management roles. The firm also enlists advisers to oversee defunct operations and develop plans for returning money to creditors. Stephen Cooper, one of the firm’s namesakes, has alongside teams at the firm overseen Enron Corp. as it liquidated and film studio Metro-Goldwyn-Mayer Studios Inc. before and during “prepackaged” bankruptcy proceedings. Mr. Cooper is no longer with the firm and isn’t working on the Dewey situation.

Dewey owes $75 million on a $100 million credit line from banks led by J.P. Morgan Chase & Co. Distressed-debt investors have been circling around Dewey creditors in recent days to buy up potential claims—betting that they can nab them at discounts and get a better recovery when the law firm ultimately winds down.

Watchdog Asks To Stub Pot Grower’s Bankruptcy – Wall Street Journal (blog)

Lawyer — Fri, 18 May 2012 20:12:47 +0000

By Katy Stech

: Associated Press

The feds are burned out with a medical marijuana grower that it suspects isn’t quite taking its bankruptcy case seriously.

A federal court watchdog wants a judge to dismiss the Chapter 11 bankruptcy case of Denver-based CGO Enterprise LLC, arguing that the company shouldn’t be allowed to reorganize its finances in a way that would allow it to continue profiting from criminal activity.

U.S. trustee Richard Wieland, who patrols bankruptcy cases for the Justice Department, pointed out that CGO Enterprise executives would likely have to reorganize its operations around sales from its primary asset: $130,000 worth of unharvested marijuana leaves listed on the bankruptcy petition filed May 1 in U.S. Bankruptcy Court in Denver.

Any company’s Chapter 11 reorganization plan requires approval from a federal bankruptcy judge—an unlikely consent. Wieland pointed to wording in an earlier bankruptcy case that said a company should have the hope of proposing “a legally and economically feasible plan of reorganization” in his request for the court to throw out the case.

Colorado has legalized medical marijuana and regulates it heavily. A business entity that shares CGO Enterprise’s headquarters was denied a license in November to grow pot for a network of licensed retailers throughout the state.

But as states take uncoordinated steps toward recognizing the industry, the federal government still classifies the substance as a dangerous drug.

“It is well known that the cultivation and distribution of marijuana for profit would be a criminal violation of the federal Controlled Substances Act and other narcotics statutes,” Wieland said.

Wieland added that shutting down the company under Chapter 7 protection—which would require the court to appoint a liquidator—isn’t an option, either.

“Because the primary use of these objects relates to illegal activity, a Chapter 7 trustee cannot administer such assets in a manner that is consistent with law and public policy,” he said.

CGO Enterprise itself hasn’t given the court any more details about how it hopes to reorganize beyond what it said in its six-page bankruptcy petition. It’s the type of silence that can also easily get a company’s bankruptcy case tossed.

“Please don’t contact me any further regarding this,” company attorney Greg Goodman said Thursday in response to a request for comment.

In a signed order, U.S. Bankruptcy Court Judge Michael Romero has given CGO Enterprise President Vince Austin until June 14 to explain to the court why his company filed for bankruptcy and to provide more details on its operations.

The company’s bankruptcy filing shielded it from eviction; it owes about $800,000 to its landlords, according to court papers. Attorneys for the landlord have asked for court permission to interview Austin as part of a broader investigation.

Theft and fraud by crews push airline towards bankruptcy – New York Daily News

Lawyer — Fri, 18 May 2012 20:12:46 +0000

THEFT, fraud and abuse of perks by pilots and crew has set India’s national carrier on course to bankruptcy, the aviation minister has claimed, with staff caught stealing whisky and caviar, and being chauffeured in limousines to five-star hotels.

In eight years Air India, knownas the “Maharaja” for its turbaned cartoon mascot, has fallen from profit to an estimated $10 billion (£6.3 billion) in debt. In frustration, Ajit Singh, India’s aviation minister, has said the country does not need a national carrier.

Air India is investigating 161 cases of theft, fraud and abuse of perks, he told MPs.

One catering officer was caught stealing caviar worth around £300, while a purser was discovered walking away with more than 370 spirit miniatures.

Air India’s internal vigilance department found that one pilot had been paid more than £250,000 in allowances for simulator training while he was off work on sick leave.

Generous staff benefits are said to have contributed to the airline’s losses. Investigators discovered pilots insisted on staying in five-star hotels in New York, Chicago and Mumbai during stop-overs instead of spending the night at cheaper airport hotels. Serving and retired pilots and crew would take business class seats ahead of paying customers. Investigators also found evidence of expensive spare parts disappearing, duty-free alcohol stolen, and spare seats and cargo space sold privately to rival airlines.

“It’s been going on for years,” said Dr Sannat Kaur, former joint secretary of India’s civil aviation ministry, and now chairman of the International Foundation for Aviation. “There was leakage but as long as the company was in profit there was no issue.” The abuses have come into sharper focus as the airline’s problems have mounted. Ill-advised airliner purchases and a merger with its domestic partner Indian Airlines compounded problems.

The disclosures were made as more than 350 Air India pilots escalated an unofficial strike by calling in sick. The strike was called as part of a squabble over which pilots should fly the new Boeing 787 Dreamliner aircraft.

This article was distributed through the NewsCred Smartwire.

Original article © The Daily Telegraph 2012

The Broke and the Beautiful: Mitt Romney Edition – Wall Street Journal (blog)

Lawyer — Fri, 18 May 2012 20:12:29 +0000

By Melanie Cohen

This week on The Broke and the Beautiful, presidential hopeful Mitt Romney faces criticism from President Obama’s re-election campaign over the practices of his former employer, private equity firm Bain Capital. Also, Nadya “Octomom” Suleman’s Chapter 7 bankruptcy case has been tossed.

: Getty Images; Republican presidential hopeful Mitt Romney gestures during a speech at a campaign stop on May 16, 2012, in St. Petersburg, Fla.

It’s been a while since we’ve blogged about Republican presidential contender Mitt Romney’s ties to private equity firm Bain Capital. But this week, the re-election campaign for President Barack Obama is trying to portray Romney as a callous corporate raider, The Wall Street Journal reported. In Obama’s first major attempt to paint a poor picture of Romney, the campaign highlighted a Kansas steel company that filed for bankruptcy eight years after being taken over by Bain and others. What happened to GST Steel after Bain took over “was like watching an old friend bleed to death,” former worker Joe Soptic noted in the ad.

The Toledo Blade noted that Romney was also accused of helping to effect the bankruptcy of a chain of department stores that located in 26 Ohio cities. In the 1980s, Bain bought a bunch of clothing stores and organized them into Stage Stores Inc., later expanding the chain and borrowing heavily against it with junk bonds. Bain then sold the leftover shares in 1997 at a profit. The company filed for bankruptcy in 2000. Romney’s campaign maintains that Stage Stores had success under Bain’s leadership.

: Associated Press/StarPix; Nadya Suleman poses for an undated photo in to promote her July 2010 appearance on MTV’s 3rd season of “Silent Library.”

Nadya Suleman, better known as “Octomom,” took a starring role in Broke after she filed for Chapter 7 bankruptcy earlier this month. But Suleman’s bankruptcy case was dismissed Tuesday because she didn’t complete the required paperwork, the Orange County Register reported. Suleman, whose bankruptcy filing stayed a foreclosure auction of the California home she is living in, said she had between $500,000 and $1 million in debts but failed to include the accompanying financial documents and statements.

: Associated Press; New Los Angeles Dodgers owners Guggenheim Baseball Management partners hold a news conference at Dodger Stadium on May 2.

Now that the sale of the Los Angeles Dodgers is complete, the team can focus less on bankruptcy and more on its continuous lead in the National League standings. And according to the Los Angeles Times, the Dodgers’ new owners might get hundreds of millions of dollars in benefits from the settlement between ex-owner Frank McCourt and Major League Baseball. According to the deal, the bankruptcy court—and not the MLB—has the final say over the Dodgers’ TV revenue distribution, resulting in millions per year that otherwise could have been divided among other baseball teams. The settlement’s terms can stay in place for up to 40 years, say two people familiar with the matter.

Two weeks ago, Broke noted the curveball thrown at Mickey Mantle’s restaurant, which has been facing eviction from its spot in Central Park South. But the restaurant named after the baseball legend is safe from being relegated to the dugout for a little longer. According to New York One, investors were able to raise enough money—$71,000—to keep the restaurant from closing for a couple of weeks. Bill Liederman, a friend of restaurant owner Chris Villano who’s been helping raise money, still needs to come up with $400,000 to pay off back rent, though.

Buffett Said to Have Pursued ResCap Purchase Before Bankruptcy – BusinessWeek

Lawyer — Fri, 18 May 2012 08:02:39 +0000

Billionaire Warren Buffett sought to
buy Residential Capital from Ally Financial Inc. (ALLY) (ALLY) before the
government-owned company put the home lender in bankruptcy,
according to three people familiar with the matter.

Buffett assigned former hedge-fund manager Ted Weschler to
negotiate an offer with Ally, said the people, who requested
anonymity because the talks were private. Buffett’s Berkshire
Hathaway Inc. (BRK/A) (A) would have paid almost nothing upfront for the
assets, while taking on potential liabilities such as mounting
litigation costs and other claims, the people said.

Buffett sought to avoid a ResCap bankruptcy filing because
Berkshire had unsecured debt in the mortgage unit, according to
the people. Detroit-based Ally turned down the Weschler proposal
after deciding that a bankruptcy filing and sale better
protected the company from future liabilities, the people said.

ResCap’s board voted to declare bankruptcy and arrange a
sale to Fortress Investment Group LLC (FIG) (FIG) and Nationstar Mortgage
Holdings Inc. for about $2.3 billion, ResCap Chairman and Chief
Executive Officer Thomas Marano said in an interview this week.
Fortress and Nationstar won’t take on the liabilities that
Berkshire had proposed assuming, according to the people.

“We are confident in the bankruptcy court-supervised
bidding process, which is designed to ensure that the ResCap
estate receives the best possible combination of price and terms
for its assets in a court-approved transaction,” said Susan
Fitzpatrick, a ResCap spokeswoman, in an e-mailed statement.

Buffett, 81, didn’t return a message left with an
assistant at Omaha, Nebraska-based Berkshire seeking comment.
Gina Proia, a spokeswoman for Ally, and the U.S. Treasury
Department’s Matt Anderson declined to comment.

Losses Piled Up

ResCap sought court protection May 14 after losses piled up
on subprime and Alt-A mortgages bundled into bonds during the
credit crisis. The Chapter 11 reorganization is one of the
biggest collapses of a home lender since Wachovia Corp. agreed
to be acquired by Wells Fargo & Co. at the end of 2008.

Ally agreed to pay $750 million to ResCap to settle any
claims against the parent company, such as those brought by
bondholders or other third parties, CEO Michael Carpenter said
this week. A Chapter 11 filing protects a company from creditors
and allows it to operate while a turnaround is devised.

The U.S. Trustee, which monitors bankruptcy proceedings as
part of the Justice Department, selected members of the
unsecured creditors committee for ResCap’s bankruptcy, according
to a filing in U.S. Bankruptcy Court in Manhattan. American
International Group Inc., Allstate Corp. and FGIC Corp. were
among nine members named to the committee, which will negotiate
on behalf of unsecured creditors.

Missed a Chance

Buffett missed a chance to acquire ResCap’s home-loan
origination business and mortgage-servicing assets on $374
billion of loans, which Nationstar, majority-owned by Fortress,
agreed to purchase. Mortgage servicers handle billing,
collection and foreclosures. Buffett may still bid on ResCap in
the court-supervised process.

The billionaire has been preparing Berkshire for his
eventual departure, in part by hiring Weschler and former hedge-
fund manager Todd Combs to help oversee investments in the past
two years. The two apprentice stock pickers oversee $2.75
billion each, Buffett said at the firm’s May 5 annual meeting.

Weschler, before joining Berkshire, ran hedge fund
Peninsula Capital Advisors LLC and became one of the largest
investors in bankrupt chemical maker W.R. Grace & Co. A 2005
regulatory filing shows he served as chairman of the official
committee of equity security holders.

Berkshire joined Leucadia National Corp. in 2009 to buy
bankrupt Capmark Financial Group Inc.’s loan-servicing and
mortgage business for more than $400 million. Capmark, a
commercial-mortgage firm, had been owned by Ally when it was
called GMAC LLC.

Ally, 74 percent-owned by U.S. taxpayers after a $17.2
billion bailout, may divest more than $30 billion of vehicle-
finance, banking and insurance assets in Canada and Mexico as
well as in Europe and South America to help repay U.S. funds,
according to a statement.

To contact the reporters on this story:
Jeffrey McCracken in New York at
jmccracken3@bloomberg.net;
Dakin Campbell in San Francisco at
dcampbell27@bloomberg.net;
Noah Buhayar in New York at
nbuhayar@bloomberg.net

To contact the editors responsible for this story:
Jennifer Sondag at
jsondag@bloomberg.net;
Dan Kraut at
dkraut2@bloomberg.net;
David Scheer in New York at +1-212-617-2358 or
dscheer@bloomberg.net

Circus & Eldorado Joint Venture Seeks Bankruptcy in Nevada – Bloomberg

Lawyer — Fri, 18 May 2012 08:02:39 +0000

Circus & Eldorado Joint Venture, the
operator of the Silver Legacy Resort Casino, filed for
bankruptcy amid declining gaming revenues in Reno, Nevada.

The 19th century and silver mining-themed hotel and casino,
a joint venture between MGM Mirage (MGM) and Eldorado Resorts LLC,
listed assets of $264.1 million and debt of $174.4 million in
Chapter 11 documents filed today in U.S. Bankruptcy Court in
Reno.

The restructuring through Chapter 11 “is not the result of
operational issues, but rather is driven by the need to
restructure the mortgage notes as a consequence of their
maturity on March 1, 2012,” Stephanie Lepori, chief accounting
and financial officer of the joint venture, said in court
papers.

The resort, which opened in 1995, is connected to MGM’s
Circus Circus Hotel and Casino and Eldorado’s Eldorado Hotel by
200-foot wide skyway corridors. It has six restaurants, a health
spa, and features a fully automated antique mining rig and
87,300 square feet of gaming space, according to the company’s
filings with the Securities and Exchange Commission. Its hotel
has 1,709 guest rooms.

Gaming Revenue

Gaming revenue in Nevada fell to about $562 million in 2010
from $754 million in 2007, and through November 2011, revenue
had fallen about 5 percent from the prior year, according to a
January report from Standard & Poor’s. Average hotel occupancy
rates fell to 66 percent in 2010 from 77 percent in 2006,
according to the Reno-Sparks Convention & Visitors Authority and
the Nevada State Gaming Control Board.

Circus & Eldorado had tried and failed to restructure its
debt out-of-court before the filing. After failing to pay off
$142.8 million in 10.125 percent senior secured notes when they
matured on March 1, the company entered a restructuring
agreement with its partners and a “significant holder” of the
notes on March 16, according to filings with the Securities and
Exchange Commission.

On May 2, it announced that it had extended its April 30
deadline on its debt under the restructuring agreement to May
14, and said a holder of its notes had agreed to forbear as long
as the agreement was in place.

‘Consensual Restructuring’

“It has become apparent, however, that pursuit of the
proposed consensual restructuring contemplated” by the
restructuring agreement “is not feasible on an out-of-court
basis,” Lepori said. The agreement was amended and restated as
of May 15 to adjust certain deadlines, terms and conditions,
Lepori said in court papers. The company plans to file its
reorganization plan by June 1.

Under the original restructuring agreement, the significant
noteholder agreed to support a plan that would call for the
partnership to take a new $70 million first-lien loan.

Top holders of the 10.125 percent notes due March 1, 2012,
include Capital World Investor, with a 27 percent stake as of
Dec. 31, 2011, and Thrivent Financial with a 3 percent stake as
of Dec. 30, 2011, according to data compiled by Bloomberg.

Circus & Eldorado had a net loss of $9.6 million on revenue
of $120.6 million in 2010.

During the first nine months of 2011, the net loss was $4
million on revenue of $95.6 million. For the period, interest
expense was $11.3 million and operating income was $7.5 million.

Circus & Eldorado joins other casinos that have filed for
bankruptcy in recent years including Hooters Casino Hotel and
Tropicana Entertainment LLC.

The case is In re Circus & Eldorado Joint Venture,
12-51156, U.S. Bankruptcy Court, District of Nevada (Reno).

To contact the reporters on this story:
Dawn McCarty in Wilmington at
dmccarty@bloomberg.net;
Tiffany Kary in New York at
tkary@bloomberg.net

To contact the editor responsible for this story:
John Pickering at
jpickering@bloomberg.net

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S&P Lifts Ally Financial Outlook After ResCap Bankruptcy Filing – Wall Street Journal

Lawyer — Thu, 17 May 2012 20:02:03 +0000

Dodgers owners could gain much from Bankruptcy Court settlement – Los Angeles Times

Lawyer — Thu, 17 May 2012 20:02:01 +0000

The Dodgers‘ new owners could reap hundreds of millions of dollars in benefits from the confidential terms of a U.S. Bankruptcy Court settlement between former owner Frank McCourt and Major League Baseball.

The terms can be enforced for up to 40 years, with final authority over distribution of the Dodgers’ television revenue granted to the court rather than to MLB, according to two people familiar with the sale process but not authorized to discuss it. As a result, the Dodgers’ new owners could retain millions each year that otherwise would be shared with other teams.

The terms help explain the record sale price for the Dodgers and the context of MLB attorney Thomas Lauria’s statement in court last month that the settlement could result in a league of “the Dodgers and the other 29 teams.”

The disclosure of the terms could aggravate tensions among owners already upset that Commissioner Bud Selig let McCourt control the sale process to get him to surrender the Dodgers.

The commissioner’s office disputes that the terms could enable the Dodgers to tap financial streams unavailable to other teams, according to a person briefed on the league’s position.

Dodgers President Stan Kasten and MLB spokesman Pat Courtney each declined to comment, noting that the terms are under court seal.

McCourt took the Dodgers into bankruptcy last year, after Selig rejected a proposed television contract with Fox Sports. That contract called for the Dodgers to receive a minority ownership stake in Prime Ticket and annual rights fees starting at $84 million, with an annual increase of 4%.

The league takes 34% of each team’s television revenue and distributes it to other teams via revenue sharing. The league can assess an additional charge if it determines a team-owned television outlet is paying an annual rights fee under fair market value.

Under the confidential terms of the settlement with McCourt, the league agreed that the annual rights fees in the proposed Fox contract represented fair market value, according to three people familiar with the sale agreement.

Guggenheim Baseball, the Dodgers’ new owners, can negotiate a new television contract as soon as this fall, with Fox Sports, Time Warner Cable and perhaps CBS expected to bid. If the Dodgers accept an annual rights fee, they would simply pay 34% of whatever money they receive into the revenue-sharing pool.

However, the Dodgers are expected to pursue a regional sports network, on their own or in partnership with Fox, TWC or another television outlet. Guggenheim could establish a media company separate from the Dodgers, then have the company pay the team in accordance with the proposed Fox contract and keep the remaining revenue.

The difference could be tens of millions each year, according to media analysts. With broadcast outlets fighting fiercely over rights to live sporting events, the annual value of the Dodgers’ next television contract is expected to start well above $84 million.

“There will be a significantly bigger number,” said former NBA TV president Ed Desser, who testified on behalf of MLB and Fox in the Dodgers’ bankruptcy proceedings. “If the Guggenheim people didn’t believe that, they would not have bid what they bid for the team.”

Guggenheim’s winning bid of $2.15 billion was believed to be more than $500 million above the next-highest offer.

The confidential terms — and the ability of the court to enforce them regardless of what Selig might say — represented what Guggenheim attorney Michael Small called in court a “substantial component of the value proposition of the transaction.”

The league believes the deal simply provides the Dodgers with “most favorable” status, similar to the New York Yankees, Boston Red Sox and other teams that own their television outlet, according to the person briefed on the league’s position.

Andrew Zimbalist, a Smith College economist and advisor to the commissioner’s office on revenue sharing, said he could not discuss the specifics of the Dodgers’ settlement but disputed that the league had made a poor deal. He noted that ownership of a regional sports network might not be so lucrative over the long term, as fans transition from watching games on television to watching on the Internet, where the league holds the rights.

However, the more millions that flow to the regional sports network as opposed to revenue sharing, the more the Dodgers could make by selling a share of the network, said a sports industry banker who declined to be identified. Such networks generally command a sale price of at least 12 times revenue, the banker said.

The Dodgers also could try to air English and Spanish broadcasts on separate channels while paying one rights fee rather than two, according to two people familiar with the sale process. The commissioner’s office probably would take exception, but the league would have to appeal to a court that last month sided with the Dodgers on interpretation of the settlement.

Marc Ganis, president of Chicago-based Sportscorp Ltd., said the settlement could compel owners to challenge Selig.

“It’s bad enough that there is a third party,” Ganis said. “You have one set of rules — and a judge — for one team, and you have another set of rules for 29 other teams.

“They’ll say, ‘How can Bud Selig treat us differently? Do we have to file for bankruptcy and threaten to put Bud Selig on the witness stand? Is that we have to do to get treated like the Dodgers?’”

bill.shaikin@latimes.com

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