Reorganization plan
Perkins’ regulars at 4 Colorado sites are forced to find a new seat
When a business files for Chapter 11 bankruptcy protection, the assets are not sold off to pay the debt, but the business is allowed to stay open. The business becomes a debtor-in-possession, essentially allowing it to continue to maintain its operations under the purview of the bankruptcy court. The business can reorganize its debts under a plan approved by a United States judge.
When a multiple location business continues to operate during the bankruptcy process, it does not mean that every store they own will remain open. Some Colorado regulars will have to find a new Perkins restaurant after the company closed four of its businesses as a result of their recent Chapter 11 bankruptcy protection filing.
On Thursday, July 14, 2011, Perkins & Marie Callender’s submitted a plan for reorganization with the bankruptcy court. Although the plan has yet to be approved, the national corporation chose to preemptively close the Perkins restaurants located in the state, three of which were all in Colorado Springs. The corporation also chose to end operations in 27 other locations across the country.
The president and chief executive officer for Perkins & Marie Callender’s expressed his hope and expectation that the multiple closings will allow the corporation to “emerge from its financial restructuring in a significantly strengthened financial position.”
Colorado residents who love their American eatery can still visit the nine locations that remain open. Both restaurants in Loveland will continue to serve its customers along with single locations in Arvada, Golden, Westminster, Denver, Fort Collins, Greeley and Longmont.
Source: The Denver Post, “Bankruptcy filing closes four Perkins restaurants in Colorado,” Howard Pankratz, 16 July 2011
Frank McCourt dodges accusations blames Bud Selig for Chapter 11 bankruptcy
The Dodgers time in Los Angeles has been well spent, bringing home five World Series wins and nine pennants. Six Cy Young winners have called Dodger Stadium home along with numerous Hall of Fame inductees. Recently, however, the Los Angeles Dodgers have made the news due to the family drama of the team’s owner.
Ex-spouses Frank and Jamie McCourt have publicly battled over ownership of the All-American sports team for months, and the turmoil has had an effect on more than just their divorce settlement. The team filed for Chapter 11 bankruptcy protection on Monday, June 27, 2011.
While the media rights will, according to Dodger representation, “one way or another, generate enough value to facilitate a reorganization,” Frank McCourt has placed blame for the need to file on a decision made by Bud Selig, the Commissioner for Major League Baseball.
Selig had refused to approve a $3 billion deal between Fox, the television network and the team that was to last 17-years. According to McCourt, “He’s turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves today.”
According to the filings submitted to the U.S. bankruptcy court in Delaware, the team has liabilities that range somewhere between $100 and $500 million while they have claimed assets of approximately $500 million to $1 billion. Several of the players are some of the team’s creditors owed the largest amount of debt including former outfielder, Manny Ramirez who has not been paid approximately $21 million.
Dodger fans need not worry about the rest of the season. Under the terms of the bankruptcy, the team will be able to continue the normal day-to-day operations pursuant to a $150 million debtor-in-possession financing commitment.
Source: Market Watch, “Los Angeles Dodgers file for bankruptcy,” Shawn Langlois, 27 June 2011
CEO says GM has made ‘tremendous progress’ since bankruptcy
General Motors is an American automaker that was hit hard by the recession and filed for Chapter 11 bankruptcy protection in 2009 after years of poor sales and profit losses. It was the fourth largest bankruptcy filing in United States history, according to Internet sources.
But yesterday, at the company’s first annual meeting for shareholders since its bankruptcy filing, its CEO announced that the automaker has made “tremendous progress” since implementing its reorganization plan, which had to be approved by the United States government because of the 500 million shares it possesses in the company.
The CEO dubbed the 2009 Chapter 11 restructuring a “rebirth,” saying that the company has now seen five profitable quarters in a row. However, the CEO said that there are still several challenges that GM faces, including soaring gas prices, international competition and changing technologies.
Ultimately, the success of the company will depend on the sales of GM cars and trucks, the CEO said, which includes makes such as Chevrolet and Cadillac, both of which the company plans to start marketing more in Europe.
This has been one of the most interesting and infamous bankruptcy cases in history, partly because the company was so well-known, and partly because of the so-called government bailout the company received.
Although most companies facing difficult financial times do not have the opportunity to be bailed out by the government, they do have the option to file for Chapter 11 bankruptcy protection.
Essentially, Chapter 11 is a complex “reorganization” procedure that devises a plan allowing the business to keep operating and to pay back its debt with future earnings. Unlike Chapter 7 bankruptcy, which is overseen by appointed trustee, Chapter 11 is overseen by the company’s creditors.
The entire Chapter 11 process can be lengthy, taking anywhere from months to years, but it can also be highly successful at getting the business back on its feet. Contact an experienced bankruptcy attorney in your state to find out more about this process.
Source: detnews.com, “Akerson: GM strong after ‘rebirth’ in bankruptcy, but challenges remain,” Christina Rogers, 6/8/2011.
Another orchestra to play its way out of bankruptcy
Recently, we discussed how after filing Chapter 11 bankruptcy in April, the Philadelphia Orchestra announced that it has a new plan to keep entertaining and bring in a profit. Now it has been reported that the 75-year-old Louisville Orchestra has also submitted a bankruptcy exit plan after filing for Chapter 11 protection in December of last year.
Reportedly, the plan was submitted to United States Bankruptcy Court on Monday, one day before an extended deadline from the court had made it due. The plan describes how the orchestra plans to pay off its creditors, including contributions to its musicians’ pension plans, overdue rent to the Kentucky Center and two bank lenders.
Specifically, the orchestra has proposed paying the close to $43,500 it owes in contributions to the pension plans in full and paying $2,000 a month for 12 months for its use of the Kentucky Center. One lender, Chase Bank, has said that it will forgive half of its $350,000 secured claim and will take cash for the rest, and the other lender, Fifth Third Bank, will forgive most of its $155,000 secured claim.
Additionally, all unsecured creditors would receive 50 cents to every dollar they are owed under the plan. Attorneys for the orchestra said in court papers that this is the “best restructuring option available to the debtor and its creditors.”
“Any alternative, including any of which would force the debtor to remain in Chapter 11 for an extended period of time or to liquidate its assets, would seriously damage the value of the debtor’ business and could result in substantially lower recoveries for creditors,” the court papers said, according to the Wall Street Journal.
As you can see, there is hope for businesses after filing Chapter 11 bankruptcy. With the help of an experienced attorney, it is possible to come up with an effective plan to regain control over finances and become profitable once again.
Source: The Wall Street Journal, “Louisville Orchestra Files Exit Plan, Continues Union Talks,” Jacqueline Palank, 5/31/2011.
Interim president and cheif revenue officer make plans for MediaNews Group
In our prior posting titled The Denver Post owner, MediaNews Group’s President and CEO steps down, we discussed significant changes that are being made to the management and board of directors in Denver-based MediaNews Group Inc. The corporation is the owner of several newspapers including The Denver Post and has recently been reorganized under Chapter 11 bankruptcy.
As a part of the reorganization, the corporation plans to make significant changes. The interim president, Gordon Paris, and Michael Sileck, the man appointed to the newly created position of chief revenue officer are making plans for the corporation’s future success.
The plans include new ways to enhance revenue through rethinking strategies and initiatives that will assess new business opportunities. According to Sileck the new “measures will strengthen the company’s performance in its core markets, and continue the transformation of the business from a print-oriented newspaper company to a locally focused provider of news and information across multiple platforms. In addition, they will position the company to identify, pursue and execute on strategic consolidation opportunities.”
When asked whether employees at the smaller newspapers owned by the larger corporation should fear losing their jobs, Singleton made the assurance that nothing would be different in the near future for individual papers and their employees.
According to one of the remaining MediaNews board members the corporation owed “a debt of gratitude” to Singleton for his role in growing the corporation and bringing it through the 2010 bankruptcy.
Source: Denver Business Journal, “Singleton to step down as CEO of Denver Post owner MediaNews Group“, Greg Avery and Mark Harden, 1/18/11
The Denver Post owner, MediaNews Group’s President and CEO steps down
MediaNews Group Inc. is one of the largest newspaper chains and is the corporation that owns the local newspaper The Denver Post. In fact, it remains the second-largest newspaper chain after filing for Chapter 11 bankruptcy protection in the recent past.
Although last year’s Chapter 11 reorganization wiped out approximately $765 million of the corporation’s debt, the founder and CEO of the company William Dean Singleton announced this month that he will be resigning from his position. He will remain in his role until a replacement is found. The 59-year-old man plans to relinquish his dat-to-day leadership of the company that is based in Denver, Colorado.
He has relinquished his CEO responsibilities, but Singleton says that he will remain the executive chairman of the board. He plans to continue being involved in strategy and deal-making processes. “We see a lot of expansion opportunities, and it’s difficult to do both” he said when discussing his prior dual position. “We are definitely eyeing growth.”
Although Singleton has chosen to step down along with Joseph Lodovic IV, otherwise known in familiar circles as “Jody,” the two will remain in control of the company. After the reorganization, lenders such as Wells Fargo and Bank of America now own 89 percent of the corporation.
As a part of the changes, two new Alden Global executives have been added to MediaNews Group Inc.’s board of directors. “Alden is a substantial shareholder,” said Singleton. “The changes that we’ve made aligns board membership with share holdings.”
Source: Denver Business Journal, “Singleton to step down as CEO of Denver Post owner MediaNews Group“, Greg Avery and Mark Harden, 1/18/11
Eva Longoria May be a Hit, but Her Nightclub is not Sharing in Her Success
Eva Longoria, the spitfire Latina star of ABC’s television show Desperate Housewives seems to be enjoying significant success in her career, but her nightclub has not fared as well. The Las Vegas restaurant and nightclub, Beso, located at the CityCenter has experienced a noteworthy lull. The young actress owns 32 percent of the limited liability corporation, Beso that filed for Chapter 11 bankruptcy protection this past Thursday, January 6, 2011.
According to documents filed with the United States Bankruptcy Court, the corporation has tallied up approximately $5.7 million in debt and other liabilities while claiming only assets in the amount of $2.5, insufficient to cover the mounting debt.
The corporation hopes to restructure the increasing debt as a part of the bankruptcy process. Officials have estimated their future losses at $76,000 per month. The restaurant and nightclub has reportedly been struggling to pay for the rental of the space, owing more than $1.8 million to their landlord.
The actress has allegedly done her best to keep the company going, lending over a million dollars to the company. Longoria was listed in the bankruptcy documents as a creditor owed approximately $1,375,000 in legal fees and cash loans.
The nightclub’s history has been filled with controversy after a lawsuit was filed by several investors and managers against the actress, Beso and other listed co-defendants alleging that they had been improperly “pushed out” of the company after lending a substantial sum for future construction projects. The lawsuit initiated several counterclaims of mismanagement.
Source: Las Vegas Sun “Eva Longoria’s Beso files bankruptcy to restructure debt” Steve Green 1/6/11
Trump Backs new CEO in Plans to Revitalize Trump Casinos after Bankruptcy
Donald Trump is one of the wealthiest, most famous businessmen in the world. Although his hit television show “The Apprentice” is watched for the business drama, when Donald Trump says, “you’re hired,” it is a serious recommendation. Trump announced his confidence in the new chief executive officer of Trump Entertainment Resorts Inc. “He’s got a great vision for the company. He’s a great manager, he’s a great person and he’ll do a great job,” Trump said of the new CEO.
The new CEO was named as a part of a corporate restructuring program for a number of Trump brand Casinos after emergence from Chapter 11 bankruptcy protection this past July. During the bankruptcy process, the company was able to reduce their debt from $1.7 billion down to $344 million, a value that the company says it can work with.
One of the first actions taken by the new CEO was to terminate the employment of 50 managers and followed in December with 250 more total layoffs. “When you have to let someone go for economic reasons that aren’t tied to job performance, that’s extremely difficult,” the new CEO said when questioned about his decision.
A major part of the post-bankruptcy restructuring plan is to sell the Trump Marina Hotel Casino, the property that drew in the smallest amount of revenue in 2010. Although Donald Trump now owns only 10 percent of the company in exchange for the use of his name, his opinion and recommendation for a manager is taken in high regard.
Source: Press of Atlantic City “New Trump CEO faces the challenge of revitalizing casinos after bankruptcy” Donald Wittkowski 1/3/11
Colorado Based Shane Co.’s Future no Longer Sparkles; It Shines
One of the nation’s largest jewelers has felt the financial struggles shared by so many businesses in the past few years, but Colorado based Shane Co. announced late last week that they would emerge from bankruptcy.
In a prior posting titled Colorado Based Jeweler ShaneCo. Sees a Sparkle in the Company’s Future, we reported that the bankruptcy judge had approved the corporation’s reorganization plan. The plan approved on November 10, 2010 has played a major role in allowing the company to no longer need the Chapter 11 bankruptcy protection that they filed for.
The owner and founder of the company, Tom Shane has been determined from day one to emerge from bankruptcy as quickly as possible without hurting the future of the company or its employees. During the proceedings, Shane refused to lay off employees or cut costs that would affect his consumers.
Although one of the largest creditors of the company was Tom Shane himself, the founder reportedly put his personal money on the line to secure investments and helps pay the corporation’s debts owed to other creditors.
“This is a great day for Shane Co.,” he professed to reporters. “At the beginning of the reorganization, I made a commitment to our vendors, customers and team members that Shane Co. would pay 100 cents of every dollar owed to all, and emerge from the proceedings stronger than ever.”
The reorganization plan created through Shane and his business bankruptcy attorney has seemed to give the company the strong future that the founder had hoped to see.
Source: BankruptcyHome.com “Colorado Jeweler emerges from bankruptcy” Eric Sanderson 12/23/10
Colorado Based Jeweler ShaneCo. Sees a Sparkle in the Company’s Future
ShaneCo., a Colorado based jewelry retailer stated back in January of 2009 that the recession “had a substantial, negative impact on its revenue.” The comment was found in the documents that were filed in a United States bankruptcy court requesting Chapter 11 protection. At the close of 2009, their reported revenue sunk an incredible 23 percent from $276 million the year before to $212 million. After nearly two years, the company finally plans to emerge from bankruptcy protection. The optimistic prediction is based upon approval of a reorganization plan.
United States Bankruptcy Judge Howard Tallman granted the final okay for the plan on November 10, 2007 at a hearing held in the District of Colorado bankruptcy court located in Denver, Colorado. According to the documents filed in association with the approval request, as of January of this year, the company had liabilities totaling $112.6 million and assets in the amount of $98.8 million.
The company continues to be managed by a team that includes father and son. Thomas Shane founded the company and now currently acts as Chief Executive Officer while his son, Rordan Shane, holds the title of Executive Vice President. Thomas Shane reported his confidence through electronic communications that the company would emerge from bankruptcy because “from day one we were vocal with our commitment to repay in full every dollar we owed.”
ShaneCo. is known for their unique diamond selection and personalized sale process and employs a significant number of workers across the nation at their 20 stores located in 13 different cities.
Source: Bloomberg Businessweek “Jewelry Retailer Shane Wins Chapter 11 Plan Approval” Don Jeffrey 11/11/10
Developer of 21,400 Acre Colorado Springs Ranch Files for Chapter 11
The plan for Banning Lewis Ranch in Colorado Springs, Colorado dates back to the 1960s, but continues to await completion. In 1988, the property that covers a significant portion of the east side of Colorado Springs was annexed by the city. Ownership of the 21,400 acres was bought and sold by a number of investors until the Banning Lewis Ranch Co. LLC and its subsidiary, Banning Lewis Ranch Development I & II LLC purchased the property and began construction in 2007.
As the housing market began to decline, so did the funding and support for the ranch and Banning Lewis Ranch Co. LLC and the subsidiary were forced to file for Chapter 11 bankruptcy. The company hopes to restructure their debt through the bankruptcy process and continue operation of the project into the future.
Mayor Lionel Rivera believes that the community project will “move forward” into the future as the city continues to expand. Plans for the project include the prediction that 75,000 residences will be built that can house approximately 180,000 people. The predictions are far from realization as only 200 families currently live on the property and only 50 more homes have completed closings.
Over $75 million has already been spent to prepare the area for housing development by adding roads, water and sewer lines and the company owes approximately $242.4 million to six different creditors. The subsidiary company owes $186.7 million to 20 of its larger creditors. Although the city’s $880 million water delivery pipeline was going to be accessed by the ranch development, the city assured its taxpayers that the pipeline was planned to serve a number of other developments as well.
Source: The Gazette “Banning Lewis developer files Chapter 11 bankruptcy” Wayne Heilman, Andy Wineke and Rich Laden 10/28/10
Update: Blockbuster Will Honor Discount Programs with Bankruptcy Loan
In a prior post entitled Blockbuster Movie Stores No Longer a Blockbuster Hit, we mentioned that Blockbuster Inc. had filed for bankruptcy protection in mid September. The advent of technological advances like live video streaming and the arrival of companies such as NetFlix and RedBox have outmoded the traditional Blockbuster Inc. experience of going to the store to rent a video. The change in consumer behavior caused the financial hardship for the well known movie rental store.
Today, October 28, 2010 Blockbuster finally received the official approval allowing them to accept a $125 million loan. The loan will facilitate continued operation of the company while going through the bankruptcy process. The loan granted to Blockbuster is called a “debtor in possession” loan often referred to as a “DIP loan.” DIP loans assist business while they are in bankruptcy by providing necessary and immediate funding for daily operations like paying employees during the reorganization process because their pre-bankruptcy liabilities are frozen once they file for Chapter 11 bankruptcy protection.
Blockbuster has announced that they will be able to continue to honor consumer discount programs such as the “Rewards” program, coupons and gift cards now that they have received approval for the bankruptcy loan. Jim Keyes, CEO of the company said that the company is “pleased that the court has granted these final orders… we continue to work diligently with our senior noteholders, the movie studios, the unsecured creditors committee and other key parties on our recapitalization plan, which, when implemented, will strengthen our balance sheet and allow us to continue transforming our business model.”
Blockbuster will be required to produce a business plan and have it approved by November 30, 2010. On that same day, a copy of the description of the company’s reorganization terms will also become due.
Source: The Street “Blockbuster Bankruptcy Loan Approved” Jeanine Poggi 10/28/10
Colorado Crossing Developer Hopes Reorganization Proposal is Approved
Immediately before the economy took a down turn, the real estate market was booming and multi-use projects looked like the next prosperous trend. Then, the economy went into recession stalling a significant number of projects and leaving the developers with half finished buildings and no funding to continue. Colorado Crossings was one of the multi-use projects whose completion was prevented by the recession, forcing the developer to file for Chapter 11 bankruptcy protection.
The developer recently filed a reorganization proposal in a Denver bankruptcy court that is pending approval. The reorganization plan includes the sale of 17.5 acres of the Colorado Crossing site. The designated land would remain on the market for approximately 6 months to build interest in the property, and then it would be sold or auctioned to the highest bidder. Proceeds from the sale would go towards paying $776,000 in back taxes owed to El Paso, Denver and Douglas counties, and the remainder would be used to pay contractors and subcontractors. The proposal also includes a plan to sell or refinance an additional 109 acres.
Creditors claim that the proposed reorganization plan for the commercial real estate would fail to raise enough money to settle the large amounts of debt owed. According to the disclosure statements, 80 companies are owed over $25 million and that number would increase to $36.9 million if forced to liquidate instead of reorganize. Creditors cite a document filed during initial bankruptcy proceedings that estimate the 17.5 acres value at approximately $15 million. Creditors are in the process of creating their own reorganization proposal which they plan to submit to the bankruptcy court.
Source: The Gazette “Developer of stalled Colorado Crossing project files reorganization plan” Rich Laden 9/30/10
Colorado-based Jeweler Nearing End of Chapter 11 Bankruptcy
Foregoing the pursuit of a business workout, Centennial, Colorado-based jewelry store chain Shane Co. has been making strides toward completing Chapter 11 bankruptcy since it filed for protection from creditors back in January of 2009. Shane cited the poor economy and the severely negative impact it has had on the sales of their product, which is inherently a luxury item, when filing for bankruptcy. The company had also defaulted on loan agreement terms with various creditors.
Shane Co. was able to obtain court approval last week to send the reorganization plan out to creditors for a vote on whether or not to approve the plan. U.S. Bankruptcy Judge Howard Tallman presided over a two-day long hearing in a Denver courtroom last week to grant approval of the jewelry retail company’s disclosure statement to be sent to creditors. The disclosure statement effectively explains to creditors the next steps Shane Co. will be taking in the coming months to completing Chapter 11. Judge Tallman set a hearing for November 10th to address the status of the plan’s confirmation at that time.
The plan outlined in the disclosure statement stipulates Shane Co. will repay 100% of what is currently owed to creditors holding secured claims. Shane Co.’s plan also states they plan to pay those creditors with unsecured claims against the company over an unspecified period of time from the available company revenue. The company’s 2008 revenue was $64 million less than 2007′s, a 23 percent decrease that was a deciding factor in Shane Co. filing for Chapter 11 Bankruptcy.
Source: Bloomberg “Jeweler Shane’s Bankruptcy Reorganization Plan to Go to Creditors for Vote” 9/29/10