Delaware Bankruptcy Litigation : Delaware Bankruptcy Lawyer & Attorney : Fox Rothschild Law Firm : Financial Restructuring & Bankruptcy Litigation

Introduction

Eddie Bauer, the Washington-based retailer, filed for bankruptcy on June 16, 2009, approximately four years after the company emerged from the Spiegel bankruptcy.  What started as one store opened by Eddie Bauer in 1920, grew to a clothing retailer with over 500 stores and catalogs reaching over 100 million customers.   During its history, the company was owned by General Mills in 1971, and then Spiegel in 1985.  As stated in its Declaration in Support of its First Day Motions (the "Declaration"),  Eddie Bauer was spun-off from Spiegel under Spiegel's Plan of Reorganization in May of 2005. 

The Company's Financials

According to Eddie Bauer's Voluntary Bankruptcy Petition (the "Petition"), the company has assets worth approximately $476 million against debts of $426 million.  The Petition lists the following companies as its ten largest unsecured trade creditors:

1. RR Donnelley Receivables ... $855,526
2. Expeditor's International ... $700,000
3. Boom ... $464,976
4. Midland Paper ... $299,469.97
5. Vipdesk Connect Inc. ... $250,000
6. Fry, Inc. ... $225,000
7. Stageplan Inc. ... $217,807
8. Newgistics ... $200,000
9. Scheiner Commercial ... $178,572
10. Epsilon ... $150,000

The company generates approximately half of its sales revenue ($444 million in 2008), from retail sales, a quarter from outlet store sales ($253 million), and a quarter from direct sales ($274 million).  Combined, net merchandise sales in 2008 reached $971 million.  Add in royalties and various joint ventures, and Eddie Bauer's total revenues for 2008 reached $1.02 billion. 

• Email This
• Print
• Comments
• Trackbacks

Introduction

Hayes Lemmerz, one of the world's largest wheel manufacturers, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on May 11, 2009.  This is Hayes second time in to bankruptcy within the last ten years.  The company previously filed for bankruptcy in Delaware in 2001.  According to its Declaration in Support of First Day Pleadings (the "Declaration"), Hayes Lemmerz's first bankruptcy was due to excessive debt, poorly integrated acquisitions and underperforming facilities.  Eight years later, Hayes is in bankruptcy again, however, this time the company claims its bankruptcy is "the result of economic forces beyond Hayes' control and [is] necessary to implement a balance sheet restructuring."   

• Email This
• Print
• Comments
• Trackbacks

Introduction

On June 12, 2009, MagnaChip Semiconductor ("MagnaChip"), filed a Chapter 11 Petition for Bankruptcy in the United States Bankruptcy Court for the District of Delaware.  As reflected in MagnaChip's Declaration in Support of First Day Motions (the "Declaration"), MagnaChip manufactures and sells analog and mixed-signal semiconductor products for consumer electronics.  MagnaChip's conductors are used in products ranging from computer notebooks to cell phones and flat screen televisions.

This post will look at MagnaChip's business, including its revenue, debt and assets.  Further, the post will provide a brief explanation as to why MagnaChip filed for bankruptcy and what it hopes to accomplish while in bankruptcy. 

• Email This
• Print
• Comments
• Trackbacks

Introduction

On June 25th, the Debtors in the SemCrude bankruptcy present their Motion Approving Debtors' Disclosure Statement (the "Motion").  Debtors' Motion provides a good opportunity to review the standards by which bankruptcy courts often measure the content of a debtor's disclosure statement.  The following provides a summary of some of the frequently cited cases and Bankruptcy Code provisions governing this fundamental component of the bankruptcy reorganization process.

The Code Provisions

A disclosure statement must contain adequate information for creditors and shareholders to make an informed judgment about a plan of reorganization. See In re Scioto Valley Mortgage Co., 88 B.R. 168, 170 (Bankr. S.D. Oh. 1988). Section 1125(b) of the Bankruptcy Code provides the threshold level of information that must be included in a disclosure statement:

An acceptance or rejection of the plan may not be solicited after the commencement of the case under this title from a holder of claim or interest with respect to such solicitation, unless, at the time of or before such solicitation, there is transmitted to such holder the plan or a summary of the plan, and a written disclosure statement approved, after notice and a hearing, by the court as containing adequate information.
11 U.S.C. § 1125(b).  (Emphasis added).

• Email This
• Print
• Comments
• Trackbacks

Introduction

Anchor Blue Retail Group ("Anchor Blue"), the California-based clothing retailer, filed for Bankruptcy in the United States Bankruptcy Court for the District of Delaware on May 27, 2009 (the "Petition Date").  According to its Declaration in Support of First Day Motions (the "Declaration"),  the company has over 2,800 employees and annual sales in 2008 of $370 million.  Anchor Blue operates two different retail formats:  the Anchor Blue stores and Levi's and Dockers outlet stores. 

Objectives in Bankruptcy

In the months leading up to bankruptcy,  Anchor Blue sought to sell all of its assets as a going concern.  The Company's efforts resulted in it entering into two separate asset purchase agreements.  In addition to the asset purchase agreements, Anchor Blue also entered into a debtor-in-possession financing agreement that provides financing for its bankruptcy proceeding while the company seeks to sell assets under section 363 of the Bankruptcy Code. 

• Email This
• Print
• Comments
• Trackbacks

 Introduction

R.H. Donnelly Corporation ("Donnelly" or the "Debtor"), the Cary, North Carolina publisher of phone directories, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on May 28, 2009.  According to its Declaration in Support of First Day Motions (the "Declaration"), the Debtor operates "Dex Net," a business database containing information on over 600,000 businesses in 28 states.  Besides its on line services, the Debtor publishes directories in over 600 different markets reaching over 75 million users.

Debtors' Financials

By the end of 2008, Donnelly's assets were valued at $11.9 billion.  Its revenues for 2008 reached $2.62 billion.  As stated in its Declaration, Donnelly derived 15% of its revenue in 2008 from the sale of advertising to national and regional companies that purchase ad space in multiple directories.  As a result of the weakening economy, many of these larger ad purchasers cut back on their advertising, creating a negative effect on Donnelly's revenue.

• Email This
• Print
• Comments
• Trackbacks

Introduction

Visteon Corporation  filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on May 28, 2009.  According to Visteon's Declaration in Support of First Day Motions (the "Declaration"), Visteon is one of the largest suppliers of automotive components to original equipment manufacturers ("OEM") worldwide.  With manufacturing and engineering facilities in 27 countries, Visteon's sales reached $9.54 billion in 2008. 

Ford's Role in Visteon's Bankruptcy

In 2000, Visteon spun-off from Ford Motor Company after decades as a parts division of Ford.  By 2006, Visteon began a two year restructuring of its business that would result in Visteon reducing its workforce by 15,000 employees.  During its pre-bankruptcy restructuring,  Visteon was able to close or sell-off over 30 of its facilities, saving hundreds of millions of dollars in engineering and administrative costs.

• Email This
• Print
• Comments
• Trackbacks

Introduction

White Energy, Inc. ""White Energy" or the "Debtor"), one of the largest ethanol and gluten producers in the United States, filed for bankruptcy in the United States Bankruptcy for the District of Delaware on May 7, 2009.  According to its Declaration in Support of First Day Motions (the "Declaration"), White Energy generated over $500 million in revenue in 2008.  Based in Dallas, Texas,  White Energy operates three ethanol production facilities in Kansas and Texas. 

White Energy produces both ethanol and gluten (an ingredient used by food producers) at its Russell, Kansas facility.  As stated in its Declaration, the Debtor processes wheat to make gluten.  White Energy uses starch, a byproduct from gluten production, in its ethanol production. By doing so, White Energy is able to reduce its overall costs to produce ethanol.

• Email This
• Print
• Comments
• Trackbacks

Introduction

On May 1, 2009, Magna Entertainment ("Magna") filed a motion in the United States Bankruptcy Court for the District of Delaware whereby it sought authority to schedule an auction, receive approval of auction bid procedures and proceed with the sale of assets (the "Sale Motion").  I have previously written about bankruptcy sale motions on this blog,  however, I wanted to devote this post to the auction procedures that are often used in bankruptcy proceedings.  Specifically, this post is intended to address questions that arise when a chapter 11 debtor seeks to auction of assets.  Among them, how do debtors go about auctioning assets while in bankruptcy, how long does the auction process take, and finally, what are common requirements imposed on parties wishing to bid on a debtor's assets?  Recognizing that no two bankruptcies are the same, this post will look at the auction procedures proposed in Magna in an effort to shed light on the bankruptcy auction process in general.

• Email This
• Print
• Comments
• Trackbacks