Posted on November 18, 2009 by Jason Cornell, Esq.

Trustees in the Pope & Talbot and Specialty Motors Bankruptcies File Hundreds of Preference Actions

The Chapter 7 Trustees in the Pope & Talbot and Specialty Motors bankruptcies recently filed hundreds of complaints in the United States Bankruptcy Court for the District of Delaware.  George Miller is the Chapter 7 Trustee in the Pope & Talbot bankruptcy while Jeoffrey Burtch is the Trustee in the Specialty Motors (aka "Von Weise Inc.") bankruptcy.  Both groups of complaints seek the avoidance and recovery of alleged preferential transfers from various creditors of the debtors. 

The adversary actions filed in both Pope and Specialty Motors are before the Honorable Christopher S. Sontchi.  In prior preference actions, Judge Sontchi entered scheduling orders similar to the form scheduling order attached here.  A copy of Judge Sontchi's Chamber Procedures are attached here.

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Jason Cornell is a bankruptcy attorney at the law firm Fox Rothschild LLP in Wilmington, Delaware.  If you have questions regarding a Delaware bankruptcy proceeding,  you can reach Jason at 302 427 5512, or jcornell@foxrothschild.com.

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Posted on October 17, 2009 by Jason Cornell, Esq.

Accuride Corporation Files for Bankruptcy in Delaware Hoping to Win Approval of Pre-Arranged Restructing Plan

Introduction

Accuride Corporation, the Indiana-based manufacturer of heavy and medium-duty wheels, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on October 8, 2009.  According to Accuride's Declaration in Support of First Day Motions, the company filed for bankruptcy in order to reduce its debt through confirmation of a pre-arranged restructuring plan.  Specifically, Accuride seeks approval of a plan of reorganization that (i) extends the maturity date on its loans to 2013;  (ii) cancels notes in exchange for 98% of the common stock of reorganized Accuride;  (iii) offers new senior secured notes worth $140 million; and, (iv) provides current stockholders with 2% of the stock issued for reorganized Accuride.

 

Accuride's Business

Accuride and Accuride Canada were formed in 1986 for the purpose of acquiring all of the assets of a division of Firestone.  Two years after formation, Phelps Dodge Corporation purchased Accuride.  One year after Phelps' purchase, Kohlberg Kravis Roberts & Co. acquired a controlling interest in Accuride.  As stated in Accuride's Bankruptcy Declaration, Accuride's stock originally traded on the New York Stock Exchange, however, it was subsequently delisted and now trades in the over-the-counter market.

The Company's Financials

In its Petition for Bankruptcy, Accuride lists its assets at $682 million, against liabilities of $847 million.  Accuride's sales reached $1.4 billion in 2006, however, by 2008 sales were down to $931 million. The company's senior credit facility includes a term loan with a balance of $303 million and a revolving credit facility with a principal balance of $100 million.  In addition to its credit facility, the company issued notes worth $275 million.  According to Accuride's Petition for Bankruptcy, its ten largest unsecured trade creditors are as follows:

  1. Matalco Inc. ... $1.1 million
  2. Joseph Tryerson ... $804,609
  3. Ryerson ... $791,756
  4. Gallatin Steel ... $557,663
  5. American Colloid ... $323,409
  6. PrimeTrade Inc. ... $321,506
  7. Anixter Fasteners ... $248,044
  8. Foseco Metallurgical $236,594
  9. Hydro Aluminum $230,801
  10. B&B Metals Processing ... $228,683

Events Leading to Bankruptcy

Accuride is one of several auto parts suppliers that filed for bankruptcy in recent months.  As with other parts manufacturers, Accuride attributes it bankruptcy filing to the global economic downturn.  In its Bankruptcy Declaration, Accuride cites an industry publication that reports a drop in demand for trucking vehicles by 23% in the first half of 2007.  Forecasts predict further declines for 2009.  Given the poor economic outlook for the last three years, Accuride's stock price fell from $16.91 in 2007 to $.36 per share at the time it filed for bankruptcy. 

This bankruptcy proceeding is before the Honorable Brendan L. Shannon.

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Jason Cornell is a bankruptcy attorney in Wilmington, Delaware with the law firm Fox Rothschild LLP.  If you have questions regarding this bankruptcy, or any other Delaware bankruptcy proceeding, you can contact Jason at 302 427-5512, or jcornell@foxrothschild.com.
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Posted on September 17, 2009 by Jason Cornell, Esq.

Samsonite Files for Bankruptcy and Plans to Reject Up to 84 Store Leases

Samsonite Corporation, one of the world's largest luggage manufacturers, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on September 2, 2009.  According to Samsonite's Declaration in Support of First Day Motions, the company "does not anticipate that any of its customers or suppliers will be materially affected by this [bankruptcy] filing."  While this is good news for Samsonite's customers, the outcome for the company's landlords is less certain.

As stated in its Declaration, Samsonite leases 173 retail stores in 38 states.  Due to a sudden drop in consumer demand for travel products, Samsonite experienced a significant reduction in its cash flow.  As a result, the company engaged in a restructuring process that culminated in the filing of its bankruptcy petition in Delaware.  Through bankruptcy, Samsonite intends to reject up to 84 leases for those stores the company deems unprofitable. 

Landlords dealing with commercial tenants in bankruptcy face a host of issues, including administrative rent, rejection damages and adequate assurance.  A previous post on this blog titled "Ten Things Every Commercial Landlord Should Know About a Tenant in Bankruptcy" provides a good introduction to the issues that confront a landlord when a commercial tenant files for bankruptcy.  Judge Peter J. Walsh, a former Chief Judge of the Delaware Bankruptcy Court, recently issued an opinion in the Sportsman's Warehouse bankruptcy that provides a very helpful understanding of how bankruptcy courts approach claims for administrative rent and taxes that arise under a lease.  Landlords in Samsonite may find Judge Walsh's decision particularly relevant as Judge Walsh is also the judge presiding over the Samsonite bankruptcy.  

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Jason Cornell is a bankruptcy attorney with Fox Rothschild LLP in Wilmington, Delaware.  If you have questions regarding this or any other Delaware bankruptcy proceeding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com.

 

 

 

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Posted on September 2, 2009 by Jason Cornell, Esq.

Payment Processor, Cynergy Data, Files for Bankruptcy Seeking to Sell Substantially All of its Assets

Introduction

Less than two years after its formation, credit card processor, Cynergy Data, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  According to Cynergy's Declaration in Support of Chapter 11 Petitions and First Day Motions,  the company processes over $10 billion in credit payments over a twelve month period.  Cynergy's card volume is the result of transactions with over 80,000 merchants.

Cynergy filed for bankruptcy in order to receive bankruptcy court approval of the sale of substantially all of its assets to the ComVest Group under section 363 of the United States Bankruptcy Code.  Cynergy and ComVest entered into an asset purchase agreement following an auction process wherein Cynergy contacted over 48 different parties that might have an interest in purchasing its assets.  In response to its marketing efforts, 24 parties executed confidentiality agreements allowing them to review Cynergy's books and records in order to submit a bid.  Three final offers were submitted and ComVest and Cynergy executed an asset purchase agreement on August 26, 2009.

 

Sale Process

At the same time that it filed for bankruptcy, Cynergy also filed a motion approving bid procedures and the sale of substantially all of its assets.  Included in the sale motion are procedures to designate those contracts that will be assumed and assigned under the asset purchase agreement.  Cynergy proposes sending "Cure Notices" which will identify the contracts to be assigned, as well as the cure amount for any defaults, as provided for under section 365 of the Bankruptcy Code.  The sale motion also spells out how parties can file objections to the Cure Notice.

Creditors whose contracts are assumed and assigned to the purchaser of Cynergy's assets may stand in a substantially better position than those creditors whose contracts or leases are not assumed and assigned.  Under section 365 of the Bankruptcy Code, a debtor in bankruptcy must "cure" defaults under a contract , or provide adequate assurance that the debtor will promptly cure, before the contract can be assumed and assigned to a third party.

Cynergy's Financials

According to Cynergy's Petition for Bankruptcy, the company has assets of $109 million against debts of $186 million.  As stated in the Declaration, Cynergy entered into a senior credit facility for $39.8 million with Comerica Bank as agent, and a junior credit facility for $80 million with Dymas Funding Company as agent (both credit agreements are prepetition).  The company lists its 10 largest unsecured creditors as follows:

  1. Process America ... $2.8 million
  2. Paymentech ... $2.6 million
  3. TSYS ... $1.4 million
  4. wwwmygrantsitenet  ... $1.4 million
  5. Second Source ... $1.1 million
  6. DJM*Lifstylefit.com ... $900,764
  7. wwwfedgrantusa.com ... $812,629
  8. Merchant Processing Services ... $756,782
  9. Pivotal Payments ... $509,068
  10. Fast Transact ... $503,110

This bankruptcy proceeding is before the Honorable Kevin Gross. 

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Jason Cornell is a bankruptcy attorney in the Wilmington, Delaware office of Fox Rothschild LLP.  If you have questions regarding this or any other Delaware bankruptcy proceding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com.  Fox Rothschild LLP does not represent Cynergy Data LLC in this bankruptcy proceeding.
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