All items from WSJ.com: Bankruptcy Beat

As Argentina finds itself on the verge of a second default, what blame, if any, does the distressed investing community hold?

In February 2012, certain distressed investor bondholders who held out and did not agree to a debt restructuring and exchange with Argentina won a decision in the U.S. District Court for the Southern District of New York requiring Argentina to pay the holdouts the full amount due under the bonds. The court eventually issued an order enjoining Argentina and all banks who disburse funds on behalf of Argentina from paying those bondholders who consensually agreed to a debt restructuring unless the holdouts were paid the amounts originally due under the bond indenture. Appeals of those decisions were not successful. And now, Argentina finds itself on the possible brink of a default to all bondholders.



Posted 3 days 4 hours ago

As Argentina finds itself on the verge of a second default, what blame, if any, does the distressed investing community hold?

As Argentina edges closer to a second default on its sovereign debt in little more than a decade, commentators have been warning of a potential recurrence of the devastation wrought by the Great Argentine Depression of 1998-2002. Many have been quick to lay the blame for Argentina’s current financial dilemma on “vulture fund” investors who refused to take part in Argentina’s 2005 and 2010 debt restructurings and are owed roughly $1.5 billion. However, as with every controversy, there is more than one side to the story.



Posted 3 days 5 hours ago

As Argentina finds itself on the verge of a second default, what blame, if any, does the distressed investing community hold?

The real issue at play here isn’t who’s “right” or who’s “wrong,” but whether the appropriate legal and restructuring mechanisms are in place to achieve equitable solutions for all parties in the future without anyone having to go through this type of brinksmanship.
To put it another way:  Is it time to consider expanding the U.S. Bankruptcy Code to more directly address sovereign debt as it already addresses corporate, state and municipal debt?
I cannot claim to know exactly how the Code might be expanded; however, the Argentina case does shine a light on a number of areas where the time-tested learnings from corporate restructurings might well be applied to sovereign restructurings in the future, leading to easier, effective and equitable outcomes. Two critical areas that come to mind are:



Posted 3 days 5 hours ago

As Argentina finds itself on the verge of a second default, what blame, if any, does the distressed investing community hold?

With the crisis surrounding Argentina’s debt continuing to play out in both the U.S. courts and in Buenos Aires, questions are being asked about who is responsible for the potential economic collapse of this significant and fragile economy. In large measure, the answer depends upon how the protagonists in this decade-long struggle are perceived.
Are the hedge funds spearheaded by Paul Singer and NML Capital Ltd., who purchased Argentinian bonds at rock bottom prices solely to reap massive profits, “vultures?” Are they willing to thwart Argentina’s restructuring to further that aim? Or, are these hedge funds properly exercising their legal rights to maximize the return to their investors? On the other hand, is Argentina merely taking all available efforts to restructure its debt? Or is the country, as the Second Circuit noted, “a uniquely recalcitrant debtor?” Realistically, the answer falls somewhere in the middle.



Posted 3 days 6 hours ago

A court in The Hague has ruled that Russia owes former shareholders of the now-defunct oil giant Yukos more than $50 billion in compensation for the government’s seizure of the company, The Wall Street Journal reports.
Nursing-home operator Covenant Care LLC said its $70 million offer for 19 nursing homes in Southern California was unfairly rejected due to fine print, despite topping the lead bid of $62 million. Read the story in the Daily Bankruptcy Review.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
The city of Detroit would get a monitor to ensure its progress toward cutting $7 billion in long-term obligations and keeping its finances in order, according to the latest version of a debt-cutting plan submitted by the city’s emergency manager Friday, WSJ reports.



Posted 3 days 8 hours ago

The U.S. and Canadian judges who will decide how to divide $7.3 billion raised in the liquidation of the former Canadian technology icon went their separate ways Friday, with the U.S. judge canceling and the Canadian judge forging ahead with a hearing on an issue that could be key to the decision.
The issue is how much interest bondholders can expect to collect for the years between Nortel ’s 2009 bankruptcy filing and the date when the proceeds of the global liquidation are finally handed out.  That date is as yet unknown.  The gap between what bondholders want, $1.6 billion, and what non-U.S. Nortel creditors say they are entitled to receive, $90 million, is huge.
Late Thursday afternoon, U.S. Bankruptcy Judge Kevin Gross in Wilmington withdrew from a scheduled joint session on the question, after Nortel U.S. reached a settlement with bondholders owed close to $4 billion. Unveiled on the eve of the joint hearing, the proposed settlement will cap the interest bondholders will be able to collect at $1.01 billion.



Posted 6 days 2 hours ago

This month, the Examiners will tackle a timely and thorny topic—Argentina’s debt troubles.
Last month, the U.S. Supreme Court declined to take up a long-running battle between Argentina and its bondholders. The court’s move means that a lower court ruling barring Argentina from repaying its new bonds ahead of its old bonds will stand, and Argentina is now entering mediation with a group of holdout bondholders, mostly hedge funds, that have refused to accept the country’s restructuring proposals. At stake in the talks is Argentina’s ability to avoid what would be its second default in 13 years, and it must reach a deal by next Wednesday. A federal judge ordered the country and its holdout creditors to around-the-clock mediation. But as of Friday afternoon, the mediator said no deal had been reached, and Argentina’s delegation was slated to return home from the talks in New York.



Posted 6 days 2 hours ago

A Delaware bankruptcy judge next week could approve the creditor-payment plan that would distribute money from the $149.2 million sale of failed hybrid auto maker Fisker Automotive Inc.
On Monday, Judge Kevin Gross has the power to approve the distribution plan for proceeds from the company’s sale to China’s Wanxiang Group. Wanxiang America has said it will revive Fisker’s car-making operations, and the plan offers old company’s trade vendors and other unsecured creditors a chance to share in the profits through a 20% ownership stake in the reorganized company.
Unsecured creditors, which include dealers and some owners of Fisker’s Karma cars, are also supposed to split $20 million of the sale proceeds, according to court papers. The group is owed between $75 million to $250 million.
Hong Kong billionaire Richard Li, who bought the U.S. Department of Energy’s $168 million loan to Fisker prior to the company’s bankruptcy auction, would collect about $100 million under the plan.
In court papers, lawyers who drafted the plan said that it got supporting votes “from every voting class by an overwhelming margin, including approximately 95% of all voting creditors by number and more than 99% by value.”
Founded in 2007 with the goal of launching a luxury plug-in hybrid vehicle, Fisker filed for Chapter 11 protection last year.



Posted 6 days 5 hours ago

Nortel Networks Corp .’s U.S. division said Thursday it has reached a deal with bondholders owed nearly $4 billion to cap the interest they can collect at $1.01 billion. Read the Daily Bankruptcy Review story via The Wall Street Journal.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
Bankruptcy behind them, American Airlines Group Inc . and United Continental Holdings Inc ., the two largest U.S. airlines by traffic are launching stock buybacks, the Journal reports.



Posted 6 days 8 hours ago

Republic of Texas Brands Inc., which exited Chapter 11 bankruptcy protection earlier this month, is blazing a new trail in Texas.
The company plans to change its name to Totally Hemp Crazy and complete a merger with Chill Texas Inc., the distributor of a cannabis-based energy drink made in Austria.
“The completion of the acquisition is in process and will be completed before the end of the month,” Tom Shuman, a 30-year veteran of the beverage industry and the company’s new chief executive, said in a statement Tuesday.
The new name reflects the company’s renewed focus on THC-free, cannabis-based beverages like its Chillo energy drink, which promises consumers “a whole new feeling of being alive.”



Posted 1 week 4 hours ago