All items from Bankruptcy Beat

Melanie Cohen

Crumbs Bake Shop Inc . notified employees Monday that it would be closing all of its stores at the end of the business day, a spokeswoman for the New York-based cupcake maker said. The Daily Bankruptcy Review article is available 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.”)

Posted 3 weeks 16 hours ago

Girls Gone Wild founder Joe Francis arrives at the 2012 MTV Movie Awards in Los Angeles.

Joe Francis’s ride at the helm of his Girls Gone Wild porn business is over, but he’s refusing to hand over the keys.
Bankruptcy lawyers who recently sold the Girls Gone Wild brand said the company’s founder won’t return a 2007 Cadillac Escalade or a 2012 Bentley Flying Spur that belong to the company and not to Mr. Francis personally.
In court papers, the lawyers have asked a federal judge to formally scold Mr. Francis. They also want to start charging him a $5,000 fine for every day that the luxury vehicles remain at large. (What Mr. Francis actually needs is a minivan. His girlfriend, model Abbey Wilson, is pregnant with twin girls.)
Mr. Francis says he doesn’t have the cars.

Posted 3 weeks 1 day ago

People walk past a kiosk with an advertisement for Wi-Fi provider Gowex in Madrid on July 3. Gowex on Sunday said it had filed for bankruptcy protection.
Agence France-Presse/Getty Images

Spanish technology firm Gowex SA said it filed for bankruptcy after Chairman and Chief Executive Jenaro García admitted to falsifying accounts and resigned, The Wall Street Journal reports.
The trustee in charge of Jeffrey Soffer’s failed Fontainebleau Las Vegas casino project has struck a settlement that would put more than $83 million of directors and officers insurance money into creditors’ pockets. Read the Daily Bankruptcy Review article here.

Posted 3 weeks 1 day ago

Next week in bankruptcy, vitamin and supplement supplier Natrol Inc. and its lender, Cerberus Business Finance LLC, will go to court to settle a dispute over control of the company.
Last month, Cerberus asked Judge Brendan Shannon of the U.S. Bankruptcy Court Wilmington, Del., to oust Natrol’s current management, replacing executives with a Chapter 11 trustee.
Court papers show Cerberus, owed $75 million, hired investigators who turned up what it says is evidence of, at best, a leadership in disarray and lacking “the business judgment and acumen to run the enterprise going forward.” At worst, the lender says, there’s evidence of “serious misconduct” that resulted in more than $25 million being siphoned out of Natrol in a scheme tainted with cronyism and nepotism.
Natrol Chief Executive Mesrop Khoudagoulian said the breakdown in the company’s relationship with Cerberus is a result of “misunderstandings, miscommunications and misperceptions.”
A Natrol spokeswoman said Cerberus’s efforts to appoint a Chapter 11 trustee are part of a strategy to gain leverage in the reorganization process.
For Cerberus, which has a reputation as a savvy, sophisticated and experienced lender to troubled companies, Natrol’s case marks the first time it has been driven to the point of calling for the appointment of a Chapter 11 trustee to take over the handling of a business, its lawyers said.

Posted 3 weeks 5 days ago

Foster Field in San Angelo, Texas, the home of the Colts.

The San Angelo Colts, a professional baseball team in San Angelo, Texas, filed for Chapter 11 bankruptcy protection Tuesday to prevent a foreclosure on the team’s stadium.
The Colts, part of the United Baseball League, are one of the few teams in the country that own their stadium, according to John Bryant, the league’s owner and president. The United Baseball League is one of eight of fully independent professional baseball organizations that have no official connections to either Major League Baseball or Minor League Baseball.
According to Mr. Bryant, the team missed payments on a $384,000 mortgage, prompting its lender, 1st Community Federal Credit Union, to initiate a foreclosure on the stadium. The 14-year-old stadium was built at a cost of $3 million and seats just 4,400, according to Colts General Manager Heath Brown.

Posted 3 weeks 5 days ago

A bankruptcy judge said on Wednesday that Genco Shipping & Trading Ltd.’s restructuring plan appropriately values the dry-bulk shipper and that he will confirm the plan. Read the Daily Bankruptcy Review article here.
(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.”)
An appeals court ruled that a challenge to Detroit’s bankruptcy case has to be heard before the city’s debt-cutting plan hits trial, The Wall Street Journal reports.
A judge on Wednesday set a schedule for General Motors Co.'s bankruptcy court fight with the so-called “economic victims” of GM’s ignition switch defect, urging both sides to work together toward a resolution. Read the DBR article via WSJ.

Posted 3 weeks 5 days ago

The Brooklyn Academy of Music’s Peter Jay Sharp Building, where New York City Opera performed “Anna Nicole” until Oct. 2.
Spencer Platt/Getty Images

Could the curtain rise again at the New York City Opera?
The shuttered institution, which closed its doors last fall after years of financial woes, could be revived in some fashion, according to two lawyers working on the opera’s Chapter 11 bankruptcy case.
“There is a possibility that the opera could come back in some incarnation,” Klestadt & Winters partner Sean Southard, an attorney for the opera’s unsecured creditors, told Bankruptcy Beat on Tuesday.
Nicole Stefanelli, an attorney at Lowenstein Sandler who represents the opera, added: “At this point, it’s not really clear what will end up happening, but there was at least one proposal to revive New York City Opera.”
Ms. Stefanelli wouldn’t offer any hints as to who may be interested in the opera, saying the names are “strictly confidential,” but noted that most everyone considering making a deal “are interested in seeing some sort of revival.”

Posted 3 weeks 6 days ago

Philip Falcone‘s LightSquared on Tuesday unveiled a $3.05 billion restructuring plan that would give 74% of the wireless venture to Cerberus Capital Management LP, Fortress Investment Group  LLC and J.P. Morgan Chase & Co., and leave Mr. Falcone with just 12.5% of the reorganized company’s equity. The Wall Street Journal has the Daily Bankruptcy Review article here.
(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.”)
A federal judge on Tuesday approved nearly $400 million in fees and expenses owed to the professionals responsible for guiding American Airlines through its Chapter 11 restructuring, DBR reports via WSJ.

Posted 3 weeks 6 days ago

Madonna performs at the Joe Louis Arena on Thursday Nov. 8, 2012, in Detroit. Published Credit: Invision/Associated Press
Gary Malerba/Invision/Associated Press

Madonna is crazy for the bankrupt city of Detroit.
The Grammy-winning singer and entertainer, who grew up in the city’s suburbs, was “deeply inspired” by a visit last month and plans to contribute money to a youth boxing gym, a charter school and a nonprofit that employs homeless women  (h/t Associated Press).
“It was obvious to me that I had to get involved and be part of the solution to help Detroit recover,” Madonna said in a statement. “A piece of my heart will always be in Detroit and I’m humbled to be able to give back to my community.”

Posted 4 weeks 10 hours ago

Energy Future Holdings Corp. insiders took nearly $46 million out of the company in the 12 months leading up to its April 29 bankruptcy filing, new court records show.
Some $19.5 million of that money went to the investors that loaded the company with debt in a 2007 leveraged buyout:  TPG Capital Management LP, Goldman Sachs & Co. and Kohlberg, Kravis Roberts & Co.
All the firms declined comment on the payments from the Dallas-based power seller.  It’s not unusual for private equity investors to reap fees of various sorts from their portfolio companies, so that even when an investment goes wrong, as Energy Future did, the cost of easing out is shifted away from the investors.
The rest of the money was spread among a top management team and board of directors that numbers 20 people, with President and Chief Executive Officer John Young the top earner, at more than $5 million for the 12-month period. It’s pay and bonuses and benefits, according to papers filed with the U.S. Bankruptcy Court in Wilmington, Del.

Posted 4 weeks 11 hours ago