All items from WSJ.com: Bankruptcy Beat

Missy Hammond Dunaway’s painted notebooks depict the Kentile Floors sign.
Missy Hammond Dunaway

Commuters on the F and G subway trains may no longer have an up close view of the Kentile Floors sign in Brooklyn, which is being dismantled to later be relocated.
But the sight of it may never be too far.
Fans of the iconic sign, which began being taken down letter by letter last week, used to show their appreciation on Instagram and Facebook. Now, the sign will live on through T-shirts, totes, nails and even body art.
Pete Hildebrand, owner of Live Poultry Apparel, which has New York-inspired handmade clothes and accessories, said his Kentile Floors T-shirts have sold in the thousands since the sign became endangered.
“It’s been crazy, I feel sort of bad about it,” Mr. Hildebrand said. “It’s sort of bittersweet—I’d much rather see the sign saved than sell shirts.”



Posted 3 weeks 6 days ago

This week on The Broke and the Beautiful, Frank McCourt isn’t just horsing around with an equestrian jumping show, and soccer’s not so popular in Pittsburgh even amid World Cup fever. Also, a gal pal of Armand Assante is in some trouble.

Frank McCourt in June 2014.
Reuters/David McNew

Frank McCourt may no longer own a Major League Baseball team, but he’s not neighing all sports. According to Bloomberg, Mr. McCourt, who in 2012 sold the Los Angeles Dodgers to a group led by ex-basketball star Earvin “Magic” Johnson, bought a 50% stake in the Longines Gold Champions Tour. The international horse jumping show canters across 14 different venues in 12 countries.



Posted 3 weeks 6 days ago

On Tuesday in Manhattan, a judge will consider approving nearly $400 million in fees and expenses for the professionals who worked on the American Airlines bankruptcy.
The amounts were recommended by fee examiner Robert Keach, a former American Bankruptcy Institute president who said the attorneys and advisers engineered “perhaps the most efficient airline reorganization case on record.”
Mr. Keach, a lawyer from Bernstein, Shur, Sawyer & Nelson PA in Maine, said in a filing that the case was one of the most successful ever, pointing to the full repayment of the airline’s secured and unsecured creditors as well as a return to equity holders, a rare outcome in a bankruptcy case. American parent AMR Corp. exited bankruptcy through a merger with US Airways Group Inc.
American’s lead bankruptcy counsel, Weil, Gotshal & Manges LLP, is set to earn the most on the assignment, with a $77.4 million bill. Law firm Debevoise & Plimpton LLP, which served as aircraft counsel, logged $54.1 million.
Four other advisers requested more than $20 million: Deloitte Financial Advisory Services LLP, with $36.2 million; financial adviser Rothschild Inc., with $30.5 million; and law firms Skadden, Arps, Slate, Meagher & Flom LLP and Paul Hastings LLP, with $28.9 million and $27.4 million, respectively.



Posted 3 weeks 6 days ago

Five entities with a stake in land where the ambitious Las Vegas W hotel was supposed to be built filed for bankruptcy in Nevada on Wednesday. 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.”)
A fee examiner tasked with keeping costs down in the American Airlines bankruptcy recommended this week that a court approve nearly $400 million in fees and expenses earned by professionals. Read DBR’s updated version in The Wall Street Journal.
According to WSJ, a U.S. court won’t let Argentina take more time to negotiate with creditors, moving it closer to defaulting again.



Posted 3 weeks 6 days ago

As Detroit nears a crucial point in its restructuring, what lessons does the city’s historic bankruptcy offer troubled municipalities?

There are several lessons from other troubled municipalities that were identified in Detroit. They include the critical importance of accurately projecting tax revenue and matching expenses (Stockton, Calif.), the deleterious effect of defined benefit plans and unfunded pensions/benefits (all municipalities), the failure to understand and manage risk from complicated financial instruments (Jefferson County, Ala.), and gambling on infrastructure (Harrisburg, Pa.). But perhaps the most compelling lesson is the value of cultural institutions and whether these assets should be used to satisfy creditors or protected in bankruptcy-remote vehicles.
In 1919, the Detroit Institute of Arts, or DIA, transferred ownership of its art collection and building to the city in exchange for annual funding. That action has come full circle as the cultural institution that once relied on the city may now be its savior.



Posted 4 weeks 19 hours ago

As Detroit nears a crucial point in its restructuring, what lessons does the city’s historic bankruptcy offer troubled municipalities?

Detroit’s bankruptcy offers a cautionary tale for responsible municipal officials on how, and how not to, manage their budget. The pressure from pension obligations was a big factor in the Detroit bankruptcy.
The simple lesson focuses on how municipalities save up to pay pensions to their retired police, firefighters, and other municipal employees. The city sets aside funds for the future retirement payments and expects earnings from the investments to help pay the pensions.
But municipal pension managers tend to assume a greater future rate of return from the pension investments than has been, and is likely to be, realized.



Posted 4 weeks 19 hours ago

As Detroit nears a crucial point in its restructuring, what lessons does the city’s historic bankruptcy offer troubled municipalities?

The bankruptcy of Detroit should serve as a caveat to other troubled municipalities. It illustrates that troubled municipalities must confront their problems much earlier and in a substantive manner rather than kick them down the road. Assuming that key rulings in the Detroit bankruptcy (such as to the power to restructure pension obligations and deal with assets like the Detroit Institute of Arts’ collection, as well as proposed plan provisions that are alleged to be discriminatory) are sustained, they will provide leverage for troubled municipalities to seek out-of-court resolutions and, if necessary, pre-bankruptcy agreements for dealing with burdensome liabilities and other post-employment benefit obligations.
The lessons from the Detroit bankruptcy are:



Posted 4 weeks 20 hours ago

As Detroit nears a crucial point in its restructuring, what lessons does the city’s historic bankruptcy offer troubled municipalities?

One Nobel laureate traces Detroit’s collapse to failed social policies from the 1960s. The Chicago Fed comments on the city’s lack of financial oversight. A major business journal’s primary lesson: Detroit should have filed for bankruptcy 30 years earlier, before the U.S. auto industry’s prolonged decline. The city’s debt load suggests a more concise conclusion.



Posted 4 weeks 20 hours ago

Thirty men who were sexually abused decades ago as children at two Catholic schools in the Seattle area will split about $12.1 million from the Archdiocese of Seattle, which owned the schools. 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.”)
Puerto Rico’s governor proposed a law that would let some public entities restructure, The Wall Street Journal reports.
American Airlines Inc.’s bankruptcy case cost $400 million, the Dallas Morning News reports.
According to WSJ, Argentina’s ready to negotiate with a group of holdout creditors over defaulted debt.



Posted 4 weeks 22 hours ago

As Detroit nears a crucial point in its restructuring, what lessons does the city’s historic bankruptcy offer troubled municipalities?

In many ways, municipalities are analogous to major corporations, with different stakeholders, various levels of debt exposure and numerous obligations to customers, business partners and employees. However, when pursuing corporate restructurings, there is often ample room to eliminate select operating expenses (or entire divisions), reduce headcount and pursue the sale of non-core assets, among other options. Unfortunately, municipalities—particularly those under extreme duress—have much less flexibility. They have to provide necessary services to citizens, fulfill pension obligations, enforce laws and maintain infrastructure. These and other municipal budgetary considerations naturally require significant funding. Liquidity is paramount to keeping local governments running.



Posted 4 weeks 1 day ago