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Tuesday, June 10, 2008 11:09:51 PM
Repost:
Southeast Banking to get $1.5B bid ... why there is value in STBP!
A New York investment bank plans to inject $1.5 billion into Southeast Banking Corp., a company that's been in bankruptcy for more than 16 years but still has $800 million worth of unused net operating loss carryforwards.
Miami-based Southeast shut its doors and lost its bank charter after filing for Chapter 7 on Sept. 20, 1991, in the U.S. Bankruptcy Court for the Southern District of Florida in West Palm Beach.
The case, however, was converted to a Chapter 11 filing nearly 16 years later, on Sept. 14, so the debtor survived, even though it paid back creditors in full in 1993 from proceeds generated by the sale of virtually all its assets soon after its Chapter 7 filing.
The surviving entity will use the $1.5 billion capital infusion to restructure as an investment vehicle under a reorganization plan it soon expects to file, documents show.
The unspecified investment bank — since negotiations are ongoing, its name hasn't yet been disclosed — would swap its $1.5 billion infusion for a new class of preferred stock.
It would also take a 22.5% stake in the reorganized Southeast in exchange for an additional $3.5 million investment.
The deal has to be carefully crafted. To use the net operating loss carryforwards, or NOLs, to offset its tax liabilities, Southeast can't experience a change of control under tax laws.
Southeast's remaining tangible assets are limited to about 200 acres of real estate in Jacksonville, Fla., that are said to be valued at several millions of dollars.
Under the proposed deal, Southeast's majority owners would retain their controlling stake to assure that the reorganized company could take advantage of the NOLs that have accrued over several years of losses.
The reorganized company would thus be able to slip underneath the 'Section 382 limitation' of the U.S. tax code, which restricts the use of NOLs to offset losses if there's a change of majority ownership.
'Holders of existing Southeast preferred and common stock will receive a total of 52.5% of the new common stock to be issued under the reorganization plan,' the bank's Web site said.
The 25% balance of Southeast's ownership would go to existing bondholders under a plan that would soon be filed in the West Palm Beach court.
Talks with the investment bank on final terms of the deal are continuing with Southeast and holders of its bonds and equity, the Web site said.
'The issues remaining to be negotiated are mainly legal in nature,' according to the Web site.
Southeast retained investment bank Structured Capital Solutions LLC last fall to help it search for an investment partner.
Chief Judge Paul Hyman converted Southeast's Chapter 7 liquidating petition to Chapter 11 reorganization last fall to allow the investment bank to sign an initial letter of intent under a confidentiality agreement.
The investment bank recently signed an 'enhanced' letter of intent and now expects to close the deal in the first quarter, the Web site said.
Neither liquidating trustee-turned-Chapter 11 trustee Jeffrey Beck, a sole practitioner at Jeffrey Beck & Associates in Boca Raton, Fla., nor Miami counsel Greenberg Traurig LLP could be reached for comment Thursday.
Beck was initially appointed as the bank's third Chapter 7 liquidating trustee and is also successor-receiver to the Federal Deposit Insurance Corp. on a parallel receivership due to the FDIC's oversight of a Southeast banking affiliate.
The Miami bank's bondholders and unsecured creditors have received more than $420 million in cash.
The bankruptcy estate has only paid out about $50 million of the more than $130 million in postpetition interest that has accrued to bondholders over the life of the bankruptcy.
An ad hoc committee of subordinated noteholders that was formed when Southeast was still in Chapter 7 included Elliott Associates LP, Stonehill Investment Corp. and Mariner Investment Group, documents show.
An official creditors committee was never empaneled.
Southeast filed for Chapter 7 after federal and state regulators raided its principal banking subsidiary, Southeast Bank NA, and seized documents of its affiliate, Southeast Bank of West Florida.
The FDIC was appointed as receiver for the bank on Sept. 19, 1991, and Southeast's directors voted in favor of filing for Chapter 11 on the following day. All the directors then immediately resigned.
The FDIC quickly sold all of Southeast's assets to First Union National Bank of Florida (now known as Wachovia Bank NA).
The reorganizing company has encountered proceedings before more than 20 judges in multiple courts since its bankruptcy and forced receivership in what insiders have dubbed the largest Chapter 7 petition ever filed in Florida's Southern District.
STBP Article posted at bankruptcydata.com
http://www.bankruptcydata.com/BankruptcyDataNewsNEW.asp
Southeast Banking Notice Docketed
The Chapter 11 trustee assigned to the Southeast Banking case filed with the U.S. Bankruptcy Court an eighth notice of additions to the Company's Global Settlement Website: www.sebcglobalsettlement.com. The addition is "Question 32": "What additional information is the Trustee in a position to disclose about the status of the investor and the proposed transaction that is intended to serve as a basis for the Chapter 11 plan?" Among other things, the response asserts, "On November 14, 2007, the Trustee entered into a non-binding enhanced letter of intent (the ELOI) with a bulge bracket U.S. investment bank headquartered in New York (the Investment Bank), the same investor with whom he had executed an earlier non-binding letter of intent which served as the basis to convert the case to Chapter 11. The original letter of intent and ELOI describe the broad outline for the Investment Bank to purchase (i) approximately $1.5 billion in a new class of SEBC preferred stock and (ii) approximately $3.5 million of new SEBC common stock, constituting approximately 22.5% of the total SEBC common stock (the Transaction). The terms of the common and preferred stock will be set forth in the documentation to be created under a Chapter 11 Plan, and the consummation of the Transaction is subject to approval as part of that Plan....Currently, the Trustee and his professionals are preparing a financial analysis and term sheet for such parties to illustrate the likely economics of the Transaction, as well as a comparison of the Transaction with the potential result of liquidation under either a liquidating Chapter 11 plan or through re-conversion to and liquidation under Chapter 7....The Transaction contemplates that Reorganized SEBC will use the funds contributed by the Investment Bank to make a number of fixed income investments, and thereby continue to be engaged in a financial investment business....There are, of course, tax and other significant implications of the Transaction and the Chapter 11 Plan that would approve and implement the Transaction...."
************************************
Information and DD highlighting " Team STBP "
Mr. Jeff Beck and Mr. Mark Bloom are the two lead individuals on the case. Mr. Jerry Markowitz is the newly appointed shareholder's representative. The others listed have provided additional counsel.
Compensation for Jeffrey H Beck, Trustee Chapter 9/11, Period: 11/1/2007 to 2/29/2008, Fee: $222,864.50, Expenses: $445.49.
http://www.becktrustee.com/jhbeckresume.html
Compensation and Reimbursement of Expenses (Greenberg Traurig, P.A.) for Mark D Bloom Esq, Trustee s Attorney, Period: 11/1/2007 to 2/29/2008, Fee:
$467,359.50, Expenses: $11,665.98.
http://www.gtlaw.com/People/MarkDBloom
Shareholder's Representative Jerry M. Markowitz: Markowitz, Davis, Ringel & Trusty, P.A.
http://www.mdrtlaw.com/attorney-markowitz.htm
Fee Application (Warren H. Smith & Associates, P.C.) for Warren H Smith, Auditor, Period: 11/1/2007 to 2/29/2008, Fee: $42,391.50, Expenses: $2.40. Filed by Auditor
http://www.whsmithlaw.com/warren.htm
Compensation and Reimbursement of Expenses of McDermott, Will & Emery LLP for David Rogers, Special Counsel, Period: 9/17/2007 to 2/29/2008, Fee: $20,270.50,
Expenses: $169.07.
http://www.mwe.com/index.cfm/fuseaction/bios.detail/object_id/34473065-f654-4214-a003-2b5e3de133ae.cfm
Compensation and Reimbursement of Expenses (Smith Hulsey & Busey) for Cynthia C Jackson, Special Counsel, Period: 10/1/2007 to 2/29/2008, Fee: $15,708.00,
http://www.smithhulsey.com/assets/asp/AttorneyDetails.asp?id=34
Application to Employ Mesirow Financial Consulting, LLC as Financial Advisor [NO Affidavit Attached] Filed by Other Professional Jerry M. Markowitz, the Legal Representative for Holders of SEBC Common Stock (5377)
http://www.mesirowfinancial.com/mfc/default.jsp
Mr. Feltman was once Trustee of STBP back in 1992! He is no stranger to the situation here!
Read Paragraph 7
http://www.sebcglobalsettlement.com/pleadings/SEBC019.pdf
SEBC Bankruptcy Web site
http://www.sebcglobalsettlement.com/index.htm
My son and I
Southeast Banking to get $1.5B bid ... why there is value in STBP!
A New York investment bank plans to inject $1.5 billion into Southeast Banking Corp., a company that's been in bankruptcy for more than 16 years but still has $800 million worth of unused net operating loss carryforwards.
Miami-based Southeast shut its doors and lost its bank charter after filing for Chapter 7 on Sept. 20, 1991, in the U.S. Bankruptcy Court for the Southern District of Florida in West Palm Beach.
The case, however, was converted to a Chapter 11 filing nearly 16 years later, on Sept. 14, so the debtor survived, even though it paid back creditors in full in 1993 from proceeds generated by the sale of virtually all its assets soon after its Chapter 7 filing.
The surviving entity will use the $1.5 billion capital infusion to restructure as an investment vehicle under a reorganization plan it soon expects to file, documents show.
The unspecified investment bank — since negotiations are ongoing, its name hasn't yet been disclosed — would swap its $1.5 billion infusion for a new class of preferred stock.
It would also take a 22.5% stake in the reorganized Southeast in exchange for an additional $3.5 million investment.
The deal has to be carefully crafted. To use the net operating loss carryforwards, or NOLs, to offset its tax liabilities, Southeast can't experience a change of control under tax laws.
Southeast's remaining tangible assets are limited to about 200 acres of real estate in Jacksonville, Fla., that are said to be valued at several millions of dollars.
Under the proposed deal, Southeast's majority owners would retain their controlling stake to assure that the reorganized company could take advantage of the NOLs that have accrued over several years of losses.
The reorganized company would thus be able to slip underneath the 'Section 382 limitation' of the U.S. tax code, which restricts the use of NOLs to offset losses if there's a change of majority ownership.
'Holders of existing Southeast preferred and common stock will receive a total of 52.5% of the new common stock to be issued under the reorganization plan,' the bank's Web site said.
The 25% balance of Southeast's ownership would go to existing bondholders under a plan that would soon be filed in the West Palm Beach court.
Talks with the investment bank on final terms of the deal are continuing with Southeast and holders of its bonds and equity, the Web site said.
'The issues remaining to be negotiated are mainly legal in nature,' according to the Web site.
Southeast retained investment bank Structured Capital Solutions LLC last fall to help it search for an investment partner.
Chief Judge Paul Hyman converted Southeast's Chapter 7 liquidating petition to Chapter 11 reorganization last fall to allow the investment bank to sign an initial letter of intent under a confidentiality agreement.
The investment bank recently signed an 'enhanced' letter of intent and now expects to close the deal in the first quarter, the Web site said.
Neither liquidating trustee-turned-Chapter 11 trustee Jeffrey Beck, a sole practitioner at Jeffrey Beck & Associates in Boca Raton, Fla., nor Miami counsel Greenberg Traurig LLP could be reached for comment Thursday.
Beck was initially appointed as the bank's third Chapter 7 liquidating trustee and is also successor-receiver to the Federal Deposit Insurance Corp. on a parallel receivership due to the FDIC's oversight of a Southeast banking affiliate.
The Miami bank's bondholders and unsecured creditors have received more than $420 million in cash.
The bankruptcy estate has only paid out about $50 million of the more than $130 million in postpetition interest that has accrued to bondholders over the life of the bankruptcy.
An ad hoc committee of subordinated noteholders that was formed when Southeast was still in Chapter 7 included Elliott Associates LP, Stonehill Investment Corp. and Mariner Investment Group, documents show.
An official creditors committee was never empaneled.
Southeast filed for Chapter 7 after federal and state regulators raided its principal banking subsidiary, Southeast Bank NA, and seized documents of its affiliate, Southeast Bank of West Florida.
The FDIC was appointed as receiver for the bank on Sept. 19, 1991, and Southeast's directors voted in favor of filing for Chapter 11 on the following day. All the directors then immediately resigned.
The FDIC quickly sold all of Southeast's assets to First Union National Bank of Florida (now known as Wachovia Bank NA).
The reorganizing company has encountered proceedings before more than 20 judges in multiple courts since its bankruptcy and forced receivership in what insiders have dubbed the largest Chapter 7 petition ever filed in Florida's Southern District.
STBP Article posted at bankruptcydata.com
http://www.bankruptcydata.com/BankruptcyDataNewsNEW.asp
Southeast Banking Notice Docketed
The Chapter 11 trustee assigned to the Southeast Banking case filed with the U.S. Bankruptcy Court an eighth notice of additions to the Company's Global Settlement Website: www.sebcglobalsettlement.com. The addition is "Question 32": "What additional information is the Trustee in a position to disclose about the status of the investor and the proposed transaction that is intended to serve as a basis for the Chapter 11 plan?" Among other things, the response asserts, "On November 14, 2007, the Trustee entered into a non-binding enhanced letter of intent (the ELOI) with a bulge bracket U.S. investment bank headquartered in New York (the Investment Bank), the same investor with whom he had executed an earlier non-binding letter of intent which served as the basis to convert the case to Chapter 11. The original letter of intent and ELOI describe the broad outline for the Investment Bank to purchase (i) approximately $1.5 billion in a new class of SEBC preferred stock and (ii) approximately $3.5 million of new SEBC common stock, constituting approximately 22.5% of the total SEBC common stock (the Transaction). The terms of the common and preferred stock will be set forth in the documentation to be created under a Chapter 11 Plan, and the consummation of the Transaction is subject to approval as part of that Plan....Currently, the Trustee and his professionals are preparing a financial analysis and term sheet for such parties to illustrate the likely economics of the Transaction, as well as a comparison of the Transaction with the potential result of liquidation under either a liquidating Chapter 11 plan or through re-conversion to and liquidation under Chapter 7....The Transaction contemplates that Reorganized SEBC will use the funds contributed by the Investment Bank to make a number of fixed income investments, and thereby continue to be engaged in a financial investment business....There are, of course, tax and other significant implications of the Transaction and the Chapter 11 Plan that would approve and implement the Transaction...."
************************************
Information and DD highlighting " Team STBP "
Mr. Jeff Beck and Mr. Mark Bloom are the two lead individuals on the case. Mr. Jerry Markowitz is the newly appointed shareholder's representative. The others listed have provided additional counsel.
Compensation for Jeffrey H Beck, Trustee Chapter 9/11, Period: 11/1/2007 to 2/29/2008, Fee: $222,864.50, Expenses: $445.49.
http://www.becktrustee.com/jhbeckresume.html
Compensation and Reimbursement of Expenses (Greenberg Traurig, P.A.) for Mark D Bloom Esq, Trustee s Attorney, Period: 11/1/2007 to 2/29/2008, Fee:
$467,359.50, Expenses: $11,665.98.
http://www.gtlaw.com/People/MarkDBloom
Shareholder's Representative Jerry M. Markowitz: Markowitz, Davis, Ringel & Trusty, P.A.
http://www.mdrtlaw.com/attorney-markowitz.htm
Fee Application (Warren H. Smith & Associates, P.C.) for Warren H Smith, Auditor, Period: 11/1/2007 to 2/29/2008, Fee: $42,391.50, Expenses: $2.40. Filed by Auditor
http://www.whsmithlaw.com/warren.htm
Compensation and Reimbursement of Expenses of McDermott, Will & Emery LLP for David Rogers, Special Counsel, Period: 9/17/2007 to 2/29/2008, Fee: $20,270.50,
Expenses: $169.07.
http://www.mwe.com/index.cfm/fuseaction/bios.detail/object_id/34473065-f654-4214-a003-2b5e3de133ae.cfm
Compensation and Reimbursement of Expenses (Smith Hulsey & Busey) for Cynthia C Jackson, Special Counsel, Period: 10/1/2007 to 2/29/2008, Fee: $15,708.00,
http://www.smithhulsey.com/assets/asp/AttorneyDetails.asp?id=34
Application to Employ Mesirow Financial Consulting, LLC as Financial Advisor [NO Affidavit Attached] Filed by Other Professional Jerry M. Markowitz, the Legal Representative for Holders of SEBC Common Stock (5377)
http://www.mesirowfinancial.com/mfc/default.jsp
Mr. Feltman was once Trustee of STBP back in 1992! He is no stranger to the situation here!
Read Paragraph 7
http://www.sebcglobalsettlement.com/pleadings/SEBC019.pdf
SEBC Bankruptcy Web site
http://www.sebcglobalsettlement.com/index.htm
My son and I
My son and I
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