BANKRUPTCY PLAYS (CHAPTER)

[rbon63]

NSPR-Breakout with an extremely low float of 7470K expanding into world markets. The sky is the limit!

[rbon63]

$MTBC - Super hot reversal play!

[rbon63]

$GIGA - Breakout with a low float of 10,140K!

[rbon63]

$CAPR - Hot Stock with a low float of 23,500K!

[rbon63]

$CDNA - Breakout buying frenzy taking place now!

[rbon63]

$CDNA - Breakout with a low float!!

[rbon63]

$FCEL - Breakout!

[rbon63]

$RGSE - Breakout!

[rbon63]

Good morning, premarket breakout stocks : $CATB, $CAPR, $MTBC!

[rbon63]

$KOOL - Breakout with extremely low float!

[rbon63]

$CLSN - Low float breakout!

[rbon63]

More stock breakouts in progress : $GALT and $SRAX!

[rbon63]

$ECYT - Breakout buying frenzy taking place now!

[rbon63]

$SGYP - Breakout with a short squeeze in progress with a massive amount of shares to be covered 60,000,000!

[rbon63]

$SGYP - Breakout now!

[rbon63]

$PTX - Breakout with a low float of 11.120K and a short squeeze in progress now!

[rbon63]

$ITUS - Low float breakout buying frenzy taking place now!

[rbon63]

$ITUS - Low float breakout now!

[rbon63]

Trifecta of super hot stocks trending higher now : $ETRM, $ARDM and $ITUS!

[rbon63]

Extremely low float stocks breakouts now : $ETRM and ARDM!!

[rbon63]

$SDRL - Breakout buying frenzy up 56% and climbing!!

[rbon63]

$SDRL - Breakout to new highs with massive short squeeze in progress now!

[rbon63]

$SDRL - Breakout in progress now!!

[Penny Stocks 2.0]

HAMPQ .0085 INVESCO LTD. 11% Ownership. NYSE $32 PPS with Billions of dollars in play!!

[sludgehound]

PERF Perfumania BK Chpt 11, close 64 stores, reorg

Story seemed to hit 3:35pm ET today. Close 1.87 +0.54
Gapped up from 1.30 area for some days.

https://www.bizjournals.com/newyork/news/2017/08/28/perfumania-to-close-64-stores.html?ana=e_ae_set1&s=scroll&ed=2017-08-28&u=juqFEj2WwYpP01Gspn7O8A0273e38c&t=1503980890&j=78755581

Perfumania to close 64 stores, blames declining mall traffic for bankruptcy

[sludgehound]

SDRL Seadrill Shares Plunge 31% On Chapter 11 Plan
-- Market Talk

10:27 am ET August 24, 2017 (Dow Jones)
10:27 ET - Shares of offshore drilling services major Seadrill (SDRL) plunge 31% to less than twenty cents after saying it will likely file for bankruptcy protection next month. The Bermuda-based company, controlled by Norwegian shipping magnate John Fredriksen, says its $10B restructuring plan will likely "be implemented via Chapter 11 proceedings on or before September 12." SDRL is one of the world's biggest offshore drilling companies with 68 oil rigs. It faces a $1B maturing bond in September, with daily leases for its rigs falling from $800,000 to less than $200,000 over the past 18 months as cheap oil from US shale drilling flooded the market. SDRL has warned shareholders that they will suffer heavy losses in any restructuring exercise. ([e-mail])

(END) Dow Jones Newswires

August 24, 2017 10:27 ET (14:27 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.

[AOuvier]

OEDVQ 0.0019, 0.001X0.0019

[sludgehound]

DRWI in trouble DragonWave -- Comerica Bank

OTTAWA, CANADA -- (Marketwired) -- 07/20/17 -- DragonWave Inc. (TSX: DRWI)(NASDAQ: DRWI) ("The Corporation" or "DragonWave") has received from Comerica Bank , as agent for Comerica Bank and Export Development Canada , a repayment demand of US$17,243,336 . The Corporation also received a notice of intention to enforce the security under the June 1, 2012 Revolving Credit Agreement, pursuant to section 244(1) of the Bankruptcy and Insolvency Act ( Canada ) (the "Notice of Intention to Enforce").
DragonWave continues to pursue alternative financing; however, there is no assurance that the Corporation will be successful in securing such financing, or if such financing discussions will be sufficiently advanced in the next 10 days when the notice period set out in the Notice of Intention to Enforce expires, at which time Comerica Bank and Export Development Canada may seek to take steps to enforce the security.
Comerica Bank , as agent, has reserved its right to proceed with enforcement of its security, at any time prior to the time specified in the Notice of Intention to Enforce, in those circumstances where such earlier enforcement may be permitted by law.
About DragonWave
DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is wireless network backhaul, including a range of products ideally suited to support the emergence of underlying small cell networks. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters are located in Ottawa, Ontario , with sales locations in Europe , Asia , the Middle East and North America . For more information, visit http://www.dragonwaveinc.com.
DragonWave® is a registered trademark of DragonWave Inc.
Forward-Looking Statements
Certain statements in this release constitute forward-looking statements or forward-looking information as defined by applicable securities laws. Forward-looking statements include statements as to DragonWave's restructuring efforts, efforts to reduce operating expenses and address working capital, and identification and assessment of strategic alternatives in relation to short term liquidity requirements. These statements are subject to certain assumptions, risks and uncertainties, including DragonWave's ongoing efforts to manage cash flows and liquidity.
Forward-looking statements are provided to help external stakeholders understand DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements. DragonWave's actual results, performance, achievements and developments may differ materially from the results, performance, achievements or developments expressed or implied by such statements, as a result of the risks identified above as well as other risks identified in our publicly filed documents. Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated July 12, 2017 and in the Company's Annual Information Form and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively. DragonWave assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.
Contacts:
Investor Contact:
Patrick Houston
CFO
DragonWave Inc.
[e-mail]
[phone] ext 2278

Media Contact:
Nadine Kittle
Marketing Communications
DragonWave Inc.
[e-mail]
[phone] ext 2262


Source: DragonWave Inc.

[sludgehound]

Thanks for PGNPQ filing. DRYS next? 1-7 R/S

Saw DRYS file a counter claim against one of the many lawsuits against it.
Then came ah news of R/S approved by BoD back in early May as to size of
split & resulting shares.

04:33 PM EDT, 07/18/2017 (MT Newswires) -- DryShips (DRYS), a diversified owner of ocean going cargo vessels, said after market close on Tuesday that it will effect a 1-for-7 reverse stock split of the company's issued common shares.
Shares fell as much as 29% in extended trading.
The reverse stock split will take effect, and the company's common shares will begin trading on a split-adjusted basis on the Nasdaq Capital Market as of the opening of trading on July 21.
When the reverse stock split becomes effective, every seven shares of the company's issued common stock will be automatically combined into one share of common stock.
As of the date of this press release, the company had 36.3 million shares issued and outstanding. Effecting the reverse stock split will cut the number of issued and outstanding common shares to approximately 5.2 million shares.
Price: 0.59, Change: -0.24, Percent Change: -29.17

[HDOGTX]

PGNPQ 15-12 filing

http://archive.fast-edgar.com/20170718/ANAZF22C8Z22M9ZK229D2ZZZDRQMZ2W2ZV92

[HDOGTX]

VNRSQ Commons receive distributions , News just out

Vanguard Natural Resources, LLC Announces Settlement with Ad Hoc Equity Committee PR Newswire "Press Releases US - English"

HOUSTON , July 14, 2017 /PRNewswire/ -- Vanguard Natural Resources, LLC (OTC: VNRSQ) ("Vanguard" or "the Company") has reached a settlement with the Ad Hoc Equity Committee (the "Equity Committee"). Under the agreement, the Equity Committee agrees to (i) withdraw any and all objections to the Debtors' plan of reorganization and (ii) fully support the Debtors' Second Amended Joint Plan of Reorganization, as amended (the "Modified Plan"). The Modified Plan will include the following amended terms, among others:


The Modified Plan extends the expiration deadline for new warrants from three years to three and a half years for both preferred and common units of the Company.
Holders of the Company's common units will receive distributions of new warrants regardless of whether two-thirds of the common units vote as a class to accept the Company's Modified Plan.
The definition of "Exculpated Parties" will be amended to add the Ad Hoc Equity Committee.
The Modified Plan provides for the payment of up to $350,000 of reasonable and documented fees and expenses of the advisors to the Ad Hoc Equity Committee in addition to those previously agreed upon. No further fees and expenses of such advisors will be allowed or payable.

Furthermore, all deposition notices and other discovery propounded by the Equity Committee against any other party are deemed immediately withdrawn and any scheduled depositions are canceled.

The Equity Committee recommends that holders of the Company's common units who have not voted to vote in favor of the Modified Plan by Monday, July 17, 2017 at noon Central Standard Time . The Equity Committee also recommends that holders of the common units who initially voted to reject the Company's unmodified plan of reorganization to submit new ballots accepting the Modified Plan by the deadline. New ballots can be obtained through Broadridge Voting at proxyvote.com or through Prime Clerk LLC at https://cases.primeclerk.com/payless/EBallot-Home.

[rbon63]

$TDW- Trending higher!

[sludgehound]

TEUM gets "going concern" audit opinion

04:17 PM EDT, 04/05/2017 (MT Newswires) -- Pareteum (TEUM) said its annual report included a going concern qualification paragraph in the audit opinion from its independent registered public accounting firm.
Price: 0.79, Change: , Percent Change:

[sludgehound]

Fitch report on retail defaults. Payless Shoes latest

By Ciara Linnane , MarketWatch
The bankruptcy of a household name brand highlights the challenges facing retailers, including discounters
Payless ShoeSource's bankruptcy filing has propelled Fitch Ratings' U.S. retail default rate higher and kept the sector on track for up to $6 billion of defaults this year in the latest blow to retail bondholders.
The rating agency's trailing 12-month loan default rate for the retail sector has climbed to 1% in April from 0% in March and 0.5% at the end of February, according to the rating agency.
Fitch is expecting the rate to spike to 9% by year-end as retailers continue to struggle with slowing traffic, shrinking margins caused by steep discounting and the competition from juggernaut Amazon.com (AMZN) . Consumer behavior is also changing with experiences and services more in demand than "stuff".
"Retailers have also suffered from the ebb and flow of brand popularity," Fitch said in a report. "Negative comparable-store sales and fixed-cost deleverage have led to negative cash flow, tight liquidity and unsustainable capital structures."
Payless was one of nine retailers on Fitch's "Loans of Concern" list, which comprises issuers with a significant risk of defaulting on their debt in the next 12 months. The other eight with combined loan debt of nearly $6 billion are Sears Holding Corp. (SHLD) with about $2.5 billion of debt, 99 Cents Only Stores LLC, Charming Charlie LLC , Gymboree Corp. , Nine West Holdings Inc. ; NYDJ Apparel LLC ; rue21, Inc.; and True Religion Apparel Inc.
Don't miss: From a risk-of-bankruptcy standpoint, the retail business is the new oil and gas (http://www.marketwatch.com/story/retail-industry-is-expected-to-replace-oil-and-gas-as-2017s-distressed-sector-2017-02-15)
(https://sw.graphiq.com/w/4In7UKsAEcZ)
Moody's said in February that it has 19 names in its retail and apparel portfolio, or 14% of the total, that are trading at Caa/Ca, deep into speculative, or "junk," territory. That is close to the 16% considered distressed during the 2008/2009 period, said retail analyst Charles O'Shea . The rise is part of a wider trend affecting sectors across Moody's coverage that has retail replacing oil and gas as the most-troubled industry.
See: Number of distressed U.S. retailers at highest level since Great Recession (http://www.marketwatch.com/story/number-of-distressed-us-retailers-at-highest-level-since-great-recession-2017-02-27)
Payless filed for chapter 11 protection on Tuesday with a $385 million debtor-in-possession loan, composed of a $305 million asset-backed loan and an $80 million term loan, that has been extended by existing lenders to refinance debt and provide $120 million liquidity during the restructuring. Payless became highly leveraged in a 2012 buyout and its debt burden has crushed it during a period of weak sales and cash flow.
Don't miss:Sears is 'one sick puppy,' and there may be no remedy (http://www.marketwatch.com/story/sears-is-one-sick-puppy-and-there-may-be-no-remedy-2017-01-12)
Read:Macy's and Kohl's still struggling to come to grips with e-commerce and the Amazon effect (http://www.marketwatch.com/story/macys-and-kohls-still-struggling-to-come-to-grips-with-e-commerce-and-the-amazon-effect-2017-01-05)
The company is planning to hold liquidation sales for 400 underperforming stores that will be closed and will try to renegotiate leases or close more stores. Payless has entered a pact with parties that own about two-thirds of its first lien and second lien debt, which would reduce overall debt by about 50%.
The first lien loans were bid at 38 cents on the dollar on Tuesday and the second-lien loans at 13 cents on the dollar, suggesting low recovery prospects.
Read also:The smart money is record 'short' in stocks, and the dumb money is record 'long' (http://www.marketwatch.com/story/the-smart-money-is-record-short-in-stocks-and-the-dumb-money-is-record-long-2017-04-05)
Payless has joined a growing list of retailers to seek bankruptcy protection in recent months.
Eastern Outfitters, whose chains include Eastern Mountain Sports and Bob's Stores, filed for chapter 11 protection last month, and The Limited filed in January, causing the company to close all its stores.
Other companies that have filed for chapter 11 or completely liquidated in the past year include Wet Seal , American Apparel , Aéropostale Inc. (AROPQ) , +0.00% and Sports Authority .
Macy's Inc. (M), Gap Inc. (GPS), Sears Holding Corp. and Guess Inc. (GES) are among the retailers that have announced store closures in recent months. Macy's and Sears are often anchor stores that are meant to draw traffic to malls and other shopping centers, and specialty stores like Gap depend on the boost.
As a household name brand, the Payless bankruptcy has disappointed some investors, who believed the discounter was somewhat cushioned from the stresses hitting the broader sector, said Diana Smith , associate director of retail and apparel at market research company Mintel. As a shoe retailer, it was also viewed as being immune to the Amazon threat as a product category that works well out of physical stores. Consumers typically want to try on shoes before they buy them, said Smith.
That dynamic is changing, according to Mintel's Men's and Women's Footwear September 2016 report, which showed 30% of shoe buyers are now more comfortable buying footwear online than they were previously.
"All of this reinforces the need for a seamless shopping experience and highlights the importance of remaining relevant to core customers while constantly attracting new ones," she said.
The stress in the sector is hurting the buyers of retail debt. The Bank of America Merrill Lynch High Yield Super Retail Index is showing a negative return of 1.1% for the year to date. The broader US High Yield Master Index is showing positive returns of 2.7% for the same period.
In equities, the SPDR S&P Retail exchange-traded fund (XRT) has lost 6% in the year to date, while the S&P 500 has gained 6%.
See also:For traditional retailers, the ' Amazon effect' extends to tech talent and not just sales (http://www.marketwatch.com/story/for-traditional-retailers-the-amazon-effect-extends-to-tech-talent-and-not-just-sales-2017-01-20)
- Ciara Linnane ; 415-439-6400; [e-mail]
(END) Dow Jones Newswires

[sludgehound]

ORIG P.R. on restructuring

http://mailing.capitallink.com/emailmarketer/link.php?M=11085937&N=3644&L=536328&F=H

OCEAN RIG ANNOUNCES OVER 75% SUPPORT FOR RESTRUCTURING AGREEMENT FROM HOLDERS OF THE COMPANY'S CONSOLIDATED INDEBTEDNESS

[Yosako]

As of 2016-12-31 Quarterly Statement Balance Sheet in Google Finance (OTCMKTS:HGGGQ)

(in millions)
Total Equity 38.61
Total Shares Outstanding 27.81

NOTE their equity (assets - liabilities) has been plummeting real ugly each quarterly statement. However if the latest numbers "hold" right now, theoretically that'd be a $1.38 per-share liquidation price...? O_o'
However in those plays common shares can be cancelled so beware.

[Slojab]

Anyone have thoughts on this BK news? ACPW was a NASDAQ company until recently.

http://www.otcmarkets.com/stock/PIOI/news/P10-Industries--Inc---formerly-Active-Power-Inc---files-for-reorganization-under-Chapter-11--announces-new-investor--while-preserving-shareholder-value?id=154035

[MrSparks]

Anyone else watching HGGGQ? This is actually a legit company. Who doesn't know of HH Gregg LOL

[sludgehound]

Supreme Ct rules against structured dismissals of Bk

The U.S. Supreme Court on Wednesday rejected an increasingly popular bankruptcy-court tactic, structured dismissals of bankruptcy cases by way of settlements that override payment priority rules.
The ruling came in the closely watched case of Jevic Transportation, a New Jersey trucking company that shut down suddenly, throwing thousands of drivers out of work, and filed for bankruptcy in 2008.
Jevic's chapter 11 bankruptcy ran out of money and ended with a court-approved deal that meant some cash for junior creditors, but nothing for drivers that had priority claims.
Instead of a chapter 11 plan, Jevic wrapped up its affairs with a settlement and dismissed its bankruptcy case. A six-justice majority of the high court on Wednesday found that ran afoul of rules set out by Congress .
"Bankruptcy courts may not approve structured dismissals that provide for distributions that do not follow ordinary priority rules without the consent of affected creditors," said Justice Stephen Breyer , writing for the majority.
Robert Feinstein , a lawyer who helped put together the settlement, said creditors "are reviewing the opinion and considering its implications" when the Jevic case heads back to bankruptcy court for more work. Over 1,000 unsecured creditors received checks years ago as the result of the settlement that has now been vacated, Mr. Feinstein said.
Jack Raisner , lawyer for the unpaid truck drivers, said he was grateful the court "preserved and reaffirmed the important right on which employees have long relied: to get paid" instead of allowing a bankrupt company to pay off lower ranked creditors.
"That no longer can happen without the employees' consent," he said
Unpaid wages, taxes and other categories of debt have been given priority in bankruptcy by Congress , and are required to be paid before other debts. Jevic's structured dismissal overran those rules, over the protests of the unpaid truckers.
Wednesday's ruling overturned the Jevic dismissal, on the grounds that beleaguered companies cannot do in a settlement what they couldn't do in chapter 11 or chapter 7, ignore the payment priority scheme set out by Congress .
As long as priority creditors don't consent to the deal, such settlements can't be approved, the high court said.
Jevic's deal didn't save the company as a business or promote the possibility a chapter 11 exit plan could be confirmed, a six-justice majority of the high court noted.
"It's an important case because it clarifies that the bankruptcy-court priority rules are guardrails that powerful claimants cannot evade just because it serves their interests," said Jonathan Lipson , a professor at Temple University Beasley School of Law , who co-authored an amicus brief signed by more than a dozen bankruptcy scholars.
Wednesday's decision overturns a bankruptcy court ruling approving the settlement and dismissal. A federal district court and the Third U.S. Circuit Court of Appeals upheld the bankruptcy judge's decision, which cited the company's " dire circumstances."
By the end of Jevic's chapter 11 bankruptcy, there was only $1.7 million in the bankruptcy coffers, all of it claimed by private-equity firm Sun Capital Partners , which had acquired the company in a 2006 leveraged buyout. Jevic owed $53 million to Sun Capital and LBO funder CIT Group , a secured debt that threatened to absorb all the cash in the chapter 11 proceeding.
Unless there was a deal with Jevic's owner, there wouldn't be cash to cover chapter 11 expenses or pay any creditors, architects of the settlement argued. According to the high court, Sun Capital didn't want a settlement that would help fund continued litigation from the out-of-work truck drivers, so the "priority-skipping" pact was negotiated and agreed to.
At the time the settlement was formulated, the truck drivers had made headway on an $8 million lawsuit premised on the Worker Adjustment and Retraining Notification Acts, state and federal labor laws designed to cushion the blow of sudden mass layoffs. Sun Capital ultimately won the WARN Act case on the grounds it wasn't the truck drivers' employer.
Advocates of structured dismissals argued that rejecting Jevic's settlement will do nothing for creditors and will erase the small benefit that some junior creditors enjoyed.
But the Supreme Court's ruling says there is no reasoning away the payment priority scheme, which expresses public policy in determining some bankruptcy claims are more important than others. Even allowing the possibility of a " priority skipping" structured settlement in rare cases shifts the bargaining power that gives unpaid workers and taxing authorities some leverage in bankruptcy, the court said.
Mr. Lipson said lower courts treated cash-strapped Jevic as a "rare case, when it was anything but rare. Companies frequently enter bankruptcy with little or no unencumbered assets and there's no reason to think that that's going to change." Allowing a "rare case" exception, he said, invited litigation, while keeping the priority scheme clear promotes settlements that bring all creditors on board.
Bankruptcy lawyer Chris Ward , who isn't involved in the Jevic case, noted that the Supreme Court didn't rule out structured dismissals. "You can still use structured dismissals as a tool to dismiss a bankruptcy case. You just need to follow the absolute priority rule," Mr. Ward said.
"The essential point is that, regardless of the reason, the proposed settlement called for a structured dismissal that provided for distributions that did not follow ordinary priority rules," Justice Breyer wrote.
While bankruptcy courts have the power to dismiss bankruptcy cases, they don't have the power to approve a settlement that distributes assets, and then dismiss the cases, the high court said.
Justice Clarence Thomas and Justice Samuel Alito dissented, saying the case law wasn't sufficiently developed to decide the question.
Write to Peg Brickley at [e-mail]

(END) Dow Jones Newswires
03-22-17 1403ET

[HighPeaks]

Thank you for that info. Appreciate it.

[Enterprising Investor]

Yes.

However, be warned that the SEC could deregister at any time.

On the other hand, it could take years.

[HighPeaks]

Does anyone know if a company that files Chapter 7 could still trade?

[AKAPAK]

COSIQ info

Don't know if anybody watches or cares, but most recent plan going for fianl is that commons are gone.

You can check latest PR for legal contact for docs.

[linda1]

Thank you very much.

DD and verifiable info is important in my investments.
I should report this Robert Weber to the FBI.

[Themistocles_I]

Linda,

I don't usually send personal messages to investors, but I think you did a nice job with your continued DD throughout the last few weeks with NWAV. I also took notice that people insulted you with your questions, even though they were all valid. I just want you to know that I appreciated your efforts.

I'm out of NWAV as well. I don't like the way some people there had lied to everyone regarding the O/S, and I don't like the way people are now pumping this stock so they can cover their losses. I understand we all are here to make money, but the complete lack of disregard and respect for people will keep me away from this board, and those people.

I decided to follow you at this point because you seem like you're serious about keeping things real, and I appreciate that.

GLTY

[trop]

$COSIQ watch this one. Possible 5-bagger in next few weeks, imo

[swampboots]

IMSC joins club.

[bigfoot422]

Rjetq ( Republic Airways )

PPS November of 2015 at 6.80

Prior PPS as high as 15. 00

O/S 50 million 40% of which owned by Hedge Funds, ( check SEC filings ) as recent as 9/22/16.

Pre settlements were made by major creditors

Republic Airways exit to bankruptcy in very near future

Worth a look

jmpo

[sludgehound]

Horsehead Holding Bk case, low ball assets

How Bankrupt Is Horsehead Holding? Its Investors Want to Know
Fair Game
By GRETCHEN MORGENSON AUG. 26, 2016

How Bankrupt Is Horsehead Holding? Its Investors Want to Know http://nyti.ms/2bozjn2

Guy Spier, an investor in Horsehead Holding, asked the judge for an equity committee. Credit Richter Frank-Jurgen
In large and complex corporate bankruptcies, shareholders are usually kicked to the curb, left with nothing of any value to show for their investments. Normally, that’s the way it should be: Bankruptcies, after all, involve companies whose assets are worth far less than their obligations.

But what if those assets are actually worth more than the company contends? Then shareholders are forced to leave money on the table for other stakeholders to grab, particularly the company’s dominant creditors who typically drive the bankruptcy process.

Such a situation may be unfolding at Horsehead Holding, a producer of zinc and nickel products in Pittsburgh that filed for Chapter 11 protection in February. It listed $421 million in secured and unsecured debt obligations.

Like many companies in the commodities business, Horsehead has stumbled. Spot prices for zinc and nickel swooned in 2015, and a new zinc plant it built in Mooresboro, N.C., encountered production problems.

Still, metals prices have rebounded significantly since the company filed for bankruptcy. And some Horsehead shareholders contend the company is lowballing the value of its assets to let leading creditors gain control of it at a bargain price.

The decline in Horsehead’s assets has certainly been precipitous. Just before the February filing, its assets were valued at $1 billion. Six months later, Horsehead’s financial adviser estimated that the company’s assets were worth about one-third of that.

What’s occurring in the Horsehead case has implications for any shareholder whose company faces severe financial woes, some legal experts say. Because of longstanding biases against giving shareholders any say in a bankruptcy, equity holders are often asked to trust the valuations assigned to a company without being able to verify them.


Diane Lourdes Dick, an associate professor of law at Seattle University Law School, said the Horsehead case highlighted a flaw in the bankruptcy process.

“What we have here are equity owners that are functionally shut out of the process, and that provides the opportunity for exploitation by other stakeholders,” she said. “It is yet another example of the unique challenges that equity holders face when the company they’ve invested in is in Chapter 11.”

Horsehead’s valuation history certainly seems odd. Its audited financial statements for the September 2015 quarter show assets worth $1 billion. An unaudited report from early February valued the assets at roughly the same. A KPMG report commissioned by Horsehead shareholders values the company at over $1.1 billion.

But in a July filing with the court, Horsehead’s financial adviser said the company’s assets were worth an estimated $280 million to $375 million. The main reason for the decline? The company’s decision to write down to almost zero the new zinc plant in Mooresboro it built for $550 million.

What accounts for the almost total loss in the plant’s value? Lazard, adviser to Horsehead in the bankruptcy, said it based its valuation on prices of the company’s debt and equity, both of which are naturally depressed by the company’s Chapter 11 filing. Lazard also referred vaguely to its consideration of “the latest 12 months revenue multiples of selected comparable guideline companies.”

This makes some of Horsehead’s shareholders suspicious.

“The major issue is how the company has been urging the court to believe that hundreds of millions of dollars of value vanished into thin air and a brand-new factory was deemed to be worthless,” said Thomas I. Boswell of Boswell Capital Management in Hong Kong, operator of the Intrinsic Value Limited Partnership, which owns 250,000 Horsehead shares. “To say that they’re writing off a $500 million plant basically because the share price of our stock and the prices of our bonds have fallen is ludicrous.”

Horsehead did not respond to an email seeking comment.

Christopher S. Sontchi, the federal judge overseeing the bankruptcy proceeding in Delaware, has raised questions of his own about the steep decline in the company’s worth. In an unusual ruling in May, he allowed the formation of an equity committee, giving Horsehead shareholders a chance to participate in the process. More than 1,000 individual investors own the stock.

“To put it bluntly, something doesn’t smell right to the court,” Judge Sontchi said, according to a court transcript. “There was a certain valuation scenario that existed pre-petition and there’s a radically different valuation scenario that exists post-petition, and there’s a sufficient amount of ambiguity as to what’s right and who’s right, that I believe it’s appropriate in this unique circumstance to appoint an equity committee.”

The judge ruled in favor of an equity committee after an impassioned plea from Guy Spier, a well-known value investor and Horsehead shareholder who oversees the Aquamarine Fund. Mr. Spier declined to comment.

After the committee was formed, it made some interesting discoveries. One was that Horsehead had received, and turned down, attractive bids for some of its assets just before it filed for bankruptcy. Accepting such bids could have kept the company going, the shareholders contend. Court filings indicate those bids far exceeded the valuation of Horsehead assets presented by the company in July.

Still, the court has not given shareholders much time to argue against the company’s reorganization plan. A confirmation hearing is scheduled to begin on Tuesday.

Horsehead will undoubtedly marshal a strong defense of its valuation to the court. And if the judge confirms the plan, management of the reorganized company will receive an unspecified percentage of its shares as incentive awards. There is also the potential for a public stock offering in the restructured company down the road.

Horsehead’s debt holders will be the biggest winners, though. Among them is Greywolf Capital Management, an investment firm that collaborated with Goldman Sachs on the creation of Timberwolf I, one of the most toxic collateralized debt obligations to emerge in the mortgage crisis.

A spokesman for Greywolf declined to comment.

The Horsehead matter shows, Professor Dick said, why it may be necessary in more bankruptcy restructurings to give shareholders a chance to be heard early in the process, so they can serve as a counterweight to the outsize influence of big creditors.

“In a restructuring, a company can be transferred from the shareholders to the creditors for less than adequate consideration,” she said. “There’s no way to correct for that unless you allow shareholders to advocate for themselves.”

Twitter: @gmorgenson

[sludgehound]

SIGAQ emerges from Bk 445pm ET
NEW YORK --(BUSINESS WIRE)-- SIGA Technologies, Inc. ( SIGA ) (OTCMKTS:SIGAQ), a company specializing in the commercialization of solutions for serious unmet medical needs and biothreats, announced today that the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") has entered an order confirming the Debtor's Third Amended Chapter 11 Plan, dated April 7, 2016 , and, as a result, SIGA has successfully emerged from chapter 11. A copy of the Plan, as confirmed by the Bankruptcy Court , can be found at https://cases.primeclerk.com/siga/.
"We are pleased the Bankruptcy Court has confirmed the Plan and that we have successfully emerged from chapter 11. We look forward to satisfying the judgment resulting from the litigation with PharmAthene, Inc. , focusing on growing our business and supplying the U.S. Government and other jurisdictions with important bio-threat protection," said Eric Rose , Chairman and CEO, SIGA Technologies, Inc.
ABOUT SIGA TECHNOLOGIES, INC.
We are a company specializing in the development and commercialization of solutions for serious unmet medical needs and biothreats. Our lead product is Tecovirimat, TPOXX, also known as ST-246(R), an orally administered antiviral drug that targets orthopoxviruses. While TPOXX is not yet approved as safe and effective by the U.S. Food & Drug Administration , it is a novel small-molecule drug that is being delivered to the Strategic National Stockpile under Project BioShield. For more information about SIGA , please visit SIGA's web site at www.siga.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including statements relating to the effect of the loss of our litigation with PharmAthene, Inc. , our ability to raise the funds necessary to satisfy the judgment arising from such loss and our chapter 11 bankruptcy case. Such forward-looking statements are subject to various known and unknown risks and uncertainties and SIGA cautions you that any forward-looking information provided by or on behalf of SIGA is not a guarantee of future performance. SIGA's actual results could differ materially from those anticipated by such forward-looking statements due to a number of factors, some of which are beyond SIGA's control, including, but not limited to, (i) the risk that potential products that appear promising to SIGA or its collaborators cannot be shown to be efficacious or safe in subsequent pre-clinical or clinical trials, (ii) the risk that SIGA or its collaborators will not obtain appropriate or necessary governmental approvals to market these or other potential products, (iii) the risk that SIGA may not be able to obtain anticipated funding for its development projects or other needed funding, including from anticipated governmental contracts and grants, (iv) the risk that SIGA may not complete performance under the Biomedical Advanced Research Development Authority (BARDA) Contract on schedule or in accordance with contractual terms, (v) the risk that SIGA may not be able to secure or enforce sufficient legal rights in its products, including intellectual property protection, (vi) the risk that any challenge to SIGA's patent and other property rights, if adversely determined, could affect SIGA's business and, even if determined favorably, could be costly, (vii) the risk that regulatory requirements applicable to SIGA's products may result in the need for further or additional testing or documentation that will delay or prevent seeking or obtaining needed approvals to market these products, (viii) the risk that one or more protests could be filed and upheld in whole or in part or other governmental action taken, in either case leading to a delay of performance under the BARDA Contract or other governmental contracts, (ix) the risk that the BARDA Contract is modified or canceled at the request or requirement of the U.S. government, (x) the risk that the volatile and competitive nature of the biotechnology industry may hamper SIGA's efforts to develop or market its products, (xi) the risk that the changes in domestic and foreign economic and market conditions may affect SIGA's ability to advance its research or may affect its products adversely, (xii) the effect of federal, state, and foreign regulation, including drug regulation and international trade regulation, on SIGA's businesses, (xiii) the risk that our chapter 11 bankruptcy case may make it more difficult to obtain additional financing, (xiv) the risk that our internal controls will not be effective in detecting or preventing a misstatement in our financial statements, (xv) the risk that some amounts received and recorded as deferred revenue may someday be determined to have been more properly characterized as revenue when received, (xvi) the risk that some amounts received and recorded as deferred revenue ultimately may not be recognized as revenue, (xvii) the risk associated with the loss of our appeal to the Delaware Supreme Court in our litigation with PharmAthene, Inc. , including, the risks related to a failure to satisfy the judgment arising from the loss of the litigation with PharmAthene, Inc. and (xviii) the costs and expenses and other inherent uncertainty attendant to a chapter 11 case. More detailed information about SIGA and risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this press release, is set forth in SIGA's filings with the Securities and Exchange Commission , including SIGA's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 , and in other documents that SIGA has filed with the SEC . SIGA urges investors and security holders to read those documents free of charge at the SEC's web site at http://www.sec.gov. Interested parties may also obtain those documents free of charge from SIGA . Forward-looking statements are current only as of the date on which such statements were made, and except for our ongoing obligations under the United States of America federal securities laws, we undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise.