Patriot, salaried retirees agree on benefit changes
Apr 23, 2013, 2:11pm CDT Updated: Apr 23, 2013, 5:44pm CDT


Greta Weiderman
Reporter- St. Louis Business Journal


Patriot Coal and The Salaried Retiree Committee have agreed to modify and terminate certain benefits for non-union retirees of Patriot.

During a hearing Tuesday morning in U.S. Bankruptcy Court in St. Louis, Patriot Coal officials presented an agreed-upon proposed order to Judge Kathy Surratt-States.

According to the proposed order, Patriot will provide benefits to its non-union, salaried retirees through July 31, establish a Voluntary Employee Beneficiary Association (VEBA) Trust for the retirees and provide $250,000 for it, and cap the maximum benefit of the retirees’ life insurance at $30,000.

If Patriot Coal reorganizes into a new company, $3.75 million in shares of equity of the reorganized Patriot will be contributed to the VEBA.

Also at Tuesday morning’s hearing, lawyers representing Patriot Coal and Peabody Energy presented arguments about how many documents Peabody Energy should be required to provide Patriot in the discovery process.

The discussion hinged on restoring back-up tapes of emails and the search for non-email electronic documents.

"The bankruptcy court today shared our view that the full scope of the information requests was unreasonable," Peabody Energy spokesman Vic Svec said in a statement. "We are pleased that the court has ordered this process to proceed on more reasonable grounds."

Patriot and its creditors’ committee asked the court in early April to allow it to investigate Patriot’s 2007 spinoff from Peabody Energy, claiming Patriot was saddled with $600 million in health care and environmental liabilities in the deal.

Peabody filed an objection April 16 to Patriot Coal’s proposal to investigate its 2007 spinoff from Peabody, arguing that Peabody should not be required to provide Patriot with all of the documents it was requesting.

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"We also believe that any claims the debtors might bring against Peabody Energy in relation to the launch of Patriot Coal would be without merit and we will vigorously defend against them in court," Svec said in a statement.

Patriot filed for Chapter 11 bankruptcy protection in July last year. Patriot assumed most of its legacy liabilities when it was spun off from Peabody Energy in 2007, and also acquired retiree liabilities when it bought Magnum Coal in 2008. Magnum had purchased certain assets that were at one time owned by Arch Coal, also based in St. Louis.

Patriot Coal (OTC: PCXCQ), led by CEO Ben Hatfield, reported a net loss of $730.6 million last year on $1.92 billion in revenue.

Patriot Coal Reaches Accord on Nonunion Worker Benefits
By Joe Whittington & Tiffany Kary - Apr 23, 2013 11:50 AM PT



Patriot Coal Corp. (PCXCQ), the bankrupt mining company, reached a settlement resolving how it will reduce benefits for nonunion retirees, a lawyer said.

Patriot will pay $4 million into a plan administered by a trustee to pay benefits for nonunion workers, Brian Resnick, a lawyer for Patriot, said today in U.S. Bankruptcy Court in St. Louis. The payment would consist of $250,000 in cash plus stock in a reorganized company, he said. Life insurance will be capped at $30,000 and current benefits will stay in effect until July 31 under the settlement.

“The deal we cut with the nonunion employees is encouraging,” Marshall Huebner, another lawyer for Patriot, told U.S. Bankruptcy Judge Kathy Surratt-States. The company is “moving forward” talks with unionized employees, Huebner said.

Patriot filed for bankruptcy in July, citing falling demand for coal and obligations to pay $1.6 billion in lifetime health care for its 8,100 retirees. The St. Louis-based company is scheduled to go before Surratt-States April 29 with a motion to change agreements with the United Mine Workers of America, which represents about 42 percent of Patriot’s 4,000 employees.

The company today is asking Surratt-States for permission to probe former parent Peabody Energy Corp. (BTU) and for more time to control its bankruptcy. Patriot is also arguing against a motion to have an independent trustee oversee its case.

The company said April 3 that it needed to save money by reducing or ending benefits for nonunion retirees that may cost it about $51.3 million.

The case In re Patriot Coal Corp., 12-bk-51502, U.S. Bankruptcy Court, Eastern District of Missouri (St. Louis).

To contact the reporters on this story: Joe Whittington in U.S. Bankruptcy Court in St. Louis; Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

Penny stock Patriot Coal continues to fight against paying benefits for its workers. Rick Szambel of Albert Fried updates TheStreet's Debra Borchardt with the latest bankruptcy news.
04/18/13 - 03:27 PM EDT - Debra Borchardt

Peabody Energy Objects to Bankruptcy Probe by Patriot
By Tiffany Kary - Apr 17, 2013 10:09 AM PT

Peabody Energy Corp. (BTU) objected to a proposal to investigate possible claims by Patriot Coal Corp. (PCXCQ), saying the coal producer already plans to pursue a lawsuit and has set aside $2 million to fund it.

Separately, Patriot creditors and lenders said yesterday that approving two noteholders’ request to appoint a trustee in the company’s Chapter 11 case may trigger a liquidation.

Patriot and its creditors’ committee shouldn’t be allowed to use a bankruptcy law to investigate potential lawsuits over Peabody’s 2007 spinoff of the company, Peabody said in a filing in U.S. Bankruptcy Court in St. Louis, where both companies are based. Peabody said it is already cooperating with information requests and restoring old e-mails and records at its own cost.

“None of this is legitimately necessary to ‘investigate’ a potential adversary proceeding against Peabody,” according to Peabody’s filing. “If it were, Patriot would not have proposed already to set aside $2 million for a litigation trust to fund litigation against Peabody.”

Patriot filed for bankruptcy in July, seeking to reorganize and shed some of the $1.6 billion it estimates is owed for lifetime health care for 8,100 retirees. On April 23, a judge is scheduled to consider the company’s motion to reduce benefits by changing an agreement with the United Mine Workers of America, which represents about 42 percent of its 4,000 employees.
Trustee Proposed

The judge will also consider a request by noteholders Aurelius Capital Management LP and Knighthead Capital Management LLC to appoint an independent Chapter 11 trustee.

The company, its unsecured creditors and its bankruptcy lenders all said in objections filed yesterday that appointing a trustee would trigger a default on Patriot’s bankruptcy operating loan.

“Ironically, the noteholders point to a potential financial covenant default down the road as a reason for appointing a trustee, without acknowledging that the relief they request would ensure and greatly accelerate the crisis they allegedly want to avoid,” Patriot said.

Patriot also disputed the noteholders’ main argument for appointing a trustee -- that most of Patriot’s 99 units in bankruptcy don’t have obligations to its unions and retirees and can therefore be reorganized separately.
‘Severely Damaging’

Any separation of Patriot’s units “would be utterly impracticable and severely damaging to the debtors’ business operations, resulting in value degradation for all of the debtors’ stakeholders,” Patriot said.

Citigroup Inc.’s Citibank and Bank of America Corp., agents to the loan, both said that the appointment of a trustee would constitute a default. Patriot’s ability to access cash collateral would end and lenders would “cease extending further credit,” Citibank said.

Wilmington Trust Co., as indenture trustee for Patriot’s $250 million in 8.25 percent senior notes due in 2018, said it supports the motion to appoint a trustee.

The case In re Patriot Coal Corp., 12-51502, U.S. Bankruptcy Court, Eastern District of Missouri (St. Louis).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

Patriot Coal Creditors Oppose Control Extension
By Tiffany Kary - Apr 16, 2013 3:01 PM PT

Patriot Coal Corp. (PCXCQ) should lose control of its reorganization next month, opening the bankrupt mining company to proposals from outside investors or a buyer, creditors and noteholders said.

A committee of unsecured creditors, noteholders Aurelius Capital Management LP and Knighthead Capital Management LLC, and the United Mine Workers of America today filed separate objections to Patriot’s bid to extend exclusive control over its bankruptcy by about four months.

“When exclusivity comes to an end on May 5, 2013, parties in interest should be free to file viable plans of reorganization and move these cases promptly toward a successful reorganization,” unsecured creditors said in a filing in U.S. Bankruptcy Court in St. Louis.

Patriot filed for bankruptcy in July, citing falling coal demand and $1.6 billion in lifetime health-care obligations for its 8,100 retirees. Patriot, based in St. Louis, is seeking to trim costs by negotiating with unionized employees. The company has said it must shed at least $150 million more in labor expenses to avoid liquidating in bankruptcy, an outcome it says would be worse for retirees, employees and creditors.

Patriot seeks 120-day extensions to deadlines of May 5 to file a plan and July 4 to win creditor support, giving the company those exclusive rights until Sept. 2 and Nov. 1.

Exit Strategy

The company needs an exit strategy to leave bankruptcy, requiring an investor to repay the bankruptcy loan, pay top priority claims in full, fund a trust Patriot has proposed to pay retirees, and give the company working capital to stay in business, creditors said. Ending exclusivity may allow a buyer or investor to step forward, said the UMWA, which represents about 42 percent of Patriot’s 4,000 employees.

“After 10 months and one previous extension of exclusivity, the debtors have no buyer and no investors, having barely commenced a search for them, and no plan to reorganize on a standalone basis, and are poised on the brink of a confrontation with the majority of their mining workforce,” the union said.

The two noteholders said Patriot’s failure to file a reorganization proposal by now shows the company has made “little headway.”

‘May Default’

“Meanwhile, the debtors lurch towards liquidation,” Aurelius and Knighthead said. “By their own account, they may default on their post-petition financing facility as soon as this July -- barely more than 60 days from now.”

The noteholders have proposed an independent trustee to oversee the case, and seek to have the company separate some units from others. Of Patriot’s 99 units in bankruptcy, 86 have no liability to the company’s unions, they said.

Patriot’s exclusivity request and bid to cut costs by changing its UMWA agreements are set for a court hearing April 23. Patriot has proposed giving the union a 35 percent stake in the reorganized company.

The case In re Patriot Coal Corp., 12-51502, U.S. Bankruptcy Court, Eastern District of Missouri (St. Louis).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

Patriot Coal Bondholders Seek Trustee for Bankruptcy
By Tiffany Kary - Mar 29, 2013 3:32 PM PT

Two Patriot Coal Corp. (PCXCQ) bondholders, claiming the majority of its 99 units in bankruptcy don’t have obligations to unions and retirees, are seeking the appointment of a trustee to oversee how assets are distributed.

The U.S. mining company’s bankruptcy is being mismanaged because it assumes all the units have obligations to the collective bargaining or retiree health care agreements of the United Mine Workers of America, Aurelius Capital Management LP and Knighthead Capital Management LLC, said in court papers filed yesterday in U.S. Bankruptcy Court in St. Louis. Their bid for a trustee sets up a dispute over how bondholders and unions are treated in the Chapter 11 case.

Patriot filed for bankruptcy in July, seeking to reorganize and shed some of the $1.6 billion it estimates is owed to pay for lifetime health care for 8,100 retirees. The company said in a statement today that it will oppose the bondholders’ request.

The motion “is a misguided, costly and disruptive distraction at a time when the company is focused on achieving the cost savings it needs to reorganize successfully and protect the interests of all stakeholders,” Michael Freitag, a Patriot spokesman, said in the statement.
‘Compounding Problem’

Aurelius and Knighthead own 3.25 percent notes due 2013 and a majority of the 8.25 percent notes due 2018, the funds said. They seek an independent Chapter 11 trustee to oversee the case and said that without one, the company is moving “inexorably towards liquidation.”

“Compounding the problem, rather than moving expeditiously to take the non-obligor debtors out of bankruptcy, the debtors- in-possession have spent nine months negotiating with the UMWA about these illegal proposals,” the funds wrote.

Patriot has proposed moving retiree health-care benefits to a trust, known as a Voluntary Employee Beneficiary Association or VEBA. The VEBA would be funded by all of the company’s 99 units, including 13 of them that don’t have obligations to unions and retirees, the funds said.

While the amount Patriot would owe retirees under the new agreements hasn’t been determined, it’s estimated at $1 billion, according to court papers.

Patriot has proposed pay cuts and benefit changes for unionized employees in bankruptcy, and also sued Peabody Energy Corp. (BTU) to force its former parent to keep paying for the health- care costs of certain retirees who were employed by Peabody before Patriot’s 2007 spinoff.
Demand Tumbled

The company’s bankruptcy filing came after U.S. coal demand tumbled amid increased competition from cheaper and natural gas and as it faced stricter environmental regulations. Patriot said it was at a disadvantage to competitors because 41 percent of its workforce is unionized.

Separately, Wilmington Trust Co., a trustee for the company’s $250 million in 8.25 percent notes, today objected in court papers to a motion to form an equity committee.

Shareholders who seek to form a committee to represent their interests in the case can’t prove that there will be any money left over for equity once bondholders are repaid, Wilmington Trust said.

The company has said it needs to reduce its labor costs by at least $150 million, and the company’s bonds trade at a discount, signs that there will be no money left for shareholders, Wilmington said.

Patriot’s shares most recently traded at 10 cents on the dollar March 28. Its 3.25 percent senior convertible notes due 2013 last traded at 12.08 cents on the dollar, and its 8.25 percent notes last traded at 48.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The case In re Patriot Coal Corp., 12-51502, U.S. Bankruptcy Court, Eastern District of Missouri (St. Louis).

Patriot Coal revises proposal to union by offering stake to UMWA
24 minutes ago
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Bloomberg reported that Patriot Coal Corp, the bankrupt mining company facing protests as it seeks to cut benefits to union workers, has revised its proposal and offered them an equity stake in a reorganized company.

Patriot submitted a new offer to the United Mine Workers of America Wednesday, according to court papers filed in the Eastern District of Missouri Thursday. Under the new proposal, the company's fifth, UMWA would get a 35 percent stake in a reorganized company.

It said “Unfortunately, Patriot simply does not have the financial resources to support its current benefit levels and will not survive without substantial changes across its cost structure.”

Patriot has proposed to reduce its obligations by creating a voluntary employees' beneficiary association, or VEBA, trust administered by the UMWA Health and Retirement Funds. The trust would get funding from Patriot in several ways, and the new proposal would include royalty contribution for every ton produced at all existing mining complexes.

The new proposal also extends by six months the date on which retiree health care will be moved to the trust, giving retirees and beneficiaries more time to receive their current level of benefits.

Its initial proposal was made in November, and the latest proposal had been to give the UMWA an unsecured claim in the bankruptcy.

Patriot filed for bankruptcy in July, citing falling demand for coal and obligations to pay USD 1.6 billion in lifetime health care for its 8,100 retirees. Patriot is seeking to trim costs by negotiating with unionized employees, and the St Louis based company said it needs to shed at least USD 150 million more in labor expenses to avoid liquidating in bankruptcy, an outcome it says would be worse for retirees, employees and creditors.

Source - Bloomberg

December 4, 2012, 10:10 AM

The Daily Docket: Washington Mutual Trustees Want Goldman Sachs Probe


By Melanie Cohen

Trustees for creditors left unpaid after the biggest banking failure in U.S. history say they suspect Goldman Sachs Group Inc. GS -1.54% of targeting Washington Mutual Inc. WMIH +3.19%, in a naked short-selling scheme. Read the Daily Bankruptcy Review article here.

(Daily Bankruptcy Review and DBR Small Cap are daily newsletters 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.”)

Brooklyn, N.Y.-based hospital Interfaith Medical Center filed for Chapter 11 protection, the New York Times reports.

According to The Wall Street Journal, Democrats in the House of Representatives want action taken against MF Global Holdings Ltd. MFGLQ +3.33% because it says the firm “blatantly misled” a regulator.

Financially ailing companies often pay bonuses and other compensation to executives, directors and private-equity owners in the months before filing for bankruptcy protection. Read the DBR article via WSJ.

Private equity firm GCS Capital may buy the asset-management unit of Franco-Belgian bank Dexia SA DEXB.BT 0.00%, WSJ reports.

According to Reuters, labor and benefits will be a big part of public hearings on what could turn into big changes for bankruptcy rules in the U.S.

Also according to Reuters, an appeals court withdrew a ruling putting Bank of New York Mellon Corp. BK -1.12% above Sentinel Management Group’s former customers, who are looking to recoup money in the company’s collapse.

Write to Melanie Cohen at melanie.cohen@dowjones.com. Follow her on Twitter at @MelanieLisa.

Washington Mutual Trustees Ask to Probe Goldman Sachs
Peg Brickley
December 03, 2012
(c) 2012 Dow Jones & Company, Inc.

Trustees for creditors left unpaid after the biggest banking failure in U.S. history say they suspect Goldman Sachs Group Inc. of targeting Washington Mutual Inc., in a naked short-selling scheme.

If those suspicions prove out, the alleged wrongs could translate into a damage award for those still looking for money from Washington Mutual 's Chapter 11 case, according to papers filed Friday in the U.S. Bankruptcy Court in Wilmington, Del.

Goldman Sachs spokesman Michael DuVally declined comment on Monday. Creditors are asking for a court order entitling them to investigate Goldman Sachs' trading activities for evidence of naked short selling.

Naked short selling involves trading in shares that an investor doesn't own, doesn't borrow and doesn't deliver. The phantom stock trades flood the market with what appear to be shares available for sale, and they drive down the stock price.

Creditor attorneys say there's "unmistakable" evidence Washington Mutual was victimized by naked short sales in the months leading up to its September 2008 bankruptcy filing. They want to know if long-time investment banker Goldman Sachs was involved in "abnormally high levels' of short selling of Washington Mutual's stock.

Washington Mutual was the holding company that owned Washington Mutual Bank , or WaMu , a thrift swept under in 2008 after indulging in the subprime lending boom. Its final affairs are in the hands of a bankruptcy trust.

Goldman Sachs was called on by Washington Mutual , charged with shoring up market confidence and locating a buyer, court papers say.

"Instead of providing this promised support to [ Washington Mutual ], it appears that Goldman Sachs may have decided it could make more money by betraying its client," court papers allege.

If they get proof, creditors believe they can hit Goldman Sachs with a suit for damages over breach of its contract as investment banker for Washington Mutual .

A court-appointed examiner weighed the chances of suing Goldman Sachs for holding a short position in the stock of its client, Washington Mutual , but dismissed it, noting the investment banking contract authorized Goldman Sachs to "hold long and short positions" in the stock.

Creditors attorneys say that only applies to "legal" shorting of the stock, not "unlawful naked shorts or...participation in a scheme to artificially depress [ Washington Mutual 's] stock price."

They cited settlements Goldman Sachs signed in 2007 and 2010 ending Securities and Exchange Commission claims it participated in illegal short-sale trading.

A wide-ranging Chapter 11 plan settlement meant full recovery for many top-ranking creditors, but left shareholders and creditors who ranked at the bottom of Washington Mutual 's pile of unpaid debts still looking for funds to make good their losses.

The request to probe Goldman Sachs is part of the cash chase, which is being led by the same lawyers who championed Washington Mutual 's shareholders in bankruptcy court, from the firm of Susman Godfrey LP.

The bankruptcy settlement ended much of the litigation stemming from WaMu 's demise, but creditors say Goldman Sachs is still fair game.

The most recent figures indicate there was nearly $368 million in cash still sitting in the Chapter 11 coffers at the end of September as efforts continue to scrape up value for unpaid creditors.

Write to Peg Brickley at peg.brickley@dowjones.com.

Well in that case that sucks!

Sat Dec 01 03:10:48 2012 Dividend or Interest Paid

One or more of your investments has paid a cash dividend or interest, the details are below.

Account: XXXX-XXXX
Payment Date: 11/30/2012

If a cash dividend has been paid for positions previously enrolled in the Dividend Reinvestment Program, please note that your dividend payments will be reinvested in the same security.

If you are not enrolled in the Dividend Reinvestment Program, the amount shown below has been credited to your account.

Security: PATRIOT COAL CORP -SR NT CONV (70336TAA2)
Amount Credited: $X,XXX.00

Reinvest dividends automatically or sell your fractional shares, now.

If you have any questions, please call 1-800-ETRADE-1 (1-800-387-2331) anytime 24/7 or send us a Secure Message.

PLEASE READ THE IMPORTANT DISCLOSURES BELOW

(c) 2008 E*TRADE Securities LLC, Member FINRA/SIPC. All rights reserved. The information contained in this Smart Alert does not constitute a recommendation by E*TRADE Securities, and is subject to the Smart Alerts Terms and Conditions and the E*TRADE Securities Customer Agreement. We cannot respond to e-mails sent to this mailbox. If you have questions, please contact us through the Online Service Center.

Patriot Coal Execs Hid Costs Of $45M Cleanup, Investor Says

By Carolina Bolado
Law360, New York (September 24, 2012, 2:48 PM ET) -- Two executives at bankrupt Patriot Coal Corp. were hit with a putative shareholder class action Friday over allegedly false statements the company made regarding a $45 million court-ordered cleanup of selenium discharges in two West Virginia coal mines.

In a complaint filed in Missouri federal court, shareholder Ernesto Espinoza (and frequent and vocal IHUB poster, sambeaux), accused ex-CEO Richard M. Whiting and Chief Financial Officer Mark N. Schroeder of hiding the true state of the company's finances, inflating its stock price and causing in investor losses when the truth was finally revealed....

US Trustee Fights Patriot Shareholders' Committee Bid

By Lisa Uhlman
Law360, New York (September 17, 2012, 4:53 PM ET) -- The U.S. trustee objected Friday to Patriot Coal Corp. shareholders' request for an official committee, saying they failed to show their interests are not being adequately represented or that it's even likely they'll get a meaningful recovery.

U.S. Trustee Tracy Hope Davis objected to the motion by Patriot shareholders CompassPoint Partners LP, Frank Williams and Eric Wagoner for the court to order her to appoint an official committee of equity holders, saying there is nothing to suggest that her initial refusal Aug. 24 to appoint one...

Ilene Slatko ?@DelShareholder

Re: WMIH From page 18 of the below document, "(11)Holders of Preferred Equity Interests and Common Equity... http://fb.me/1S8q0eFTo
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1h Ilene Slatko Ilene Slatko ?@DelShareholder

Re: WMIH There were a flurry of filings made late last week, asking the court to overturn over $100 million in... http://fb.me/1rtFutElO
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Important Tax Information – Required Tax Forms
For U.S. federal income tax purposes, the LBHI Plan Trust is intended to be treated as a
liquidating trust” taxable as a “grantor trust” of which the former LBHI stockholders are
regarded as the grantors. In this regard, the former stockholders will be treated as directly
receiving an undivided interest in the Plan Stock and then transferring such interest to the LBHI
Trust in exchange for the beneficial interests in the LBHI Plan Trust. Moreover, on a goingforward
basis, each former stockholder of LBHI that is a beneficiary of the LBHI Plan Trust will
treated for U.S. federal income tax purposes as a direct owner of the underlying assets of the LBHI Plan Trust (namely, the Plan Stock), in accordance with its former relative priority and
economic entitlements as a stockholder.

Why to ask for thousands of forms W-9

Accredited Business Consolidators Slams Bank of N.Y. Mellon for 10% Loss From Sale of Lehman Bros. Assets - cbl By citybizlist Staff NEW YORK -- Accredited Business Consolidators Corp. (OTC Pink Sheets: ACDU) has slammed the Bank of New York Mellon, accusing the trustee of some Lehman Bros. debt of doing little to protect noteholders as it booked a loss of at least $800,000 by liquidating related assets, according to an 8-K filing with the U.S. Securities and Exchange Commission. "If Bank of New York Mellon, which serves as trustee for the Capital Trusts, was taking a more proactive role in protecting the rights of the noteholders, we would have been more comfortable in seeing the end result," the Doylestown-based firm said after it decided to not wait for uncertain bankruptcy proceedings to unfold and sold its assets at a loss of at least 10 percent. ACDU, as Accredited Business Consolidators refers to itself, last year formed Bankruptcy Claims Fund Inc., with its subsidiary, Italian Oven Financial Inc., as the majority owner. Bankruptcy Claims then bought some Lehman Bros. debt assets consisting of investments in trusts that held subordinate notes known as Capital Trusts for more than $8 million. Those shares traded publicly on the Pink Sheets under the ticker symbols LEHKQ, LEHLQ, LHHMQ and LEHNQ. ACDU also restructured those assets using favorable market conditions. But ACDU suffered a setback on March 15 when Lehman Bros., in its bankruptcy reorganization plan, proposed to treat holders of subordinate notes as unsecured creditors but transfer the funds to holders of senior unsecured notes and bonds. Under the circumstances, ACDU said, the only way for a Capital Trust stakeholder to receive any money would be for the senior notes to be paid at 100 percent of their face value during the liquidation process. ACDU believed it could claim payment guarantees if bankruptcy liquidation fell short of reimbursement to Capital Trust noteholders. However, the trustee, Bank of New York Mellon, contended that "the guarantee would only provide rights in the event a recovery is realized." Consequently, ACDU said, it was left with the choice of pursuing protracted and expensive court battles or of selling out and incurring a loss. It chose the latter, selling its Capital Trust assets for about 10 percent lower than the original investment.

HERE WAS A REPLY

Thank you for the excellent information This paragraph caught my eye in particular But ACDU suffered a setback on March 15 when Lehman Bros., in its bankruptcy reorganization plan, proposed to treat holders of subordinate notes as unsecured creditors but transfer the funds to holders of senior unsecured notes and bonds. Under the circumstances, ACDU said, the only way for a Capital Trust stakeholder to receive any money would be for the senior notes to be paid at 100 percent of their face value during the liquidation process. (Interesting that - despite the above - apparently they could sell their holdings for only a 10% drop in price)

Surprise! Chase Is Refinancing Your Mortgage

NEW YORK -- While millions of struggling homeowners have had to jump through all sorts of hoops trying to refinance their mortgages, Michelle and Bob Irwin barely had to lift a finger.

This summer, the couple received a letter from JPMorgan Chase (JPM), their mortgage servicer, informing them that it was going to slash the interest rate on their mortgage to 2.8% from their current rate of 6.5% for the next five years and then adjust it to a fixed 3.9% for the remaining 18-year term of their loan -- a move that would reduce their payments by $229 a month.

The couple, one of thousands that Chase has sent similar letters to, had no idea they were even under consideration for new loan terms. And it couldn't have come at a better time. The Irwins had fallen 20 months behind on their mortgage payments after Bob was laid off from his job at the local lumber mill in Darrington, Wash. The couple was about to lose their home.

Bob had found work as a commercial fisherman a year ago. And while the job entailed a lucrative crabbing season off the coast of California, the couple was still playing catch-up with their finances.

They had tried to work with Chase to get their payments reduced, but with very little income they couldn't get approved for a mortgage modification and fell further behind.

So when the letter arrived, Michelle's heart sank. "I saw a FedEx envelope on the porch from Chase and I thought, 'Oh no, that can't be good,'" she said. "Then I opened it and read it... I felt like I won the lottery. I ran out into the front yard, screaming like a kid."

In many ways, the Irwins did win the lottery.

As part of the $25 billion mortgage settlement that was struck between the nation's five biggest banks and the state attorneys general and federal government, Chase had pledged $4.2 billion in mortgage relief for tens of thousands of borrowers by either reducing the interest rate or the principal owed (or both) on their loans.

Under the settlement, banks get more credit for modifications that are completed in the first year so the banks are trying to move quickly. By the time the deal was approved in April, Chase had already put together a team to mine through its mortgage paperwork and identify candidates who met the modification guidelines. The borrowers' loans had to be directly held by Chase, not divvied up among investors or backed by Fannie Mae or Freddie Mac. And many of the eligible borrowers also either had to be delinquent on their loans or owe far more on their homes than they were worth.

Chase identified thousands of borrowers who fit the bill and mailed them letters asking them to call the bank to discuss a modification of their loan, according to spokeswoman Amy Bonitatibus. Yet, getting customers to respond was more difficult than the bank thought. It heard back from only about half the customers it contacted.

Hoping to get more mortgages modified more quickly. Chase has streamlined the process. It now reworks the loan terms and simply lays out the new payment plan in a letter to its borrowers. The borrower sees the new rate, or how much principal has been taken off their balance, and what their new payments will be. All they have to do is sign the letter approving the new terms and send it back to the bank.

Chase sees the new process as a winning proposition. It's modifying mortgages it already owns so it doesn't need to verify the borrower's income, assets and work history. And by making payments more affordable for its borrowers, it's reducing the likelihood they'll default.

According to a preliminary report on the progress of the settlement issued by its official monitor, Chase claimed $369 million in credits for modifying 3,086 mortgages between March 1 and the end of June. The bank has offered modifications to another 11,500 borrowers (for credit worth up to $1.2 billion) but those had yet to be completed.

The Irwins are one of those lucky ones. They still owe $100,000 on their home, but their monthly mortgage payment is now a much more affordable $601 a month. "I've stopped buying lottery tickets," said Michelle.

So JPM is off the hook and there was a settlement for $26M. But it looks like on May 07, 2012 the judge disallowed having to reserve $435M (I got that # from sidedraft since I didnt listen in that day). Shouldn't that significantly help the waterfall???

I know it will take time to come up with $ for the waterfall but that is a very nice decrease in the claim vs. settlement. I mean we have plenty of time to come up with the waterfall money

You should be happy knowing that you are going to get paid in full with interest.

This is not a normal POR. This POR is a hybrid POR. It is a mixture of liquidation (for IRS taxes) and a reorganization with the remaining assets.

Senior debt is excluded from having priority over "other financial obligations for classes 3,4A,4B,5. This is one of the reasons that it took so long to shuffle the classes around and get this POR approved. Like having The Paulson Group lay their cards on the table.

*********cut/paste from POR**********************

"Senior Affiliate Claim means any Claim asserted by an Affiliate of LBHI that is entitled to a contractual right of priority in payment to all Subordinated Claims (excluding an “Other Financial Obligation” as defined in the Class 10B Subordinated Notes or Class 10C Subordinated Notes), other than a Senior Affiliate Guarantee Claim."



***********cut/paste from class 10B sub debt prospectus

Subject to the payment in full of all Other Financial Obligations, the holders of the Subordinated Notes shall be subrogated to the rights of the holders of such Other Financial Obligations to receive payments or distributions of assets of the Corporation applicable to such Other Financial Obligations until the Subordinated Notes shall be paid in full

This means that we class 10B holders become "other Financial Obligations" listed in the POR definition of senior debt classes 3,4A,4B,5.

Everyone in WAMU received shares in the new company. LOL if it were LBHI they would be rich right now. LOL

No comment other than what I have said before, prospectus is irrelevant since the POR is confirmed.

Patriot Coal Creditors Want Bankruptcy to Stay in N.Y.
By Tiffany Kary on August 28, 2012


Patriot (PCXCQ) Coal Corp. and its creditors and bankruptcy lenders oppose transferring the case to West Virginia from New York, pitting themselves against unions, insurers and the U.S. government.

The United Mine Workers union and several insurers who have argued for the move to Charleston, West Virginia, haven’t proven it would be more convenient for all creditors or lead to a more economical Chapter 11 case, the creditors said in papers filed yesterday in U.S. Bankruptcy Court in Manhattan.

“The UMWA asserts that Charleston is more convenient for the workers and retirees it represents -- a goal that is praiseworthy, but should not control the venue analysis,” the creditors said.

Patriot, one of the largest coal producers in the U.S., filed for bankruptcy in July. It was asked first by its union to move the case. The U.S. Trustee, an arm of the Justice Department that oversees bankruptcies, joined in the motion, saying the St. Louis-based company created two new units just before its bankruptcy with what appeared to be the sole purpose of avoiding other bankruptcy courts.

Patriot said New York is the most cost-effective and convenient place for its bankruptcy. Not one of its top five secured creditors is located in West Virginia and the company’s advisers and other professionals have offices in New York, according to court papers filed yesterday.
‘Exceedingly Expensive’

“Moreover, flights to and from Charleston, West Virginia, are often exceedingly expensive,” the company said, citing prices of more than $2,200 for a refundable, round-trip ticket.

Citigroup Inc. (C) and Bank of America Corp (BAC)., which helped arrange $802 million in loans to Patriot after its bankruptcy, also said yesterday that they oppose a venue transfer, citing potential increases in travel costs and professional fees.

The company’s bankruptcy counsel, Davis Polk & Wardwell; its conflicts counsel, Curtis, Mallet-Prevost, Colt & Mosle LLP; its investment banker, Blackstone Group LP (BX); and its financial adviser, AP Services LLC, all have offices in New York but not West Virginia, the company said.

Only 10 of the company’s unsecured creditors, holding $9.6 million of the more than $507 million in claims, are based in West Virginia, according to court papers.

Patriot’s facilities, employees, retirees and creditors are largely located in West Virginia, and conducting its bankruptcy in New York makes it more difficult for the company’s 2,000 active employees and more than 10,000 retirees to participate in the case, according to the United Mine Workers. West Virginia has a greater economic interest in the case’s outcome, as most creditors are there, the union has said.
Kentucky’s Interest

The Department of Natural Resources in Kentucky joined the mine workers’ motion, citing the company’s mining activities in Kentucky. West Virginia has said it has an interest in whether the company sells or abandons its property in that state.

A hearing on the arguments is scheduled for Sept. 11.

Patriot has 12 active mining complexes in Appalachia and the Illinois Basin and controls an estimated 1.9 billion tons of coal reserves, according to court papers. It sells thermal coal to electricity generators and metallurgical coal to steel and coke producers.

In the Chapter 11 filing July 9, Patriot listed assets of $3.57 billion and debt of $3.07 billion as of May 31.

The case is In re Patriot Coal Corp., 12-bk-12900, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: Stephen Farr at sfarr@bloomberg.net