More Yahoo info: by frtgrdn21
My theory:
Arco is a huge company and has billions. It is likely that someone in the lower/regional management for ARCO initiated this "partnership" with LUM.
What likely happened; Someone working in ARCO's investment division thought LUM common stock was a good investment. Spent $10+ mil buying common and then the stock price collapsed. Then they decided to recoup their money by giving LUM a $28 mil loan for 49% of the company in form of warrants. Then housing market deteriorates further and their money (loan) was also gone. LUM defaults left and right. ARCO has only one way to recover their cash and that is through this pre-arranged BK. If common, unsubs and subs get wiped out in court, they steal the company and recover their investment loses (plus some). Unfortunatly, the sub-debt holders are not rolling over and disappearing.
Now someone in ARCO's top managment got an idea of what can happen and wants out. ARCO can be on the hook for a lot more then the $40 or so million that they already flushed down the toilet with this company. ARCO promised $400k to help with the reorganization and another $17 mil. credit afterwards, hense the new hiring by LUM before the BK of two highly touted money managers. They don't want to put another dime into this black hole of a company, but the judge is making them. This is kind of funny if you think about it.
