AI
Friday, May 07, 2010 11:09:43 AM
Visteon, General Growth, Abitibi, Lehman: Bankruptcy (Update1)
By Bill Rochelle
May 7 (Bloomberg) -- Visteon Corp. filed a revised reorganization plan and disclosure statement early this morning where bondholders can own the company by providing $1.25 billion cash in return for all the new stock.
Holders of two-thirds of the bonds signed an agreement to support the new plan. If they can’t supply the cash, Visteon will confirm a plan similar to the March 15 version, under which term loan lenders owed $1.63 billion would receive about 85 percent of the stock, with noteholders splitting up the remainder.
The new cash is to come from a $950 million rights offering, which some of the noteholders are to backstop, and from a $300 million direct purchase of new stock. Bondholders will receive 95 percent of the stock in return for the cash, with the other 5 percent being distributed to bondholders. Workers’ pensions plans will be retained.
Under the new version, term-loan lenders will be paid in full with cash on hand and new cash from noteholders. The reorganized Visteon would also have a $300 million undrawn working capital loan when the plan is confirmed.
Only bondholders who are so-called accredited investors may participate in the rights offering. Those who aren’t accredited investors will get the lesser of 40 percent in cash or a share in a pool of $50 million cash. The cash will come from some bondholders, so it won’t deplete company cash.
General unsecured creditors of Visteon International Holdings Inc. will be paid in full. Other general unsecured creditors will receive the lesser of 50 percent in cash or a share of a pool of $141 million cash.
Under the new plan, holders of the 12.25 percent senior notes owed $202 million should have a 29.5 percent to 30.3 percent recovery, according to the revised disclosure statement. If the plan from March 15 ultimately is confirmed, their estimated recover will be from 58 percent to 62 percent.
Holders of the 7 percent and 8.25 percent senior notes are expected to have an 8.1 percent to 8.2 percent recovery under the new backstopped plan. Their dividend under the old plan is a projected 21 percent to 25 percent.
Holders of existing stock receive nothing under either plan.
Visteon said it wants the revised disclosure statement to be approved as soon as possible so creditors can vote on the plan.
Visteon’s plan from March included recoveries then predicted to be from 19 percent to 57 percent for unsecured creditors, who would have received nothing on $1.3 billion in claims under the prior version of the plan filed in December. For details about the March plan, where secured lenders owed $1.63 billion would receive 85 percent of the stock, click here for the March 16 Bloomberg bankruptcy report.
Visteon filed for reorganization last May, listing assets of $4.6 billion against debt totaling $5.3 billion. Sales in 2008 were $9.5 billion, including $3.1 billion to Ford Motor Co. Visteon was spun off from Ford in 2000.
Visteon, based in Van Buren Township, Michigan, at the outset owed $2.7 billion for borrowed money, including $1.5 billion on a secured term loan, $862 million on unsecured bonds and $214 million on other debt obligations.
The case is In re Visteon Corp., 09-11786, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Updates
Simon Makes ‘Best and Final’ Offer for General Growth
Mall owner Simon Property Group Inc. sweetened its offer again last night to acquire General Growth Properties Inc. in advance of today’s hearing in bankruptcy court. Indianapolis- based Simon said the new proposal is its “best and final” offer.
Simon said it won’t participate “in any way” if warrants are issued after today’s hearing to a group including Brookfield Asset Management Inc. Warrants would go to the Brookfield group in return for being the so-called stalking horse at an auction to finance the reorganization.
The new offer values General Growth’s equity at $6.5 billion, according to Simon. For existing General Growth shareholders, Simon says the offer is worth $20 a share. For each share of existing General Growth stock, the Simon proposal is $5 cash, $10 in Simon stock and stock in a spinoff of some General Growth properties said to be worth $5 a share.
General Growth’s stock closed yesterday at $15.84 a share in New York Stock Exchange composite trading. Simon said its new offer represents an improvement of $2.6 billion, or a 66 percent premium, over the Brookfield bid. As before, unsecured creditors would be paid in full by Simon.
As an alternative, Simon said it’s willing to sponsor a recapitalization of General Growth at $11 a share. It would buy 227.3 million shares for a total of $2.5 billion.
Simon said it would implement the alternative if the acquisition plan couldn’t be completed because, for instance, federal regulators were to block the purchase under antitrust laws. Simon says it’s willing to dispose of properties to alleviate antitrust objections.
The hearing, currently scheduled for today, has been adjourned several times as Simon and Brookfield bid against one another. To read about Brookfield’s most recently enhanced offer, click here for the May 4 Bloomberg daily bankruptcy report. To read other Bloomberg coverage of Simon’s new offer, click here.
The bidding between Simon and the Brookfield group is to provide the financing for General Growth to complete a Chapter 11 reorganization of the holding company. General Growth already has court approval for Chapter 11 restructurings covering 107 of 108 mortgage loans for property-owning subsidiaries representing $14.8 billion in debt.
The financing from Simon or Brookfield is to underpin a Chapter 11 reorganization plan where all debt at the parent level will be paid in full.
General Growth began the largest real-estate reorganization in history by filing under Chapter 11 in April 2009. The books of Chicago-based General Growth had assets of $29.6 billion and total liabilities of $27.3 billion as of Dec. 31, 2008. The company owns or manages more than 200 shopping-mall properties.
The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
EnviroSolutions Disclosure Approved, Confirmation July 21
EnviroSolutions Holdings Inc., a trash hauler and owner of three landfills, may face a fight with the unsecured creditors’ committee at the confirmation hearing on July 21 for approval of the Chapter 11 plan.
The committee says the company is worth more than the first-lien debt. It is therefore urging unsecured creditors to vote against the plan, which was negotiated with holders of 75 percent of the $211 million in first-lien debt.
The plan calls for the first-lien creditors to receive almost all of the new stock, plus an $85 million secured term loan, in return for their existing $198 million term loan. The explanatory disclosure statement projects a 78 percent recovery on the existing term loan.
Second-lien lenders, owed $23.3 million, are to receive $1.2 million cash. If they all vote for the plan, grant releases and don’t object to confirmation, the recovery rises to $1.4 million. The recovery on the second lien is projected to be 5.1 percent to 6 percent.
Northwestern Mutual Life Insurance Co., the holder of $41.7 million in subordinated notes, is to receive nothing.
General unsecured creditors, owed $5.9 million, are to be paid 17 percent in cash.
The bankruptcy court in New York approved the disclosure statement on May 5.
Based in Manassas, Virginia, EnviroSolutions had a $29.3 million net loss in 2009 on revenue of $134 million. It operates in the mid-Atlantic states and the Northeast.
The case is In re EnviroSolutions of New York LLC, 10- 11236, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Xerium Shareholders Want More of Reorganized Company
Xerium Technologies Inc., a maker of consumable products for paper manufacturers, will have opposition from two shareholders at the May 12 confirmation hearing for approval of the reorganization plan.
Privet Fund Management LLC and Tiburon Capital Management Inc. say the valuation of the company underpinning the plan is based on “stale data” while Xerium’s business has improved “dramatically.”
Contending that the bankruptcy judge in Delaware should deny confirmation of the plan, the shareholders note that the projections are based on an assumption that margins will remain at 20 percent rather than the historical level of 23.7 percent.
If the judge won’t deny approval of the plan outright, the shareholders ask him to delay consideration of the plan and appoint an official committee to represent them.
Xerium filed on March 30 a so-called prepackaged plan that would convert $620 million of secured debt into 82.6 percent of the new stock, $10 million in cash and $410 million in new term loans to mature in 2015.
Existing shareholders would keep 17.4 percent of the stock while being given warrants for another 10 percent. Unsecured creditors are to be paid in full.
Xerium solicited votes on the plan before filing the Chapter 11 petition.
The Raleigh, North Carolina-based company listed assets of $693.5 million against debt totaling $813.2 million. For nine months ended Sept. 30, the net loss was $15.2 million on sales of $368 million. For the three quarters, the interest expense of $48.9 million exceeded $43 million of income from operations.
The case is In re Xerium Technologies Inc., 10-11031, U.S. Bankruptcy Court, District of Delaware (Wilmington).
H.I.G., Charlesbank Take TLC in Confirmed Plan
TLC Vision Corp., an operator of laser vision correction centers, has a court-approved Chapter 11 plan where ownership will transfer to H.I.G. Capital LLC and Charlesbank Capital Partners.
The bankruptcy judge signed a confirmation order yesterday approving the plan where Charlesbank and H.I.G. will provide enough cash to fully repay $25 million of financing for the reorganization, plus $107.5 million owing pre-bankruptcy secured lenders. They also will provide $9 million cash and a $3 million note for payment toward claims of unsecured creditors.
Unsecured creditors of the U.S. company, owed $5.4 million, are to receive 90 percent of their claims in cash plus 10 percent through the note. Unsecured creditors of the Canadian affiliate, owed $2.3 million, are to have the same treatment.
The plan is designed to leave reorganized TLC with almost no debt.
Shareholders of the Canadian affiliate are to split up $278,500. Shareholders of the U.S. company receive nothing.
TLC owns and manages 71 laser correction centers while providing management services and equipment to independently owned practices in 40 states.
The case is In re TLC Vision (USA) Corp., 09-14473, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Almatis Confirmation Hearing Set for July 19
Almatis BV, a producer of specialty alumina products, scheduled a combined hearing on July 19 where it hopes the bankruptcy judge in New York will approve disclosure materials and sign a confirmation order approving the reorganization plan worked out before the Chapter 11 filing on April 30.
The plan would almost extinguish claims of second-lien and mezzanine lenders who are opposing the plan. Junior creditors opposing the plan include affiliates of Babson Capital Management LLC, Alcentra Group Ltd. and Permira Advisers LLP. They argue that Almatis’s value is “much greater than the $540 million” claimed by the company. They contend that Almatis “walked way” from proposals by Dubai International Capital LLC that would pay the first lien in full while giving new debt and equity to junior lenders.
Dubai International bought the Almatis business in 2007 for $1.2 billion. Almatis’s plan would reduce bank debt to $415 million from $1.05 billion. The new debt is to consist of a $273 million senior credit and a $137 million junior credit.
The plan offers a projected 2.2 percent recovery for second-lien creditors, who would receive warrants for 3 percent of the equity value above an equity value of $325 million. Mezzanine lenders, for a 0.5 percent recovery, would take warrants for 2 percent of the equity value above a valuation of $400 million. The plan has nothing for junior mezzanine lenders.
General unsecured creditors are to be paid in full.
For details on the Almatis plan and options for first-lien lenders, click here for the April 30 Bloomberg bankruptcy report.
Almatis’s revenue in 2009 was $400 million. For 2010, projected revenue is $534 million. Almatis, based in Rotterdam, began defaulting on senior debt in June 2009.
Almatis listed total debt of $1.3 billion, including $681 million on first-lien obligations, $77.7 million on second-lien debt and $200.6 million on mezzanine debt. There is junior mezzanine debt of $80.6 million, plus trade debt of $20 million. Assets were listed for $1.53 billion.
Oaktree Capital Management LLC, based in Los Angeles, holds 46 percent of the first-lien debt, according to a court filing.
The case is In re Almatis BV, 10-12308, U.S. Bankruptcy Court, Southern District New York (Manhattan).
AbitibiBowater to Sell Alabama Sawmill for $4.1 Million
AbitibiBowater Inc., the largest newsprint maker in North America, has a contract to sell 107 acres and a non-operating sawmill in Marshall County, Alabama, for $4.1 million in cash. The buyer is Progress Rail Corp.
The mill hasn’t generated revenue since 2005 and permanently closed in November. The hearing for approval of the sale is set for May 26.
The company filed a plan without a disclosure statement proposing to pay secured creditors in full, in cash. Unsecured creditors would take the new stock, while existing shareholders would receive nothing. (BULL SHIT, we'll see about THAT) The plan would be financed in part by a rights offering available to unsecured creditors. The terms of the offering weren’t spelled out.
The creditors’ committee contends it found defects in parts of a $400 million term loan made in April 2008. The committee contends the loan was a fraudulent transfer as to subsidiaries which guaranteed new debt because they weren’t obligated on the debt being paid off or refinanced.
AbitibiBowater was formed in October 2007 through a merger between Montreal-based Abitibi-Consolidated Inc. and Greenville, South Carolina-based Bowater Inc. The Montreal-based company began reorganizing with 24 pulp and paper mills plus 30 wood- product plants. Revenue in 2008 was $6.8 billion.
In Chapter 11 petitions filed in April 2009, the combined AbitibiBowater companies listed assets of $9.9 billion and debt totaling $8.8 billion as of September 2008.
The case is AbitibiBowater Inc., 09-11296, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Developer Doyle Heaton Sets Plan Confirmation in June
Doyle Heaton, a real-estate developer in the Bay Area around San Francisco, provides an example of how an individual can use Chapter 11 to shed debt.
Heaton filed for bankruptcy reorganization in January. The disclosure statement explaining his Chapter 11 plan said that “most” of his projects are “under water,” meaning they are worth less than the mortgages against them.
The bankruptcy judge approved the disclosure statement at a hearing on May 5, according to court records. The confirmation hearing for approval of the plan is set for June 24.
Although Heaton estimates that unsecured claims could be as much as $119 million, representing personal guarantees he gave for individual projects, he forecasts being able to reduce the claims to $12 million by working out the projects owned in separate corporations. The disclosure statement says unsecured creditors can expect to recover as much as 27.5 percent.
Unsecured creditors’ recovery is expected to come from one asset, Heaton’s 30 percent interest in a project estimated to be valued $3.1 million, less a 20 percent success fee Heaton would receive. The disclosure statement says Heaton will try to confirm the plan using the so-called cramdown process if all creditors classes don’t accept.
The case is In re Doyle D. Heaton and Mary K. Heaton, 10- 40297, U.S. Bankruptcy Court, Northern District of California (Oakland).
Gems TV Asset Auction Set for June 2
Gems TV (USA) Ltd., a television retailer of gemstone jewelry products, will sell most of the assets other than inventory at auction, although not as quickly as hoped.
The bankruptcy judge on May 5 approved holding an auction on June 2, while the company had wanted the auction on May 18. Competing bids must arrive by May 28. The hearing for approval of the sale is set for June 3.
The assets being sold exclude inventory and the Gems TV trademark.
The first bid will be a $3.7 million offer from Zalemark Holding Co. The assets include other trademarks and customer lists.
Reno, Nevada-based Gems TV shut down the business before filing under Chapter 11 on April 5. The petition said assets are less than $50 million while debt is expected to exceed $100 million.
The case is In re Gems TV (USA) Ltd., 10-11158, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Statistics
Default Rates Continue Declining in April, Moody’s Says
The worldwide default rate on junk-rated companies declined to 9 percent in April from 10 percent in March, according to a report yesterday from Moody’s Investors Service. The default rate topped out at 13.5 percent in November, Moody’s said.
During the first four months of 2010, 22 companies defaulted, compared with 115 in the same period of 2009.
Looking only at junk-rated companies in the U.S., the default rate in April declined to 9.5 percent from 11 percent in March.
In a separate report, Moody’s said that companies owned by private-equity investors were responsible for more than half of defaults in 2009. Private equity-sponsored companies also had a larger share of distressed-debt exchanges and prepackaged bankruptcies than other companies.
In 2009, distressed-debt exchanges made up 35 percent of all defaults in the U.S., Moody’s said. In the 1980s, distressed-debt exchanges were 13 percent of all defaults.
Moody’s calculates the default rate by counting the number of defaults within the past 12 months.
Moody’s is predicting that the default rate will shrink more, to 2.7 percent by the year’s end. By this time next year, Moody’s sees the default rate at 2 percent.
Issues trading at distressed levels declined to 14.1 percent in April from 17.1 percent in March. The high for distressed debt was 53.5 percent one year ago. Debt is considered distressed if the yield is 10 percentage points higher than U.S. Treasury securities of comparable maturity.
Briefly Noted
Neenah Reports $3.5 Million Net Loss in March
Neenah Foundry Co., a producer of cast-iron products such as manhole covers and sewer grates, reported a $3.5 million net loss in March on sales of $29.6 million. The operating loss in the month was $2.2 million. Neenah’s plan is scheduled for approval at a June 23 confirmation hearing. The plan was negotiated with holders of 55 percent of secured notes and all the subordinated notes in advance of the Chapter 11 filing on Feb. 3. To read details on the plan, click here for the April 29 Bloomberg bankruptcy report. Neenah, from a Wisconsin town of the same name, reported a $150 million net loss for the Sept. 30 fiscal year on sales of $333 million.
The case is In re Neenah Enterprises Inc., 10-10360, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Aleris Reports $18.4 Million Net Income in March
Aleris International Inc., a producer of rolled and extruded aluminum products, reported net income of $18.4 million in March on revenue of $373.9 million.
The company had a $17.5 million gain in March on derivatives. To read about Aleris’s reorganization plan, click here for the March 29 Bloomberg bankruptcy report. The plan confirmation hearing is set for May 13.
Aleris filed under Chapter 11 in February 2009, listing assets of $4.2 billion against debt totaling $4 billion, including $472 million on revolving credit and related facilities, plus more than $1.1 billion on secured term loans. In addition, there are $1.1 billion in unsecured notes.
The case is In re Aleris International, 09-10478, U.S. Bankruptcy Court, District of Delaware (Wilmington).
U.S. Trustee Objects to Crescent Resources Releases
Real-estate developer Crescent Resources LLC is proposing releases for third parties that appellate courts in Texas don’t allow, according to an objection to confirmation of the Chapter 11 plan filed this week by the U.S. Trustee.
While not opposing approval of the plan, the bankruptcy watchdog for the Justice Department believes the releases for officers, directors and others must be trimmed back to comply with rules established by the U.S. Court of Appeals in New Orleans. Creditors are voting on Crescent’s plan in advance of the confirmation hearing on May 20. For details of the plan, click here to see the March 26 Bloomberg bankruptcy report.
Crescent, based in Charlotte, North Carolina, filed under Chapter 11 in June with commercial, residential and multifamily projects in 10 southeastern and southwestern states. It listed assets of $2.2 billion against debt totaling $1.9 billion, including almost $1.5 billion on pre-bankruptcy credit agreements. Crescent is a joint venture between Duke Energy Corp. and Morgan Stanley Real Estate Fund.
The case is In re Crescent Resources LLC, 09-11507, U.S. Bankruptcy Court, Western District of Texas (Austin).
Pepsi, U.S. Foodservice on Magic Committee
Magic Brands LLC, the parent company of the Fuddruckers and Koo Koo Roo restaurant brands, has an official unsecured creditors’ committee with five members, including Pepsi-Cola North America and U.S. Foodservice Inc.
Magic Brands filed under Chapter 11 on April 21 with a contract for a sale to Travistock Group for $24 million. There will be a May 10 hearing for the bankruptcy judge to decide on procedures for an auction and sale.
After closing 24 stores, Austin, Texas-based Magic Brands will have more than 85 company-owned Fuddruckers locations in operation in 11 states. There are 13 Koo Koo Roo stores in California. Of the company-operated locations, 70 stores are leased and the remainder owned. The petition says assets are less than $10 million while debt is less than $50 million.
The Koo Koo Roo stores were in bankruptcy previously. Owned by Prandium Inc., they were sold to Magic Brands through Chapter 11 in 2004. The 135 Fuddruckers stores in 32 states owned by franchisees aren’t in bankruptcy.
The case is In re Magic Brands LLC, 10-11310, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Cooper-Standard Has Approval for Exit-Financing Commitment
Cooper-Standard Automotive Inc. received court approval on May 5 for a commitment for a $150 million working capital loan that will help the auto-parts maker leave bankruptcy following a May 12 confirmation hearing for approval of the Chapter 11 plan. Other financing includes a $450 million note offering and a backstopped $355 million equity-rights offering. The revised reorganization plan would reduce debt by $650 million to $480 million. To read details of the plan, click here for the March 23 Bloomberg bankruptcy report.
The Novi, Michigan-based company makes auto fluid-handling, body-sealing systems, and systems for controlling noise, vibration and harshness. Revenue in 2008 was about $2.6 billion. The Chapter 11 petition filed in August listed assets of $1.73 billion against debt totaling $1.79 billion.
The case is In re Cooper-Standard Holdings Inc., 09-12743, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Broadstripe Receives Last Exclusivity Extension
Broadstripe LLC, a St. Louis-based broadband cable operator, received a fifth extension of the exclusive right to propose a plan. The new deadline is July 2. No more extensions are possible because the company by then will have been in Chapter 11 for 18 months. The case has been stuck in a dispute where the unsecured creditors’ committee sued secured lenders, contending their claims should be subordinated or recharacterized as equity. In addition, there are two claims by rival cable operators totaling almost $160 million for alleged failures to complete asset-purchase agreements.
Broadstripe filed a reorganization plan based on an agreement reached before the Chapter 11 filing in January 2009 with holders of the first- and second-lien debt. On entering Chapter 11, Broadstripe had 93,000 customers in Maryland, Michigan, Washington State and Oregon. It was created through four acquisitions in 1998 and 1999 and filed for Chapter 11 reorganization in January 2009.
The case is In re Broadstripe LLC, 09-10006, U.S. Bankruptcy Court, District of Delaware (Wilmington).
New Filing
Thousand Oaks, California, Hotels File Chapter 11
The owners of TownePlace Suites by Marriott and the adjoining Courtyard by Marriott hotels in Thousand Oaks, California, filed Chapter 11 petitions yesterday in Woodland Hills, California.
Both companies said that assets and debt are more than $10 million.
The cases are In re Ocean Park Hotels TOY - LLC, 10-15358, and In re Ocean Park Hotels - TOP LLC, 10-15359, U.S. Bankruptcy Court, Central District of California (Woodland Hills).
Watch List
Blockbuster Analysts Question Ability to Survive
For the views of analysts about whether Blockbuster Inc. can survive, click here.
The movie-rental chain had a $569 million net loss for the Jan. 3 fiscal year and has a CC corporate rating from Standard & Poor’s. The company admits there is substantial doubt about its ability to continue as a going concern.
For the Jan. 3 fiscal year, the operating loss was $355 million. Revenue for the year was $4.06 billion, down from $5.07 billion in the prior year.
The balance sheet is now upside down, with assets on the books for $1.54 billion against liabilities totaling $1.85 billion.
Blockbuster said in February that it is closing an additional 545 stores this year. The new closings are in addition to 347 in 2009.
Dallas-based Blockbuster had 5,220 company-owned and 1,300 franchised stores as of Jan. 3.
Advance Sheets
ISDA Setoff Dispute Going Up on Appeal in Lehman
Swedbank AB is appealing a May 5 ruling in the Lehman Brothers Holdings Inc. case where U.S. Bankruptcy Judge James M. Peck held that an ISDA agreement doesn’t allow setting off a post-bankruptcy deposit against a pre-bankruptcy debt.
After the Chapter 11 filing, $11.7 million was deposited into Lehman’s account at the Stockholm-based bank. Relying on the ISDA agreement, Swedbank claimed it was entitled to set the $11.7 million in deposits off against $32 million Lehman owed from before bankruptcy.
Peck said there could be no valid right of setoff because required “mutuality” was lacking. Peck cited cases saying that the company after bankruptcy is considered a different entity from the pre-bankruptcy company. Thus, debts from before bankruptcy cannot be set off against credits after bankruptcy.
Swedbank already filed a notice of appeal. The bank evidently will argue that setoff is permitted by 2005 amendments to bankruptcy law covering so-called safe-harbor provisions for swap agreement.
Peck addressed the argument in his 19-page opinion on May 5 and concluded that Congress didn’t intend to end the mutuality requirement for swap agreements. Peck entered an order requiring Swedbank to return the funds the following business day.
ISDA refers to the International Swaps and Derivatives Association Inc.
The Lehman holding company filed under Chapter 11 in New York on Sept. 15, 2008, and sold office buildings and the North American investment-banking business to Barclays Plc one week later. The Lehman brokerage operations went into liquidation on Sept. 19, 2008, in the same court. The brokerage is in the control of a trustee appointed under the Securities Investor Protection Act.
The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operation is Securities Investors Protection Corp. v. Lehman Brothers Inc., 08-01420, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXcokaAlREAc
By Bill Rochelle
May 7 (Bloomberg) -- Visteon Corp. filed a revised reorganization plan and disclosure statement early this morning where bondholders can own the company by providing $1.25 billion cash in return for all the new stock.
Holders of two-thirds of the bonds signed an agreement to support the new plan. If they can’t supply the cash, Visteon will confirm a plan similar to the March 15 version, under which term loan lenders owed $1.63 billion would receive about 85 percent of the stock, with noteholders splitting up the remainder.
The new cash is to come from a $950 million rights offering, which some of the noteholders are to backstop, and from a $300 million direct purchase of new stock. Bondholders will receive 95 percent of the stock in return for the cash, with the other 5 percent being distributed to bondholders. Workers’ pensions plans will be retained.
Under the new version, term-loan lenders will be paid in full with cash on hand and new cash from noteholders. The reorganized Visteon would also have a $300 million undrawn working capital loan when the plan is confirmed.
Only bondholders who are so-called accredited investors may participate in the rights offering. Those who aren’t accredited investors will get the lesser of 40 percent in cash or a share in a pool of $50 million cash. The cash will come from some bondholders, so it won’t deplete company cash.
General unsecured creditors of Visteon International Holdings Inc. will be paid in full. Other general unsecured creditors will receive the lesser of 50 percent in cash or a share of a pool of $141 million cash.
Under the new plan, holders of the 12.25 percent senior notes owed $202 million should have a 29.5 percent to 30.3 percent recovery, according to the revised disclosure statement. If the plan from March 15 ultimately is confirmed, their estimated recover will be from 58 percent to 62 percent.
Holders of the 7 percent and 8.25 percent senior notes are expected to have an 8.1 percent to 8.2 percent recovery under the new backstopped plan. Their dividend under the old plan is a projected 21 percent to 25 percent.
Holders of existing stock receive nothing under either plan.
Visteon said it wants the revised disclosure statement to be approved as soon as possible so creditors can vote on the plan.
Visteon’s plan from March included recoveries then predicted to be from 19 percent to 57 percent for unsecured creditors, who would have received nothing on $1.3 billion in claims under the prior version of the plan filed in December. For details about the March plan, where secured lenders owed $1.63 billion would receive 85 percent of the stock, click here for the March 16 Bloomberg bankruptcy report.
Visteon filed for reorganization last May, listing assets of $4.6 billion against debt totaling $5.3 billion. Sales in 2008 were $9.5 billion, including $3.1 billion to Ford Motor Co. Visteon was spun off from Ford in 2000.
Visteon, based in Van Buren Township, Michigan, at the outset owed $2.7 billion for borrowed money, including $1.5 billion on a secured term loan, $862 million on unsecured bonds and $214 million on other debt obligations.
The case is In re Visteon Corp., 09-11786, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Updates
Simon Makes ‘Best and Final’ Offer for General Growth
Mall owner Simon Property Group Inc. sweetened its offer again last night to acquire General Growth Properties Inc. in advance of today’s hearing in bankruptcy court. Indianapolis- based Simon said the new proposal is its “best and final” offer.
Simon said it won’t participate “in any way” if warrants are issued after today’s hearing to a group including Brookfield Asset Management Inc. Warrants would go to the Brookfield group in return for being the so-called stalking horse at an auction to finance the reorganization.
The new offer values General Growth’s equity at $6.5 billion, according to Simon. For existing General Growth shareholders, Simon says the offer is worth $20 a share. For each share of existing General Growth stock, the Simon proposal is $5 cash, $10 in Simon stock and stock in a spinoff of some General Growth properties said to be worth $5 a share.
General Growth’s stock closed yesterday at $15.84 a share in New York Stock Exchange composite trading. Simon said its new offer represents an improvement of $2.6 billion, or a 66 percent premium, over the Brookfield bid. As before, unsecured creditors would be paid in full by Simon.
As an alternative, Simon said it’s willing to sponsor a recapitalization of General Growth at $11 a share. It would buy 227.3 million shares for a total of $2.5 billion.
Simon said it would implement the alternative if the acquisition plan couldn’t be completed because, for instance, federal regulators were to block the purchase under antitrust laws. Simon says it’s willing to dispose of properties to alleviate antitrust objections.
The hearing, currently scheduled for today, has been adjourned several times as Simon and Brookfield bid against one another. To read about Brookfield’s most recently enhanced offer, click here for the May 4 Bloomberg daily bankruptcy report. To read other Bloomberg coverage of Simon’s new offer, click here.
The bidding between Simon and the Brookfield group is to provide the financing for General Growth to complete a Chapter 11 reorganization of the holding company. General Growth already has court approval for Chapter 11 restructurings covering 107 of 108 mortgage loans for property-owning subsidiaries representing $14.8 billion in debt.
The financing from Simon or Brookfield is to underpin a Chapter 11 reorganization plan where all debt at the parent level will be paid in full.
General Growth began the largest real-estate reorganization in history by filing under Chapter 11 in April 2009. The books of Chicago-based General Growth had assets of $29.6 billion and total liabilities of $27.3 billion as of Dec. 31, 2008. The company owns or manages more than 200 shopping-mall properties.
The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
EnviroSolutions Disclosure Approved, Confirmation July 21
EnviroSolutions Holdings Inc., a trash hauler and owner of three landfills, may face a fight with the unsecured creditors’ committee at the confirmation hearing on July 21 for approval of the Chapter 11 plan.
The committee says the company is worth more than the first-lien debt. It is therefore urging unsecured creditors to vote against the plan, which was negotiated with holders of 75 percent of the $211 million in first-lien debt.
The plan calls for the first-lien creditors to receive almost all of the new stock, plus an $85 million secured term loan, in return for their existing $198 million term loan. The explanatory disclosure statement projects a 78 percent recovery on the existing term loan.
Second-lien lenders, owed $23.3 million, are to receive $1.2 million cash. If they all vote for the plan, grant releases and don’t object to confirmation, the recovery rises to $1.4 million. The recovery on the second lien is projected to be 5.1 percent to 6 percent.
Northwestern Mutual Life Insurance Co., the holder of $41.7 million in subordinated notes, is to receive nothing.
General unsecured creditors, owed $5.9 million, are to be paid 17 percent in cash.
The bankruptcy court in New York approved the disclosure statement on May 5.
Based in Manassas, Virginia, EnviroSolutions had a $29.3 million net loss in 2009 on revenue of $134 million. It operates in the mid-Atlantic states and the Northeast.
The case is In re EnviroSolutions of New York LLC, 10- 11236, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Xerium Shareholders Want More of Reorganized Company
Xerium Technologies Inc., a maker of consumable products for paper manufacturers, will have opposition from two shareholders at the May 12 confirmation hearing for approval of the reorganization plan.
Privet Fund Management LLC and Tiburon Capital Management Inc. say the valuation of the company underpinning the plan is based on “stale data” while Xerium’s business has improved “dramatically.”
Contending that the bankruptcy judge in Delaware should deny confirmation of the plan, the shareholders note that the projections are based on an assumption that margins will remain at 20 percent rather than the historical level of 23.7 percent.
If the judge won’t deny approval of the plan outright, the shareholders ask him to delay consideration of the plan and appoint an official committee to represent them.
Xerium filed on March 30 a so-called prepackaged plan that would convert $620 million of secured debt into 82.6 percent of the new stock, $10 million in cash and $410 million in new term loans to mature in 2015.
Existing shareholders would keep 17.4 percent of the stock while being given warrants for another 10 percent. Unsecured creditors are to be paid in full.
Xerium solicited votes on the plan before filing the Chapter 11 petition.
The Raleigh, North Carolina-based company listed assets of $693.5 million against debt totaling $813.2 million. For nine months ended Sept. 30, the net loss was $15.2 million on sales of $368 million. For the three quarters, the interest expense of $48.9 million exceeded $43 million of income from operations.
The case is In re Xerium Technologies Inc., 10-11031, U.S. Bankruptcy Court, District of Delaware (Wilmington).
H.I.G., Charlesbank Take TLC in Confirmed Plan
TLC Vision Corp., an operator of laser vision correction centers, has a court-approved Chapter 11 plan where ownership will transfer to H.I.G. Capital LLC and Charlesbank Capital Partners.
The bankruptcy judge signed a confirmation order yesterday approving the plan where Charlesbank and H.I.G. will provide enough cash to fully repay $25 million of financing for the reorganization, plus $107.5 million owing pre-bankruptcy secured lenders. They also will provide $9 million cash and a $3 million note for payment toward claims of unsecured creditors.
Unsecured creditors of the U.S. company, owed $5.4 million, are to receive 90 percent of their claims in cash plus 10 percent through the note. Unsecured creditors of the Canadian affiliate, owed $2.3 million, are to have the same treatment.
The plan is designed to leave reorganized TLC with almost no debt.
Shareholders of the Canadian affiliate are to split up $278,500. Shareholders of the U.S. company receive nothing.
TLC owns and manages 71 laser correction centers while providing management services and equipment to independently owned practices in 40 states.
The case is In re TLC Vision (USA) Corp., 09-14473, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Almatis Confirmation Hearing Set for July 19
Almatis BV, a producer of specialty alumina products, scheduled a combined hearing on July 19 where it hopes the bankruptcy judge in New York will approve disclosure materials and sign a confirmation order approving the reorganization plan worked out before the Chapter 11 filing on April 30.
The plan would almost extinguish claims of second-lien and mezzanine lenders who are opposing the plan. Junior creditors opposing the plan include affiliates of Babson Capital Management LLC, Alcentra Group Ltd. and Permira Advisers LLP. They argue that Almatis’s value is “much greater than the $540 million” claimed by the company. They contend that Almatis “walked way” from proposals by Dubai International Capital LLC that would pay the first lien in full while giving new debt and equity to junior lenders.
Dubai International bought the Almatis business in 2007 for $1.2 billion. Almatis’s plan would reduce bank debt to $415 million from $1.05 billion. The new debt is to consist of a $273 million senior credit and a $137 million junior credit.
The plan offers a projected 2.2 percent recovery for second-lien creditors, who would receive warrants for 3 percent of the equity value above an equity value of $325 million. Mezzanine lenders, for a 0.5 percent recovery, would take warrants for 2 percent of the equity value above a valuation of $400 million. The plan has nothing for junior mezzanine lenders.
General unsecured creditors are to be paid in full.
For details on the Almatis plan and options for first-lien lenders, click here for the April 30 Bloomberg bankruptcy report.
Almatis’s revenue in 2009 was $400 million. For 2010, projected revenue is $534 million. Almatis, based in Rotterdam, began defaulting on senior debt in June 2009.
Almatis listed total debt of $1.3 billion, including $681 million on first-lien obligations, $77.7 million on second-lien debt and $200.6 million on mezzanine debt. There is junior mezzanine debt of $80.6 million, plus trade debt of $20 million. Assets were listed for $1.53 billion.
Oaktree Capital Management LLC, based in Los Angeles, holds 46 percent of the first-lien debt, according to a court filing.
The case is In re Almatis BV, 10-12308, U.S. Bankruptcy Court, Southern District New York (Manhattan).
AbitibiBowater to Sell Alabama Sawmill for $4.1 Million
AbitibiBowater Inc., the largest newsprint maker in North America, has a contract to sell 107 acres and a non-operating sawmill in Marshall County, Alabama, for $4.1 million in cash. The buyer is Progress Rail Corp.
The mill hasn’t generated revenue since 2005 and permanently closed in November. The hearing for approval of the sale is set for May 26.
The company filed a plan without a disclosure statement proposing to pay secured creditors in full, in cash. Unsecured creditors would take the new stock, while existing shareholders would receive nothing. (BULL SHIT, we'll see about THAT) The plan would be financed in part by a rights offering available to unsecured creditors. The terms of the offering weren’t spelled out.
The creditors’ committee contends it found defects in parts of a $400 million term loan made in April 2008. The committee contends the loan was a fraudulent transfer as to subsidiaries which guaranteed new debt because they weren’t obligated on the debt being paid off or refinanced.
AbitibiBowater was formed in October 2007 through a merger between Montreal-based Abitibi-Consolidated Inc. and Greenville, South Carolina-based Bowater Inc. The Montreal-based company began reorganizing with 24 pulp and paper mills plus 30 wood- product plants. Revenue in 2008 was $6.8 billion.
In Chapter 11 petitions filed in April 2009, the combined AbitibiBowater companies listed assets of $9.9 billion and debt totaling $8.8 billion as of September 2008.
The case is AbitibiBowater Inc., 09-11296, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Developer Doyle Heaton Sets Plan Confirmation in June
Doyle Heaton, a real-estate developer in the Bay Area around San Francisco, provides an example of how an individual can use Chapter 11 to shed debt.
Heaton filed for bankruptcy reorganization in January. The disclosure statement explaining his Chapter 11 plan said that “most” of his projects are “under water,” meaning they are worth less than the mortgages against them.
The bankruptcy judge approved the disclosure statement at a hearing on May 5, according to court records. The confirmation hearing for approval of the plan is set for June 24.
Although Heaton estimates that unsecured claims could be as much as $119 million, representing personal guarantees he gave for individual projects, he forecasts being able to reduce the claims to $12 million by working out the projects owned in separate corporations. The disclosure statement says unsecured creditors can expect to recover as much as 27.5 percent.
Unsecured creditors’ recovery is expected to come from one asset, Heaton’s 30 percent interest in a project estimated to be valued $3.1 million, less a 20 percent success fee Heaton would receive. The disclosure statement says Heaton will try to confirm the plan using the so-called cramdown process if all creditors classes don’t accept.
The case is In re Doyle D. Heaton and Mary K. Heaton, 10- 40297, U.S. Bankruptcy Court, Northern District of California (Oakland).
Gems TV Asset Auction Set for June 2
Gems TV (USA) Ltd., a television retailer of gemstone jewelry products, will sell most of the assets other than inventory at auction, although not as quickly as hoped.
The bankruptcy judge on May 5 approved holding an auction on June 2, while the company had wanted the auction on May 18. Competing bids must arrive by May 28. The hearing for approval of the sale is set for June 3.
The assets being sold exclude inventory and the Gems TV trademark.
The first bid will be a $3.7 million offer from Zalemark Holding Co. The assets include other trademarks and customer lists.
Reno, Nevada-based Gems TV shut down the business before filing under Chapter 11 on April 5. The petition said assets are less than $50 million while debt is expected to exceed $100 million.
The case is In re Gems TV (USA) Ltd., 10-11158, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Statistics
Default Rates Continue Declining in April, Moody’s Says
The worldwide default rate on junk-rated companies declined to 9 percent in April from 10 percent in March, according to a report yesterday from Moody’s Investors Service. The default rate topped out at 13.5 percent in November, Moody’s said.
During the first four months of 2010, 22 companies defaulted, compared with 115 in the same period of 2009.
Looking only at junk-rated companies in the U.S., the default rate in April declined to 9.5 percent from 11 percent in March.
In a separate report, Moody’s said that companies owned by private-equity investors were responsible for more than half of defaults in 2009. Private equity-sponsored companies also had a larger share of distressed-debt exchanges and prepackaged bankruptcies than other companies.
In 2009, distressed-debt exchanges made up 35 percent of all defaults in the U.S., Moody’s said. In the 1980s, distressed-debt exchanges were 13 percent of all defaults.
Moody’s calculates the default rate by counting the number of defaults within the past 12 months.
Moody’s is predicting that the default rate will shrink more, to 2.7 percent by the year’s end. By this time next year, Moody’s sees the default rate at 2 percent.
Issues trading at distressed levels declined to 14.1 percent in April from 17.1 percent in March. The high for distressed debt was 53.5 percent one year ago. Debt is considered distressed if the yield is 10 percentage points higher than U.S. Treasury securities of comparable maturity.
Briefly Noted
Neenah Reports $3.5 Million Net Loss in March
Neenah Foundry Co., a producer of cast-iron products such as manhole covers and sewer grates, reported a $3.5 million net loss in March on sales of $29.6 million. The operating loss in the month was $2.2 million. Neenah’s plan is scheduled for approval at a June 23 confirmation hearing. The plan was negotiated with holders of 55 percent of secured notes and all the subordinated notes in advance of the Chapter 11 filing on Feb. 3. To read details on the plan, click here for the April 29 Bloomberg bankruptcy report. Neenah, from a Wisconsin town of the same name, reported a $150 million net loss for the Sept. 30 fiscal year on sales of $333 million.
The case is In re Neenah Enterprises Inc., 10-10360, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Aleris Reports $18.4 Million Net Income in March
Aleris International Inc., a producer of rolled and extruded aluminum products, reported net income of $18.4 million in March on revenue of $373.9 million.
The company had a $17.5 million gain in March on derivatives. To read about Aleris’s reorganization plan, click here for the March 29 Bloomberg bankruptcy report. The plan confirmation hearing is set for May 13.
Aleris filed under Chapter 11 in February 2009, listing assets of $4.2 billion against debt totaling $4 billion, including $472 million on revolving credit and related facilities, plus more than $1.1 billion on secured term loans. In addition, there are $1.1 billion in unsecured notes.
The case is In re Aleris International, 09-10478, U.S. Bankruptcy Court, District of Delaware (Wilmington).
U.S. Trustee Objects to Crescent Resources Releases
Real-estate developer Crescent Resources LLC is proposing releases for third parties that appellate courts in Texas don’t allow, according to an objection to confirmation of the Chapter 11 plan filed this week by the U.S. Trustee.
While not opposing approval of the plan, the bankruptcy watchdog for the Justice Department believes the releases for officers, directors and others must be trimmed back to comply with rules established by the U.S. Court of Appeals in New Orleans. Creditors are voting on Crescent’s plan in advance of the confirmation hearing on May 20. For details of the plan, click here to see the March 26 Bloomberg bankruptcy report.
Crescent, based in Charlotte, North Carolina, filed under Chapter 11 in June with commercial, residential and multifamily projects in 10 southeastern and southwestern states. It listed assets of $2.2 billion against debt totaling $1.9 billion, including almost $1.5 billion on pre-bankruptcy credit agreements. Crescent is a joint venture between Duke Energy Corp. and Morgan Stanley Real Estate Fund.
The case is In re Crescent Resources LLC, 09-11507, U.S. Bankruptcy Court, Western District of Texas (Austin).
Pepsi, U.S. Foodservice on Magic Committee
Magic Brands LLC, the parent company of the Fuddruckers and Koo Koo Roo restaurant brands, has an official unsecured creditors’ committee with five members, including Pepsi-Cola North America and U.S. Foodservice Inc.
Magic Brands filed under Chapter 11 on April 21 with a contract for a sale to Travistock Group for $24 million. There will be a May 10 hearing for the bankruptcy judge to decide on procedures for an auction and sale.
After closing 24 stores, Austin, Texas-based Magic Brands will have more than 85 company-owned Fuddruckers locations in operation in 11 states. There are 13 Koo Koo Roo stores in California. Of the company-operated locations, 70 stores are leased and the remainder owned. The petition says assets are less than $10 million while debt is less than $50 million.
The Koo Koo Roo stores were in bankruptcy previously. Owned by Prandium Inc., they were sold to Magic Brands through Chapter 11 in 2004. The 135 Fuddruckers stores in 32 states owned by franchisees aren’t in bankruptcy.
The case is In re Magic Brands LLC, 10-11310, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Cooper-Standard Has Approval for Exit-Financing Commitment
Cooper-Standard Automotive Inc. received court approval on May 5 for a commitment for a $150 million working capital loan that will help the auto-parts maker leave bankruptcy following a May 12 confirmation hearing for approval of the Chapter 11 plan. Other financing includes a $450 million note offering and a backstopped $355 million equity-rights offering. The revised reorganization plan would reduce debt by $650 million to $480 million. To read details of the plan, click here for the March 23 Bloomberg bankruptcy report.
The Novi, Michigan-based company makes auto fluid-handling, body-sealing systems, and systems for controlling noise, vibration and harshness. Revenue in 2008 was about $2.6 billion. The Chapter 11 petition filed in August listed assets of $1.73 billion against debt totaling $1.79 billion.
The case is In re Cooper-Standard Holdings Inc., 09-12743, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Broadstripe Receives Last Exclusivity Extension
Broadstripe LLC, a St. Louis-based broadband cable operator, received a fifth extension of the exclusive right to propose a plan. The new deadline is July 2. No more extensions are possible because the company by then will have been in Chapter 11 for 18 months. The case has been stuck in a dispute where the unsecured creditors’ committee sued secured lenders, contending their claims should be subordinated or recharacterized as equity. In addition, there are two claims by rival cable operators totaling almost $160 million for alleged failures to complete asset-purchase agreements.
Broadstripe filed a reorganization plan based on an agreement reached before the Chapter 11 filing in January 2009 with holders of the first- and second-lien debt. On entering Chapter 11, Broadstripe had 93,000 customers in Maryland, Michigan, Washington State and Oregon. It was created through four acquisitions in 1998 and 1999 and filed for Chapter 11 reorganization in January 2009.
The case is In re Broadstripe LLC, 09-10006, U.S. Bankruptcy Court, District of Delaware (Wilmington).
New Filing
Thousand Oaks, California, Hotels File Chapter 11
The owners of TownePlace Suites by Marriott and the adjoining Courtyard by Marriott hotels in Thousand Oaks, California, filed Chapter 11 petitions yesterday in Woodland Hills, California.
Both companies said that assets and debt are more than $10 million.
The cases are In re Ocean Park Hotels TOY - LLC, 10-15358, and In re Ocean Park Hotels - TOP LLC, 10-15359, U.S. Bankruptcy Court, Central District of California (Woodland Hills).
Watch List
Blockbuster Analysts Question Ability to Survive
For the views of analysts about whether Blockbuster Inc. can survive, click here.
The movie-rental chain had a $569 million net loss for the Jan. 3 fiscal year and has a CC corporate rating from Standard & Poor’s. The company admits there is substantial doubt about its ability to continue as a going concern.
For the Jan. 3 fiscal year, the operating loss was $355 million. Revenue for the year was $4.06 billion, down from $5.07 billion in the prior year.
The balance sheet is now upside down, with assets on the books for $1.54 billion against liabilities totaling $1.85 billion.
Blockbuster said in February that it is closing an additional 545 stores this year. The new closings are in addition to 347 in 2009.
Dallas-based Blockbuster had 5,220 company-owned and 1,300 franchised stores as of Jan. 3.
Advance Sheets
ISDA Setoff Dispute Going Up on Appeal in Lehman
Swedbank AB is appealing a May 5 ruling in the Lehman Brothers Holdings Inc. case where U.S. Bankruptcy Judge James M. Peck held that an ISDA agreement doesn’t allow setting off a post-bankruptcy deposit against a pre-bankruptcy debt.
After the Chapter 11 filing, $11.7 million was deposited into Lehman’s account at the Stockholm-based bank. Relying on the ISDA agreement, Swedbank claimed it was entitled to set the $11.7 million in deposits off against $32 million Lehman owed from before bankruptcy.
Peck said there could be no valid right of setoff because required “mutuality” was lacking. Peck cited cases saying that the company after bankruptcy is considered a different entity from the pre-bankruptcy company. Thus, debts from before bankruptcy cannot be set off against credits after bankruptcy.
Swedbank already filed a notice of appeal. The bank evidently will argue that setoff is permitted by 2005 amendments to bankruptcy law covering so-called safe-harbor provisions for swap agreement.
Peck addressed the argument in his 19-page opinion on May 5 and concluded that Congress didn’t intend to end the mutuality requirement for swap agreements. Peck entered an order requiring Swedbank to return the funds the following business day.
ISDA refers to the International Swaps and Derivatives Association Inc.
The Lehman holding company filed under Chapter 11 in New York on Sept. 15, 2008, and sold office buildings and the North American investment-banking business to Barclays Plc one week later. The Lehman brokerage operations went into liquidation on Sept. 19, 2008, in the same court. The brokerage is in the control of a trustee appointed under the Securities Investor Protection Act.
The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operation is Securities Investors Protection Corp. v. Lehman Brothers Inc., 08-01420, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXcokaAlREAc
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