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BANKRUPTCY WEEK AHEAD: AbitibiBowater Seeks To Poll Creditors On Plan
Jul 23, 2010 11:36:53 (ET)
By Marie Beaudette
Of DOW JONES DAILY BANKRUPTCY REVIEW
AbitibiBowater Inc. (ABWTQ) will ask the Wilmington, Del., bankruptcy court next Friday for permission to send its bankruptcy-exit plan to creditors for a vote.
AbitibiBowater's restructuring plan would pay lenders in full in cash and allow unsecured creditors, including bondholders, to take control of the paper company.
The Montreal company plans to fund its exit from Chapter 11 protection with $2.3 billion in new financing, including $500 million it plans to raise through a debt offering backstopped by Fairfax Financial Holdings Ltd. (FRFHF, FFH.T) and other bondholders.
The company recently obtained permission to pay J.P. Morgan Chase & Co. (JPM), Citigroup Inc. (C) and Barclays PLC (BCS, BARC.LN) $1.2 million in fees and cover up to $300,000 in costs to arrange the financing AbitibiBowater needs to exit bankruptcy.
At Friday's hearing, the company will ask the court to sign off on an outline of its restructuring plan, known as a disclosure statement, which must be approved before creditors can begin voting on the plan.
AbitibiBowater, the world's largest producer of newsprint, filed for bankruptcy protection last year in the U.S. and Canada to restructure some $7 billion in debt. The company aims to exit bankruptcy protection in early fall.
On Monday, the examiner in the Tribune Co. (TRBCQ) bankruptcy is due to file a report on his investigation into the media giant's 2007 leveraged buyout.
The examiner, Los Angeles bankruptcy lawyer Kenneth Klee, was appointed earlier this year to look into the Sam Zell-led buyout that saddled Tribune with an extra $8 billion in debt. The company filed for Chapter 11 protection the following year.
The appointment of Klee, a UCLA professor who helped draft the U.S. Bankruptcy Code as a congressional staffer in the 1970s, came after Tribune bondholders represented by Wilmington Trust Corp. (WL) pressured the company to submit to an independent investigation of the deal, which they suspect involved fraud and mismanagement.
In signing off on the investigation, Judge Kevin Carey of the Delaware bankruptcy court said he could use an examiner's help in deciding whether a settlement Tribune reached with some of its lenders that would end to potential lawsuit claims stemming from the LBO puts a fair price on the litigation.
J.P. Morgan Chase and other lenders slated to take control of the company when it exits bankruptcy could face lawsuits over the buyouts. Advisers and company leaders are also potential lawsuit targets if the settlement falls through.
The proposed settlement forms the basis of Tribune's bankruptcy-exit plan, which is now out for a creditor vote.
The U.S. Justice Department is expected to name an examiner in the Washington Mutual Inc. (WAMUQ) bankruptcy Monday after the company earlier this week relented to shareholder demands for a probe of a key settlement in the Chapter 11 case.
On Tuesday, Washington Mutual, the former parent of Washington Mutual Bank, consented to the appointment of an investigator in the case. The company's shareholders have been fighting Washington Mutual's settlement of litigation stemming from the 2008 seizure and sale of its thrift.
The U.S. trustee, the arm of the Justice Department charged with monitoring bankruptcy cases, is now charged with appointing the examiner who will investigate Washington Mutual's settlement with J.P. Morgan, which purchased the thrift, and the Federal Deposit Insurance Corp., which brokered the sale.
Judge Mary Walrath of the Delaware bankruptcy court approved the probe and set a Sept. 7 deadline for a preliminary report from the examiner. Washington Mutual is slated to go back to court in November to seek confirmation of its creditor-repayment plan, which is based on the settlement.
Washington Mutual's shareholders have complained that the settlement would settle valid legal claims for too little.
(This item appears in Dow Jones' Daily Bankruptcy Review newsletter.)
-By Marie Beaudette, Dow Jones Daily Bankruptcy Review; 202-862-1354
(END) Dow Jones Newswires
July 23, 2010 11:36 ET (15:36 GMT)
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