Tousa Interstate Bakeries New Century Bankruptcy (Update1)
Tousa, Interstate Bakeries, New Century: Bankruptcy (Update1)
By Bill Rochelle
Jan. 30 (Bloomberg) — Tousa Inc., the Florida-based
homebuilder that filed in Chapter 11 yesterday along with 46
affiliates, must complete the bankruptcy reorganization within
six months to comply with the plan support agreement the company
signed before filing with holders of a majority of the senior
notes.
The plan calls for swapping existing senior notes and other
unsecured claims for the new stock and a sharing of recoveries
from a litigation trust. Holders of subordinated notes are to be
offered a not-yet determined share of the litigation trust and
warrants to purchase an unspecified amount of the new stock.
The agreement with senior noteholders will terminate if
they don;t agree on a business plan in 30 days and Tousa doesn;t
file a Chapter 11 plan in 60 days. In addition, the U.S.
Bankruptcy Court in Fort Lauderdale, Florida, must approve a
disclosure statement in 120 days explaining the plan and the
bankruptcy judge must approve the plan within six months from
the bankruptcy filing date.
Tousa;s chief financial officer said in a court filing that
bankruptcy resulted in part from the downturn in the housing
market and competition “for a limited universe of homebuyers.;;
In addition, bankruptcy became unavoidable, said Tommy
McAden, the finance officer, because Tousa “added $500 million
in secured indebtedness;; to the balance sheet “shortly before
the unexpected housing industry and capital markets difficulties
in August 2007.;;
Listing assets of $2.28 billion against debt totaling
$1.77 billion, McAden noted that the debt includes $200 million
in a first lien loan, $108 million on a revolving credit and
$317 million in second lien term debt. Debt also includes
$1.1 billion in unsecured notes, of which $550 million is senior
debt and $510 million is subordinated.
Tousa;s plan to emerge from reorganization assumes the
company will be able to refinance the first lien and revolving
credit while reinstating the second lien term loan.
The largest homebuilder to file in Chapter 11 since the
downturn in the market, Hollywood, Florida-based Tousa didn;t
put its mortgage finance, insurance and closing services
subsidiaries into bankruptcy.
Financing of $150 million for the reorganization comes from
Citigroup Global Markets Inc. The company intends to continue
building and delivering homes without interruption.
Tousa is 67 percent-owned by Technical Olympic SA. Tousa
does business under names including Newmark Homes and Engle
Homes. Tousa;s revenue for the first nine months of 2007 was
$1.62 billion. For 2006, sales were $2.6 billion.
Tousa missed interest payments this month on $200 million
in 7.5 percent senior subordinated notes of 2015, $300 million
in 9 percent senior notes of 2010 and $185 million in
10.375 percent subordinated notes due 2012. Tousa was delisted
from the New York Stock Exchange in November.
The case is In re Tousa Inc., No. 08-10928, U.S. Bankruptcy
Court, Southern District Florida (Fort Lauderdale).
Other Updates
Interstate Bakeries Plan Going to Creditors for Vote
The Teamsters union was unsuccessful yesterday in its
attempt to block approval of the disclosure statement explaining
the Interstate Bakeries Corp. reorganization plan.
The Teamsters argued that creditors shouldn;t waste their
time voting on the plan because it can;t be approved by the
bankruptcy judge given the union;s refusal to accept the
company;s demand for contract concessions.
A new contract with concessions is required for Kansas
City, Missouri-based Interstate to use $400 million in financing
from the lending group led by Silver Point Capital LLC. The
company admitted that the plan won;t work without concessions.
The U.S. Bankruptcy Judge in Kansas City told the union its
objections will be properly heard at the March 12 confirmation
hearing, where he will decide if the plan can be approved.
The Silver Point financing requires approval of the plan in
a confirmation order by March 14 and emergence from
reorganization not later than March 31.
Interstate filed under Chapter 11 in September 2004 while
it was the largest wholesale baker in the U.S. The brand names
include Wonder, Hostess, Merita, Dolly Madison, Drake;s and
Butternut. The company currently has 41 bakeries, 633
distribution centers and 730 thrift stores.
The case is In re Interstate Bakeries Corp., 04-45814, U.S.
Bankruptcy Court, Western District of Missouri (Kansas City).
Musicland Creditors Sue Best Buy to Recover $145 Million
The unsecured creditors; committee of Musicland Holding
Corp. filed a lawsuit to recover $145 million from Best Buy Co.
after gaining nothing from this month;s approval of a
liquidating Chapter 11 plan.
Best Buy bought the chain in early 2001 for $425 million in
cash and $260 million of debt assumption. Best Buy put the
company on the market in 2003 after announcing that the stores
ended the March 1 fiscal year with a net loss of $411 million,
including a $23 million loss from store operations.
After buying the chain from Best Buy subject to the debt,
Sun Capital Partners Inc. allowed Musicland to file in Chapter
11 in January 2006.
The creditors; lawsuit contends that Best Buy made
Musicland pay it $145 million toward the debt Best Buy assumed
in the acquisition. The creditors contend Musicland was
insolvent at the time, the $145 million should be considered
equity and the payment to Best Buy was “fraudulent.;;
Known for its music stores under the names Sam Goody, Media
Play and Suncoast, Musicland filed the liquidating Chapter 11
plan in September 2006. When finally approved in a confirmation
order this month, the liquidating plan pays only a portion of
secured trade claims and provides unsecured creditors with a
share of litigation recoveries.
In March 2006 the bankruptcy court authorized Musicland to
sell 345 Sam Goody and Suncoast stores for $104 million to Trans
World Entertainment Corp., the owner of the Coconuts,
Wherehouse, Planet Music and F.Y.E. music stores. The
acquisition gave Trans World some 1,100 stores.
Located in Minnetonka, Minnesota, before liquidating,
Musicland filed under Chapter 11 in January 2006, listing assets
of $371.5 million and debt of $485.6 million.
The case is In re Musicland Holdings Corp., No. 06-10064,
U.S. Bankruptcy Court, Southern District New York (Manhattan).
Price for Calpine;s Fremont Plant Rises 105% at Auction
Calpine Corp., the power producer whose Chapter 11 plan was
approved in a Dec. 19 confirmation order, watched as the price
rose 105 percent at auction for the sale of an uncompleted 707-
megawatt combined-cycle natural-gas-fired electric generating
plant in Fremont, Ohio.
American Municipal Power-Ohio Inc., the original bidder
with an offer of $124 million, saw the price rise at yesterday;s
auction to $253.6 million when a unit of FirstEnergy Corp.
emerged as the winning bidder.
Calpine will be in bankruptcy court today looking for court
approval of the sale.
Calpine;s plan pays creditors with the reorganized
company;s stock and gives warrants expiring in August to
existing stockholders. The stock closed yesterday at $16.74, up
44 cents in when-issued trading on the New York Stock Exchange.
The high and low closing prices since the stock began trading on
a when-issued basis are $18.50 and $15.
Calpine;s Chapter 11 filing was the largest in 2005
measured by assets.
The case is In re Calpine Corp., 05-60200, U.S. Bankruptcy
Court, Southern District of New York (Manhattan).
Lionel Has Loss, Extended Financing and Longer Exclusivity
Lionel LLC, the toy-train maker trying to arrange financing
so it can emerge from Chapter 11 reorganization, reported a
$831,000 profit in December. For 2007 as a whole, the bottom
line was a $6.4 million net loss.
Operating income in December was $1.4 million. For 2007,
operating income was $2.8 million.
Lionel;s exclusive time for filing a plan was extended
earlier this month to March 31. The company also received
approval for an extension of secured financing to May 30.
At the same time last week, a U.S. bankruptcy judge in New
York allowed the company to pay salaries of $1 million and
$465,000 a year to the chief executive officer and executive
vice president.
Lionel made a settlement last year with its long-time
adversary, Mike;s Train House Inc. The settlement is the
underpinning for the reorganization plan promising payment in
full to all creditors. Although the terms of the settlement with
Mike;s Train House are secret, it contains a March 31 deadline
for emerging from reorganization.
Lionel filed under Chapter 11 in November 2004 after Mike;s
Train House won a $40.8 million judgment for misappropriating
train designs. The judgment was set aside when the U.S. Court of
Appeals for the Sixth Circuit ordered a new trial in December
2006.
The case is In re Lionel L.L.C., 04-17324, U.S. Bankruptcy
Court, Southern District of New York (Manhattan).
Filing Possible
Tropicana Notes Accelerated and Indenture Trustee Sues
The indenture trustee for $960 million in 9.625 percent
senior subordinated notes due in 2014 issued by casino operator
Tropicana Entertainment LLC accelerated the debt and filed suit
in Delaware Chancery Court to compel payment.
The indenture trustee is also asking the state judge to
stop the company from selling assets. To read Bloomberg
coverage, click here.
Tropicana last month announced obtaining a one-year
forbearance agreement with the senior lenders. The forbearance
began Dec. 12, when New Jersey regulators announced the
termination of the company;s license for the casino in Atlantic
City.
Tropicana at the time said it intends to sell the Atlantic
City property “as soon as is practicable.;; The company is also
selling casinos in Evansville, Indiana, and Vicksburg,
Mississippi.
The company previously said it expects the sales to “pay
all or substantially all of its debt under the senior credit
facility.;;
The forbearance agreement increased the interest rate and
gave Tropicana availability for half the $180 million credit
facility.
The New Jersey casino is now technically being run by a
receiver.
The Crestview Hills, Kentucky-based company also has casino
properties in Baton Rouge, Louisiana; Greenville, Mississippi;
and Laughlin and Lake Tahoe, Nevada.
Tropicana was part of $2.1 billion acquisition last year by
Ft. Mitchell, Kentucky-based Columbia Sussex Corp.
Briefly Noted
New Century Financial Corp. is asking the bankruptcy court
for a 24-day extension of the exclusive right to file a
liquidating Chapter 11 plan. The new deadline would be Feb. 21
if the U.S. bankruptcy judge in Delaware agrees at a Feb. 20
hearing. New Century says it;s ready to file a plan, with the
creditors; committee as a co-sponsor. According to the company,
the committee needs a few more days to work out “minor
intercreditor issues;; before filing the plan. New Century is
asking the judge to prevent everyone besides the creditors;
committee from filing a competing plan. Before the filing last
April to liquidate in Chapter 11, the Irvine, California-based
company was responsible for $60 billion in home loans in 2006
and generated $220 billion in loans since inception. The case is
In re New Century TRS Holdings, Inc., No. 07-10416, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Adelphia Communications Corp. made a third supplemental
distribution of $216 million in cash and 737,000 shares of stock
of buyer Time Warner Cable Inc. The stock had a “deemed;; value
of about $28 million under the plan of reorganization. The
market value yesterday was closer to $18.4 million. The
distribution was made under the confirmed liquidating Chapter 11
plan carried out in February. The first distribution consisted
of $11.2 billion in cash and stock, followed by distributions of
more cash and stock in August and December. The distribution on
Jan. 28 brings the total to more than $12.5 billion. The sale
price to Time Warner Cable was $17 billion in cash and stock.
Further distributions will be made as more disputed claims are
resolved. The case is In re Adelphia Communications Corp.,
02-41729, U.S. Bankruptcy Court, Southern District of New York
(Manhattan).
Dura Automotive Systems Inc., the auto-parts maker that;s
renegotiating the reorganization plan creditors already
accepted, was given the bankruptcy court;s blessing yesterday to
refinance the secured loan supporting the Chapter 11 case.
Ableco Finance LLC will pay off the existing $105 million
secured loan while providing another $45 million and a
$20 million letter of credit facility, for a total of
$170 million. The new credit will expire on July 31. To read
Bloomberg coverage, click here. Dura filed under Chapter 11 in
September 2006 with 16,000 employees at 63 factories in 14
countries. The operations outside the U.S. and Canada aren;t in
reorganization. The petition by Rochester Hills, Michigan-based
Dura listed $2 billion in assets and debt of $1.7 billion. The
case is In re Dura Automotive Systems, Inc., No. 06-11202, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Pope %26amp; Talbot Inc., the Canadian pulp and lumber producer,
announced yesterday in a filing with the U.S. Securities and
Exchange Commission that it obtained a sixth covenant waiver for
violating the budget. The waiver was given by the secured
creditors financing the reorganizations in the U.S. and Canada.
This month, courts in the U.S. and Canada approved the sale of
the softwood sawmills to International Forest Products Ltd. An
auction for the pulp mills, testing whether anyone will better
the offer from Indonesia-based Sinar Mas Group, is scheduled for
Feb. 5. Pope %26amp; Talbot began reorganizing in Canada near the end
of October and filed under Chapter 11 in Delaware in November.
The filing in Canada was under the Companies; Creditors
Arrangement Act. The Canadian case was moved to British Columbia
from Ontario. The company says the assets are $347.9 million
while total debt is $473.2 million. The U.S. case is In re Pope
%26amp; Talbot Inc., 07-11738, U.S. Bankruptcy Court, District of
Delaware (Wilmington).
Capital Land Investors LLC was formally taken over by the
previously appointed Chapter 11 trustee for an affiliate of USA
Investment Partners LLC. Capital Land filed under Chapter 11 in
Las Vegas in early December, owning 700 acres of desert land in
Perris, California, 75 miles east of Los Angeles. Recently filed
lists of assets and debt estimate the property is worth
$30 million while secured debt is $63 million. Unsecured claims
are less than $1 million. The bankruptcy judge in the USA
Investment Partners case appointed a trustee two days after
creditors filed an April 4 involuntary petition. The USA
Investment trustee put Capital Land into Chapter 11 to sell the
property. The previously pending cases are In re USA Investment
Partners LLC, 07-11821, and In re USA Investors VI, LLC,
07-12377, both in U.S. Bankruptcy Court, District of Nevada (Las
Vegas). The Capital Land case is In re Capital Land Investors
LLC, No. 07-18099, in the same court.
Daniel Marino, the head of finance at Bayou Group LLC, the
hedge fund that turned out to be a Ponzi scheme, was sentenced
yesterday to a 20-year prison term despite his cooperation with
prosecutors. James Marquez, a Bayou co-founder, was sentenced
last week to four years and three months in prison and ordered
to pay $6.2 million in restitution. The federal district judge
yesterday said she would require Marino to pay “nine figures;;
in restitution. The amount is to be set in 90 days. Another
founder, Samuel Israel III, is yet to be sentenced. Marino and
Israel took guilty pleas in September 2005. Marquez pleaded
guilty in December 2006. To read Bloomberg coverage, click here.
When evidence came to light that Bayou was being operated like a
Ponzi scheme, U.S. District Judge Colleen McMahon in White
Plains, New York appointed a receiver for Bayou in April 2006.
The receiver put Bayou in Chapter 11 the next month. McMahon was
the sentencing judge yesterday. The Bayou Chapter 11 case is In
re Bayou Group LLC, No. 06-22306, U.S. Bankruptcy Court,
Southern District New York (White Plains).
The fight for control of U.S. Energy Systems Inc., a clean
energy producer, was put on hold until Feb. 5 while the company
and former Chief Executive Asher Fogel try to negotiate a
settlement. The company contends the Chapter 11 filing this
month put a halt to a shareholders; meeting called for in
December by the Delaware Chancery Court at Fogel;s request. If
not settled, the U.S. bankruptcy judge in New York will have an
opportunity to rule whether a company;s board about to lose
control can file bankruptcy to halt a hostile takeover of the
executive suite. To read Bloomberg coverage, click here. The
petition by the Avon, Connecticut-based company listed assets of
$258 million against debt totaling $175 million. The case is In
re U.S. Energy Systems Inc., No. 08-10054, U.S. Bankruptcy
Court, Southern District of New York (Manhattan).
Buffets Holdings Inc., the second-largest family restaurant
operator in the U.S., said it won;t be able to file a financial
statement on time for the quarter ended Dec. 12 as a result of
last week;s Chapter 11 filing. In saying it would be late, the
company disclosed in a filing with the Securities and Exchange
Commission yesterday that it had a $34.6 million net loss in the
quarter, little changed from the $34.9 million net loss for the
quarter in the prior year. The net loss this year includes
charges of $2.8 million for lease terminations and $6.4 million
for asset impairment. Eagan, Minnesota-based Buffets operates
under the names Old Country Buffet, HomeTown Buffet, Ryan;s and
Fire Mountain. Twelve-month revenue was $1.55 billion. The
filing listed $964 million in assets against debt of
$1.16 billion. The case is In re Buffets Holdings Inc.,
08-10141, U.S. Bankruptcy Court, District of Delaware
(Wilmington).
Central Illinois Energy LLC, the owner of an uncompleted
ethanol plant in Canton, Illinois, filed its official lists of
assets and debt saying the plant is worth $40 million while debt
totals $141 million. The lender Credit Suisse Group, holding a
$95 million secured claim, declined to provide financing for the
plant;s completion until the facility is sold. To read Bloomberg
coverage, click here. Central Illinois filed under Chapter 11 on
Dec. 13 in U.S. Bankruptcy Court in Peoria, Illinois. The plant
is to have the capacity of producing 37 million gallons of
ethanol a year. The case is In re Central Illinois Energy LLC,
07-82817, U.S. Bankruptcy Court, Central District of Illinois
(Peoria).
Avado Brands Inc., the restaurant operator in the process
of selling 90 Don Pablo;s Mexican Kitchen restaurants and 22
Hops Grillhouses in 20 states, was given an extension of the
exclusive right to file a liquidating Chapter 11 plan until May
2. Avado filed again under Chapter 11 in September in Delaware,
29 months after completing a prior reorganization in the
bankruptcy court in Dallas. The new petition listed assets of
$88 million against debt totaling $108 million. The case is In
re Avado Brands Inc., 07-11276, U.S. Bankruptcy Court, District
of Delaware (Wilmington).
Statistics
Loan Defaults Rise from Record Low to Rate of One Year Ago
Yesterday;s Chapter 11 filing by Tousa Inc. — coupled with
the bankruptcy filings since December by Buffets Holdings Inc.,
Propex Inc., and Heartland Automotive Holdings Inc. — caused a
rise in the Standard %26amp; Poor;s index of syndicated loan defaults
to 0.76 percent, the highest in one year and almost equal to the
0.78 percent default rate in January 2007.
In early December, before the recent spate of bankruptcy
filings, the default rate was an all-time low of 0.26 percent,
S%26amp;P said.
Even at the new higher rate, defaults are a fraction of the
historical default rate of 3.1 percent.
If companies were included that haven;t yet filed
bankruptcy but missed interest payments, the default rate on
institutional loans would be 1.13 percent, the highest in 13
months.
Canada News
Communications Equipment Provider Cygnal Proposes Plan
Cygnal Technologies Corp., the designer and installer of
network-communications equipment that in November filed for
protection from creditors in the Ontario Superior Court of
Justice, announced yesterday it has “finalized a joint plan of
arrangement;; under the Companies; Creditors Arrangement Act.
The secured lender Laurus Master Fund Ltd. will take over
ownership while unsecured creditors are to receive cash or a
combination of cash and notes. Existing common stock will be
extinguished.
Unsecured creditors may elect to take a pro rata share of a
cash fund of less than $2 million provided by Laurus, or
75 percent of the cash plus a note for the same amount.
Sales for the Markham, Ontario-based company were
$122 million last year.
To contact the reporter on this story:
Bill Rochelle in New York at
