Business Bankruptcy News Bulletin Summary for Week of September 27

The items below are excerpted from the Business Bankruptcy News Bulletin. A full issue contains information on dozens of troubled companies, as well as informational and analysis highlights and an examination of business bankruptcy matters. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

What to Expect in a Chapter 7 Bankruptcy Filing

Debtors and creditors can expect different sorts of developments in a bankruptcy filing, depending on what type of filing a debtor makes. For example, in a Chapter 7 filing a trustee is appointed to take over the property of the estate. The debtor is then given up to forty days, after the filing of the petition, to attend a first meeting of creditors, the so-called 341 meeting. At that time the trustee and creditors ask about the financial condition of the company. If the bankrupt debtor doesn’t have much in the way of assets the case is typically wrapped up quickly, in three months or so. It can take longer if there are significant assets to be dealt with. If the debtor does not cooperate or in some cases not show up for the 341 meeting, the trustee and/or committee may make recommendations to the court regarding liquidation of the debtor’s assets.

BANKRUPT COMPANIES

AbitibiBowater Inc.’s unsecured creditors approved the Montreal, Quebec-based newsprint manufacturer’s reorganization plan, allowing it to emerge from protection from creditors in Canadian bankruptcy court. A vote on the reorganization plan in the U.S. Bankruptcy Court is scheduled for today. For more information contact the U.S. court at 302-252-2560 and refer to case number 09-11296.

Bahama Investments I LLC, Kissimmee, Fl., filed Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. The firm listed assets of between $1 million and $10 million and liabilities of between $100 million and $500 million. The filing was under case number 10-12945. Also filing were Bahama Investments II LLC under case number 10-12946 and other affiliates. For more information contact the court at 302-252-2560.

Blockbuster Inc., the financially-troubled Dallas, Tx. video rental company, filed Chapter 11 in the U.S. Bankruptcy Court in the Southern District of New York. Under the plan, the company, which could close more than half of its nearly 3,000 outlets, would exchange $630 million due senior noteholders for equity while almost $300 million in common and preferred shares as well as subordinated debt would be wiped out.  BB also received $125 million in DIP financing from those same senior noteholders. Franchises and its international operations are not included in the filing. Blockbuster owes 20th Century Fox, Warner Home Video, Sony Pictures, Walt Disney, Universal Studios and Lions Gate more than $70 million combined.

General Growth Properties Inc., the bankrupt Chicago, Il. mall operator, reached a deal to pay heirs of billionaire Howard Hughes $230 million for their remaining stake in a residential development. That transfer of ownership would take place within a month of General Growth’s upcoming emergence from Chapter 11 proceedings. The firm’s reorganization plan calls for a $7 billion recapitalization financed by private-equity firms including Pershing Square Capital Management LLP and Brookfield Asset Management Inc.

Hudson & Keyse LLC, a collection firm in Painesville, Oh., filed Chapter 7, with a creditors’ meeting to be scheduled for the middle of next month. The filing, in the U.S. Bankruptcy Court for the Northern District of Ohio, listed assets of less than $300,000 and liabilities of more than $63 million.

Performance Institute Inc., Arlington, Va., filed Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. The firm listed assets of between $10 million and $50 million and liabilities of between $100 million and $500 million. The filing was under case number 10-13075. For more information contact the court at 302-252-2560.

Thompson Publishing Group Inc., Washington, D.C., filed Chapter 11 in the U.S. Bankruptcy Court in Delaware, saying that it reached a deal with PNC Bank as a stalking horse bidder which will buy Thompson’s assets and assume certain debt. In its filing, Thompson listed assets of between $10 million and $50 million and liabilities of between $100 million and $500 million. For further information contact the court in Wilmington, De. at 302-252-2560.