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Puerto Rico Governor Calls for Bankruptcy; Adviser Says Island “Insolvent”

Puerto Rico's governor yesterday called for the commonwealth to be allowed to restructure its debts under U.S. Bankruptcy Code, while a newly appointed adviser to the U.S. territory said it is "insolvent" and will soon run out of cash, Reuters reported yesterday. Governor Alejandro Garcia Padilla, in a televised address, said sacrifice must be shared by bondholders, as he called for Washington, D.C., to allow a bankruptcy debt restructuring. The Caribbean island is struggling to relieve a $73 billion debt burden. It came to a crunch point yesterday after a dire report on its stability by former International Monetary Fund economists was released ahead of key deadlines on Wednesday to repay debt. Former Bankruptcy Judge Steven Rhodes, who oversaw Detroit's historic bankruptcy and has now been retained by Puerto Rico to help solve its problems, gave a blunt assessment yesterday. Puerto Rico "urgently needs our help," Judge Rhodes said. "It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer," he added. Puerto Rico's bonds skidded yesterday as investors sought greater compensation amid the heightened risk. Puerto Rico is not eligible for chapter 9 restructuring under the Bankruptcy Code because it is not a municipality. Rhodes said the island's future hinges on gaining eligibility for debt restructuring, while stressing that bankruptcy would not be a "bailout." Read more.

In related news, the declaration by Puerto Rico’s governor that the island’s $72 billion in debt is “not payable” was not only a warning to its creditors, but also aimed at leaders in Washington, D.C., but the federal response was relatively reserved yesterday, the New York Times reported today. The White House made it clear that Puerto Rico would not receive a “federal bailout” but expressed some support for an effort to allow the island’s public corporations to use federal bankruptcy protections. Puerto Rico is not allowed to authorize chapter 9 bankruptcy as a U.S. commonwealth. But the push in Congress for chapter 9 faces stiff opposition from many Republicans, particularly conservatives, who say that allowing Puerto Rico to restructure its debts in bankruptcy would amount to a free pass for decades of fiscal mismanagement by local government officials. Read more.

Lehman Brothers, Barclays Settlement Approved by Bankruptcy Judge

Bankruptcy Judge Shelley C. Chapman yesterday approved a settlement in the long-running legal fight between Lehman Brothers Inc. and Barclays PLC, punctuating one of the more intriguing sagas of Lehman’s collapse and its aftermath, the Wall Street Journal reported today. Judge Chapman said yesterday that the deal, which calls for Lehman to pay Barclays $1.28 billion for so-called margin assets tied to Barclays’s purchase of Lehman’s brokerage business in 2008, was “fair and equitable.” The legal battle over the assets, which climaxed in a 34-day trial back in 2010, ends with both sides agreeing to drop all litigation against the other. More than $580 million cash will become available for Lehman creditors, because Lehman had set aside about $1.87 billion for the dispute. Both Barclays and James W. Giddens, the trustee unwinding Lehman’s brokerage, have said the payment is about $80 million less than what Giddens would have had to pay without a settlement.

Accused of Fraud, Nurses Registry Files for Bankruptcy

A prominent Kentucky health-care company that once featured University of Kentucky basketball coach John Calipari in its TV ads filed for bankruptcy protection in the face of accusations from Medicare officials that it paid illegal kickbacks to doctors, Dow Jones Daily Bankruptcy Review reported today. Nurses' Registry and Home Health Corp. filed for bankruptcy on Friday in U.S. Bankruptcy Court in Lexington, Ky., demanding that Medicare officials release $1 million in payments for health-care services it provided. The 200-worker company, which provides skilled nursing, physical therapy and occupational therapy to roughly 1,350 patients, takes in nearly $1.3 million a month in Medicare payments, or about two-thirds of its revenue, according to documents filed in U.S. Bankruptcy Court in Lexington, Ky. Medicare officials suspended payments to Nurses Registry earlier this year after suing the company over alleged kickbacks and improper billing. Nurses Registry has denied wrongdoing. Read more. (Subscription required.)

 

For further insight into fraud and bankruptcy, be sure to pick up ABI’s newest title, Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case.

Judge to Approve Revel Liquidation Plan, Settlements

A federal judge said yesterday that he will approve Revel AC Inc.’s liquidation plan after the former owner of the twice-bankrupt Atlantic City, N.J., casino reached several long-elusive settlements with its creditors, the Wall Street Journal reported today. Bankruptcy Judge Michael Kaplan said that the liquidation plan, which will bring Revel’s hard-fought chapter 11 case to a close, will start the process of rejuvenating Atlantic City. The plan divvies up proceeds from the sale of the 47-story boardwalk tower. Revel, which cost $2.4 billion to build, was sold to developer Glenn Straub for $82 million, leaving little behind to repay creditors.

Baha Mar Resort Files Bankruptcy Blaming Contractor Delays

The owners of Baha Mar, a Caribbean resort project valued at more than $3.5 billion, filed for bankruptcy court protection in Delaware, blaming delays by the general contractor, Bloomberg News reported yesterday. The four-hotel resort and golf complex, featuring the largest casino in the Caribbean and its own private island, was presented as the most significant tourism project in the history of the Bahamas. But disputes between the Swiss-Bahamian Izmirlian family, which runs Baha Mar, and a Chinese builder caused the project to miss its scheduled opening in March. Construction on Baha Mar, which was to open on March 27, remains unfinished and no new date has been set. The project is 97 percent complete, according to court papers. Baha Mar Ltd. listed unaudited assets of $3.1 billion and debt of about $2.7 billion in chapter 11 documents in U.S. Bankruptcy Court in Wilmington, Del., where affiliate Northshore Mainland Services Inc. is incorporated. 

The prestigious ABI Corporate Restructuring Competition provides students from leading business schools an opportunity to solve a hypothetical realistic business case of a distressed company before an audience of experts in the turnaround/crisis management/restructuring industries. In addition to the case presentations, there will be a sponsored networking cocktail reception and a dinner, with keynote remarks by Hon. Marjorie Rendell, a federal judge on the U.S. Court of Appeals for the Third Circuit and a former first lady of Pennsylvania.

Past winners include teams from Columbia Business School, The Wharton School, Northwestern University Kellogg Graduate School of Management, New York University Leonard N. Stern School of Business, the Stanford Graduate Business School and Dartmouth College Tuck School of Business. Other competitors include Duke University Fuqua School of Business, Illinois College of Business, University of California – Berkeley Haas School of Management, University of Chicago Booth School of Business and the Yale School of Management.

The annual CRC Reception and Dinner is the networking event of the season and will be attended by leading practitioners, U.S. bankruptcy court judges and participants from ABI’s Complex Financial Restructuring Program. This valuable interaction between student teams and industry professionals contributes to student development and to the professionalism of turnaround/crisis management.

 

 

 

 

Conference Address

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ABI’s Complex Financial Restructuring Program is unique. It goes beyond financial and legal theory and takes a practical look into the strategies of restructuring professionals: attorneys, investment bankers and financial advisors. This day-long program, based on a real case study of a troubled company’s efforts to reorganize, will provide insight and practical advice on how to deal with the ethical dilemmas, strategic decisions and negotiations that are part of the day-to-day reality of restructuring practice. If you advise clients on restructuring issues, you can’t afford to miss this one-of-a-kind program.

This year’s program is provided in partnership with the Philadelphia Chapter of TMA.

 

 

 

 

Conference Address

Notice: Attendee information is not meant to be used for mass mailings, invitations, bulk emails, e-mail harvesting or any other commercial purpose. Personal or contact information on this list is intended solely for personal use and should not be duplicated, reproduced or distributed to a third party If you are interested in opting out of inclusion of either printed or online attendee lists, please send an email to meetings@abiworld.org.

Returning this year to the Detroit area, in partnership with the Consumer Bankruptcy Association of the Eastern District of Michigan, is ABI’s 11th Annual Detroit Consumer Bankruptcy Conference. This year’s day-long program features sessions on student loans, Law v. Siegel, a Supreme Court update, claims in chapter 13 cases and various issues in chapter 7 cases, and a plenary session on witness preparation, as well as a case law update. It is a must-attend program for all Michigan-area consumer bankruptcy practitioners!

 

 

 

 

Conference Address

Notice: Attendee information is not meant to be used for mass mailings, invitations, bulk emails, e-mail harvesting or any other commercial purpose. Personal or contact information on this list is intended solely for personal use and should not be duplicated, reproduced or distributed to a third party If you are interested in opting out of inclusion of either printed or online attendee lists, please send an email to meetings@abiworld.org.

Please join ABI at the 11th Annual International Insolvency & Restructuring Symposium in Spain! The symposium features some of the world’s top professionals in restructuring speaking on the industry’s hottest topics. This educational program has been developed to provide attendees with an interactive learning experience led by a faculty of prominent practitioners and commentators, as well as leading judges. Earn up to 5/6 hours of CLE/CPE hours of credit!

 

 

 

 

Conference Address

Notice: Attendee information is not meant to be used for mass mailings, invitations, bulk emails, e-mail harvesting or any other commercial purpose. Personal or contact information on this list is intended solely for personal use and should not be duplicated, reproduced or distributed to a third party If you are interested in opting out of inclusion of either printed or online attendee lists, please send an email to meetings@abiworld.org.

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