bankruptcy & restructuring 2013 year end review

2013 Year end

review

Bankruptcy &

restructuring

VoicesBankruptcy and restructuring specialists offer their expecta-tions for 2014 and what surprised some in 2013. Pages 3-5

Bond and loan recoVeriesOceanside Partners’ secured lenders had the largest dis-parity among 28 companies that filed disclosure state-ments in 2013. AMR creditors are expected to be paid in full. Page 6

chapter 11 pricesA look at price of debt from some of the largest bankrupt companies. Page 7

filings By stateThe biggest increase in Chapter 11 petitions from businesses involving debt of $1 million or more was seen in New Hampshire, South Dakota and South Carolina. Page 8

2013’s largest filingsThe largest Chapter 11 in 2013 was from college textbook publisher Cengage Learning. Page 9

Bankruptcy indexBloomberg’s bankruptcy index, a gauge of Chapter 11 cases involving $100 million or more in debt, fell 16.17 percent in the fourth quarter from year-ago levels. Page 10

real estate chapter 11sSouth Carolina saw the biggest jump in Chapter 11 filings from debtors identified as single asset real estate. Page 11

chapter 9sDetroit’s Chapter 9 petition was the largest ever, but the number of local governments seeking court protection fell from 2012. Page 12

chapter 15sThe number of Chapter 15 fil-ings from foreign debtors rose in 2013 from 2012. Canada was the biggest source of these cases. Page 13

contents

4Q 2013 reView By aleksandrs rozens

In 2013, 1,679 businesses with assets and liabilities of $1 million or more filed Chapter 11 petitions. That’s down 22 percent from 2,156 such cases in 2012.

The decline in Chapter 11 filings acceler-ated in the second half of 2013.

Three percent fewer companies filed for bankruptcy in the first quarter of 2013, com-pared with the fourth quarter of 2012. Filings remained constant in the second quarter before falling 19 percent in the third quarter and nine percent in the fourth quarter.

While Detroit’s bankruptcy in July was a re-cord Chapter 9, the number of local govern-ments seeking court protection fell to seven last year from 12 in 2012 and 13 in 2011.

The number of bankruptcies from foreign debtors continued to grow in 2013. Thirty-six Chapter 15 petitions were filed by non-U.S. companies, down from 35 such cases in 2012. Canadian companies were the leading source of these Chapter 15s.

Bloomberg Brief Bankruptcy & Restructuring

Bloomberg Brief Ted Merz Executive Editor [email protected] +1-212-617-2309

Bloomberg News Patrick Oster Managing Editor [email protected] +1-212-617-4088

Bankruptcy & Aleksandrs Rozens Restructuring [email protected] Newsletter Editor +1-212-617-5211

Contributing Editor Deirdre Fretz [email protected] 212-617-5166

Contributing Analyst Robert Restaino [email protected]

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2008 2009 2010 2011 2012 2013 Source: Bloomberg LP

Use of ‘Going Concern’ Off in Q4 From Q2 High, Up Slightly From Q3

While the use of the phrase “going concern” in Bloomberg terminal stories rose in the fourth quarter from the third quarter, its usage was down from the second quarter. The phrase was invoked 1,304 times in the second quarter of 2013, the highest since the first quarter of 2009 when it was used 1,269 times.

chapter 11s and chapter 9s fell in ’13, chapter 15s rose

ECONOMIC WORKBENCH:HAVE OUR DATA MAKE YOUR POINT ECWB <

GO

>

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outlook 2014: Voices

The Federal Reserve’s easy money policy has driven down corporate defaults, but the expected tapering in monetary policy could bring about a pickup in advisory work, according to restructuring professionals. Shipping and media kept advisers busy in 2013 and retail and restaurants likely will be key sources of restructurings in 2014. For some professionals, Detroit’s Chapter 9 portends more bankruptcy activity by local governments, while other restructuring specialists aren’t sure the Michigan city’s historic Chapter 9 hints at a large wave of filings from municipalities.

— Aleksandrs Rozens

Kenneth A. Buckfire Co-President and Managing Director Miller Buckfire

“Every corporation that had a balance sheet maturity issue in the last couple of years and has one in the next two years has basically refinanced already. The really interesting question is: what will the impact of rising rates

be on profits and profit margins and revenues? You will more likely see a situation in which rising interest rates have a bigger impact on operating statements than they do on balance sheets.

The next wave of restructurings will be for those industries that are very sensitive to consumer spending — housing, cars, consumer durables, consumer electronics. Restaurant chains that basically cater to middle-income families have shown declining revenues, declining profits.

If the minimum wage actually rises as is now being discussed, that would have a very negative impact on any business that hires a lot of people at a minimum wage. They are going to get squeezed. The biggest issue since 2009 has been stagnant incomes for the vast majority of people in the workforce. People have been bailed out from a spending point of view by low inter-est rates and the ability to borrow, but if interest rates go up that will have an impact on incomes and people’s ability to borrow.

I do not think we will see a lot more Chapter 9s in the next year. You’ll see a lot more cities and non-state governments do restruc-turings over the next couple of years, but very few of them will result in Chapter 9s. It’ll be a much more consensual restructuring with the cooperation of their creditors. None of them really want cities to default.”

Kelly Stapleton Managing Director Alvarez & Marsal

“For municipalities, Judge Rhodes’ opinion in Detroit made a significant impact on the utility of Chapter 9. Rhodes’ comments — though in dicta — that pension claims are subject to impairment like any general unsecured claim

provide both a call to arms for unions and pensioners who believe their pension rights inviolate and a ray of hope for overburdened municipalities hoping to shed those burdens. Everyone has had their eye on Detroit to see how this struggle will play out.

Rising interest rates, particularly in light of the Fed’s recent pronouncement of reduced tapering, will certainly stress lever-

aged capital structures throughout the economy. Obviously this will create more difficulties for refinancings and provide increasing default risks for debt-rich capital structures, particularly those with large components of floating rate debt.

The trustee’s office has made professional fees a priority. Their new fee guidelines for attorneys enacted in November scrutinize the way fee applications are prepared. As the bankruptcy restruc-turing world gets used to the new procedures, you’ll see them applied to financial advisers as well.”

Jack Hersch Partner, Portfolio Manager TIG Distressed Opportunities LP

“One of the things interesting about last year was that once the Fed started to talk tapering in June and after the market took a big hit, it came back. You had a more-than-a-hundred-basis-point move in the ten-year

[Treasury note] and a high-yield market that remained very strong and attractive once we got past the summer. A lot of people thought it was going to sell off and it never did. There’s no ques-tion that dislocation in June created opportunity [to buy].

I was heavily involved with AMR. That did very, very well. I bought it in the 60s in 2012. I was out by 120 before the Justice Department came in. Then, I switched to US Airways equity. Once you believed AMR was not going to fold, the paper was clearly cheap. And then once you realized a merger with US Airways was likely, the paper was extremely cheap.

It was more of a year for very highly leveraged names that needed their capital structures adjusted. Clear Channel [Commu-nications Inc.] being an example. Travelport [LLC] being another example. We had investments in those.

Post-reorg equity has been a fertile place to invest, generally. Often the best time to buy is a little after an emergence [from bankruptcy], after weak hands have sold. In this case, US Airways stock is remarkably cheap. The equity community does not seem to understand what the merged entities are going to look like.

JC Penney and Puerto Rico should be on every distressed guy’s radar screen.”

Zul Jamal Managing Director Moelis & Co.

“We started to see some of the character-istics of the bull market that we saw in 2006

retail, shipping likely sources of corporate workouts for advisory firms

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OutlOOk 2014: VOices

and 2007: a lot more no-covenant and very covenant-lite leverage loans, which a lot of companies were able to use to refinance their way out of problems. We started to see some PIK toggle deals. The maturity wall that people had talked about really got pushed out significantly. Restructuring activity was significantly lower.

The activity we did see was focused on specific sector issues as opposed to anything driven by the economy or the LBO overhang.

Shipping will continue to experience pressures because the supply-demand imbalance still needs to correct itself. New supply continues to come in and demand growth has not been nearly what it had been historically — global economic growth has not been as robust. Until that works its way through the system, shipping will be an industry that will continue to experience some stresses.

Health-care services, government services also saw some activity. The government has stabilized after the turmoil of the shutdown, but we are still living in an environment of lower gov-ernment spending. As health-care costs are affected as a result of the Affordable Care Act certain health-care service providers may begin to experience some challenges. You may see some more restructuring in sectors such as coal mining, E&P, smaller IPP (in-dependent power producers), infrastructure plays where you have highly levered situations that are not experiencing the demand growth expected when they were first purchased.

We probably will see European distressed debt change hands and distressed asset sales, but I think it will happen slowly over time so it can happen as quietly as possible.”

Deirdre McGuinness Managing Director KCC LCC“The Chapter 11s we are seeing are pre-ne-gotiated. We are looking at sales or prepacks that go in and out fairly quickly. Companies don’t have the balance sheets to fight any-more and litigate. So, it’s easier to accept the inevitable and come up with a prepack.

There are a lot of eyes watching the current Chapter 9 cases and carefully dissecting legal issues and judicial opinions to date because, of course, those will assist in the analysis of other Chapter 9s. Clearly, Judge Rhodes’ decision resonated through-out the bankruptcy community. I think it will help pave the road for Chapter 9s and it won’t be as uncharted.”

David YingHead of Restructuring

Evercore Partners“It’s a very benign environment when it

comes to defaults. You’d have to have a major change in the interest rate environment, a material move in interest rates for a prolonged period of time — which I don’t anticipate — to

see an increase in restructurings. Right now, interest coverage ratios for leveraged credits have never been better because rates are so low and companies have had the last two or three years to access these very attractive long-term interest rates.

Each one of these restructuring deals is hotly contested by lots of competitors. It’s always been hard, but in this environment it’s been extremely tough because the competition is fierce. I don’t think any of the firms are getting out of the business. Everybody is pretty challenged and therefore keeping their headcount under tight scrutiny. In terms of transitioning to an ancillary busi-ness, I think that is very hard because the talent base and the connections in the restructuring business are pretty unique to the industry. All of the other industries you could try to branch out to — M&A or financing — they are very well established with very well established participants. Changing your stripes is pretty darn hard.

In Europe the banking system seems to have gotten a bit healthier. A number of the banks have started to have sufficiently strong financial positions so they can start to address some of their problem-loan portfolios.

You have seen some of the European banks start to sell loans in specific industries. Two shipping restucturings were recently precipitated by big banks selling their positions. Now those companies are free to restructure because the banks are selling and the new buyers are not willing to extend the maturity profile of these overleveraged capital structures. It’s very episodic. I would not call it a landslide. It’s a trickle.”

Allan Brilliant Partner Dechert LLP

“The one thing that started in 2013 and continues into 2014 is the number of multi-national issues, especially restructurings, coming out of the emerging markets. There have been a lot more high-yield defaults in

emerging markets. It seems like international Chapter 15s are go-ing to be picking up, especially with the defaults.

In 2014, I am expecting a lot more restructurings coming out of commodity-related industries — some metals and mining compa-nies — and continued low prices for coal and natural gas will also spur restructuring and bankruptcies. The coal industry has not completely shook out yet. Companies whose margin is based in part on natural gas — such as merchant energy producers — will be under enormous pressure — and I expect we will see more merchant energy restructurings and bankruptcies in 2014.”

Neil Kaufman, Partner and Chairman of the Corporate Department Abrams Fensterman

“The bankruptcy process has moved much more towards section 363 asset sales as opposed to plans of reorganization. That seems to be a trend throughout the country

and that results in more sales of businesses coming out of the bankruptcy process. It’s become increasingly common for compa-nies to not even bother with a plan of reorganization. They just go right in and sell their business. I’ve been seeing more and more with my clients. It’s hard for me to tell whether buyers are more

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likely to be vulture investors or strategic buyers because I mostly see it on behalf of strategic buyers.

From a strategic buyer standpoint you always have to be careful when you buy a bankruptcy business. Why is it there? Is it there be-cause it’s a bad business and no matter what you do you’ll never be able to turn it into a good business? Or is it a good business that was maybe overleveraged in the buyout process and can’t swim against the tide of their debt load? Once they get freed of that debt load a lot of times you can pick off an interesting business in the bankruptcy sale for a lot less than you would have paid prior to the bankruptcy.”

Tim Coleman, Head of Restructuring Blackstone Group

“The business has been lumpy for a lot of people. We have been doing business in a variety of different places such as South America, Mexico and Asia. That’s some-thing that has fed our pipeline.

It’s been a slow year from a default standpoint. Defaults are something like 1.4 percent, which is about as low as it goes in the world of defaults. Likewise companies have issued almost a tril-lion dollars of non-investment grade bonds and bank debt, which is a record upon records. It’s not a great robust environment for restructuring generally because of those kinds of situations.

People expect the default rate to go up in 2014. The latest estimate is a little over three percent and I think we’ll see more defaults. Ultimately all this issuance could turn into restructuring opportunities. Typically if you issue a CCC — I think the number is 65 percent of them all end up in some kind of restructuring within five years. So as you look at the ratings and the kinds of deals being issued — whether it is CCC or on up the ladder — many of those deals will end up needing some kind of restructuring.

Energy will continue to be an issue. We expect to see some health-care and international companies that are struggling as different markets go through their own downturns. We will still see media as something that will be a driver. We are doing a fair amount in ship-ping and I think we’ll still see some shipping business next year.”

Eric Siegert, Head of Restructuring Houlihan Lokey

“We don’t expect a meaningful change in the pace of restructuring activity in 2014. There is no single catalyst which is going to trigger a landslide of activity. Eventually, a combination of events will trigger an increase

in activity: inflation, rate increases and diminished access to credit will change the dynamic. Access to nearly free money to fix all ail-ments will eventually cease.

Regulatory changes can also be a factor. Coal got sort of a double whammy, with the recent abundance of inexpensive natu-ral gas combined with regulatory issues.

It probably won’t be like 2008 and 2009, where a single catalyst in the residential market brought the whole house of cards down. I don’t think you’ll suddenly have a wave of defaults that occur in

a given month in a given year. Maturities are going to start to be a problem. Companies are not going to be able to access capital and refinance maturing debt, interest rates will go up, and liquid-ity will get tighter. I expect that we’ll see activity in the shipping space, and that’s really driven by overall economic activity. As goes the overall economy, so goes the amount of goods that are traveling overseas.The economy is still not robust anywhere. It appears that it will kind of limp along.

With respect to municipal restructuring, we expect an uptick in activity regardless of whether these municipalities have the right to use the bankruptcy code to ease their situations. The bankruptcy option will impact how municipalities restructure and the tools they use to restructure. There are municipalities that are struggling all over the place. They are going to have to do something; their backs are being broken with all the pension costs and retiree costs.

In 2013 we saw more distressed M&A as opposed to traditional debt for equity conversions. So there were a lot of more unique situations, or one-off situations that would not fit into the typical restructuring paradigm.”

Peter Kaufman Head of Restructuring Gordian Group

“I expect more local governments to run into trouble. Municipalities will be filing more. You’ll see trends continue where municipal pension holders and municipal bond holders are at risk. Look at what’s happening with

Detroit. That’s a bellwether.Hospitals are going to be under siege due to a variety of differ-

ent trends. A lot of them rely on funds from the government which are not going to be there.

Healthcare is a real focus for us these days. You’ll still be seeing the shakeout from Obamacare. That’s going to play out in unex-pected ways as people actually find out what’s in the law and they have to react to it.”

Kristen Bentz Executive Director PMG Venture Group

“I see vast consolidation within retail, a lot of people are just getting out of the game. A lot of people are going to be filing for bankruptcy. This Christmas was it for a lot of retailers and the thing that is interesting

about this space is that it is a sector that prides itself on consum-er behavior data and it didn’t see it coming. They thought staying open on Thanksgiving was really going to help.

People will go with a Chapter 11 before they go with a Chapter 7. A lot of retailers are opposed to biting the bullet and liquidating immediately. There’s a lot more ego involved in retail and fashion. It’s a lot more different than other sectors.

Middle-market retailers — I could easily see them having a really rough time and having to shut down stores. Not liquidation per se, but shutting down stores and reorganizing.”

OutlOOk 2014: VOices

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Source: Bloomberg LP

2013 reView: Bond & loan recoVeries By deirdre Fretz and roBert restaino

1250 oceanside partners leads loan recovery disparity; aMr to pay debtors in full

Recovery rates from 28 companies that issued disclosure statements in 2013. Bonds are shown in blue and loans are shown in orange. The size of the bubble represents the face value of the debt at issue. Bubbles appear on date of the disclosure statement.

Secured lenders to 1250 Oceanside Partners had the largest disparity in estimated recovery rates among the 28 companies with liabilities of $500 million or more that filed disclosure statements in 2013 in preparation for exiting bank-ruptcy. AMR debtors are expected to be paid in full, illustrating the wide variety of outcomes from the Chapter 11 process.

1250 Oceanside Partners, a 1,800-acre proposed development near Kona on the island of Hawaii, plans to pay a $20 million mortgage to the county in full. A $627 million secured loan purchased from Bank of Scotland in December 2012 by Sun Kona Finance I LLC was exchanged for the company’s sole asset — land with an estimated value of about $40 million. No payment was made toward unsecured claims, composed largely of $32 million sought by lot owners.

Cengage Learning also projected a wide range in recovery rates. First-lien

lenders are projected to recover 72.8 per-cent of funds lent, while unsecured bond holders will likely receive no payment.

AMR, with $10.2 billion in secured bonds and $3.5 billion in unsecured bonds outstanding when it filed for bankruptcy on Nov. 29, 2011, will pay holders in full under the terms of its merger with US Airways.

Investors in MF Global were projected to recover 23 percent of both $1.2 billion in loans and $1.1 billion in bonds, accord-ing to disclosure statements, after clients received their assets in full. This debt recovery rate was significantly below the market expectation reflected in bond prices during the liquidation process. The failed brokerage’s $325 million in 6.25 percent unsecured bonds maturing in 2016 traded as high as 78.25 cents on the dollar on Feb. 20, according to TRACE.

Energy Mission’s Dec. 3 filing with the court estimates a $57 million first-lien loan will be paid in full, and holders of

$3.85 billion in senior unsecured bonds will receive 78.65 percent of face value. The independent power producer that has been in bankruptcy for over a year is be-ing purchased by NRG for $ $2.64 billion, including $2.29 billion in cash and $350 million in stock.

Over the prior 12 years, lenders recov-ered about 80 percent of the face value of their loans on average, according to 900 disclosure statements captured in Bloomberg’s database of 2,000 bank-ruptcies. Recoveries came in the form of repayment, exchange or other settlements through the bankruptcy process. Bond-holders recovered just under 50 percent, on average, over the same period, often with a disparity in recovery rates between secured and unsecured bonds.

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largest actiVe filings

Company Date of Filing UpdateBenchmark

Security

Longview Power Aug. 30, 2013

The company created to own a $2 billion coal-fired power plant in West Virginia was forced to seek bankruptcy protection after construction flaws reduced its power output, hindering its ability to make debt payments, according to court documents.The company's access to contractor credit lines, set aside as collateral for lenders, has been disputed. Lenders have requested exclusivity into March.

Edison Mission Dec. 17, 2012

The independent power producer won bankruptcy court approval of a description of the terms of a reorganization plan that includes an asset sale to NRG Energy Inc. for $2.64 billion. Next hearing scheduled for Jan. 22.

ATP Oil and Gas Aug. 17, 2012The sale of $637 million in assets to Bennu Oil & Gas LLC, an acquisition vehicle formed on behalf of the debtor-in-possession lenders, was approved by the bankruptcy court on Oct. 17.

MF Global Oct. 31, 2011

The MF Global Inc. brokerage is being liquidated and was expected to return all clients' funds by year-end 2013. A Chapter 11 plan for the holding company was approved by the bankruptcy court in April and implemented in June.

Cengage July 2, 2013

The textbook company is seeking exit financing. A confirmation hearing is scheduled for Feb. 24 on a plan to restructure $5.8 million in debt, much of which it took on when acquired by Apax Partners and Omers Capital Partners in 2007. A March 2014 exit is planned.

edison Mission Bonds rise on sale; longview’s loans Volatile as access to credit debated

Largest Active Chapter 11 FilingsdeBtor Venue deBtor counsel date of filing liaBilities listed

MF Global Bankr. S.D. N.Y. Skadden Arps 10/31/2011 $39.7 billionAMR Corp. Bankr. S.D. N.Y. Weil Gotshal 11/29/2011 $29.6 billionResidential Capital LLC Bankr. S.D. N.Y. Morrison Foerster 5/14/2012 $15.3 billionCengage Learning Inc. Bankr. E.D.N.Y. Kirkland & Ellis 7/2/2013 $6.47 billionEdison Mission Bankr. N.D. Ill. Kirkland & Ellis 12/17/2012 $5.09 billionATP Oil & Gas Bankr. S.D. Texas Mayer Brown 8/17/2012 $3.5 billionPatriot Coal Bankr. S.D. N.Y. Davis Polk 7/9/2012 $3.07 billionLightSquared Bankr. S.D. N.Y. Milbank Tweed Hadley 5/14/2012 $2.29 billionGatehouse Media Bankr. D. Del. Young, Conaway, Stargatt & Taylor 9/27/2013 $1.28 billionLongview Power Bankr. D. Del. Richards, Layton & Finger 8/30/2013 $1.1 billion

Source: Court filings.

Edison Mission bonds rose throughout the year, jumping on Oct. 18 as NRG’s acquisition of the company was announced. Longview Power’s loans were volatile as the company’s access to credit lines from contractors was disputed.

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2013 reView: filings By state

Business Bankruptcies decline in Majority of states, Jump Most in south dakota

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The decline in Chapter 11 filings accelerated in the second half of 2013. Three percent fewer companies filed for bankruptcy in the first quarter, compared with the fourth quarter of 2012. Filings remained constant in 2Q before falling 19 percent in 3Q and 9 percent in 4Q.

Decline in Chapter 11 Caseload Accelerates in H2 Number of Billion-Dollar Filings Fell 41 Percent

2012

2013 $1 billion or more

$500 million - $1 billion

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Companies with assets and liabilities between $1 million and $10 million made up a larger portion of bankruptcy filings in 2013 compared with 2012. Ten companies with liabilities of $1 billion or more filed a Chapter 11 petition in 2013, compared with 17 the previous year.

While Chapter 11 filings by businesses with $1 million or more worth of debt fell in most states, South Dakota, South Carolina and New Hampshire saw an increase in petitions. In South Carolina, Chapter 11s rose by 143 percent to 17 cases, in South Dakota they rose 200 percent to 3 cases and in New Hampshire they were up 167 percent to 8 cases. California, New York and Florida had the most new Chapter 11s; 228 businesses filed in California while New York and Florida each had 152 business bankruptcies.

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2013 reView: largest filings

Media, publishing drive large 2013 chapter 11 Bankruptcies

Top Bankruptcies of Q4 2013deBtor Venue deBtor counsel Judge liaBilities listed industry date of filing

Fisker Automotive Holdings Bankr. D. Delaware Kirkland & Ellis Kevin Gross $467.9 million automotive, hybrid cars 11/22/20013

Green Field Energy Bankr. D. Delaware Latham & Watkins LLP Kevin Gross $447.2 million energy, oil-field services provider 10/27/2013

Physiotherapy Holdings Bankr. D. Delaware Klehr Harrison Harvey Branzburg LLP Kevin Gross $350 million health care 11/12/2013

Simply Wheelz LLC Bankr. S.D. Mississippi Butler Snow O’Mara Stevens & Cannada Edward Ellington $322.2 million car rental business 11/5/2013

Allens Inc. Bankr. W.D. Arkansas Mitchell Law Firm/Greenberg Traurig LLP Ben T Barry $287.9 milllion vegetable canner 10/28/2013

Savient Pharmaceuticals Bankr. D. Delaware Skadden Arps Slate Meagher & Flom Mary F. Walrath $260.4 million health care 10/13/2013

Atlantic Express Transportation Bankr. S.D. New York Akin, Gump, Strauss,

Hauer & Feld Sean H. Lane $251.2 million bus company 11/4/2013

Velti Inc. Bankr. D. Delaware DLA Piper Peter Walsh $175.1 millionprovider of marketing and advertising services for mobile devices

11/4/2013

Global Aviation Holdings Inc. Bankr. D. Delaware Polsinelli PC Mary F. Walrath $170.6 million flight 11/12/2013

NNN 123 North Wacker LLC Bankr. N.D. Illinois Kaye Scholer Jack B. Schmet-

terer $135.5 million real estate 10/4/2013


Top Bankruptcies of 2013deBtor Venue deBtor counsel Judge date of filing industry liaBilities listed

Cengage Learning, Inc. Bankr. E.D.N.Y. Kirkland & Ellis Elizabeth S. Stong 7/2/2013 textbook publisher $6.47 billion

Dex One Corp Bankr. D. Del. Pachulski Stang Ziehl & Jones Kevin Gross 3/18/2013 phone-book

publisher, media $2.79 billion

Anchor Bancorp Bankr. W.D. Wis. Kerkman & Dunn Robert D. Martin 8/12/2013 bank holding company $2.427 billion

SuperMedia Bankr. D. Del. Young, Conaway, Stargatt & Taylor Kevin Gross 3/18/2013 phone-book

publisher, media $1.9 billion

Central European Distri-bution Corp. Bankr. D. Del. Skadden Arps Slate

Meagher & Flom Christopfer S. Sontchi 4/7/2013 vodka producer $1.74 billion

Revel AC Bankr. D. N.J. Kirkland & Ellis Judith H. Wizmur 3/25/2013 casino $1.5 billion

GateHouse Media Bankr. D. Del. Young, Conaway, Stargatt & Taylor Mary Walrath 9/27/2013 newspapers/media $1.28 billion

RDA Holding Bankr. S.D.N.Y. Weil Gotshal & Manges Robert D. Drain 2/17/2013 magazine publisher/media $1.185 billion

Exide Technologies Bankr. D. Del. Skadden Arps Slate Meagher & Flom Kevin J. Carey 6/10/2013 battery

manufacturer $1.14 billion

Longview Power Bankr. D. Del. Richards, Layton & Finger B Brendan Linehan Shannon 8/30/2013 power company $1.1 billion


In 2013, Readers Digest returned to bankruptcy court for the second time in four years, while phone-book publishers Dex One and SuperMedia merged their businesses as their restructuring was supervised by a Delaware judge. Cengage Learning, a college textbook publisher, sought court protection more than five years after a buyout led by Apax Partners LLP left it with about $5.8 billion in debt. GateHouse Media, a newspaper publisher, filed a Chap-ter 11 after creditors approved a plan to combine its assets with those of Newscastle Investment Corp.

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2013 reView By roBert restaino

Consumer Discretionary Cases Led Large Filings Delaware Is Dominant Venue for Large Cases

Five consumer discretionary debtors filed Chapter 11s involving assets and liabilities of $500 million or more, making it the largest industry cat-egory among such cases in 2013.

In 2013, Delaware’s venue took on 36 Chapter 11 cases from businesses involving $50 million or more in liabilities, while New York’s southern district took on 10 such cases.

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Consumer Discretionary


Outer Circle: 2013 Inner Circle: 2012

Bloomberg corporate Bankruptcy index declined in Q4 2013The Bloomberg Corporate Bankruptcy Index ended the fourth quarter of 2013 at a level of 60.17, down 15.49 percent from the close of the third quarter of 2013. The index was down 17.71 percent from the fourth quarter of 2012. The largest Chapter 11 bankruptcy filings during the fourth quarter of 2013 included Fisker Automotive Holdings, Green Field Energy Services, Physiotherapy Holdings, and Simply Wheelz LLC. The Index, found at {BNKRINDX <Index> <Go>} on the Bloomberg Professional Service, is a barometer of recent U.S. bankruptcy activity for corporations with at least $100 million in reported liabilities.

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2013 reView: single asset real estate

single asset real estate filings decline in Most states; south carolina sees Biggest rise

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Single asset real estate made up 22 percent of all Chapter 11 filings by businesses with $1 million or more in debt in 2013, down from 25 percent in 2012.

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New York overtook California as the state with the most Chapter 11 fil-ings classified as single asset real estate cases. Cases from California declined by 42 percent in 2013 to 47 filings from 81 in 2012.

The number of single asset real estate filings declined across most states in 2013. New York saw the most such cases despite a decline to 61 filings in 2013 from 63 in 2012. South Carolina’s single asset real estate cases rose by 300 percent in 2013 to 8 filings, from 2 in the previous year.

Real Estate as a Portion of All Filings Fell in 2013 New York Real Estate Cases Overtake California

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2013 reView: chapter 9 By aleksandrs rozens

Chapter 9s of 2013date of fil-

ing deBtor Venue liaBilities listed

August 6, 2013 Sanitary and Improvement District No. 249 of Sarpy

Bankr. D. Nebraska

$1 million to $10 million

July 13, 2013 Adair County Public Hospital Corp. Bankr. W.D. Kentucky


July 18, 2013 City of Detroit Bankr. E.D. Michigan $18 billion

July 1, 2013 Pulaski County Property Owners Improvement District

Bankr. E.D. Arkansas


May 24, 2013 Sanitary and Improvement District No. 494 of Douglas County

Bankr. D. Nebraska


March 21, 2013 Hardeman County Hospital District Bankr. N.D. Texas


March 1, 2013 Pauls Valley Hospital Authority Bankr. W.D. Oklahoma


Source: Court filings

Utilities Are Top Source of Chapter 9s Historically

Between 1980 and 2013 municipal utilities were the biggest source of Chapter 9s; 167 utilities and special districts sought court protection, ac-cording to data compiled by Chapman Strategic Advisors.

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Source: Chapman Strategic Advisors LLC

Municipal Bankruptcies Decline From 2012 Levels

In 2013 seven local governments filed Chapter 9s, down from 12 in 2012 and 13 in 2011. One of the 2012 cases, Mammoth Lakes, California, was dismissed after the town settled a lawsuit. Two of last year’s Chapter 9s were from Nebraska. In 2012, four Chapter 9s were from local govern-ments in California.

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seven chapter 9s of 2013 include detroit’s historic petitionWhile the number of local governments filing Chapter 9 petitions fell in 2013 to seven from a dozen in 2012, Detroit’s historic petition captured the attention of restructuring professionals. The city listed over 100,000 creditors in its bankruptcy filing and its largest unsecured creditor is the General Retirement System of the City of Detroit. Last year two more petitions were filed in Nebraska, which is the state with the most Chapter 9 bankruptcy petitions.

Top Ch. 9 States Since ’80: Nebraska and California

Nebraska is the biggest source of Chapter 9 filings with 60 such petitions filed between 1980 and 2013, according to data compiled by Chapman Strategic Advisors. California was the next busiest source of municipal filings with 43 local government seeking court protection since 1980.

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Number of Chapter 9s By State Source: Chapman Strategic Advisors

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2013 reView: chapter 15 By aleksandrs rozens

Canada Still Dominant as Source of Chapter 15s New York’s Southern District Is Busiest Venue

Financial, Tech and Industrial Debtors Drive 15s Canadian Businesses Propel Chapter 15 Petitions

Fourteen, or 39% of all of last year’s Chapter 15 petitions, were from Cana-dian businesses. In 2012, 13 of 35 such cases involved Canadian debtors.

New York’s southern district drew the most Chapter 15s by foreign debtors including Sino-Forest Corp., STX Pan Ocean and Magyar Telecom.

Financial, industrial and technology companies were behind 18 of 36 2013 Chapter 15 petitions. Irish Bank Resolution Corp., a financial debtor, was one of the largest Chapter 15 cases by liabilities in 2013.

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Bankr. D. Alaska

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Bankr. S. D. Florida

Bankr. D. Delaware

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Thirty-six Chapter 15 petitions were filed by foreign debtors in the U.S. last year. That’s up from 35 such cases in 2012.

Canadian businesses continued to dominate Chapter 15s; 39 percent of last year’s cases were Canadian companies. In 2012, Canadian companies accounted for 37 percent of Chapter 15 petitions. Germany was the second-largest source of businesses seeking Chapter 15s.

ARXX Building Products, IT Xchange, Lone Pine Resources and Abitibi Helicopter were among the Canadian companies that looked to protect their assets in the U.S. with a Chapter 15.

Two of the largest Chapter 15s in 2013 were shipping companies: Korea’s STX Pan Ocean and Indonesia’s PT Berlian Laju Tanker.

New York’s southern district remains the most active venue for Chapter 15s. It took on 14 such cases in 2013, down from 16 in 2012.

Top 10 Chapter 15 Petitions

corporate deBtor deBtor counsel Judge assets liaBilities date of filing

STX Pan Ocean Co. Ltd. Blank Rome Shelley C. Chapman More than $1 billion More than $1 billion 6/20/2013Irish Bank Resolution Corp. Richards, Layton & Finger Christopher Sontchi More than $1 billion More than $1 billion 8/26/2013Sino-Forest Corp. Milbank, Tweed, Hadley & McCloy Martin Glenn More than $1 billion More than $1 billion 2/4/2013PT Berlian Laju Tanker Tbk Schnader Harrison Segal & Lewis LLP Stuart M. Bernstein $500 million - $1 billion More than $1 billion 3/26/2013Chartis Excess Limited Chadbourne & Parke LLP No one assigned as of April 3 $100 million - $500 million $100 million - $500 million 3/15/2013Banco Pontual Gregory S. Grossman Laurel M Isicoff $100 million - $500 million $100 million - $500 million 10/22/2013Zlomrez International Finance SA White & Case No one assigned as of Dec. 30 $100 million - $500 million $100 million - $500 million 12/23/2013Isofoton SA Squire Sanders Mary Ann Whipple $100 million - $500 million $100 million - $500 million 9/16/2013Pioneer Freight Futures Co. Ltd. Chadbourne & Parke LLP James M. Peck $100 million - $500 million $100 million - $500 million 7/16/2013ICP Strategic Credit Income Master Fund Ltd. Reid Collins & Tsai LLP Robert E. Gerber $10 million - $50 million $50 million - $100 million 6/28/2013

Source: Bloomberg Briefs

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bankruptcy & restructuring 2013 year end review

Economy & Finance