Loehmann's Madoff WaMu Lehman Trico, BankruptcyBloomberg

Mardi 22 déc 2015

This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. X Bloomberg the Company & Products Bloomberg Anywhere Login Bloomberg Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Company Careers Diversity & Inclusion Philanthropy & Engagement Sustainability Technology History & Facts Financial Products Bloomberg Professional Bloomberg Tradebook Bloomberg Briefs Bloomberg Indexes Bloomberg SEF Bloomberg Institute Service Center Downloads Enterprise Products Enterprise Solutions Trading Solutions Bloomberg Vault Media Bloomberg Business Bloomberg Politics Bloomberg View Bloomberg Television Bloomberg Radio Bloomberg Mobile Apps News Bureaus Customer Support Americas +1 212 318 2000 Europe, Middle East, & Africa +44 20 7330 7500 Asia Pacific +65 6212 1000 Communications Press Announcements Press Contacts Industry Products Bloomberg Government Bloomberg Law/BNA Bloomberg Big Law Bloomberg New Energy Finance Media Services Advertising Bloomberg Content Service Bloomberg Live Conferences Follow Us Facebook Twitter LinkedIn Instagram Menu News Markets Insights Video Now Reading: Search Global Europe Latest World Industries Science+Energy Technology Design Culture Graphics Pursuits View U.S. Politics Businessweek Stocks Currencies Commodities Rates+Bonds Magazine Benchmark Watchlist Economic Calendar Latest Game Plan Business Schools Small Business Personal Finance Profiles Watch Now Video Schedule + Shows Radio Events Loehmann’s, Madoff, WaMu, Lehman, Trico: Bankruptcy Don’t Miss Out — Follow us on: Facebook Twitter Instagram Youtube by William J Rochelle III 9:17 AM EST December 3, 2010 Share on FacebookShare on Twitter Share on LinkedInShare on RedditShare on Google+E-mail Dec. 3 (Bloomberg) — Discount retailer Loehmann’s Inc.
filed a reorganization plan and explanatory disclosure statement
yesterday fleshing out the agreement reached before the Chapter
11 filing on Nov. 15.
The plan is based on a new $25 million investment from
current owner Istithmar PJSC and Whippoorwill Associates Inc.,
the owner of 70 percent of the secured notes. Istithmar, an
investment firm owned by Dubai’s government, will provide 64
percent of the $25 million to buy new convertible preferred
The plan will exchange the $80.4 million owed on secured
Class A notes for 42.4 percent of the new common equity. Class A
noteholders can participate in a rights offering for $25 million
of preferred stock convertible into 47.2 percent of the new
common stock. The recovery on the Class A notes is estimated to
be 37.1 percent.
Class B noteholders, owed $38 million, are to receive 8.6
percent of the new common equity for a 13.8 percent recovery.
General unsecured creditors, owed $26.2 million, should see
a 4.2 percent dividend by splitting up $1.1 million cash.
The plan, which would reduce debt by about $115 million,
has support from holders of 73 percent of the Class A notes and
64 percent of the Class B notes, according to the disclosure
Other debt included $30.5 million outstanding at filing on
a revolving credit with Crystal Financial LLC, which is
providing a $45 million secured credit for the court
The loan agreement requires Loehmann’s to proceed on a dual
track, in case the plan fails.
A hearing for approval of the disclosure statement is set
for Jan. 5. In case the plan isn’t working, the loan agreement
requires filing a motion by Jan. 14 to sell the business. The
plan must be confirmed and implemented by Feb. 18.
Loehmann’s has 48 stores in 13 states and the District of
Columbia. Eight locations are closing.
Loehmann’s emerged from a 14-month Chapter 11
reorganization with a confirmed plan in September 2000. It was
then operating 44 stores in 17 states. Loehmann’s was acquired
by Istithmar in July 2006 in a $300 million transaction.
The case is In re Loehmann’s Holdings Inc., 10-16077, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).


Madoff Trustee Sues JPMorgan Chase for $6.4 Billion

JPMorgan Chase & Co. and affiliates were sued for
$6.4 billion yesterday by the trustee liquidating Bernard L.
Madoff Investment Securities Inc.
The trustee in a statement said that the New York-based
bank aided and abetted Madoff by being « willfully blind to the
fraud, even after learning about numerous red flags. »
Contending that JPMorgan was « thoroughly complicit, » the
Madoff trustee said the bank had « clear, documented
suspicions. » To determine if there was fraud, the trustee said
the bank « had only to review its internal account records. »
JPMorgan was Madoff’s primary bank and broker. The bank
said it « did not know about or in any way assist in the fraud
orchestrated by Bernard Madoff. » It called the complaint
« irresponsible and over-reaching. »
The trustee said any recovery in the suit will be customer
property, meaning that proceeds from settlement or judgment will
go entirely to customers and won’t be used to pay expenses of
the liquidation.
The suit seeks $1 billion in fees and profits and $5.4
billion for damages. For other Bloomberg coverage, click here.
The trustee also filed a $3.14 billion lawsuit against an
unnamed company. To read Bloomberg coverage, click here.
The Madoff firm began liquidating in December 2008. Bernard
Madoff individually went into an involuntary Chapter 7
liquidation in April 2009 and his bankruptcy case was
consolidated with the firm’s liquidation. Madoff is serving a
150-year prison sentence following a guilty plea.
The Madoff liquidation case is Securities Investor
Protection Corp. v. Bernard L. Madoff Investment Securities
Inc., 08-01789, U.S. Bankruptcy Court, Southern District New
York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern District of New York

WaMu Examiner’s Report Excluded from Evidence at Hearing

The first day of the confirmation hearing for approval of
the reorganization plan for Washington Mutual Inc. was marked by
the bankruptcy judge’s decision not to admit the examiner’s
report into evidence.
The examiner concluded in his Nov. 1 report that the plan
was based on a settlement that « reasonably resolves contentious
issues. »
In this writer’s view, it wasn’t even a close question on
whether the bankruptcy judge could consider the report in
deciding whether to approve the plan and in the process use the
cramdown mechanism on the six classes of creditors that voted
against confirmation.
The examiner’s report was based in part on confidential
information given to the examiner that isn’t even known to all
the parties supporting or opposing the plan. In this writer’s
view, the information in the report is hearsay that can’t be
used to show the truth of the information or conclusions report.
The report also isn’t admissible as the opinion of an
expert. The Federal Rules of Evidence allow a qualified expert
to give an opinion based on his or her « scientific, technical
or other specialized knowledge. » In that regard, the examiner
is not like an appraiser who draws a conclusion about value.
Further, an expert must be subject to cross-examination, which
won’t happen in the case of the examiner.
Ultimately, it’s the job of the judge, not an examiner, to
draw legal conclusions and make findings of fact, in this
writer’s opinion.
Excluding the examiner’s report from evidence doesn’t mean
the report was waste of time. Courts appoint examiners to dredge
up facts and make conclusions that may lead contending parties
to settle. Examiner’s reports also provide a roadmap for the
parties to use in lawsuits if settlement fails.
The WaMu confirmation hearing continues today. To read
Bloomberg coverage of the hearing, click here.
Four of ten classes of creditors voted in favor of the
plan. If confirmed by the bankruptcy judge, WaMu’s revised plan
would distribute more than $7 billion to creditors. For a
summary of changes WaMu made to its plan in October, click here
for the Oct. 7 Bloomberg bankruptcy report. To read about the
settlement before it was modified, click here for the May 24
Bloomberg bankruptcy report. Click here to read the May 18
Bloomberg bankruptcy report for a summary of WaMu’s plan.
The WaMu holding company filed under Chapter 11 in
September 2008, one day after the bank subsidiary was taken
over. The bank, which had been the sixth-largest depository and
credit-card issuer in the U.S., was the largest bank failure in
the country’s history. The holding company filed formal lists of
assets and debt showing property with a total value of $4.49
billion against liabilities of $7.83 billion.
The holding company Chapter 11 case is In re Washington
Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of
Delaware (Wilmington).

MGM Confirms Prepackaged Plan in Less than One Month

Metro-Goldwyn-Mayer Inc. prevailed on the bankruptcy judge
to sign a confirmation order approving the reorganization plan
two days short of a month after the prepackaged Chapter 11
The plan swaps about $5 billion of secured debt for most of
the new equity. There were no objections to confirmation.
Creditors voted before the Chapter 11 petition was filed. The
plan pays general unsecured claims in full while existing
stockholders receive nothing.
For Bloomberg coverage of confirmation, click here.
MGM’s assets include 4,100 feature films and 10,800
television episodes. The assets as of Sept. 30 were $2.67
billion with total liabilities listed for $5.77 billion, without
adjustments under generally accepted accounting principles. MGM
owns 62.5 percent of United Artists Entertainment LLC, which
isn’t in bankruptcy.
MGM, based in Los Angeles, was acquired in April 2005 in a
$4.8 billion transaction by a group including Credit Suisse
Group AG, Providence Equity Partners Inc., Sony Corp. and TPG
The case is In re Metro-Goldwyn-Mayer Studios Inc., 10-15774, U.S. Bankruptcy Court, Southern District of New York

SIPC Trims Fees 10% for Lehman Brokerage Liquidation

Securities Investor Protection Corp., which foots the bill
for liquidating the remnants of the Lehman Brothers Holdings
Inc. brokerage subsidiary, drives a hard bargain when it comes
to paying professional fees.
SIPC negotiated a 10 percent reduction in the standard time
charges by trustee James W. Giddens and his law firm Hughes
Hubbard & Reed LLP. SIPC is also requiring that another 10
percent of approved fees be held back until later in the case.
SIPC filed a paper in bankruptcy court yesterday
recommending that the bankruptcy judge approve a $22.8 million
fee allowance for the trustee and his firm covering the four
months ended in May, before deduction for the 10 percent
holdback. On top of the 10 percent reduction, SIPC prevailed on
the firm to reduce its fees an additional $23,300. The firm and
the trustee worked almost 50,000 hours on the Lehman brokerage
liquidation during the period.
There will be a Dec. 9 hearing in bankruptcy court for
approval of the fee request.
Under the Securities Investor Protection Act, so-called
customer property can’t be used to pay costs of the liquidation,
including professional fees. Consequently, SIPC uses its fund to
pay professional fees in a case like that of the Lehman
brokerage, where there aren’t enough other assets to pay
liquidation costs. When SIPC is paying the fees, the statute
says the judge should put « considerable reliance » on SIPC’s
The Lehman holding company filed under Chapter 11 in New
York on Sept. 15, 2008. The brokerage operations went into
liquidation four days later in the same court. The brokerage is
in the control of Giddens, a trustee appointed under the
Securities Investor Protection Act.
The Lehman holding company Chapter 11 case is In re Lehman
Brothers Holdings Inc., 08-13555, while the liquidation
proceeding under the Securities Investor Protection Act for the
brokerage operation is Securities Investor Protection Corp. v.
Lehman Brothers Inc., 08-01420, both in U.S. Bankruptcy Court,
Southern District New York (Manhattan).

AbitibiBowater Settles with Woodbridge Over Augusta Plant

AbitibiBowater Inc., the largest newsprint maker in North
America, reached a settlement of most disputes with Woodbridge
Co., its partner in a mill in Augusta, Georgia, named Augusta
Newsprint Co.
AbitibiBowater will purchase Woodbridge’s 47.5 percent
stake for about $15 million in cash and a four-year note for
about $90 million. The note will be secured by AbitibiBowater’s
ownership interest in the mill.
The settlement ends a dispute on appeal in U.S. District
Court in Delaware. The dispute stemmed from a so-called call
agreement, under which AbitibiBowater said it would have been
forced to buy out Woodbridge’s interest in the plant or risk
« losing all of its equity in the partnership. »
To avoid the loss, the bankruptcy court in October
authorized AbitibiBowater to reject the call agreement as a so-called executory contract. Woodbridge appealed.
The settlement avoids a situation where a victory on appeal
by Woodbridge might result in the loss of AbitibiBowater’s
interest in the plant. The settlement preserves Woodbridge’s
right to claim damages arising from rejection of the call
The bankruptcy court approved AbitibiBowater’s
reorganization plan in a Nov. 23 confirmation order. For a
summary of the plan, which treated creditors differently at each
of the 40 affiliated companies, click here for the Nov. 23
Bloomberg bankruptcy report.
The company was formed in October 2007 by a merger of
Montreal-based Abitibi-Consolidated Inc. and Greenville, South
Carolina-based Bowater Inc. Abitibi produces newsprint, uncoated
mechanical paper and lumber. Bowater also makes newsprint, along
with papers, bleached kraft pulp and lumber.
The Montreal-based company began reorganizing with 24 pulp
and paper mills plus 30 wood-product plants. Sales in 2008 were
$6.8 billion. In Chapter 11 petitions filed in April 2009, the
combined AbitibiBowater companies listed assets of $9.9 billion
and debt totaling $8.8 billion as of September 2008.
The case is AbitibiBowater Inc., 09-11296, U.S. Bankruptcy
Court, District of Delaware (Wilmington).

Second Auction Brings Trico Marine $5.3 Million More

Trico Marine Services Inc., a provider of support vessels
for the offshore oil and natural-gas industry, made even more
money from selling two vessels after the bankruptcy judge took
the unusual step of reopening the auction.
Originally, Trico intended to sell the vessels Trico Moon
and Trico Mystic for $26 million without holding an auction. The
creditors’ committee objected to the lack of an auction, saying
it knew about a higher offer.
The judge ordered an auction. Following the auction, Trico
announced that the top offer, $30.5 million, came from the
original buyer, Tidewater Inc. The price was pushed higher
because three other bidders participated in the auction.
A disappointed bidder came to court and objected, saying it
wasn’t given the ability to submit a better offer at the
auction. U.S. Bankruptcy Judge Brendan Linehan Shannon reopened
the auction. This time, PACC Offshore Services Holdings Pte Ltd.
came out on top with an offer of $31.3 million, meaning that
Trico creditors will realize in excess of $5 million more from
the auction process.
The Chapter 11 filing in August was the second by The
Woodlands, Texas-based Trico. It completed a so-called
prepackaged reorganization in early 2005 by exchanging $250
million in debt for equity. Shareholders received warrants.
Other than a Cayman Islands holding company, none of the
foreign subsidiaries are in bankruptcy this time. The
consolidated balance sheet for June listed assets of $904
million and liabilities of $1.03 billion. The bankruptcy
petition listed liabilities of $354 million for Trico Marine.
Liabilities include $202.8 million on secured convertible
debentures and $150 million owing on unsecured convertible
debentures. Non-bankrupt Trico Shipping owes $400 million on the
11.875 percent senior secured notes.
The case is In re Trico Marine Services Inc., 10-12653,
U.S. Bankruptcy Court, District of Delaware (Wilmington).

Schutt Sports to Test Stalking Horse Bid at Dec. 14 Auction

Schutt Sports Inc., a football-helmet manufacturer, will
hold an auction on Dec. 14 to learn whether a $25.1 million
offer is the best bid for the business.
The so-called stalking-horse bidder is Kranos Intermediate
Holding Corp. Competing bids are initially due Dec. 10. The
hearing for approval of the sale is scheduled for Dec. 15.
Schutt estimates that secured debt at the time of sale will
be about $19.8 million, with administrative expenses amounting
to $3.5 million more.
When Schutt filed under Chapter 11 in September, $34.8
million was owed to the secured lender, Bank of America NA.
Another $17.5 million was owing on a subordinated note held by
Windjammer Mezzanine & Equity Fund II LP. The pre-bankruptcy
secured debt was replaced with a $34 million credit to finance
the Chapter 11 case.
Before picking Kranos as the stalking horse, Schutt had
five letters of intent. The financing required a sale. Schutt
was forced into Chapter 11 by a $29 million patent-infringement
judgment in favor of competitor Riddell Inc.
Based in Litchfield, Illinois, Schutt said assets and debt
both exceed $50 million.
The case is In re Schutt Sports Inc., 10-12795, U.S.
Bankruptcy Court, District of Delaware (Wilmington).

Palm Harbor Gets Interim Approval to Borrow All $50 Million

Palm Harbor Homes Inc., a Dallas-based maker of factory-built homes, filed under Chapter 11 on Nov. 29 and on Dec. 1 was
given interim authority by the bankruptcy judge to borrow the
entire $50 million in financing provided by prospective buyer
Fleetwood Enterprises Inc.
A hearing for final approval of financing is set for Dec.
22. Fleetwood, a venture between Cavco Industries Inc. and a
fund advised by Third Avenue Management LLC., was purchased out
of Chapter 11 this year for $26 million by Cavco, a Phoenix-based producer of manufactured homes.
The new loan will be used to pay off $34 million owing to
Textron Financial Corp.
To buy the business, Fleetwood proposes paying $50 million
or the amount of outstanding financing for the Chapter 11 case,
whichever is more, plus $6.5 million attributed to the
assumption of liabilities on warranties. The price is subject to
a possible reduction.
The petition said assets are $321 million with debt
totaling $280 million. In addition to the $34 million owing to
Textron, $53.8 million was owing on 3.25 percent convertible
senior notes due 2024.
The case is In re Palm Harbor Homes Inc., 10-13850, U.S.
Bankruptcy Court, District of Delaware (Wilmington).

Watch List

Solo Cup Downgraded with Upside Down Balance Sheet

Solo Cup Co., a leading manufacturer of disposable food-service items, was downgraded one notch yesterday by Standard &
Poor’s, partly on account of « negative free cash from
operations. » The new corporate grade is B-.
S&P was also reacting to « limited ability to pass through
higher raw material costs, sluggish sales volumes, and
competitive industry conditions. »
Solo’s balance sheet was upside down as of Sept. 26, with
assets of $980 million and total liabilities of $1.05 billion.
For the three quarters through September, sales of
$1.17 billion led to an operating loss of $33.1 million and a
net loss of $87 million. Asset-impairment charges in the period
were $16.7 million.
Brands of Highland Park, Illinois-based Solo include Solo
and Sweetheart.

Indianapolis Downs Misses Grace Period on Second-Lien

Indianapolis Downs LLC, the operator of a horserace track
and casino 25 miles from Indianapolis, didn’t make the interest
payment due Nov. 1 on $375 million in second-lien notes within
the grace period, Moody’s Investors Service reported yesterday.
Moody’s said that the track remains current on the first-lien credit facility and the third-lien senior secured
subordinated notes. The capital structure is « unsustainable, »
Moody’s said.
The track is named Indiana Downs. The permanent facility
opened in March 2009. It has 2,000 slot machines and electronic
table games.

Forbearance Lapses for David Stern’s DJSP Enterprises

DJSP Enterprises Inc., part of David J. Stern’s foreclosure
business, said in a regulatory filing that the forbearance
agreement with Bank of America NA, the revolving credit lender,
ran out on Nov. 26.
Amid what DJSP called « continuing discussions, » the
company paid $3.5 million on the credit, reducing the principal
balance to $8.43 million, the filing said.
Stern is the Florida foreclosure lawyer under investigation
by the state’s attorney general. DJSP provides processing
services for the Law Offices of David J. Stern PA, which has
been barred from providing services to government-owned mortgage
companies Fannie Mae and Freddie Mac.
DJSP, based in Plantation, Florida, previously said that
the default on the revolving credit also caused a default on a
separate $1.85 million equipment loan with a bank affiliate. The
bank used the default to bar DJSP from paying interest on
subordinated debt, according to a prior disclosure.
DJSP previously said that an affiliate didn’t pay November
rent on the principal offices.
After firing 700 workers, the company has been sued for not
giving required notices under labor law, the regulatory
disclosure said.
DJSP rose 6 cents, or 13 percent, to 52 cents in Nasdaq
Stock Market trading yesterday. The closing high was $13.50 on
April 23.

Daily Podcast

Two Burton Lifland Opinions, Blockbuster and NOLs: Audio
Two opinions by U.S. Bankruptcy Judge Burton R. Lifland in
the liquidation of Bernard L. Madoff Investment Securities Inc.,
the delayed filing of the reorganization plan for the
Blockbuster Inc. movie-rental chain, and the importance of
protecting net operating loss carryforwards in Chapter 11 are
topics discussed in the bankruptcy podcast on the Bloomberg
terminal and Bloomberglaw.com. To listen, click here.

Briefly Noted

Old GM Nearing Approval of Plan Disclosure Statement

A lawyer for old General Motors Corp. told the bankruptcy
judge at a hearing yesterday that there was agreement with the
U.S. Treasury and the creditors’ committee that will permit
formal approval of the disclosure statement explaining the
Chapter 11 plan. The judge tentatively approved the disclosure
statement in October. Click here to read Bloomberg coverage
describing the compromises that may permit disclosure statement
approval at a Dec. 7 hearing.
Old GM filed the liquidating Chapter 11 plan in August. It
will create a trust for unsecured creditors that will distribute
the stock and warrants issued by new GM as consideration for the
sale of the assets. New GM is formally named General Motors Co.
For details of the plan, click here for the Sept. 1 Bloomberg
bankruptcy report.
Old GM began the largest manufacturing reorganization in
history by filing under Chapter 11 on June 1, 2009. The sale to
new GM was completed on July 10, 2009. GM listed assets of $82.3
billion against debt totaling $172.8 billion.
The case is In re Motors Liquidation Co., 09-50026, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).

NYC OTB Closing Today Before State Senate Votes

Off-Track Betting Corp. in New York City is closing down
today, even though Democratic leaders in the state Senate
haven’t given up on passing legislation proposed by the governor
to form the basis for a reorganization plan. The bill lacks
Republican support in the legislature’s upper chamber. The bill
passed in the state Assembly even after defections from some
For Bloomberg coverage, click here.
Although the bankruptcy judge approved a disclosure
statement, NYC OTB said it won’t solicit creditors’ votes unless
the enabling legislation is passed.
The bankruptcy judge ruled in March that NYC OTB is
eligible to reorganize in Chapter 9. The petition, filed in
December 2009, said assets are less than $50 million while debt
exceeds $100 million. Liabilities include $8 million in
governmental statutory claims, $43.7 million owing to the racing
industry, and $6.3 million in claims held by general unsecured
creditors. There is almost no secured debt.
The case is In re New York City Off-Track Betting Corp.,
09-17121, U.S. Bankruptcy Court, Southern District of New York

CBGB Reorganization Dismissed After Trademark Ownership Lost

The bankruptcy reorganization of CBGB Holdings LLC was
dismissed this week following a ruling by the bankruptcy judge
in October that the company didn’t own trademarks and other
property associated with what was once a music club at Bowery
and Bleecker Streets in Manhattan. For a rundown on who owns the
trademarks and why, click here to see the Oct. 15 Bloomberg
bankruptcy report.
Opened in 1973, the club’s name was an acronym for Country,
Blue Grass, and Blues. It closed in October 2006, less than a
year before the death of founder Hillel Kristal.
CBGB’s bankruptcy schedules list assets with a value of
$133,500 against debt totaling $3.59 million.
The case is In re CBGB Holdings LLC, 10-13130, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).

FairPoint Has Exclusivity Until Jan. 31, Just in Case

FairPoint Communications Inc., a local exchange carrier,
won an extension until Jan. 31 of the exclusive right to propose
a Chapter 11 plan, in case the plan awaiting confirmation isn’t
eventually pushed through. The bankruptcy judge couldn’t confirm
the Chapter 11 plan in May for lack of regulatory approval from
Vermont, New Hampshire and Maine. He overruled other objections
to confirmation. New Hampshire and Maine later settled. The
company is working on a resolution with Vermont regulators.
Lenders would own FairPoint after Chapter 11. For details
on FairPoint’s reorganization plan, click here for the March 12
Bloomberg bankruptcy report.
FairPoint’s Chapter 11 petition listed assets of
$3.24 billion against debt totaling $3.23 billion. Funded debt,
aggregating $2.7 billion, included $2 billion under a secured
credit facility, $575 million in senior unsecured notes, and $88
million on interest-rate swap agreements.
The case is In re FairPoint Communications Inc., 09-16335,
U.S. Bankruptcy Court, Southern District New York (Manhattan).


S&P Questions Waterford Ability to Refinance in 2014

Waterford Gaming LLC, a 50 percent partner in the developer
of the Mohegan Sun casino in Connecticut, received a downgrade
yesterday from Standard & Poor’s to match the demotion that S&P
gave to the casino on Nov. 24.
The corporate rating is now CCC. S&P said that Waterford
won’t be able to refinance notes at maturity in 2014 without
« significant improvement in revenue generation, » which appears
« increasingly unlikely. »
Moody’s Investors Service was of the same opinion when it
downgraded Waterford in September. Moody’s said Waterford needs
« material and sustained » improvement in revenue to be in a
position to repay $82 million of senior notes that mature in
2014. Waterford is paid a so-called relinquishment fee based on
revenue at the casino.
The new S&P grade is one level higher than the September
ding by Moody’s.

Milk Processor Dean Foods Lowered to B+ by S&P

Dean Foods Co. and its subsidiary Dean Holding Co. were
downgraded one notch yesterday by Standard & Poor’s to a B+
corporate grade in view of « softer volumes » and « aggressive
private label retail milk price discounting. »
The senior notes were reduced to a B- rating, coupled with
a guess that holders wouldn’t recover more than 10 percent
following payment default. There is a prior claim on the assets
by the almost $4.5 billion of first-lien debt.
Dean, based in Dallas, is the leading U.S. producer and
distributor of dairy products with a 40 percent market share,
according to S&P.
Moody’s Investors Service upgraded Dean to Ba3 in March and
affirmed the rating in November, although it lowered the outlook
to negative. The new S&P rating is one notch below Moody’s.

Advance Sheets

Lawyer Disbarment Fines Not Discharged in Bankruptcy

The obligation to reimburse a state bar client security
fund for payments made to clients isn’t discharged in
bankruptcy, U.S. District Judge A. Howard Matz ruled.
Section 523(a)(7) bars discharge of a debt owing to a
governmental unit as a fine or penalty, so long as it is « not
compensation for actual pecuniary loss. »
A previously disbarred lawyer contended the debt was
discharged because it was to reimburse the state fund for
payments to his former clients. Matz, based in Los Angeles,
disagreed on Dec. 1.
The relevant inquiry, according to Matz, is the
« governmental interest and purpose in imposing a fine, » not on
the « ultimate destination of the money. »
Matz followed an opinion called Findley from early this
year by the U.S. Court of Appeals in San Francisco. To read
about Findley, click here for the Feb. 3 Bloomberg bankruptcy
Even though the fine was to reimburse the fund for money it
spent, Matz said the purpose served « the state’s interest in
the rehabilitation and punishment of attorneys. »
The case is In re Emir Phillips, 09-2138, U.S. District
Court, Central District of California (Los Angeles).
To contact the reporter on this story:
Bill Rochelle in New York at
To contact the editor responsible for this story:
David E. Rovella at drovella@bloomberg.net.
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