Business Bankruptcy News Bulletin Summary for Week of January 10

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. More information on subscribing to the Bulletin at http://usbj.biz/.

Unsecured Creditors in a Chapter 7 Proceeding and When to Elect a Trustee

When an unsecured creditor holds more than 5% or 10% of the claims against the estate in a Chapter 7 bankruptcy case, and the estate is likely to hold significant assets, the creditor should seriously consider the election of a trustee.  Motivations for electing the right trustee include: 1) holding down the volume of fees to be paid out, 2) securing a trustee whose main loyalty will be to the unsecured creditors, and 3) securing a trustee who is highly qualified for the job.

BANKRUPT COMPANIES

The Archdiocese of Milwaukee filed Chapter 11 as it continues battling litigation over alleged sex abuse by some of its priests. As of last summer, the Archdiocese had total assets of just shy of $100 million, but some $90 million of that is already encumbered. Further, the Archdiocese has already spent $29 million on the sex-abuse cases. The filing was made in the U.S. Bankruptcy Court for the Eastern District of Wisconsin under case number 11-20059 and it listed assets and liabilities of between $10 million and $50 million each.

Blockbuster Inc., the bankrupt film-rental company, reported that it lost more than $42 million in the four weeks ended 11/28. Revenue came in at about $143 million. Since it filed Chapter 11 in late September, Blockbuster, which will close 180 stores as it reorganizes, has reported losses of $78.6 million.

Jennifer Convertibles Inc., a Woodbury, N.Y. furniture retailer, has seen a 1/25 hearing scheduled to consider its Chapter 11 reorganization plan, according to which Chinese manufacturer Haining Mengnu Group Co. Ltd. will end up with about 90% of Jennifer’s shares in a swap for nearly $15 million in debt assumption. Haining will also get 30% of the recovery from a liquidating trust, with creditors, who are being urged by the creditors’ committee to support the plan, getting 70% along with nearly 10% of the stock.

Lehman Brothers Holdings Inc.’s former employees are attempting to sue the investment firm’s former directors, including former CEO Richard Fuld, saying that the company invested their retirement savings in Lehman shares even as the company was allegedly manipulating its accounting by hiding its dire financial condition.

Sequoia Partners LLC, a Grants Pass, Or. developer of resorts, filed Chapter 11, hoping to reorganize its debt. The filing, in the U.S. Bankruptcy Court in Portland, Or., listed assets of up to $100 million and liabilities of as much as $50 million. While Sequoia couldn’t be reached for details on its plans for reorganization plan, it did indicate that it intends to restructure its debt. For more information contact the court at 800-726-2227.

Waterstone Land and Cattle Co. LP, Austin, Tx., filed Chapter 11 in the U.S. Bankruptcy Court for the Western District of Texas. The firm listed assets and liabilities of between $1 million and $10 million each. The filing was under case number 11-10029. Also filing were Waterstone Michelle LP under case number 11-10033 and Waterstone Tylerville LP under case number 11-10032.  For more information contact the court at 888-436-7477.