Business Bankruptcy News Bulletin Summary for Week of August 30

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.

The Importance of Creditor Classes in the Context of a Bankruptcy Filing

A class is a category of creditors’ claims against the debtor in a bankruptcy filing. Different classes have different priority in receiving payment of claims from the bankruptcy estate.

In theory, claims with higher priority are paid in full before other claims receive anything. Junior creditors and shareholders are paid after senior creditors. Specifically, the usual order is: first, administrative claims; second, statutory priority claims such as tax claims, rent claims, consumer deposits, and unpaid wages and benefits from before the filing; third, secured creditors’ claims; fourth, unsecured creditors’ claims; and fifth, equity claims.

BANKRUPT COMPANIES

Allied Electrical Contractors LLC, Memphis, Tn., filed Chapter 11 in the U.S. Bankruptcy Court for the Western District of Tennessee. The firm listed assets and liabilities of between $1 million and $10 million each. The filing was under case number 10-28999. For more information contact the court at 866-222-8029, then add 9.

American Mortgage Acceptance Co. received approval from the U.S. Bankruptcy Court for its disclosure statement related to its reorganization plan, which would give creditors shares in the reorganized firm. Creditors now have until 9/23 to vote on the plan. For further information contact the U.S. Bankruptcy Court in Manhattan, N.Y. at 212-668-2780 and refer to case number 10-12196.

Deer Creek Crossing LLC, Flagstaff, Az., filed Chapter 11 in the U.S. Bankruptcy Court for the District of Arizona. The firm listed assets of between $1 million and $10 million and liabilities of between $10 million and $50 million. The filing was under case number 10-26792. For more information contact the court at 888-549-5336.

FairPoint Communications Inc. has continued investing, saying it’s spent more than $100 million to improve its network infrastructure in Maine, New Hampshire and Vermont, despite running into various problems in doing so. The company meanwhile is trying to push through bankruptcy proceedings, with telecom regulators in Maine and New Hampshire supporting its reorganization plan in contrast to Vermont’s regulators, who are holding out.

Las Vegas Monorail, a Nevada nonprofit concern that operates a monorail along the Las Vegas strip, filed its Chapter 11 reorganization plan that calls for slashing its debt by $630 million, which would leave it with obligations of only about $18.5 million. The firm filed for bankruptcy protection back in January.

Nortel Networks Corp., the bankrupt Brampton, Ontario-based manufacturer of telecommunications equipment which is winding down its asset sales in Chapter 11, reported a second quarter net loss of $1.5 billion, including reorganization expenses of $1.4 billion. Revenue slumped 85%–to $145 million.

Station Casinos Inc. won initial approval from the U.S. Bankruptcy Court to sell most of its casinos to a group led by Frank Fertitta for about $770 million. A further hearing will be held in the U.S. Bankruptcy Court in Nevada on 8/27.