Weekly Blog Roundup on Bankruptcy-Related Topics for the Week Ended 12/2/05

Below are some notable blog posts for the week ended 12/2/05 on the following topical bankruptcy issues of interest to the bankruptcy litigator and practitioner:

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Calpine's Distress

Delphi's Bankruptcy

Hedge Funds under Scrutiny

More Professional Feasting in Bankruptcy

Substantive Consolidation

The Workout Business Today

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Calpine's Distress

The Houston Clear Thinker's Blog submits this post entitled "Calpine on the brink?" on Calpine's senior executive resignations and the recent adverse Delaware court decision.

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Delphi Bankruptcy

The Future of the Union blog continues its strong coverage of news reports on Delphi's continuing battles with the UAW, including reprints from articles in the Detroit Free Press here, here, here, and here. It also posts a transcription of CEO Steve Miller's 11/28 voice mail to Delphi employees attempting to reassure them that, if nothing else, he's there for them.

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Future of the Union blog also provides good links to press reports here and here on Jack Butler's stirring performance on Delphi's behalf at the November 29 hearing, leading to the bankruptcy court's approval of a highly controversial critical vendor motion (referenced here) that faced stiff opposition from the unsecured creditors' committee. The union supported Delphi's motion, as did Delphi's senior lenders.

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Here's another good local press story from The Grand Rapids Press on the "Local Suppliers Caught in Delphi's Web," printed before the court's hearing on the critical vendor motion.

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Hedge Funds under Scrutiny

The Bankruptcy Blog submits this link to an article from the International Herald Tribune on the SEC's investigation into the "growing role of hedge funds in bankruptcy proceedings on concern that money managers are overstating their bond holdings to get access to inside information." According to the article:

The U.S. regulators are trying to determine whether the funds exaggerate their stakes to gain membership on committees that oversee debt restructurings for bankrupt companies. The creditors' committees are privy to developments that may affect the value of a company's bonds, like takeover offers, before they are disclosed to the public....

The inquiry reflects the security regulator's increasing awareness of the potential for fraud in trading of the bonds of crippled and bankrupt companies, and it underscores the agency's effort to intensify scrutiny of hedge funds, investment pools for the wealthy that now manage a total of more than $1 trillion.

The Securities and Exchange Commission announced its first related enforcement case this month. It accused Van Greenfield, manager of New York-based Blue River, of securing a spot on WorldCom's creditors' committee in 2002 by falsely claiming to own $400 million of the company's bonds. Greenfield paid $150,000 to settle the case without admitting or denying wrongdoing.

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Another post echoing this growing investigation into the role of hedge funds in bankruptcy cases can be found at The Daily Caveat.

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More Feasting in Bankruptcy

The Turner Report provides another post on the generous compensation paid executives from the O'Sullivan Industries trough.

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The Future of the Union reprints an article here from the Detroit Free Press on professional feasting in the Delphi bankruptcy.

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Conglomerate submits related posts on professional compensation. One cites to a NYT article on investment bankers and "undeserved" compensation; the other, "Compensation Schemes: Attorney Fees, Consulting Fees, and Hair Braiding" is a fine read on these tangled and knotty issues.

Related to this, see my prior posts here and here regarding the split in the circuits regarding the standards for approval of an investment banker's fees in bankruptcy (coincidentally, in both cases as to fees requested by Houlihan Lokey).

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Substantive Consolidation

Sheppard Mullin's bankruptcy group provides this post on its Bankruptcy and Restructuring Blog regarding he 3rd Circuit's decision in the Owens Corning case in which it "narrowed the latitude for imposing the equitable remedy of substantive consolidation by stating five principles."

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The Workout Business Today

This post from Legal Pad, the blog of Callaw.com, quotes Robert Anderson, chairman of the bank and finance group in the San Francisco office of Buchalter Nemer, here as saying that workouts have been a "dead letter" in recent months, though the lending side of the practice is "still booming."

© Steve Jakubowski 2005

Written By:Christopher On March 27, 2008 4:25 AM

Thank you for discussing about the issues faced on bankruptcy. All the information above was really interesting and also will be surely useful for the future.

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