Business Bankruptcy News Bulletin Summary for Week of October 11

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 Bankruptcy Battleground Over Arbitration

Many court decisions have addressed whether an arbitration clause in a contract will be enforced by the U.S. Bankruptcy Court in accordance with the Federal Arbitration Act. The consensus seems to be that a bankruptcy court can adjudicate a dispute that’s otherwise subject to binding arbitration if the dispute falls within the "core" jurisdiction of the court. Nonetheless, recent appeals-court rulings suggest that the scope of the U.S. Bankruptcy Court’s retained discretion may be less broad than generally understood. Two cases apparently confirm the primacy of arbitration as the preferred means for resolving disputes, even those that fall within the "core" jurisdiction of the court. When Congress enacted the Federal Arbitration Act, it was declaring a strong federal policy, but the act’s mandate can be overridden if a party opposing arbitration can show that "Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue".

BANKRUPT COMPANIES

American Safety Razor Co., the Cedar Knolls, N.J. maker of razors, has seen the U.S. Bankruptcy Court overturn the results of a recent auction where American Safety refused to allow rival razor maker Energizer Holdings Inc. to make a bid, believing that an attempted buyout by Energizer would lead to antitrust complications that might slow down American Safety’s efforts to sell itself. The court instead ruled that American Safety should hold another auction, this time allowing Energizer to make an offer. For further information contact the U.S. Bankruptcy Court in Wilmington, De. at 302-252-2560 and refer to case number 10-12351.

Blockbuster Inc., the Dallas, Tx.-based chain of video-rental stores, has seen a 10/19 hearing scheduled to consider a relief motion in its Chapter 11 bankruptcy. For further information contact the U.S. Bankruptcy Court in Manhattan, N.Y. at 212-668-2780 and refer to case number 10-14997.

International Garden Products Inc., a Damascus, Or. seller of horticultural products which recently filed Chapter 11 facing more than $27 million in liability issues, said that it will ask the U.S. Bankruptcy Court for the District of Delaware to approve a $7.5 million loan being provided by a group led by Harris Bank. For more information contact the court at 302-252-2560.

Lehman Brothers Holdings Inc. has seen a 10/20 hearing scheduled to consider a motion regarding certain settlement agreements in its Chapter 11 case. For further information contact the U.S. Bankruptcy Court in Manhattan, N.Y. at 212-668-2780 and refer to case number 08-13555.

Shane Co., a Centennial, Co. jewelry chain owner, received approval from the U.S. Bankruptcy Court for its reorganization plan and can now send the plan off for creditors to vote on. The plan calls for secured creditors to be paid in full. A confirmation hearing is scheduled for 11/10. Shane filed Chapter 11 in January, 2009, when it also reported a 23% drop in revenue for its fiscal year ended that month–to $212 million. For further information contact the court at 720-904-7419 and refer to case number 09-10367.

Workflow Management Inc., the Dayton, Oh. marketing services firm which recently filed Chapter 11, has presented a reorganization plan for paying back all of its creditors in full. For the time being the company, which is also known as Workflow One, intends to continue operating. Workflow, which listed assets and liabilities of up to $500 million each, made its filing in the U.S. Bankruptcy Court in Norfolk, Va., along with twenty affiliates. The case number of the filing is 10-74617.