Tribune Co. Divests Cubs and News on Other Challenged U.S. Companies for Aug 24

The items below are taken from the Business Bankruptcy News Bulletin. A full issue contains information on dozens of troubled companies. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

Disqualifying Bankruptcy Judges

A U.S. Bankruptcy Court judge can be disqualified from presiding in a bankruptcy case if there is a conflict of interest. One example was in the court in Wilmington, De. when the judge in the case was disqualified in three of the five pending asbestos bankruptcy cases he was presiding over. The Third Circuit Court ordered the disqualification because of an alleged conflict of interest with two of the judge’s five court-appointed consultants.

Bankrupt Companies

Cabi Downtown LLC in Aventura, Fl. filed Chapter 11. The filing, in the U.S. Bankruptcy Court for the Southern District of Florida, listed assets of between $100 million and $500 million, with liabilities of about the same range owed to as many as 1,000 creditors. The case number is 09-27168.

Circuit City Stores Inc., along with unsecured creditors’ committee, filed its disclosure statement regarding its joint liquidation plan with the U.S. Bankruptcy Court.

Colonial BancGroup Inc., Montgomery, Al., filed Chapter 11, two weeks after it was seized and shuttered by banking regulators. The firm, which has been sold to BB&T Corp. of Winston-Salem, N.C., is currently being probed by the Justice Department and the Securities and Exchange Commission. In its filing, in the U.S. Bankruptcy Court  for the Middle District of Alabama, Colonial listed assets and liabilities of $45 million and $380 million respectively. In the sale, BB&T took over all of Colonial’s deposits and bought $22 billion in assets in a transaction supported by the Federal Deposit Insurance Corp. The case number of the Colonial bankruptcy filing is 09-32303. Less than a week ago Colonial’s former partner, Taylor Bean & Whitaker Mortgage Corp., also filed for bankruptcy protection as it decides whether to restructure or to liquidate.

MagnaChip Semiconductor’s unsecured creditors’ committee filed a Chapter 11 reorganization plan and disclosure statement with the U.S. Bankruptcy Court. A hearing on the disclosure statement is scheduled for 8/27.

Milacron LLC, a Batavia, Oh. plastics-processing-machinery and industrial-fluids company, emerged from Chapter 11 after going private by selling its assets to a group led by Avenue Capital Group and DDJ Capital Management LLC. During reorganization, Milacron slashed its debt by more than $500 million, or more than 80% of its obligations. The company, which will continue operating all of its main lines of business, arranged a $55 million revolving credit facility and its lenders will make available a $75 million second-lien term loan facility.

Nortel Networks Corp., the Brampton, Ontario-based maker of telecommunications equipment, has seen a 9/30 deadline set for filing proof of claims in its Chapter 11 bankruptcy. For further information contact the U.S. Bankruptcy Court in Wilmington, De. at 302-252-2560 and refer to case number 09-10152.

Saab, which is being sold by General Motors Corp. to Sweden’s Koenigsegg Group, emerged from bankruptcy protection in Swedish court. The carmaker managed to wipe out $1.2 billion in loans during its reorganization but a request for a government guarantee for a loan was denied by the Swedish government, putting a cloud over its future. Another investment meeting for Saab officials is scheduled for 9/22.

Six Flags Inc., the Manhattan, N.Y.-based operator of amusement parks, filed its first amended joint Chapter 11 reorganization plan. According to the plan, prepetition claims holders will convert their claims into a 92% stake in the reorganized company. The plan also calls for a $600 million term loan.

Sun-Times Media Group Inc. is apparently teetering on administrative insolvency. Burning through $3.8 million in cash last month left the newspaper publisher with $19.3 million, barely enough to cover severance and other costs for shutting down the business. Sun-Times Media, which filed Chapter 11 in March, is trying to paint a slightly different picture, saying that, while cash is low, it is nonetheless improving its cost structure and is getting close to a deal to sell itself to a suitor that might be more interested in its improved operations than in its immediate cash shortage.

Taylor, Bean & Whitaker Mortgage Corp., the Ocala, Fl. wholesale mortgage broker which earlier shut down its lending operations and laid off about 2,000 employees, has now filed for Chapter 11 bankruptcy protection. The firm has been under suspicion of misleading the Federal Housing Administration, which suspended the company’s authority to make FHA-insured loans. Taylor, Bean, which made its filing in the U.S. Bankruptcy Court in Jacksonville, Fl., said it plans to operate as a downsized company and will either restructure or liquidate its assets.

Tribune Co. signed a deal to sell the Chicago Cubs baseball team to the Ricketts family for $800 million. Specifically, Tribune will sell a 95% interest in a group of assets that includes the Cubbies, Wrigley Field and Tribune’s one-quarter stake in cable broadcaster Comcast SportsNet Chicago. Tribune is keeping a 5% interest in the team, for tax purposes, and the transaction hands over complete management control to the Rickettses. The sale will be carried out by placing the Cubs in Chapter 11 so that the team and the related assets can emerge free of any of Tribune’s own Chapter 11 obligations. The sale must be approved by Major League Baseball and by the U.S. Bankruptcy Court.