Business Bankruptcy News Bulletin Summary for Week of July 26

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.

A Brief Look at Some of the Chapter 11 Schedules Concerning Secured and Unsecured Claims

There are many schedules used in a bankruptcy case.  As an example, schedule D, in a Chapter 11 bankruptcy case, identifies the secured claims, even if they are only partially secured. In the case of partially secured claims, Schedule D must also identify the amount of the “deficiency” claim if it exists. Although the deficiency claim is a general unsecured claim, the debtor should not identify the deficiency claim on Schedule F too, which would be redundant. Often, a debtor has no basis to calculate the amount of the deficiency claim because the value of the underlying asset hasn’t been determined.  In such cases, the entry is marked “unliquidated” to reflect the uncertainty of the secured claim. Also, if the debtor is party to a secured financing arrangement but treated as a lease for reporting purposes under GAAP, the liability can be reflected on Schedule D and the related real property assets can be identified on Schedule A.

Regarding the value of collateral securing claims on Schedule D, before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), debtors had to state the market value of the asset. Like Schedule A, the word “market” was deleted from the column that requires the debtor to state the value of the collateral to ensure that there are no inferences concerning the applicable valuation standard.

BANKRUPT COMPANIES

Amelia Island Co. has seen an 8/23 asset auction scheduled in its Chapter 11 proceeding. So far, Noble Hospitality Fund Acquisitions LLC is the stalking horse bidder with its $47.4 million buyout offer. For more information contact the U.S. Bankruptcy Court for the Middle District of Florida at 866-879-1286.

DJ Comercial Mexicana, a big Mexican-based supermarket and restaurant chain, filed Chapter 15 in the U.S. Bankruptcy Court in New York in order to protect its U.S. assets as it attempts to restructure about $1.5 billion in debt. Only a week ago DJ filed for bankruptcy protection in Mexico. The firm, with more than 230 retail stores and more than 70 restaurants in Mexico, had fourth quarter sales of about $1.1 billion.

Flying J, which recently won approval from the U.S. Bankruptcy Court for its reorganization plan that involves selling off $1.5 billion of its assets, will end up controlled by its founding Call family. The Ogden, Ut.-based operator of truck stops also trimmed its payroll of 15,000 workers by about 2,500 positions. The firm is reorganizing in the court in Wilmington, De.

KPA Leaseco Holding Inc., Palm Beach, Fl., filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York. The firm listed assets and liabilities of more than $1 billion each. The filing was under case number 10-13883. Also filing were KPA Leaseco Inc. under case number 10-13884 in addition to other affiliates.  For more information contact the court at 866-232-1268.

Movie Gallery Inc., the bankrupt Dothan, Ga.-based movie-rental chain which has been operating under Chapter 11 since February, filed a liquidation plan that calls for dumping more than 1,000 locations and erasing shareholder value as it winds down its assets. The company, which listed liabilities of between $500 million and $1 billion in its bankruptcy filing, has said it will provide general unsecured creditors a pro rate share of a $5 million cash liquidating trust. For further information contact the U.S. Bankruptcy Court in Richmond, Va. at 800-326-5879 and refer to case number 10-30696.

Proliance International Inc.’s Chapter 11 reorganization plan has been converted to a Chapter 7 liquidation, reportedly because there were insufficient resources to cover administrative and priority claims against the manufacturer of automotive heat exchangers and related products. Proliance filed Chapter 11 a year ago listing assets of $160 million and liabilities of $134 million. For further information contact the U.S. Bankruptcy Court in Wilmington, De. at 302-252-2560 and refer to case number 09-12278.

Trump Entertainment Resorts Inc., Atlantic City, N.J., is reportedly negotiating to sell its Trump Marina Hotel Casino site as it restructures. Separately, the company now has approval from gaming regulators in New Jersey to exit bankruptcy proceedings under a plan that puts Trump under the ownership of a group of bondholders led by Avenue Capital Group. For further information contact the U.S. Bankruptcy Court in New Jersey at 877-239-2547 and refer to case number 09-13654.