Commercial Bankruptcies: The Top Reasons That Bankruptcy Creditors Sell Their Claims

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. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

The Top Reasons That Bankruptcy Creditors Sell Their Claims

The top five reasons that creditors sell their claims in bankruptcy cases are the following. First, they sell claims to mitigate or eliminate risk involved with holding a claim. Second, creditors may receive a lump-sum payment that provides immediate cash flow and the ability to reinvest sooner than might otherwise be expected. Third, selling the claims can reduce time, energy and human capital involved with attempts to monitor such claims. Fourth, they may choose to sell claims for the possibility of receiving more for a claim now rather than wait until the resolution of the bankruptcy estate. And the fifth big reason that creditors sell bankruptcy claims is because it gets debt off their books.

BANKRUPT COMPANIES

Anthracite Capital filed Chapter 7 in the U.S. Bankruptcy Court in Manhattan, N.Y., with a trustee to be appointed to liquidate the company. For more information contact the court at 212-668-2780 and refer to case number 10-11319.

CCS Medical received approval from the U.S. Bankruptcy Court for its reorganization plan and says that it’s set to emerge from Chapter 11 on a more competitive footing. According to its plan, CCS’s debt will be slashed from $522 million to $200 million, with first-lien lenders swapping their claims for all of the new equity in the reorganized firm and its debt.

Denman Tire Co., the 90-year-old industrial tire maker, has filed Chapter 7 in the U.S. Bankruptcy Court for the Northern District of Ohio.  For more information contact the court at 800-898-6899.

Firethorne Country Club in Charlotte, N.C. filed Chapter 11, shortly after it managed to avoid a hearing on a petition by one of its lenders to have Firethorne placed under receivership. Firethorne, which said it will continue normal operations as it reorganizes, listed assets and liabilities of between $1 million and $10 million each.

Gottschalks Inc.’s creditors voted in favor of a liquidation plan for the former department-store operator that would provide the various creditor classes with payments of between 4 cents and 13 cents on the dollar. The plan still awaits approval by the U.S. Bankruptcy Court.

Lehman Brothers Holdings Inc. filed a reorganization plan, along with twenty-two affiliates, that reportedly provides for $115 billion in claims. Lehman, which collapsed a year and a half ago in the mortgage meltdown, faces a total of about $875 billion in 65,000 claims from creditors.

Premier General Holdings Ltd., San Antonio, Tx., filed Chapter 11 in the U.S. Bankruptcy Court for the Western District of Texas. The firm listed assets and liabilities of between $50 million and $100 million each. The filing was under case number 10-51005. For more information contact the court at 888-436-7477.

Waterfall Country Club LLC, Clayton, Ga., filed Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Georgia. The firm listed assets and liabilities of between $1 million and $10 million each. The filing was under case number 10-21133. For more information contact the court at 800-510-8284.