Business Bankruptcy News Bulletin Summary for Week of May 24

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.

A Brief Look at Chapter 7

Debtors and creditors can expect different sorts of developments in a bankruptcy filing, depending on what type of filing a debtor makes. For example, in a Chapter 7 filing a trustee is appointed to take over the property of the estate. The debtor is then given up to forty days, after the filing of the petition, to attend a first meeting of creditors, the so-called 341 meeting. At that time the trustee and creditors ask about the financial condition of the company. If the bankrupt debtor doesn’t have much in the way of assets the case is typically wrapped up quickly, in three months or so. It can take longer if there are significant assets to be dealt with. If the debtor does not cooperate or in some cases not show up for the 341 meeting, the trustee and/or committee may make recommendations to the court regarding liquidation of the debtor’s assets.

BANKRUPT COMPANIES

Aerobics Inc., West Caldwell, N.J., filed Chapter 11 in the U.S. Bankruptcy Court for the District of New Jersey. The firm listed assets of between $1 million and $10 million and liabilities of between $10 million and $50 million. The filing was under case number 10-24769. For more information contact the court at 877-239-2547.

BI-LO LLC, the privately-held grocery store chain, has seen the U.S. Bankruptcy Court confirm its reorganization plan, allowing it to emerge from Chapter 11 protection. Owned by Lone Star Funds, the company managed to reduce its indebtedness by nearly $60 million, as its owner injected $150 million into the company. Both Credit Suisse and General Electric Capital provided $350 million in term loan financing and a revolving credit facility.

Highland Mall, Austin, Texas’ oldest mall, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Western District of Texas listing assets of between $10 and $50 million and liabilities of $1 million. For more information contact the court at 888-436-7477.

Neff Rental Inc., one of the nation’s top ten rental equipment firms, filed Chapter 11 listing assets of between $100 million and $500 million and liabilities of between $500 million and $1 billion. The company, which is attempting to reduce its debt load by nearly $400 million, has obtained DIP and exit financing to the tune of $175 million. For more information, contact the U.S. Bankruptcy Court for the Southern District of New York at 866-232-1268 and refer to case number 10-12612.

Southern Turbines LLC, Cartersville, Ga., filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Florida. The firm listed assets and liabilities of between $1 million and $10 million each. The filing was under case number 10-23291. For more information contact the court at 800-473-0226.

Washington Mutual Inc., the bank holding company known as WaMu, has reached agreement with the FDIC on a recent reorganization plan. The plan settles certain disputes which could allow the company to move closer to emerging from Chapter 11. As part of the plan, nearly $7 billion will be distributed to various parties in the settlement.

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