Business Bankruptcy News Bulletin Summary for Week of April 19

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.

How Landlords Can Protect Themselves When a Debtor Files for Bankruptcy Protection

While landlords can be unsecured creditors, there are ways they can protect themselves when a debtor seeks protection under bankruptcy proceedings. As an example, a landlord can obtain a security deposit, a move that in effect makes them a secured creditor to the extent of that deposit.  Another option for a landlord is to require a bankrupt tenant to post a letter of credit, which is considered better than a security deposit.  It’s considered better because most courts have held that a landlord may draw down on a letter or credit when the lease is rejected based on the lease and letter of credit without regard to the automatic stay. In addition, still another option for landlordsis to gain a guarantee of the lease by a third party.

BANKRUPT COMPANIES

AIG Baker Deptford LLC, a New Jersey affiliate of Birmingham, Al.-based AIG Baker Shopping Center Properties, filed Chapter 11.

Bashas’ Supermarkets Inc. is still trying to work out a reorganization plan that would speed up its path through Chapter 11, avoid litigation costs and get its unsecured creditors and lenders on board. The company, with $300 million in debt, over the winter rejected a buyout offer from supermarket operator Albertsons LLC.

Centaur Inc., trying to reorganize $680 million in debt, offered a Chapter 11 reorganization plan to its creditors that calls for hedge funds involved in the company to stay on board. However, the risk for the hedge funds is that under the plan Centaur would use a kind of security that provides it with the right to defer interest payments, which in turn could result in losses for the hedge funds.

Hawaiian Telcom in Hawaii filed to have its shares traded on Nasdaq once it emerges from bankruptcy protection. The company, which had more than $1.1 billion in debt when it filed for bankruptcy protection, has reportedly slashed that amount by $900 million.

Six Flags Inc.’s recently filed reorganization plan calls for senior bondholders to take control of the amusement-park operator when it emerges from Chapter 11.

TitleMax Holdings LLC, a Savannah, Ga. retail loan company, received approval from the U.S. Bankruptcy Court for its reorganization plan and expects to soon emerge from Chapter 11 after about a year of reorganizing. Secured lenders will provide a new credit agreement of about $150 million. For more information contact the U.S. Bankruptcy Court in Georgia at 800-473-0226 and refer to case number 09-40805.

Trump Entertainment Resorts Inc. received approval from the U.S. Bankruptcy Court for its amended Chapter 11 reorganization plan, which is supported by bondholders. The plan calls for the infusion of $225 million in new equity, which will boost the Atlantic City, N.J. casino firm’s liquidity.