Bankruptcy & Restructuring 2013 Year End Review

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www.bloombergbriefs.com Bloomberg Brief | Bankruptcy & Restructuring 2013 Year End Review

4Q 2013 Review

2

By aleksandrs rozens

Chapter 11s and Chapter 9s
Fell in ’13, Chapter 15s Rose
In 2013, 1,679 businesses with assets and
liabilities of $1 million or more filed Chapter
11 petitions. That’s down 22 percent from
2,156 such cases in 2012.
The decline in Chapter 11 filings accelerated in the second half of 2013.
Three percent fewer companies filed for
bankruptcy in the first quarter of 2013, compared with the fourth quarter of 2012. Filings
remained constant in the second quarter
before falling 19 percent in the third quarter
and nine percent in the fourth quarter.
While Detroit’s bankruptcy in July was a record Chapter 9, the number of local governments seeking court protection fell to seven
last year from 12 in 2012 and 13 in 2011.
The number of bankruptcies from foreign
debtors continued to grow in 2013. Thirty-six
Chapter 15 petitions were filed by non-U.S.
companies, down from 35 such cases in
2012. Canadian companies were the leading
source of these Chapter 15s.

Use of ‘Going Concern’ Off in Q4 From Q2 High, Up Slightly From Q3
1400

1200
1000
800

600
400
200
2008

2009

2010

2011

2012

2013

Source: Bloomberg LP
While the use of the phrase “going concern” in Bloomberg terminal stories rose in the fourth quarter from
the third quarter, its usage was down from the second quarter. The phrase was invoked 1,304 times in
the second quarter of 2013, the highest since the first quarter of 2009 when it was used 1,269 times.
Bloomberg Brief Bankruptcy & Restructuring
Bloomberg Brief Ted Merz
Executive Editor tmerz@bloomberg.net
+1-212-617-2309

Contents
Voices
Bankruptcy and restructuring
specialists offer their expectations for 2014 and what
surprised some in 2013.
Pages 3-5
bond and loan recoveries
Oceanside Partners’ secured
lenders had the largest disparity among 28 companies
that filed disclosure statements in 2013. AMR creditors
are expected to be paid in full.
Page 6
chapter 11 Prices
A look at price of debt from
some of the largest bankrupt
companies.
Page 7

filings by state
The biggest increase in
Chapter 11 petitions from
businesses involving debt of
$1 million or more was seen
in New Hampshire, South
Dakota and South Carolina.
Page 8
2013’s Largest Filings
The largest Chapter 11
in 2013 was from college
textbook publisher Cengage
Learning.
Page 9
Bankruptcy index
Bloomberg’s bankruptcy
index, a gauge of Chapter 11
cases involving $100 million
or more in debt, fell 16.17
percent in the fourth quarter
from year-ago levels.
Page 10

real estate chapter 11s
South Carolina saw the
biggest jump in Chapter 11
filings from debtors identified
as single asset real estate.
Page 11
Chapter 9s
Detroit’s Chapter 9 petition
was the largest ever, but the
number of local governments
seeking court protection fell
from 2012.
Page 12
Chapter 15s
The number of Chapter 15 filings from foreign debtors rose
in 2013 from 2012. Canada
was the biggest source of
these cases.
Page 13

Bloomberg News Patrick Oster
Managing Editor poster@bloomberg.net
+1-212-617-4088

Bankruptcy & Aleksandrs Rozens
Restructuring arozens@bloomberg.net
Newsletter Editor +1-212-617-5211

Contributing Editor Deirdre Fretz
dfretz@bloomberg.net
212-617-5166
Contributing Analyst Robert Restaino
rrestaino2@bloomberg.net
Bloomberg News Bill Rochelle

Columnist wrochelle@bloomberg.net
+1-212-617-3516

Newsletter Nick Ferris
Business Manager nferris2@bloomberg.net
+1-212-617-6975

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1 2 3 4 5 6 7 8 9 10 11 12 13


3

outlook 2014: Voices
Retail, Shipping Likely Sources of Corporate Workouts for Advisory Firms
The Federal Reserve’s easy money policy has driven down corporate defaults, but the expected tapering in monetary policy could bring
about a pickup in advisory work, according to restructuring professionals. Shipping and media kept advisers busy in 2013 and retail and
restaurants likely will be key sources of restructurings in 2014. For some professionals, Detroit’s Chapter 9 portends more bankruptcy
activity by local governments, while other restructuring specialists aren’t sure the Michigan city’s historic Chapter 9 hints at a large wave
of filings from municipalities.
— Aleksandrs Rozens

Kenneth A. Buckfire
Co-President and Managing Director
Miller Buckfire
“Every corporation that had a balance sheet
maturity issue in the last couple of years and
has one in the next two years has basically
refinanced already. The really interesting
question is: what will the impact of rising rates
be on profits and profit margins and revenues? You will more likely
see a situation in which rising interest rates have a bigger impact on
operating statements than they do on balance sheets.
The next wave of restructurings will be for those industries
that are very sensitive to consumer spending — housing, cars,
consumer durables, consumer electronics. Restaurant chains that
basically cater to middle-income families have shown declining
revenues, declining profits.
If the minimum wage actually rises as is now being discussed,
that would have a very negative impact on any business that
hires a lot of people at a minimum wage. They are going to get
squeezed. The biggest issue since 2009 has been stagnant
incomes for the vast majority of people in the workforce. People
have been bailed out from a spending point of view by low interest rates and the ability to borrow, but if interest rates go up that
will have an impact on incomes and people’s ability to borrow.
I do not think we will see a lot more Chapter 9s in the next year.
You’ll see a lot more cities and non-state governments do restructurings over the next couple of years, but very few of them will
result in Chapter 9s. It’ll be a much more consensual restructuring
with the cooperation of their creditors. None of them really want
cities to default.”
Kelly Stapleton
Managing Director
Alvarez & Marsal
“For municipalities, Judge Rhodes’ opinion in
Detroit made a significant impact on the utility
of Chapter 9. Rhodes’ comments — though
in dicta — that pension claims are subject to
impairment like any general unsecured claim
provide both a call to arms for unions and pensioners who believe
their pension rights inviolate and a ray of hope for overburdened
municipalities hoping to shed those burdens. Everyone has had their
eye on Detroit to see how this struggle will play out.
Rising interest rates, particularly in light of the Fed’s recent
pronouncement of reduced tapering, will certainly stress lever-

aged capital structures throughout the economy. Obviously this
will create more difficulties for refinancings and provide increasing
default risks for debt-rich capital structures, particularly those with
large components of floating rate debt.
The trustee’s office has made professional fees a priority. Their
new fee guidelines for attorneys enacted in November scrutinize
the way fee applications are prepared. As the bankruptcy restructuring world gets used to the new procedures, you’ll see them
applied to financial advisers as well.”
Jack Hersch
Partner, Portfolio Manager
TIG Distressed Opportunities LP
“One of the things interesting about last
year was that once the Fed started to talk
tapering in June and after the market took a
big hit, it came back. You had a more-thana-hundred-basis-point move in the ten-year
[Treasury note] and a high-yield market that remained very strong
and attractive once we got past the summer. A lot of people
thought it was going to sell off and it never did. There’s no question that dislocation in June created opportunity [to buy].
I was heavily involved with AMR. That did very, very well. I
bought it in the 60s in 2012. I was out by 120 before the Justice
Department came in. Then, I switched to US Airways equity. Once
you believed AMR was not going to fold, the paper was clearly
cheap. And then once you realized a merger with US Airways was
likely, the paper was extremely cheap.
It was more of a year for very highly leveraged names that
needed their capital structures adjusted. Clear Channel [Communications Inc.] being an example. Travelport [LLC] being another
example. We had investments in those.
Post-reorg equity has been a fertile place to invest, generally.
Often the best time to buy is a little after an emergence [from
bankruptcy], after weak hands have sold. In this case, US Airways
stock is remarkably cheap. The equity community does not seem
to understand what the merged entities are going to look like.
JC Penney and Puerto Rico should be on
every distressed guy’s radar screen.”
Zul Jamal
Managing Director
Moelis & Co.
“We started to see some of the characteristics of the bull market that we saw in 2006
continued on next page

1 2 3 4 5 6 7 8 9 10 11 12 13


4

Outlook 2014: Voices
continued from previous page

and 2007: a lot more no-covenant and very covenant-lite leverage
loans, which a lot of companies were able to use to refinance their
way out of problems. We started to see some PIK toggle deals. The
maturity wall that people had talked about really got pushed out
significantly. Restructuring activity was significantly lower.
The activity we did see was focused on specific sector issues as
opposed to anything driven by the economy or the LBO overhang.
Shipping will continue to experience pressures because the
supply-demand imbalance still needs to correct itself. New supply
continues to come in and demand growth has not been nearly what
it had been historically — global economic growth has not been as
robust. Until that works its way through the system, shipping will be
an industry that will continue to experience some stresses.
Health-care services, government services also saw some
activity. The government has stabilized after the turmoil of the
shutdown, but we are still living in an environment of lower government spending. As health-care costs are affected as a result of
the Affordable Care Act certain health-care service providers may
begin to experience some challenges. You may see some more
restructuring in sectors such as coal mining, E&P, smaller IPP (independent power producers), infrastructure plays where you have
highly levered situations that are not experiencing the demand
growth expected when they were first purchased.
We probably will see European distressed debt change hands
and distressed asset sales, but I think it will happen slowly over
time so it can happen as quietly as possible.”
Deirdre McGuinness
Managing Director
KCC LCC
“The Chapter 11s we are seeing are pre-negotiated. We are looking at sales or prepacks
that go in and out fairly quickly. Companies
don’t have the balance sheets to fight anymore and litigate. So, it’s easier to accept the
inevitable and come up with a prepack.
There are a lot of eyes watching the current Chapter 9 cases
and carefully dissecting legal issues and judicial opinions to
date because, of course, those will assist in the analysis of other
Chapter 9s. Clearly, Judge Rhodes’ decision resonated throughout the bankruptcy community. I think it will help pave the road for
Chapter 9s and it won’t be as uncharted.”
David Ying
Head of Restructuring
Evercore Partners
“It’s a very benign environment when it
comes to defaults. You’d have to have a major
change in the interest rate environment, a
material move in interest rates for a prolonged
period of time — which I don’t anticipate — to
see an increase in restructurings. Right now, interest coverage ratios
for leveraged credits have never been better because rates are so
low and companies have had the last two or three years to access
these very attractive long-term interest rates.

Each one of these restructuring deals is hotly contested by lots
of competitors. It’s always been hard, but in this environment it’s
been extremely tough because the competition is fierce. I don’t
think any of the firms are getting out of the business. Everybody
is pretty challenged and therefore keeping their headcount
under tight scrutiny. In terms of transitioning to an ancillary business, I think that is very hard because the talent base and the
connections in the restructuring business are pretty unique to
the industry. All of the other industries you could try to branch
out to — M&A or financing — they are very well established
with very well established participants. Changing your stripes is
pretty darn hard.
In Europe the banking system seems to have gotten a bit
healthier. A number of the banks have started to have sufficiently
strong financial positions so they can start to address some of
their problem-loan portfolios.
You have seen some of the European banks start to sell loans
in specific industries. Two shipping restucturings were recently
precipitated by big banks selling their positions. Now those
companies are free to restructure because the banks are selling
and the new buyers are not willing to extend the maturity profile of
these overleveraged capital structures. It’s very episodic. I would
not call it a landslide. It’s a trickle.”
Allan Brilliant
Partner
Dechert LLP
“The one thing that started in 2013 and
continues into 2014 is the number of multinational issues, especially restructurings,
coming out of the emerging markets. There
have been a lot more high-yield defaults in
emerging markets. It seems like international Chapter 15s are going to be picking up, especially with the defaults.
In 2014, I am expecting a lot more restructurings coming out of
commodity-related industries — some metals and mining companies — and continued low prices for coal and natural gas will also
spur restructuring and bankruptcies. The coal industry has not
completely shook out yet. Companies whose margin is based in
part on natural gas — such as merchant energy producers — will
be under enormous pressure — and I expect we will see more
merchant energy restructurings and bankruptcies in 2014.”
Neil Kaufman,
Partner and Chairman of the Corporate
Department
Abrams Fensterman
“The bankruptcy process has moved much
more towards section 363 asset sales as
opposed to plans of reorganization. That
seems to be a trend throughout the country
and that results in more sales of businesses coming out of the
bankruptcy process. It’s become increasingly common for companies to not even bother with a plan of reorganization. They just go
right in and sell their business. I’ve been seeing more and more
with my clients. It’s hard for me to tell whether buyers are more

continued on next page

1 2 3 4 5 6 7 8 9 10 11 12 13


5

Outlook 2014: Voices
continued from previous page

likely to be vulture investors or strategic buyers because I mostly
see it on behalf of strategic buyers.
From a strategic buyer standpoint you always have to be careful
when you buy a bankruptcy business. Why is it there? Is it there because it’s a bad business and no matter what you do you’ll never be
able to turn it into a good business? Or is it a good business that was
maybe overleveraged in the buyout process and can’t swim against
the tide of their debt load? Once they get freed of that debt load a lot
of times you can pick off an interesting business in the bankruptcy
sale for a lot less than you would have paid prior to the bankruptcy.”
Tim Coleman,
Blackstone Group
“The business has been lumpy for a lot
of people. We have been doing business in
a variety of different places such as South
America, Mexico and Asia. That’s something that has fed our pipeline.
It’s been a slow year from a default standpoint. Defaults are
something like 1.4 percent, which is about as low as it goes in the
world of defaults. Likewise companies have issued almost a trillion dollars of non-investment grade bonds and bank debt, which
is a record upon records. It’s not a great robust environment for
restructuring generally because of those kinds of situations.
People expect the default rate to go up in 2014. The latest
estimate is a little over three percent and I think we’ll see more
defaults. Ultimately all this issuance could turn into restructuring
opportunities. Typically if you issue a CCC — I think the number is
65 percent of them all end up in some kind of restructuring within
five years. So as you look at the ratings and the kinds of deals
being issued — whether it is CCC or on up the ladder — many of
those deals will end up needing some kind of restructuring.
Energy will continue to be an issue. We expect to see some healthcare and international companies that are struggling as different
markets go through their own downturns. We will still see media as
something that will be a driver. We are doing a fair amount in shipping and I think we’ll still see some shipping business next year.”
Eric Siegert,
Houlihan Lokey
“We don’t expect a meaningful change in
the pace of restructuring activity in 2014.
There is no single catalyst which is going to
trigger a landslide of activity. Eventually, a
combination of events will trigger an increase
in activity: inflation, rate increases and diminished access to credit
will change the dynamic. Access to nearly free money to fix all ailments will eventually cease.
Regulatory changes can also be a factor. Coal got sort of a
double whammy, with the recent abundance of inexpensive natural gas combined with regulatory issues.
It probably won’t be like 2008 and 2009, where a single catalyst
in the residential market brought the whole house of cards down.
I don’t think you’ll suddenly have a wave of defaults that occur in

a given month in a given year. Maturities are going to start to be
a problem. Companies are not going to be able to access capital
and refinance maturing debt, interest rates will go up, and liquidity will get tighter. I expect that we’ll see activity in the shipping
space, and that’s really driven by overall economic activity. As
goes the overall economy, so goes the amount of goods that are
traveling overseas.The economy is still not robust anywhere. It
appears that it will kind of limp along.
With respect to municipal restructuring, we expect an uptick in
activity regardless of whether these municipalities have the right to
use the bankruptcy code to ease their situations. The bankruptcy
option will impact how municipalities restructure and the tools they
use to restructure. There are municipalities that are struggling all
over the place. They are going to have to do something; their backs
are being broken with all the pension costs and retiree costs.
In 2013 we saw more distressed M&A as opposed to traditional
debt for equity conversions. So there were a lot of more unique
situations, or one-off situations that would not fit into the typical
restructuring paradigm.”
Peter Kaufman
Gordian Group
“I expect more local governments to run
into trouble. Municipalities will be filing more.
You’ll see trends continue where municipal
pension holders and municipal bond holders
are at risk. Look at what’s happening with
Detroit. That’s a bellwether.
Hospitals are going to be under siege due to a variety of different trends. A lot of them rely on funds from the government which
are not going to be there.
Healthcare is a real focus for us these days. You’ll still be seeing
the shakeout from Obamacare. That’s going to play out in unexpected ways as people actually find out what’s in the law and they
have to react to it.”
Kristen Bentz
Executive Director
PMG Venture Group
“I see vast consolidation within retail, a lot
of people are just getting out of the game.
A lot of people are going to be filing for
bankruptcy. This Christmas was it for a lot
of retailers and the thing that is interesting
about this space is that it is a sector that prides itself on consumer behavior data and it didn’t see it coming. They thought staying
open on Thanksgiving was really going to help.
People will go with a Chapter 11 before they go with a Chapter
7. A lot of retailers are opposed to biting the bullet and liquidating
immediately. There’s a lot more ego involved in retail and fashion.
It’s a lot more different than other sectors.
Middle-market retailers — I could easily see them having a really
rough time and having to shut down stores. Not liquidation per se,
but shutting down stores and reorganizing.”

1 2 3 4 5 6 7 8 9 10 11 12 13


2013 REVIEW: BOND & LOAN RECOVERIES

6

by Deirdre Fretz and Robert Restaino

1250 Oceanside Partners Leads Loan Recovery Disparity; AMR to Pay Debtors in Full
Secured lenders to 1250 Oceanside
Partners had the largest disparity in
estimated recovery rates among the 28
companies with liabilities of $500 million
or more that filed disclosure statements
in 2013 in preparation for exiting bankruptcy. AMR debtors are expected to be
paid in full, illustrating the wide variety of
outcomes from the Chapter 11 process.
1250 Oceanside Partners, a 1,800acre proposed development near Kona on
the island of Hawaii, plans to pay a $20
million mortgage to the county in full. A
$627 million secured loan purchased from
Bank of Scotland in December 2012 by
Sun Kona Finance I LLC was exchanged
for the company’s sole asset — land with
an estimated value of about $40 million.
No payment was made toward unsecured
claims, composed largely of $32 million
sought by lot owners.
Cengage Learning also projected a
wide range in recovery rates. First-lien

120
b

lenders are projected to recover 72.8 percent of funds lent, while unsecured bond
holders will likely receive no payment.
AMR, with $10.2 billion in secured
bonds and $3.5 billion in unsecured bonds
outstanding when it filed for bankruptcy on
Nov. 29, 2011, will pay holders in full under
the terms of its merger with US Airways.
Investors in MF Global were projected
to recover 23 percent of both $1.2 billion
in loans and $1.1 billion in bonds, according to disclosure statements, after clients
received their assets in full. This debt
recovery rate was significantly below the
market expectation reflected in bond prices
during the liquidation process. The failed
brokerage’s $325 million in 6.25 percent
unsecured bonds maturing in 2016 traded
as high as 78.25 cents on the dollar on
Feb. 20, according to TRACE.
Energy Mission’s Dec. 3 filing with the
court estimates a $57 million first-lien
loan will be paid in full, and holders of

AMR Secured &
Unsecured Bonds

SuperMedia

Dex One

$3.85 billion in senior unsecured bonds
will receive 78.65 percent of face value.
The independent power producer that has
been in bankruptcy for over a year is being purchased by NRG for $ $2.64 billion,
including $2.29 billion in cash and $350
million in stock.
Over the prior 12 years, lenders recovered about 80 percent of the face value
of their loans on average, according to
900 disclosure statements captured in
Bloomberg’s database of 2,000 bankruptcies. Recoveries came in the form of
repayment, exchange or other settlements
through the bankruptcy process. Bondholders recovered just under 50 percent,
on average, over the same period, often
with a disparity in recovery rates between
secured and unsecured bonds.

Rural Metro

Ames

100

($
Energy Mission

Pinnacle Air

ArCapita

80

Bonds
Loans

Recovery Rate

Eastman Kodak

60

ResCap

Cengage Learning

MF Global

40

1250 Oceanside
Partners

Revel

20

0
Ocala Funding

-20
N

D

J


F

M

A

M

J

J

A

S

O

N

D

J

J

M

A

Date of Disclosure Statement

Recovery rates from 28 companies that issued disclosure statements in 2013. Bonds are shown in blue and loans are shown in orange. The size of the
bubble represents the face value of the debt at issue. Bubbles appear on date of the disclosure statement.

1 2 3 4 5 6 7 8 9 10 11 12 13


7

Largest Active Filings
Edison Mission Bonds Rise on Sale; Longview’s Loans Volatile as Access to Credit Debated
Edison Mission bonds rose throughout the year, jumping on Oct. 18 as NRG’s acquisition of the company was announced. Longview Power’s loans were
volatile as the company’s access to credit lines from contractors was disputed.

Company

MF Global

Date of Filing

Oct. 31, 2011

Benchmark
Security

Update
The MF Global Inc. brokerage is being liquidated and was expected to
return all clients' funds by year-end 2013. A Chapter 11 plan for the
holding company was approved by the bankruptcy court in April and
implemented in June.

July 2, 2013

The textbook company is seeking exit financing. A confirmation hearing
is scheduled for Feb. 24 on a plan to restructure $5.8 million in debt,
much of which it took on when acquired by Apax Partners and Omers
Capital Partners in 2007. A March 2014 exit is planned.

Edison Mission

Dec. 17, 2012

The independent power producer won bankruptcy court approval of a
description of the terms of a reorganization plan that includes an asset
sale to NRG Energy Inc. for $2.64 billion. Next hearing scheduled for
Jan. 22.

ATP Oil and Gas

Aug. 17, 2012

The sale of $637 million in assets to Bennu Oil & Gas LLC, an acquisition
vehicle formed on behalf of the debtor-in-possession lenders, was
approved by the bankruptcy court on Oct. 17.

Aug. 30, 2013

The company created to own a $2 billion coal-fired power plant in
West Virginia was forced to seek bankruptcy protection after
construction flaws reduced its power output, hindering its ability to
make debt payments, according to court documents.The company's
access to contractor credit lines, set aside as collateral for lenders, has
been disputed. Lenders have requested exclusivity into March.

Cengage

Longview Power

Largest Active Chapter 11 Filings
Debtor
MF Global
AMR Corp.
Residential Capital LLC
Cengage Learning Inc.
Edison Mission
ATP Oil & Gas
Patriot Coal
LightSquared
Gatehouse Media
Longview Power

Venue
Bankr. S.D. N.Y.
Bankr. S.D. N.Y.
Bankr. S.D. N.Y.
Bankr. E.D.N.Y.
Bankr. N.D. Ill.
Bankr. S.D. Texas
Bankr. S.D. N.Y.
Bankr. S.D. N.Y.
Bankr. D. Del.
Bankr. D. Del.

Debtor Counsel
Skadden Arps
Weil Gotshal
Morrison Foerster
Kirkland & Ellis
Kirkland & Ellis
Mayer Brown
Davis Polk
Milbank Tweed Hadley
Young, Conaway, Stargatt & Taylor
Richards, Layton & Finger

Date of Filing
10/31/2011
11/29/2011
5/14/2012
7/2/2013
12/17/2012
8/17/2012
7/9/2012
5/14/2012
9/27/2013
8/30/2013

Source: Court filings.

1 2 3 4 5 6 7 8 9 10 11 12 13

Liabilities Listed
$39.7 billion
$29.6 billion
$15.3 billion
$6.47 billion
$5.09 billion
$3.5 billion
$3.07 billion
$2.29 billion
$1.28 billion
$1.1 billion


8

2013 review: filings by state
Business Bankruptcies Decline in Majority of States, Jump Most in South Dakota
While Chapter 11 filings by businesses with $1 million or more worth of debt fell in most states, South Dakota, South Carolina and New Hampshire saw
an increase in petitions. In South Carolina, Chapter 11s rose by 143 percent to 17 cases, in South Dakota they rose 200 percent to 3 cases and in New
Hampshire they were up 167 percent to 8 cases. California, New York and Florida had the most new Chapter 11s; 228 businesses filed in California while
New York and Florida each had 152 business bankruptcies.

Decline in Chapter 11 Caseload Accelerates in H2

Number of Billion-Dollar Filings Fell 41 Percent

650

Number of Chapter 11 Petions

550

2013
450

2012

$1 billion or more
$500 million - $1 billion

$100 - $500 million
350

$50 - $100 million
$10 - $50 million

250

$1 - $10 million

150
50
2012 Q1

Source: Bloomberg Brief

Q2

Q3

Q4

2013 Q1

Q2

Q3

Q4

The decline in Chapter 11 filings accelerated in the second half of 2013.
Three percent fewer companies filed for bankruptcy in the first quarter,
compared with the fourth quarter of 2012. Filings remained constant in 2Q
before falling 19 percent in 3Q and 9 percent in 4Q.


Companies with assets and liabilities between $1 million and $10 million
made up a larger portion of bankruptcy filings in 2013 compared with
2012. Ten companies with liabilities of $1 billion or more filed a Chapter 11
petition in 2013, compared with 17 the previous year.

1 2 3 4 5 6 7 8 9 10 11 12 13


9

2013 review: Largest filings
Media, Publishing Drive Large 2013 Chapter 11 Bankruptcies
In 2013, Readers Digest returned to bankruptcy court for the second time in four years, while phone-book publishers Dex One and SuperMedia merged
their businesses as their restructuring was supervised by a Delaware judge. Cengage Learning, a college textbook publisher, sought court protection
more than five years after a buyout led by Apax Partners LLP left it with about $5.8 billion in debt. GateHouse Media, a newspaper publisher, filed a Chapter 11 after creditors approved a plan to combine its assets with those of Newscastle Investment Corp.

Top Bankruptcies of 2013
Debtor
Cengage Learning, Inc.

Venue
Bankr. E.D.N.Y.

Dex One Corp

Bankr. D. Del.

Anchor Bancorp

Bankr. W.D. Wis.

SuperMedia

Bankr. D. Del.

Central European Distribution Corp.
Revel AC

Bankr. D. Del.
Bankr. D. N.J.

GateHouse Media

Bankr. D. Del.

RDA Holding

Bankr. S.D.N.Y.

Exide Technologies

Bankr. D. Del.

Longview Power

Bankr. D. Del.

Debtor counsel
Kirkland & Ellis
Pachulski Stang Ziehl &
Jones

Judge
Elizabeth S. Stong

Kerkman & Dunn

Robert D. Martin

Young, Conaway, Stargatt
& Taylor
Skadden Arps Slate
Meagher & Flom
Kirkland & Ellis
Young, Conaway, Stargatt
& Taylor
Weil Gotshal & Manges
Skadden Arps Slate
Meagher & Flom
Richards, Layton &
Finger B

Date of Filing
Industry
7/2/2013 textbook publisher
phone-book
3/18/2013
publisher, media
bank holding
8/12/2013
company
phone-book
3/18/2013
publisher, media

Kevin Gross

Kevin Gross
Christopfer S. Sontchi

4/7/2013 vodka producer

Judith H. Wizmur

3/25/2013 casino

Mary Walrath

9/27/2013 newspapers/media

Robert D. Drain

2/17/2013

Brendan Linehan Shannon

$2.79 billion
$2.427 billion
$1.9 billion
$1.74 billion
$1.5 billion

magazine publisher/
media
battery
6/10/2013
manufacturer

Kevin J. Carey

Liabilities listed
$6.47 billion

8/30/2013 power company

$1.28 billion
$1.185 billion
$1.14 billion
$1.1 billion


Top Bankruptcies of Q4 2013
Debtor
Fisker Automotive
Holdings

Venue

Debtor counsel

Judge

Liabilities Listed

Industry

Bankr. D. Delaware

Kirkland & Ellis

Kevin Gross

$467.9 million automotive, hybrid cars

Green Field Energy

Bankr. D. Delaware

Latham & Watkins LLP

Kevin Gross

$447.2 million

Physiotherapy Holdings

Bankr. D. Delaware

Simply Wheelz LLC

Bankr. S.D. Mississippi

Allens Inc.

Bankr. W.D. Arkansas

Savient Pharmaceuticals Bankr. D. Delaware

Klehr Harrison Harvey
Branzburg LLP
Butler Snow O’Mara
Stevens & Cannada
Mitchell Law Firm/
Greenberg Traurig LLP
Skadden Arps Slate
Meagher & Flom
Akin, Gump, Strauss,
Hauer & Feld

Kevin Gross

energy, oil-field services
provider

$350 million health care

11/22/20013
10/27/2013
11/12/2013

Edward Ellington

$322.2 million car rental business

Ben T Barry

$287.9 milllion vegetable canner

10/28/2013

Mary F. Walrath

$260.4 million health care

10/13/2013

Sean H. Lane

$251.2 million bus company

11/4/2013
11/4/2013

Atlantic Express
Transportation

Bankr. S.D. New York

Velti Inc.

Bankr. D. Delaware

DLA Piper

Peter Walsh

provider of marketing and
$175.1 million advertising services for
mobile devices

Bankr. D. Delaware

Polsinelli PC

Mary F. Walrath

$170.6 million flight

Bankr. N.D. Illinois

Kaye Scholer

Jack B. Schmetterer

$135.5 million real estate

Global Aviation
Holdings Inc.
NNN 123 North
Wacker LLC

Date of filing


1 2 3 4 5 6 7 8 9 10 11 12 13

11/5/2013

11/12/2013
10/4/2013


2013 Review

10

by robert restaino

Bloomberg Corporate Bankruptcy Index Declined in Q4 2013
The Bloomberg Corporate Bankruptcy Index ended the fourth quarter of 2013 at a level of 60.17 down 15.49 percent from the close of the
,
third quarter of 2013. The index was down 17 percent from the fourth quarter of 2012. The largest Chapter 11 bankruptcy filings during
.71
the fourth quarter of 2013 included Fisker Automotive Holdings, Green Field Energy Services, Physiotherapy Holdings, and Simply Wheelz
LLC. The Index, found at {BNKRINDX <Index> <Go>} on the Bloomberg Professional Service, is a barometer of recent U.S. bankruptcy
activity for corporations with at least $100 million in reported liabilities.
80

Bloomberg Bankruptcy Index Reading

78
76
74

72
70
68
66

64
62
60
1/1/2013

3/1/2013

5/1/2013

7/1/2013

9/1/2013

11/1/2013


Consumer Discretionary Cases Led Large Filings
Healthcare
Consumer
Discretionary

Financials

Delaware Is Dominant Venue for Large Cases
40

Outer Circle: 2013

35

Inner Circle: 2012

Technology
Energy

Consumer
Staples
Industrials
Industrials


Consumer
Staples

Energy

60

30

50

25

40

20

30

15

20

10

10

5

0

Q1 '12

Source: BLAW

Five consumer discretionary debtors filed Chapter 11s involving assets
and liabilities of $500 million or more, making it the largest industry category among such cases in 2013.

70

←S.D. NY
D. DE % of Total→

Percent

Number of Large Cases

Financials

←D. DE
←All Others
S.D. NY % of Total→

Q2 '12

Q3 '12

Q4 '12

Q1 '13

Q2 '13

Q3 '13

Q4 '13

0

In 2013, Delaware’s venue took on 36 Chapter 11 cases from businesses
involving $50 million or more in liabilities, while New York’s southern
district took on 10 such cases.

1 2 3 4 5 6 7 8 9 10 11 12 13


11

2013 review: Single Asset Real Estate
Single Asset Real Estate Filings Decline in Most States; South Carolina Sees Biggest Rise
The number of single asset real estate filings declined across most states in 2013. New York saw the most such cases despite a decline to 61 filings in
2013 from 63 in 2012. South Carolina’s single asset real estate cases rose by 300 percent in 2013 to 8 filings, from 2 in the previous year.

Real Estate as a Portion of All Filings Fell in 2013
2013
2012

New York Real Estate Cases Overtake California
CA
2013

Single Asset Real Estate
Other

2012

NY

TX

FL
0
20


Single asset real estate made up 22 percent of all Chapter 11 filings by
businesses with $1 million or more in debt in 2013, down from 25 percent
in 2012.

40

60

80

100

New York overtook California as the state with the most Chapter 11 filings classified as single asset real estate cases. Cases from California
declined by 42 percent in 2013 to 47 filings from 81 in 2012.

1 2 3 4 5 6 7 8 9 10 11 12 13


2013 review: Chapter 9

12

By aleksandrs rozens

Seven Chapter 9s of 2013 Include Detroit’s Historic Petition
While the number of local governments filing Chapter 9 petitions fell in 2013 to seven from a dozen in 2012, Detroit’s historic petition
captured the attention of restructuring professionals. The city listed over 100,000 creditors in its bankruptcy filing and its largest unsecured
creditor is the General Retirement System of the City of Detroit. Last year two more petitions were filed in Nebraska, which is the state with
the most Chapter 9 bankruptcy petitions.

Chapter 9s of 2013
Date of Filing

Utilities Are Top Source of Chapter 9s Historically

Debtor

Venue

Liabilities
listed

School Education

6

Transportation

8

August 6, 2013

Sanitary and Improvement District Bankr. D.
No. 249 of Sarpy
Nebraska

$1 million to
$10 million

July 13, 2013

Bankr. W.D. $10 million to
Adair County Public Hospital Corp.
Kentucky
$50 million

July 18, 2013

City of Detroit

Bankr. E.D.
Michigan

$18 billion

July 1, 2013

Pulaski County Property Owners
Improvement District

Bankr. E.D.
Arkansas

$1 million to
$10 million

City, village or county

May 24, 2013

Sanitary and Improvement District Bankr. D.
No. 494 of Douglas County
Nebraska

$1 million to
$10 million

Muni utilities/special districts

$1 million to
$10 million

Source: Chapman Strategic Advisors LLC

March 21, 2013 Hardeman County Hospital District

Bankr. N.D.
Texas

March 1, 2013

Bankr. W.D. $1 million to
Oklahoma
$10 million

Hospital/health care

48

53

167
0

50

100

150

200

Source: Court filings

Between 1980 and 2013 municipal utilities were the biggest source of
Chapter 9s; 167 utilities and special districts sought court protection, according to data compiled by Chapman Strategic Advisors.

Municipal Bankruptcies Decline From 2012 Levels

Top Ch. 9 States Since ’80: Nebraska and California

14

IL

6

MO

11

AL

8

11

AK

10
Number of Filings

6

TN

12

11

OK

6

13

CO

22

TX

4

38

CA

2

43

NE

0
2008

2009

2010

2011

2012

2013

60
0

10

20

30
40
50
Number of Chapter 9s By State

60

70

Source: Chapman Strategic Advisors

Source: BLAW

In 2013 seven local governments filed Chapter 9s, down from 12 in 2012
and 13 in 2011. One of the 2012 cases, Mammoth Lakes, California, was
dismissed after the town settled a lawsuit. Two of last year’s Chapter 9s
were from Nebraska. In 2012, four Chapter 9s were from local governments in California.

Nebraska is the biggest source of Chapter 9 filings with 60 such petitions
filed between 1980 and 2013, according to data compiled by Chapman
Strategic Advisors. California was the next busiest source of municipal
filings with 43 local government seeking court protection since 1980.

MONITOR LIQUIDITY FOR MULTIPLE BONDS
1 2 3 4 5 6 7 8 9 10 11 12 13

FIW

<GO>

Pauls Valley Hospital Authority


2013 review: Chapter 15

13

By Aleksandrs rozens

Top 10 Chapter 15 Petitions
Corporate Debtor

Debtor Counsel

Judge

Assets

Liabilities

STX Pan Ocean Co. Ltd.
Irish Bank Resolution Corp.
Sino-Forest Corp.
PT Berlian Laju Tanker Tbk
Chartis Excess Limited
Banco Pontual
Zlomrez International Finance SA
Isofoton SA
Pioneer Freight Futures Co. Ltd.
ICP Strategic Credit Income
Master Fund Ltd.

Blank Rome
Richards, Layton & Finger
Milbank, Tweed, Hadley & McCloy
Schnader Harrison Segal & Lewis LLP
Chadbourne & Parke LLP
Gregory S. Grossman
White & Case
Squire Sanders
Chadbourne & Parke LLP

Shelley C. Chapman
Christopher Sontchi
Martin Glenn
Stuart M. Bernstein
No one assigned as of April 3
Laurel M Isicoff
No one assigned as of Dec. 30
Mary Ann Whipple
James M. Peck

More than $1 billion
$500 million - $1 billion
$100 million - $500 million


Date of
Filing
6/20/2013
8/26/2013
2/4/2013
3/26/2013
3/15/2013
10/22/2013
12/23/2013
9/16/2013
7/16/2013

Reid Collins & Tsai LLP

Robert E. Gerber



6/28/2013

Source: Bloomberg Briefs

Canadian Businesses Propel Chapter 15 Petitions
Thirty-six Chapter 15 petitions were filed by foreign debtors in
the U.S. last year. That’s up from 35 such cases in 2012.
Canadian businesses continued to dominate Chapter 15s; 39
percent of last year’s cases were Canadian companies. In 2012,
Canadian companies accounted for 37 percent of Chapter 15
petitions. Germany was the second-largest source of businesses
seeking Chapter 15s.
ARXX Building Products, IT Xchange, Lone Pine Resources
and Abitibi Helicopter were among the Canadian companies
that looked to protect their assets in the U.S. with a Chapter 15.
Two of the largest Chapter 15s in 2013 were shipping companies:
Korea’s STX Pan Ocean and Indonesia’s PT Berlian Laju Tanker.
New York’s southern district remains the most active venue for
Chapter 15s. It took on 14 such cases in 2013, down from 16 in 2012.

Financial, Tech and Industrial Debtors Drive 15s
1 1 1

Healthcare

3

Communications

7

Energy

Consumer Discretionary

6

Financials

10

Industrials

7

Technology
Telecom


Financial, industrial and technology companies were behind 18 of 36 2013
Chapter 15 petitions. Irish Bank Resolution Corp., a financial debtor, was
one of the largest Chapter 15 cases by liabilities in 2013.

Canada Still Dominant as Source of Chapter 15s
1 1
1

1

1

1

1
1

14

1
2
2

3

2
2

2

Poland
Czech Republic
Hungary
Brazil
South Korea
Sweden
Australia
Israel
Indonesia
Ireland
Denmark
Spain
British Virgin Islands
Cayman Islands
Germany
Canada

New York’s Southern District Is Busiest Venue
Bankr. D. S.D.N.Y
Bankr. D. Delaware
Bankr. S. D. Florida

Bankr. D. Colorado
Bankr. D. Arizona
Bankr. D. Alaska

Bankr. C.D. Cal.
Bankr D. Delaware
Bank. N.D. Ohio

Bankr. N.D. Cal.
Bankr. E.D. Missouri
Bankr. E. D. Pa.
0



Fourteen, or 39% of all of last year’s Chapter 15 petitions, were from Canadian businesses. In 2012, 13 of 35 such cases involved Canadian debtors.

2

4

6

8

10

12

14

16

New York’s southern district drew the most Chapter 15s by foreign debtors
including Sino-Forest Corp., STX Pan Ocean and Magyar Telecom.

1 2 3 4 5 6 7 8 9 10 11 12 13

Bankruptcy & Restructuring 2013 Year End Review

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