Archive for March 31, 2015

Bankruptcy bracketology and how SkyMall only sold for $1.9M

In US Bankruptcy Court documents, the investment company charged with auction outlines the process that ended up with two finalists for SkyMall: CA and FSG.

Jeffrey Manning of New York-based CohnReznick LLP said in court documents that he reached out to 188 potential SkyMall buyers, sent out 177 nondisclosure agreements and had 70 of those signed. Of those, Manning said 31 parties had conference calls or meetings regarding information bidding for SkyMall.

CohnReznick then prequalified seven groups for the auction. The final process involved determining the top two bids, which were from CA and FSG, according to court records.

CA ended up winning the auction for $1.9 million.

The Wall Street Journal reports CAs initial bid was lower. CA Executive Vice President Chaim Pikarski also told the Journal he hopes to turn around the catalog company.

Mike Sunnucks writes about residential and commercial real estate, government, law, sports business and workplace issues.

Judge approves ex-Watergate lawyer to probe Caesars bankruptcy

CHICAGO (Reuters) – A lawyer who made his name as a Watergate prosecutor was approved on Wednesday to begin investigating a series of corporate deals in the lead-up to the bankruptcy of the casino operating unit of Caesars Entertainment Corp (CZR.O).

Richard Davis, a former partner at bankruptcy powerhouse Weil Gotshal Manges, will investigate whether the operating unit received fair value for choice properties including the Linq complex in Las Vegas. Davis was given a wide-ranging role by the judge who tasked him with investigating potential conflicts of interest by the bankrupt unit.

Youre game for this? Judge Benjamin Goldgar asked Davis at a hearing in Chicago bankruptcy court, before approving him for the role of examiner. Youre in.

Creditors allege the deals looted billions of dollars from the operator of 38 casinos for the benefit of the parent company, which is not bankrupt, and private equity backers Apollo Global Management (APO.N) and TPG Capital.

Separately on Wednesday, Goldgar set a June 1 hearing on Caesars request to suspend existing lawsuits filed against certain Caesars entities.

Goldgar said the question of whether to freeze those cases will depend on whether Caesars can convince him that the lawsuits could distract from the operating units bankruptcy restructuring – a harder argument to make for a company as big as Caesars, he said.

A CAREER INVESTIGATOR

Davis made his mark early in his career as a member of the Watergate Special Prosecution Force that investigated the administration of President Richard Nixon. Davis was tasked with questioning Nixon about an 18-1/2-minute gap on White House tapes.

He also worked in the US Treasury Department, where he helped negotiate the release of hostages during the Iranian hostage crisis, court records show.

Most recently Davis was tapped to probe the dealings of bankrupt hedge fund Fletcher International, whose founder, Alphonse Buddy Fletcher, is the husband of Ellen Pao, the plaintiff in high-profile gender discrimination litigation against venture capital firm Kleiner Perkins Caufield Byers.

Examiners can dramatically affect a restructuring. Caesars creditors have cited the bankruptcy of energy producer Dynegy Holdings, where an examiners report spurred the return of assets that had been transferred outside Dynegys estate.

Shares of Caesars ended down 4.9 percent at $9.40 on the Nasdaq in a sharply weaker overall market.

The case is Caesars Entertainment Operating Co Inc, US Bankruptcy Court, Northern District of Illinois, No. 15-B-1145

(Writing by Tom Hals in Wilmington, Del.; editing by Matthew Lewis)

Good News: RadioShack Says Consumer Information Isn’t Part Of Bankruptcy …

Earlier this week, we reported that the one of the assets of the former RadioShack empire up for sale is the tens of millions of names, mailing addresses, phone numbers, and e-mail addresses that the retailer has collected from its customers. Many states attorneys general objected to this possible sale, noting that it may violate Texas law and the companys own privacy policies. Fortunately, that consumer data is not yet for sale.

Liquidators Hilco Streambank listed this information as one of the Shacks assets that would be for sale, alongside the companys domain names, house brands, and patent portfolio. Yet the auction has an official consumer privacy ombudsman who looks out for, well, consumer privacy. The ombud, New York attorney Elaine Frejka, sent a letter to the bankruptcy judge in response to the letters from the attorneys general of Texas and other states objecting to the possible sale of consumer data.

Her response is simple: RadioShack told her that they arent selling consumer data.

I have been advised by the Debtors that customer lists and other customer-related information (the Customer Data”) will not be included as part of the sale to be considered by the Court on March 26, 2015. In light of the fact that the sale of Personally Identifiable Information, as defined in section 101(41A) of the Bankruptcy Code, is not at issue at this time, the Ombudsman respectfully submits that filing a report at this time would not benefit the Court or other parties-in-interest.

This doesnt definitively rule out selling the data in the future, but it isnt part of the current auction.

Shoppers personal info not part of RadioShack sale: ombudsman [Reuters]

Senate bill would waive student loans in bankruptcy

Student loans have long been exempt from the protections offered by bankruptcy, but a new Senate bill would change that. The move come as the White House and lawmakers are working on multiple fronts to attack what is being called a student-debt crisis.

By

Doug Gross, NerdWallet

Bankruptcy Judge Benchslaps A Biglaw Firm — Hard

Which federal court generates the best benchslaps? I have my own personal favorites. Theres the Seventh Circuit, home of Judge Richard Posner and Judge Frank Easterbrook, who dont suffer fools gladly. Theres the Ninth Circuit, stomping grounds of Judge Alex Kozinski, who also has a low tolerance for foolish or unethical conduct by counsel. (Fellow fans of Judge Kozinski and the Ninth Circuit, youre cordially invited to this event on April 19.)

But beyond the big circuit courts, the US Bankruptcy Court for the Southern District of Florida has to be up there. It generated one of the best benchslap stories ever, back in 2007, after Judge Laurel Myerson Isicoff didnt respond well to being referred to by a Biglaw partner as a few French fries short of a Happy Meal.

On Friday, a different bankruptcy judge in the same court lashed out at a different Biglaw firm, as reported by the Daily Business Review:

US Bankruptcy Judge John Olson bashed Duane Morris on Friday during a sanctions hearing for two Miami partners in a dispute over Plantations shuttered Fashion Mall.

Olson issued an interim sanction in January barring Duane Morris partner Lida Rodriguez-Taseff from practicing in the Southern District of Floridas bankruptcy court for 90 days. At that time, he also issued an order against fellow partner Kevin Vance, who faced a similar penalty over an electronically filed court document that contradicted the judges oral instructions.

The tone of Duane Morris pleading in this case reflects what I would conceive of as a self-satisfied smugness, full of self-congratulatory blather all to the effect that the firm is a great corporate citizen who did nothing wrong in this case, the Fort Lauderdale judge said from the bench Friday. Duane Morris may be a great corporate citizen in some of the markets in which it practices. Its conduct and attitude here is that it neither cares about being or being seen as a responsible corporate citizen in the Southern District of Florida.

Ouch. What happened?

A draft order requested by Judge Olson got majorly mangled. The incorrect draft order got filed electronically under the logon of partner Kevin Vance (who, it turns out, didnt really have substantive involvement in this matter). Heres Duane Morriss account of how that transpired:

Duane Morris attorneys said two paralegals inadvertently botched the filing and used Vances credentials without his knowledge.

David Pollack, a shareholder at Stearns Weaver Miller Weissler Alhadeff amp; Sitterson in Miami, who represented Duane Morris, said paralegals Rebecca Guillou and Dawn Perez inadvertently botched the filing. The paralegals used Vances credentials without his knowledge to upload documents he had not drafted or reviewed, Pollack said.

Guillou accepted responsibility in a statement to the court.

Somebody gave her the keys to the Ferrari, Olson said at Fridays hearing. She had no clue what she was doing, and she should never have touched them, right?

Yes, Pollack conceded. It was a mistake.

Oh, those pesky paralegals! First they make a billion-dollar blunder, and now this.

But lawyers in this case, lead partner Lida Rodriguez-Taseff you cant escape responsibility so easily. You are responsible for training and supervising your paralegals, and you are responsible for any errors they make. Indeed, Judge Olson didnt react well to Duane Morriss playing of the blame game:

The firm represents that its errors in this case were the result of pure incompetence and not malevolence. It was of course, by all appearances, perfectly willing to throw Ms. Guillou under the bus knowing full well that I would never sanction a paralegal, he said. As for the senior partner who directed that her underlings upload as agreed an order that was neither agreed nor consistent with the courts ruling–indeed directly contrary to the courts ruling–I have been informed of no sanction which the firm has imposed on Ms. Rodriguez-Taseff, giving me the distinct impression the firms oligarchs enjoy impunity.

Biglaw oligarchs generally do enjoy impunity within the confines of their firms. When in court, the judge reigns supreme. And Judge Olson was more than happy to send a message to the oligarchs of Duane Morris:

Olson had kinder words for [partner Kevin] Vance. He discharged the order against the attorney, calling him the victim of Duane Morris mistakes.

Mr. Vance, your law firm owes you a significant apology for putting you in this position, Olson said. My recollection when I practiced law was when law firms owed a significant apology to one of their partners, they knew how to express it in tangible financial terms. If your firm hasnt done that, shame on them.

Benchslaps for one partner, a bonus for another?

For his part, Judge Olson claims that he doesnt enjoy playing disciplinarian: This is not a lot of fun. This is not what I like to do for a living.

But is that truly the case? Back in 2011, some lawyers wondered if Judge Olson might be a bit of a judicial diva, according to the South Florida Business Journal:

US Bankruptcy Judge John K. Olson has had a tumultuous 18 months, raising questions about whether he’s a source of trouble or if he’s a victim of bad luck.

Since April 2010, Olson has ordered two people arrested, ordered sanctions or sanction hearings on three attorneys, and resisted two recusal requests. A higher court also overturned his decision on a major case that involved some of Wall Street’s top law firms.

All of that has occurred as Olson became engaged to and then married attorney Steven Fender in one of the first gay marriages of a federal judge.

Heres the Fender/Olson New York Times wedding announcement. Steven Fender is more than twenty years younger than Judge Olson (and looks it). Well played, Your Honor!

PS We reached out to Duane Morris for comment but have not heard back yet. If and when the firm comments, well update this post with any statement.

UPDATE (1:38 pm): If youd like to get a clearer sense of what exactly happened here, flip to the next page to read the Duane Morris affidavits.

Bankruptcy Judge Bashes Duane Morris [Daily Business Review]
Bankruptcy Judge Olson is dogged by controversy [South Florida Business Journal]
Steven Fender and John Olson [New York Times]
Judge sees self-congratulatory blather in BigLaw brief [ABA Journal]

Earlier: Mayer Brown amp; Simpson Thacher Make Epic Screwup
ATL Practice Pointers: Don’t Insult the Judge in Open Court
HappyMealGate: An Update on the Fry Guy

Boston streetwear company Karmaloop files for bankruptcy

Weighed down by millions in debt and by poor business ventures, the Boston streetwear company Karmaloop Inc. filed for Chapter 11 bankruptcy Monday.

Meanwhile, rapper Kanye West and hip-hop entrepreneur Dame Dash expressed interest in buying a majority stake of the 15-year-0ld company, said Greg Selkoe, founder and chief executive of Karmaloop.

Continue reading below

Lawmakers Push Bills to Reform Lending Rules for Manufactured Housing

Bipartisan legislation introduced in the Senate this week would make it easier for consumers to secure financing to purchase manufactured housing.

The Preserving Access to Manufactured Housing Act, introduced by Sens. Joe Donnelly, D-Ind., Pat Toomey, R-Pa., Joe Manchin, D-W.Va., and Tom Cotton, R-Ark., would amend federal regulations put in place following the Dodd-Frank Act that have resulted in most loans for manufactured housing being classified as high cost.

Manufactured housing plays an important role in homeownership options, which have unfortunately been constrained by excessive regulations by the CFPB, Cotton said in a press release. As weve seen, unintended consequences of these regulations have limited the housing and mortgaging choices of hard-working Americans in many rural areas, like my home state of Arkansas.

The Consumer Financial Protection Bureau released guidelines in 2013 that went into effect last year which expanded the range of loan products considered to be high-cost under the Home Ownership and Equity Protection Act.

Home-buying class offered in Burmese this Saturday

A home-buyer education class taught in the Burmese language will be offered 8 am-5 pm Saturday at Pathfinder Community Connections NeighborWorks HomeOwnership Center, 1005 W. Rudisill Blvd, Suite 301, in Fort Wayne.

The eight-hour class will provide information about what is needed to become a successful home buyer and owner, a news release said. The class is $60 per family; reservations are required. For registration or information, contact Trish Feightner at 456-2385, Ext. 3602, or by email at tfeightn@pathfinderservices.org, or James Shwe at 456-2385, Ext. 3603, or at jshwe@pathfinderservices.org.

All Pathfinder Community Connections instructors are certified by NeighborWorks America and the Indiana Housing Community Development Authority as home-buyer educators and counselors.

Home buying brings tax benefits

JACKSONVILLE, Fla. –

With the tax deadline approaching buying a home can bring tax benefits many taxpayers may not know about. Leigh Burdett is the market manager of Home Connect TV. She joined me on the Morning Show to talk about five different benefits to purchasing a home now.

Freedom Industries Gives Update on Cleanup Amidst Bankruptcy Proceedings …

The site of a January 2014 chemical spill that contaminated the drinking water of 300,000 West Virginians. The tanks shown were demolished in July 2014. Freedom Industries has a March 30 deadline to enter into a Voluntary Remediation Agreement with DEP.