It has been predicted that the corporate bond defaults are going to hit 3 percent this year–which is more than double last year’s 1.4 percent and 2010′s 1.3 percent. The middle market companies valued between $200 million and $1 billion are at particular risk because of the difficulty they face in trying to refinance and restructure the outside of the court, this is according to the ratings agency.

No less of an authority that Weil, Gotshal & Manges bankruptcy heavyweight Harvey Miller concurs with that assessment.

Meanwhile, 2011′s bankruptcy filings–including the ones like American Airlines, Boarders Group, MF Global, and The PMI Group–could soon be joined on the Chapter 11 docket by such big household names as Sears Holdings and Eastman Kodak. Both of them have recently taken fresh steps to cutting costs and raising revenue in an effort to shore up the sagging bottom lines.

For its share, Kodak reshuffled their lineup of outside legal counsel from last month, hiring Sullivan & Cromwell to be put in place of Jones Day as the company’s chief restructuring adviser. The move was most noteworthy because S&C hardly ever handles Chapter 11 cases, instead of trying to serve as special counsel on certain restructuring initiatives. Jones Day, on another hand, is well-versed in guiding debtor’s through bankruptcy proceedings.

Andrew Dietderich, who is the head of S&C’s restructuring group, did not respond to the request for comment about the firm’s work for Kodak. While refusing to confirm or deny the restructuring counsel switch, Kodak announced publicly that is has completely relied on S&C for various matters since 1974. In the recent months, Kodak has also turned to Rochester-based Harter Secrest & Emery for a patent licensing deal with IMAX and the sale of their big image sensor unit to a private equity buyer.
While Kodak keeps their plans unclear, the other companies–and the lawyers that were advising them–have pressed on with the major restructuring plans.

Bracewell & Giuliani financial restructuring chair Even Flaschen, for an example, led a team from the firm advising the senior lenders of Australia’s Centro Properties Group on a mammoth restructuring deal in December designed to wipe out badly $3 billion in debt. The restructuring plan has won the support of the investors and will create a new listed property trust for Australia’s second-largest mall owner in the country, which sold nearly 600 U.S. malls to The Blackstone Group last year in a &9.4 billion deal.

Also over in Europe, Clearly Gottlieb Steen & Hamilton may have landed the coveted role in advising the Greek government on its sovereign debt initiatives, but other firms–including White & Case and Allen & Overy–are now representing some of Greece’s creditors on the possibility of restructuring those obligations.

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The law firm of Foley & Lardner LLP announced recently that Erika L. Morabito rejoined the firm’s Bankruptcy & Business Reorganizations Practice as a partner in its Washington, D.C. office.

Morabito, who rejoins Foley from Patton Boggs, practices in the areas of bankruptcy, creditors’ rights, debtor reorganizations and out-of-court restructurings. Other areas she provides representation in include Chapter 11 debtors and creditors’ committees, creditors’ rights litigation, and the purchase and sale of assets under the Bankruptcy Code.

Mark L. Prager, chair of the firm’s Bankruptcy & Business Reorganizations Practice was quoted as saying in a press release at the firm’s website: “Erika brings a well-regarded and sophisticated national practice to our national bankruptcy capabilities. We know Erika well, and beyond her notable Chapter 11 representations and restructuring efforts she is an accomplished litigator, which is increasingly important to our clients in this space.”

Earlier this month, Christopher Celentino, Mikel R. Bistrow and Kathryn M.S. Catherwood joined Foley’s San Diego office as partners in the firm’s Bankruptcy & Business Reorganizations Practice – one that is widely regarded as the most prestigious in the nation. All specialize in bankruptcy and finance attorneys, and all three joined from Duane Morris LLP.

Jay O. Rothman, chairman and CEO of Foley was quoted as saying in a press release at the firm’s website: “Adding such an exceptional team of bankruptcy and finance attorneys to our San Diego office further advances our reputation and capabilities in California and across the country. Their wide-ranging, national experience in business reorganization, creditor’s rights and transactional finance will be a tremendous asset to our clients involved in these areas.”

Celentino practices in the areas of bankruptcy, insolvency, business reorganization and creditor’s rights. As well, he specializes in the crossover of family law and bankruptcy.

Bistrow has significant experience in a wide variety of areas, including bankruptcy, insolvency, commercial finance and lending, and the representation of borrowers and lenders in real and personal property loans and secured transactions.

Catherwood focuses her practice in the areas of creditors, debtors and trustees involved in workouts, commercial litigation, bankruptcy and lender liability/secured creditor matters.

Additionally, Bistrow and Celentino will serve as the Western Regional co-chairs of Foley’s Bankruptcy & Business Reorganizations Practice.

Van A. Tengberg, managing partner of Foley’s San Diego and Del Mar offices was quoted as saying in a press release at the firm’s website: “The addition of these prominent attorneys helps solidify Foley’s standing as a firm that is uniquely positioned to represent clients in high-profile bankruptcy, insolvency and finance matters.”

Founded in 1842, Foley & Lardner LLP is a full service law firm with over 900 attorneys in 21 offices around the world.

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In a statement released in Am Law Daily, the Howrey law firm’s lead bankruptcy counsel, H. Jason Gold, has said that the firm is seeking to convert to a voluntary chapter 11 bankruptcy from the involuntary Chapter 7 liquidation. He said that in the interest of providing the best and quickest path to satisfy all firm creditors, this move was necessary which in turn will provide a better organized way to the wind down process.

Read the original article here:

Howrey Seeks to Convert Bankruptcy to Chapter 11

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The general practice and civil litigation firm, which employed seven attorneys, filed for bankruptcy reorganization on February 17th.

Since then, partners Wesley Ichida, William F. Thompson III and Maile Hirota have left the firm. Two of them have started new firms.

The bankruptcy filing, signed by Paul A. Lynch as president of the firm, lists Lynch Ichida Thompson & Hirota’s assets at more than $500,000 and debts at more than $300,000.

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In the wake of chemical giant LyondellBasell filing for Chaptel 11, several top firms in the United States and the United Kingdom find themselves involved.

Cadwalader Wickersham & Taft has secured a leading role for the company in the US, with financial restructuring group heads Deryck Palmer and John Rapisardi leading the team. In the UK, LyondellBasell has procured Clifford Chance for advice.  That team is led by the head of restructuring, Mark Hyde.

Creditors involved in the case, both in the US and the UK, have secured firms such as  Freshfields Bruckhaus Deringer, Ashurst, Simmons & Simmons, Bingham McCutchen, Latham & Watkins and Milbank Tweed Hadley & McCloy.

Lyondell Chemical, the company’s US arm, filed for Chapter 11 in January.  It did not include most of the groups operations in Europe.  The decision was made to avoid having the company’s European assets liquidated.

Ashurst head of restructuring Nick Angel said: “As a generalization, an insolvency process almost anywhere in the world is to be avoided because it damages value. This is especially true where you have the prospect of different insolvency processes in different countries but it is less true for the US, where Chapter 11 processes are more readily accepted.

“What has happened here illustrates the difficulty in dealing with international groups because Chapter 11 will not be recognized throughout the world and there is no alternative worldwide process for insolvency.”

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U.S. Bankruptcy Judge Kevin Cary has ruled that lawyers for the Tribune Company’s bankruptcy case cannot charge hourly fees that exceed four figures.

Lawyers from Sidley Austin LLP, who is representing Tribune in the case, wanted hourly rates that went as high as $1,100.  That is the highest rate ever sought for a firm dealing in bankruptcy reorganization.  Cary capped the hourly payments at $925, and said that if anyone wants more than $1000, they must attend a hearing where the lawyer proves he or she is worth such a price.

Tribune filed bankruptcy under Chapter 11 this past December.  It listed $13 billion in debt, and $7.6 billion in assets.  Tribune owns eight newspapers, including the Chicago Tribune and the Los Angeles Times.  It also owns 23 television stations, the Chicago Cubs, as well as where the Cubs play, Wrigley Field.

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Prior to joining Greenberg Traurig, Haynes was with Cadwalader, Wickersham & Taft LLP where he was recently elected to the partnership.

Haynes represents debtors in Chapter 11 cases and out-of-court restructurings with a focus on the airline industry. He also represents creditors in Chapter 11 cases and is experienced in defending avoidance actions. Haynes additionally represents both sellers and bidders in bankruptcy asset sales.

Greenberg Traurig, LLP is an international, full-service law firm with more than 1,800 attorneys and governmental affairs professionals in the United States, Europe and Asia. The firm was selected as the 2007 USA Law Firm of the Year by Chambers and Partners.

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For over 30 years, Zirinsky has represented debtors, creditors, investors and other parties in large and complex restructurings, reorganizations, acquisitions, financings and litigation, covering a broad range of industries and issues. His was a lead role in the successful Chapter 11 reorganization of Northwest Airlines.

Bae has practiced in the bankruptcy & reorganization field for almost 20 years, working closely with Zirinsky.

Greenberg Traurig’s business reorganization & bankruptcy practice numbers 80 lawyers worldwide and is co-chaired by Keith Shapiro of the Chicago office and Mark Bloom of Miami.

The 8th largest firm in the US, Greenberg Traurig employs more than 1,800 attorneys throughout the world.

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Former Heller partner Peter Benvenutti said the firm filed not because it is out of money, but because its main two creditors, Bank of America and Citibank, have refused to renegotiate the terms of a $5.7 million debt.

Last week a judge ruled that the firm’s San Francisco landlord, 333 Bush Associates, was entitled to a $48 million writ of attachment. A portion of Heller’s assets were immediately frozen, and Bush Associates became a secured creditor, ahead of dozens of unsecured creditors waiting in line for their money.

Benvenutti says the firm is collecting money and expects to recover “tens of millions” in collections going forward. The firm has $3.7 million in cash, and expects to recover about $35 million in accounts receivable. The firm’s liabilities consist of the $5.7 million it owes to lenders, $10 million in other accounts payable and $4 million in taxes.

There are 54 employees left at Heller. The firm has no cash to pay them their regular salaries, and its main banks froze $6.5 million in the firm’s accounts upon learning that the firm might file for bankruptcy. The firm filed first-day motions with the court, asking to use cash collateral to pay the remaining employees, who have also been promised 100% retention bonuses in exchange for staying on.

The firm says it hopes to repay the bank lenders in the next three or four weeks.

Teams from Greenberg Traurig and Pachulski Stang Ziehl & Jones are bankruptcy co-counsel for Heller.

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The counter-cyclical practices of bankruptcy lawyers are thriving amid the worst business collapse since the Great Depression. Their firms are buried in an avalanche of Chapter 11 filings and those represent only half of the workload as troubled companies attempt to restructure their finances outside of court supervision. But the unprecedented lack of financing seen so far in this recession is putting a crimp on things…

Bankruptcy filings by businesses climbed 61% in the third quarter to 11,504… . Chapter 11 business filings soared by 76% to 2,485. The 29,960 business bankruptcies posted in the first three quarters of this year have eclipsed the 28,137 filings for all of 2007. …

While it’s lucrative work for sure, the current round has presented a new level of complexity and distress. Because the credit markets are frozen, there isn’t the traditional debtor-in-possession lending available – there isn’t even financing for potential acquirers… Replacing traditional lenders are vulture investors such as hedge funds, which are buying distressed debt and hope to become equity owners on the cheap…

The largest corporate filings are handled by an elite group of a dozen or so large law firms. Most consider the dean to be Harvey Miller, partner at Weil, Gotshal & Manges in New York who is representing Lehman and is expected to lead a General Motors filing if that comes to pass. Richmond, Va.-based Circuit City tapped heavyweight Skadden, Arps, Slate, Meagher & Flom LLP, whose restructuring practice is headed by Chicago-based John “Jack” Butler and New York-based J. Gregory Milmoe. Tribune Co. under the real estate vulture investor turned media mogul Sam Zell, chose white shoe firm Sidley Austin whose bankruptcy practice is co-headed by James Conlan and Larry Nyhan in Chicago. …

The severity of the current recession means that bankruptcy attorneys will be busy for years. It may be profitable, but not particularly joyous.

Read the whole article.

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The McLeod’s filed their complaint in circuit court against developers Frank Dagostino, Robert E. Lyons and Patrick Sheppard, as well as the law firm that once managed the escrow, Macfarlane Ferguson & McMullen.

Rachel Green from “Friends” of Tampa’s Forizs & Dogali is representing the McLeods.

The McLeods claim that 109 buyers deposited nearly $19 million with SimDag/RoBEL LLC, Trump Tower’s development company, representing up to 20% of a unit’s purchase price. Buyers typically placed 10 percent deposits in cash, and used a bank letter to secure the other 10 percent. But some simply paid the additional 10 percent in cash, which the developers were allowed to use for construction purposes.

SimDag/RoBEL “improperly diverted” $2.3 million from the account, the suit says, and now there isn’t enough money to refund the 10 percent deposits to buyers.

“We have documented every penny spent on the property, and we did nothing inappropriate – not one thing,” developer Dagostino said. “There’s just no merit to it. If you look through this lawsuit, it’s all ridiculous.”

Bill Taylor, a managing partner with Macfarlane, said his firm “acted in full compliance with the duties and obligations that it had pursuant to the escrow agreement.”

A bankruptcy judge who is hearing a Chapter 11 asset protection case from SimDag/RoBEL filed last summer could freeze the suit. SimDag/RoBEL is not named in the suit, thus shielding it from the bankruptcy court.

But there is no reason the lawsuit shouldn’t be part of the bankruptcy case, especially since it involves money already under the jurisdiction of the bankruptcy court, Dagostino said.

SimDag/RoBEL settled a licensing dispute with New York real estate celebrity and bizarre toupee aficionado Donald Trump in September, over more than $1 million Trump claimed he was owed for the use of his name on the project. The company filed for bankruptcy protection in June after it failed to build its planned $225 million, 52-story luxury tower in downtown Tampa.

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Q4 numbers showed a 34% increase in that quarter alone, according to the report.

Individuals seeking bankruptcy protection represent the bulk of filings, with a total of over one million for fiscal year 2008, up from 801,000 in 2007.

Business filings grew to nearly 38,700 for the fiscal year, up from 26,000 for 2007.

The report shows that liquidations under Chapter 7 were up by 40 percent, while Chapter 11 reorganizations rose by 49 percent. Only Chapter 12, designed to protect family farmers, was down, by 8%.

The hardest-hit states were Tennessee, Nevada, Georgia, Alabama, and Indiana.

The Central District of California, covering the Los Angeles area, saw a 96 percent rise in filings.

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