February 18, 2009 5:20 PM

The Bankruptcy Files: Broadcasters, Defense Contractors, Fisheries, and Foodstuffs

Posted by Brian Baxter

UPDATE: The BearingPoint section of this post has been updated with new information.

It's another day here at The Am Law Daily, and that means another listing of firms fighting to get in on the great bankruptcy bonanza of 2009.

Before we get to the latest batch of actual bankruptcy filings, let's look at those reported to be closest to seeking Chapter 11 protection and the firms that might stand to benefit.

The Financial Post reported on Tuesday that Canada's leading airline--Duval, Quebec-based Air Canada--could be forced to seek Chapter 11 protection from creditors if the company cannot obtain additional financing through asset sales and renegotiate credit card covenant agreements.

Air Canada last filed for bankruptcy in April 2003 in Ontario and New York, emerging 18 months later in September 2004. In that instance, Willkie Farr & Gallagher's Matthew Feldman and Blank Rome's Marc Richards served as U.S. bankruptcy counsel to the world's 11th-largest airline.

Also reported to be on the Chapter 11 ropes: Las Vegas-based Harrah's Entertainment, the world's largest gaming company. The casino operator recently sought to draw down on a $740 million credit line and has been sued by two bondholders over a recent debt deal.

Skadden, Arps, Slate, Meagher & Flom figures to land a leading role should Harrah's seek Chapter 11 protection. The firm advised Harrah's on its $9.4 billion acquisition of Caesars Entertainment in August 2004 and has long represented the company's private equity owners--Apollo Advisors and TPG Capital. The two PE giants acquired Harrah's in January 2008 for roughly $30 billion, roughly a third of which was assumed debt.

Other bankruptcy filings on our radar:

BearingPoint

BearingPoint, an information technology and management consulting company that counts the Defense Department among its primary customers, filed for bankruptcy in Manhattan on Wednesday in a bid to seek respite from some $1 billion in debt.

The McLean, Va.-based company announced that it had reached an agreement with senior secured creditors on a prearranged restructuring plan that would allow its businesses to continue uninterrupted.

Weil, Gotshal & Manges business finance and restructuring partner Alfredo Perez has been retained as bankruptcy counsel by BearingPoint. Davis Polk & Wardwell will serve as special counsel to the company. Neither firm had yet to file billing information with the bankruptcy court.

Forward Foods

The Chapter 7 collapse of the Lynchburg, Va.-based Peanut Corporation of America (PCA)--a result of selling peanuts allegedly tainted with salmonella--has claimed another victim in Forward Foods.

It turns out that the Minden, Nev.-based manufacturer of energy, protein, snack, and meal replacement bars under the Detour brand name had the misfortune of utilizing PCA peanuts in 75 percent of its products.

With a significant amount of its inventory effectively now quarantined while the FDA continues its investigation of PCA, Forward Foods filed for bankruptcy in Delaware on Wednesday.

According to the company's bankruptcy court filing, New York firm Constantine Cannon is Forward Foods's fourth-largest creditor with a debt of $741,122.63. Court records show that Forward Foods and its private equity owner--New York-based Emigrant Capital--have been engaged in a legal battle in state courts in New York and California with the company's former owners.

Emigrant acquired Forward Foods from Carlsbad, Calif.-based NEXT Proteins and two other investors in September 2006, but the PE firm and Forward Foods have been in dispute with the "sellers with regard to various aspects of disclosure and other matters involving the purchase," writes bankruptcy counsel William Kohn, chair of the business reorganization practice group at Benesch, Friedlander, Coplan & Aronoff.

Kohn and fellow Benesch bankruptcy partner Bradford Sandler have asked the Delaware court to approve a $4 million line of credit to help Forward Foods replace recalled products; doing so would allow the company to continue operations.

Bankruptcy documents show that Benesch was paid a $75,000 retainer by Forward Foods as well as $48,694.40 for legal bills incurred during the 90 days prior to the company's Chapter 11 filing. Kohn bills $695 per hour and Sandler $535 per hour. Associates Jennifer Hoover and Kari Coniglio bill at a $330 and $230 hourly rates, respectively.

Neptune Industries

Peanuts aren't the only edible connected to a current insolvency. Represented by Greenberg Traurig bankruptcy and reorganization partner Luis Salazar, three creditors are trying to force Boca Raton, Fla.-based seafood company Neptune Industries into bankruptcy.

Salazar filed an involuntary Chapter 11 petition with the U.S. bankruptcy court in West Palm Beach on February 13 on behalf of Fort Lauderdale-based Arms Reach Fisheries, Dallas-based Sandor Capital Master Fund, and Charles Landahl, Jr., of Steamboat Springs, Colo.

Neptune announced a recapitalization plan in January that has been submitted for shareholder approval.

Young Broadcasting

New York-based Young Broadcasting, which owns and operates 10 TV stations throughout the country, primarily affiliates of the CBS and ABC networks, filed for bankruptcy in Manhattan on February 13.

The company stated in court documents that it intends to continue operations and restructure its debt in the hope that it can emerge from Chapter 11 stronger and more financially secure.

Sonnenschein Nath & Rosenthal corporate reorganization and bankruptcy partner Peter Wolfson is serving as counsel to Young Broadcasting along with associates Jo Christine Reed and Michael Carney. Akerman Senterfitt has been retained as special corporate and securities counsel.

The firms had yet to file billing information with the bankruptcy court.

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