The Work

June 15, 2009 4:53 PM

The Bankruptcy Files: Riding the Six Flags Roller Coaster

Posted by Brian Baxter

Weil, Gotshal & Manges is relying on more than the bankruptcy filings of Lehman Brothers and GM to profit from a rush of restructuring assignments. Along with Paul, Hastings, Janofsky & Walker and Pachulski Stang Ziehl & Jones, the firm continues to secure work as the bankruptcy boom reaches its apex.

recent report issued by Paris-based credit insurance company Euler Hermes, a subsidiary of German insurance giant Allianz, found that business bankruptcies in the U.S. alone will likely increase 45 percent this year to 63,000 cases. We've got the legal advisers and, in some cases, the fees on a handful of recent cases below.

Six Flags

Six Flags--the second-largest amusement park operator in the world behind Walt Disney--will now be owned primarily by its lenders if a bankruptcy judge approves a deal the company negotiated with debt holders.

Saddled by more than $2 billion in debt, New York-based Six Flags filed for Chapter 11 protection on Saturday in Delaware as a means of whittling its debt load down to a more manageable $600 million.

Bloomberg reports that Six Flags, which owns 20 theme parks located throughout North America, hasn't posted an annual profit since 1998. The company is seeking a $750 million credit facility as part of its reorganization plan. The company's senior managers--including chairman and Washington Redskins owner Daniel Snyder--are expected to remain at the company during the restructuring.

Paul Hastings bankruptcy partner Paul Harner and litigation partner Steven Catlett are advising Six Flags. According to a May 2008 interview of Six Flags general counsel James Coughlin by The National Law Journal, the company has been a longtime client of the firm through banking and finance partner Michele Cohen.

Cadwalader, Wickersham & Taft is serving as special counsel to Six Flags's board of directors. (Resident rainmaker Dennis Block has also counted Six Flags as a longtime client for securities work.)

Daniel DeFranceschi, director of the bankruptcy and restructuring group at Delaware's Richards, Layton & Finger, is serving as local counsel to Six Flags.

The firms have yet to file billing statements with the bankruptcy court.

Crescent Resources

Charlotte-based Crescent Resources, which manages and develops commercial and residential real estate in the southern U.S., fired its CEO and filed for bankruptcy in Texas on June 10. Both moves were part of an effort by Crescent to refinance a $1.2 billion loan and rework its capital structures.

Weil partners Marcia Goldstein and Martin Sosland and partners Eric Taube and Mark Taylor from Austin firm Hohmann, Taube & Summers are serving as cobankruptcy counsel to the company.

Court records show that Weil partners and counsel bill between $675 and $950 per hour while associates bill at an hourly clip between $355 and $630. Crescent incurred more than $4 million in fees and expenses from Weil prior to the company's bankruptcy filing.

Real estate finance partner Robert Sink of Robinson Bradshaw & Hinson is serving as general corporate counsel to the company. The Charlotte-based firm has served as primary corporate counsel to Crescent and several of its subsidiaries since 1986.

Bankruptcy court filings show that Robinson Bradshaw has received more than $2.7 million in fees from Crescent in the year prior to the company's Chapter 11 filing. Partners and counsel from the firm bill between $320 and $525 per hour and associates at hourly rates ranging from $185 to $305.

Crescent has secured $110 million in DIP financing.

MagnaChip Semiconductor

The Sunnyvale, Calif.-based U.S. unit of South Korean display drive manufacturer MagnaChip Semiconductor filed for bankruptcy in Delaware on Friday, listing $50 million in assets and more than $1 billion in liabilities. MagnaChip had scrapped a planned IPO on the New York Stock Exchange earlier this year.

creditor matrix attached to the company's bankruptcy filing listed the following law firm creditors (contact partner listed parenthetically): Bryan Cave (corporate finance partner Matthew D'Amico), Menlo Park, Calif.-based IP firm Fernandez & Associates, Latham & Watkins (bankruptcy partner Josef Athanas), Redwood City, Calif.-based lawyer Carl Durham, Jr., Morgan, Lewis & Bockius in Palo Alto, O'Melveny & Myers in Los Angeles, Korean firm Shin & Kim, and Thompson Hine (public finance partner Robert Rywkin).

Laura Davis Jones from bicoastal bankruptcy boutique Pachulski Stang is serving as Chapter 11 counsel to MagnaChip. The firm had not yet filed billing information with the bankruptcy court.

A day before MagnaChip's U.S. units filed for bankruptcy, a South Korean investment fund announced that it had agreed to a deal to acquire the company's international assets.

Aviza Technology

MagnaChip wasn't the only chip maker to go bust last week. Scotts Valley, Calif.-based Aviza Technology announced on Tuesday that it had filed for Chapter 11 protection in San Jose.

John Murray, Robert Franklin, Doris Kaelin, and associate Jenny Fountain from Cupertino, Calif.-based Murray & Murray are serving as bankruptcy counsel to Aviza. The 11-lawyer firm has not yet submitted billing information to the bankruptcy court.

But once again Latham & Watkins and Morgan Lewis appear as creditors to a down-on-its-luck semiconductor company. According to Aviza's bankruptcy filing, Latham is owed $1,876,942.46 for legal services, making the firm the company's third-largest unsecured creditor. The firm has done M&A work for Aviza.

Aviza's debt to Morgan Lewis is listed as $282,494.84, making the firm the company's sixth-largest unsecured creditor.

Yellowstone Club

We won't even begin to sum up the Chapter 11 shenanigans occurring in the bankruptcy of the Yellowstone Club, a 13,600-acre members-only ski resort located outside Big Sky, Mont. The case was written about in The Atlantic a month ago and featured again in The New York Times this past weekend.

Wealthy heiresses, Greg LeMond, angry judges, private equity firms, Credit Suisse, and Skadden, Arps, Slate, Meagher & Flom, the Yellowstone bankruptcy has it all from Big Sky country.

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