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June 19, 2009 3:00 PM

The Bankruptcy Files: It's A Weil World

Posted by Brian Baxter

If bankruptcy court is where Wall Street is hanging out these days, then Weil, Gotshal & Manges is in the right place. The firm continues to scoop up Chapter 11 assignments for an array of high-profile clients, including a private equity firm looking to acquire the assets of Eddie Bauer and Extended Stay Hotels, which collapsed amid a nationwide drop in business travel.

Nortek, a subsidiary of Providence-based NTK Holdings, also announced this week it had retained Weil to help the company restructure its debt obligations. The air conditioning, heating, and ventilation products maker has been sucking wind after posting a $32.7 million loss last quarter with $162.3 million in debt payments looming on the horizon.

It's a Weil world, but other firms are also carving out roles for themselves:

Eddie Bauer Holdings

It seems like only yesterday that Bellevue, Wash.-based Eddie Bauer was lending its name to SUVs (and apparently still is, who knew?). But maybe the outdoor retailer hitched its brand to the wrong wagon.

The 90-year-old company became the latest retailer to succumb to the economic crisis on Wednesday, filing for bankruptcy in Delaware and asking the court to conduct an auction of its assets that it hopes to complete by the end of August. Eddie Bauer has secured $100 million in DIP financing.

Weil business finance and restructuring partner Alfredo Perez in Houston is advising New York-based private equity firm CCMP Capital Advisors, which is bidding for the assets. Bankruptcy partners Steven Kortanek and Mark Desgrosseilliers from Womble Carlyle Sandridge & Rice in Wilmington are serving as local counsel to CCMP.

Latham & Watkins scored the debtors counsel work for Eddie Bauer, with bankruptcy partner Josef Athanas and global finance chair David Heller in Chicago leading the team. Bankruptcy court filings show Eddie Bauer has paid Latham $2.1 million in fees and expenses since December 2008. Latham's partners are billing from $750 to $1,050 per hour on the matter; counsel rates range from $695 to $975; and associates command rates of $370 to $740.

Michael Nestor from Delaware's Young Conaway Stargatt & Taylor is Eddie Bauer's local bankruptcy counsel.

HVM LLC / Extended Stay Hotels

With corporate cutbacks wreaking havoc on business travel nationwide, HVM LLC found itself facing a liquidity crisis and unable to service a debt load exceeding $7 billion. The Spartanburg, S.C.-based company operates 680 properties throughout North America, including the Extended Stay Hotels brand, which caters to guests booking month-long reservations.

With occupancy rates crippled by the recession, HVM filed for Chapter 11 protection in Manhattan on Monday. The Wall Street Journal reports that Bear Stearns held a significant portion of HVM's debt, meaning that U.S. taxpayers could be the big losers in an extended bankruptcy.

As counsel to HVM, Weil business finance and restructuring chair Marcia Goldstein and partner Jacqueline Marcus are tasked with ensuring as brief a trip as possible to the bankruptcy court.

Bankruptcy court documents show the firm received $4.8 million in fees in the year prior to HVM's Chapter 11 filing. (See pages 27-29 in the filing for a month-by-month breakdown of Weil's billing records.) Weil partners and counsel are billing HVM at hourly rates between $655 and $950, while associates are billing between $355 and $640.

SendTec

Anyone in the media business can tell you--preferably over a stiff drink and a ballgame--that advertising is taking it on the chin, including companies like SendTec, a St. Petersburg-based company that  specializes in direct marketing for advertisers.

SendTec filed for bankruptcy in Tampa on Monday, three months after telling the SEC it didn't have the resources to file financial documents with the regulator. In its filing, the company listed assets of $3.7 million and liabilities of $17.4 million.

That not good news for three Am Law 100 firms that appear on SendTec's list of unsecured creditors. White & Case is the second-largest creditor with a debt of $635,700, Holland & Knight fifth at $204,200, and Haynes and Boone eighth at $130,200.

On Tuesday a newly-formed Delaware company offered to buy SendTec for $900,000. SendTec's bankruptcy counsel is John Goldsmith from Tampa's Trenam Kemker.

Isolagen

If SendTec thought it was in bad shape, Exton, Pa.-based biotech firm Isolagen raises the bar for insolvency.

Isolagen, which is trying to develop a cellular therapy process to treat wrinkles, listed assets of less than $50,000 and liabilities of $88 million in its bankruptcy filing in Delaware on June 15.

The cash crisis at Isolagen is so bad that its bankruptcy counsel--Daniel Astin and Anthony Saccullo from Ciardi Ciardi & Astin in Wilmington--agreed to a flat $200,000 fee for post-petition services. (The firm was also paid a $52,078 retainer.)

Cozen O'Connor, which court documents show has served as outside counsel to Isolagen for the past four years, will serve as special corporate counsel. Corporate partner Cavas Pavri in Philadelphia is billing Isolagen at $420 an hour while lawyers from the firm will bill between $230 and $615 per hour.

Appearing on a list of Isolagen's unsecured creditors is Houston firm Boyar & Miller, which has two separate entries showing the firm is owed a total of $343,800.

Isolagen is trying to line up DIP financing so it can continue operations and avoid liquidation.

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