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February 11, 2010 5:10 PM

The Bankruptcy Files: Will The Banner Year Continue?

Posted by Brian Baxter

A report by Jones Day calls 2009 a banner year for bankruptcy work and predicts that the trend towards prepackaged filings and section 363 sales will continue in the future. The report will be published in the February/March issue of Pratt's Journal of Bankruptcy Law, according to The New York Times.

From what we've read, the report is full of interesting data and information. A few examples, via The NYT: more companies filed for bankruptcy last year than at any time since the bankruptcy code was changed in 2005; and among companies with more than $1 billion in assets, 55 sought court protection from creditors in 2009, more than double 2008's total.

There's also a tally of the ten largest Chapter 11 cases for 2009, presented below (we've highlighted the firms that scored the coveted debtors' counsel assignment in parentheses, in place of prepetition assets):

General Motors (Weil, Gotshal & Manges)

CIT Group (Skadden, Arps, Slate, Meagher & Flom)

Chrysler (Jones Day)

Thornburg Mortgage (Baltimore's Shapiro Sher Guinot & Sandler)

General Growth Properties (Weil)

Lyondell Chemical (Cadwalader, Wickersham & Taft)

Colonial BancGroup (Atlanta's Parker, Hudson, Rainer & Dobbs)

Capmark Financial (Dewey & LeBoeuf)

Guaranty Financial Group (Haynes and Boone)

BankUnited Financial (Greenberg Traurig)

With lenders reportedly more willing to own bankrupt companies and a crisis for municipal bond owners looming on the horizon, bankruptcy lawyers could see the good times continue, even with an expected drop-off after the boom of the last two years.

The latest debtors-of-note and their legal counsel are as follows:

Penton Media

From Air Transport World to National Hog Farmer to Restaurant Hospitality, Penton Media has been a leader in business-to-business publishing. But declining ad sales and a difficult switch from print to digital media hurt Penton's bottom line.

In its Chapter 11 filing in Manhattan on Wednesday, Penton listed $841 million in assets and $1.13 billion in liabilities. Penton hopes to shed $270 million in debt through a prepackaged reorganization plan reached with lenders. Reuters reports the publisher hopes to emerge from bankruptcy in 30 days.

Jones Day corporate restructuring partners Lisa Laukitis and Brad Erens in Chicago are advising Penton. The firm has not yet filed billing records with the bankruptcy court.

Penton is owned by New York-based private equity firm MidOcean Partners and U.S. Equity Partners II, an investment fund sponsored by Wasserstein & Co., the buyout firm founded by our former owner (and lawyer) Bruce Wasserstein, who passed away in October.

Neenah Enterprises

Neenah Enterprises--named after its home base of Neenah, Wis., on Lake Winnebago--manufactures iron castings and steel forgings for municipal and industrial markets. The company, like its core customers, is feeling the effects of the recession. Neenah filed a prepackaged reorganization plan on February 3 in bankruptcy court in Delaware.

According to the company's Chapter 11 filing, Neenah has $286.6 million in assets and $449.1 million in liabilities. Larry Nyhan, cochair of Sidley Austin's corporate reorganization group, is advising Neenah. Edmon Morton, a bankruptcy partner at Delaware's Young Conaway Stargatt & Taylor, is serving as local debtors' counsel. The firms have yet to file billing statements with the bankruptcy court.

The bulk of Neenah's debt includes $225 million owed on 9.5 percent notes, Bloomberg reports. Of that amount, $88.7 million in 12.5 percent notes is held by Greenwich, Conn.-based hedge fund Tontine Capital Partners. Sarah Bernstein, a corporate partner at Chicago's Barack Ferrazzano Kirschbaum & Nagelberg, is representing Tontine.

JSC BTA Bank

Seeking to restructure roughly $11.6 billion in debt, Bloomberg reports that Kazakhstan's second-largest bank sought protection from U.S. creditors by filing for bankruptcy in Manhattan on February 4.

Based in Kazakhstan's largest city of Almaty, BTA Bank listed debt and assets each exceeding more than $1 billion in its Chapter 15 filing. The company's restructuring is in a "specialized financial court" in Kazakhstan, according to Bloomberg. Most of BTA's U.S. assets are in accounts with banks in New York.

Reuters reports that a Kazakh state-owned fund took a 75 percent stake in BTA a year ago after the bank struggled with increasing loan losses and debt payments. BTA had about $29 billion in assets before the nationalization and controls about 18 percent of banking assets in energy-rich Kazakhstan.

White & Case financial restructuring and insolvency partner Evan Hollander in New York is serving as Chapter 15 counsel to BTA. The firm is also handling BTA's restructuring efforts in court proceedings in the U.K., while British firm Lovells is providing asset recovery advice to the bank.

Japan Airlines / Aiful

When Japan Airlines filed for bankruptcy in Tokyo District Court in January, many expected the lawyers to descend upon Asia's largest carrier like passengers at a crowded check-in counter. But as our own Anthony Lin reported last month, Japanese bankruptcy proceedings are a bit different than their American counterparts. Thankfully, lawyers still play instrumental roles, even if their influence might take a back seat at times to political and cultural pressures.

JAL announced this week that it would maintain an existing alliance with American Airlines as part of its restructuring effort, The Wall Street Journal reports, nixing plans by Delta Air Lines to expand its presence in the Asian air travel market by shoving American aside. (We noted last month that Jones Day and Hogan & Hartson were serving as U.S. antitrust counsel to American and Delta, respectively, in the JAL negotiations.)

JAL isn't the only large restructuring recently taking place in Japan. Kyoto-based Aiful, a leading consumer credit company offering loans and financial products to small- and medium-sized businesses, teetered on the brink of bankruptcy last year after sustaining billions in losses.

Davis Polk & Wardwell partners Eugene Gregor and Theodore Paradise in Tokyo advised Aiful in its negotiations with creditors to approve a debt payment plan that was approved shortly before the New Year. According to Bloomberg, the successful restructuring triggered credit-default swaps insuring $1.3 billion in Aiful debt. 

Nagashima Ohno & Tsunematsu acted as Japanese counsel to Aiful.

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