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April 12, 2012 6:45 PM

The Bankruptcy Files: Reddy Ice Retains DLA Piper for Restructuring, Merger

Posted by Brian Baxter

Reddy Ice Holdings, the nation’s largest maker and distributor of packaged ice, filed for Chapter 11 protection Thursday in Dallas, adding to an already expansive docket for overloaded U.S. bankruptcy judges.

DLA Piper was retained as lead bankruptcy and corporate counsel to Reddy Ice, which lists assets of more than $434 million against liabilities of almost $531 million in its filing. Through a prepackaged bankruptcy plan backed by New York–based hedge fund Centerbridge Partners, Reddy Ice plans to merge with its bankrupt rival Arctic Glacier, the largest producer of ice in the Canadian market.

The arrangement states that Centerbridge will forgive its Reddy Ice debt in exchange for a stake in a reorganized company combined with Arctic Glacier, according to an SEC filing Thursday. Macquarie Bank agreed to provide $70 million in debtor-in-possession financing to fund the deal.

Gregg Galardi, who became cochair of DLA’s restructuring practice in New York after joining the firm last year from Skadden, Arps, Slate, Meagher & Flom, is leading a team representing Reddy Ice, along with restructuring partners Chris Dickerson in Chicago and Vincent Slusher in Dallas.

DLA corporate partners Jamie Knox and Sidney Burke in New York also are advising Reddy Ice, along with James Nelson, the head of DLA’s Texas litigation group in Dallas. The firm has been representing Reddy Ice through a long-running antitrust probe the U.S. Department of Justice conducted of the ice-packaging industry. The inquiry ended in late 2010 with no charges against the company.

Reddy Ice’s finances were sapped from paying out millions in legal fees to defend itself in the federal investigation and a series of related antitrust suits. (DLA and Honigman Miller Schwartz and Cohn represent Reddy Ice in the litigation, most of which has been consolidated in federal court in Detroit, while Jones Day is listed as counsel to Arctic Glacier.)

Kenneth Fernandez is chief compliance officer and general counsel for Reddy Ice. Kevin Cameron, a former partner at Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington, D.C., serves on Reddy Ice’s board, along with Fried, Frank, Harris, Shriver & Jacobson of counsel Michael Rauch.

Arctic Glacier, Reddy Ice’s potential merger partner, filed for Chapter 15 protection in Delaware in February. The Winnipeg-based company is attempting to reorganize its operations north of the border while it seeks protection from U.S. lawsuits and creditor claims.

Willkie Farr & Gallagher and Delaware’s Young Conaway Stargatt & Taylor are advising Arctic Glacier in its U.S. bankruptcy case, according to our previous reports. Hugh Adams, a partner at Winnipeg’s Aikins, MacAulay & Thorvaldson, is Arctic Glacier’s corporate secretary.

Susanne Clark serves as managing director and general counsel for Centerbridge, which is owed nearly $30 million as Reddy Ice's second-largest unsecured creditor, according to court records. Court filings show that Kirkland & Ellis restructuring partners Anup Sathy and Joshua Sussberg and Andrews Kurth bankruptcy partner Jason Brookner are advising Centerbridge.

The Gingrich Group

The Gingrich Group, an Atlanta-based think tank founded by Newt Gingrich, filed for bankruptcy last week, as the Republican presidential candidate's campaign struggles with its own mounting debt load.

Gingrich had previously severed ties with the organization once he entered the presidential race last year, a decision that caused key clients of the consultancy, also known as the Center for Health Transformation, to flee and led to its eventual bankruptcy, according to the Atlanta Journal-Constitution. George Geeslin, a solo practitioner in Atlanta, is advising the Gingrich Group as it liquidates its assets in Chapter 7 proceedings. Geeslin has not yet filed billing statements with the bankruptcy court.

McKenna Long & Aldridge partners Stefan Passantino, the head of the firm’s political law practice, and J. Randolph Evans, the chair of its financial institutions practice, appear on the list of Gingrich Group creditors, along with Taylor English Duma corporate partner George Gaskin, and Gingrich and his wife Callista. Evans and Passantino have long represented Gingrich on his various endeavors.

Passantino told The New York Times that Gingrich had not been involved in the Gingrich Group's operations since May 2011 and had divested himself of any interests in the think tank. "At the end of the day, the draw that made it economically attractive was Newt's brain," Passantino said.

HemCon Medical Technologies

A $30 million patent infringement ruling last month against HemCon Medical Technologies helped push the Portland-based medical products maker into bankruptcy in Oregon. HemCon, which specializes in bandages and other field dressings for wounded soldiers, lists assets and liabilities of between $10 million and $50 million.

Albert Kennedy, a bankruptcy partner at Tonkon Torp in Portland, is advising HemCon in its Chapter 11 case. The firm has not yet filed billing statements with the bankruptcy court.

According to a list of HemCon's 20 largest unsecured creditors, the company owes almost $1.5 million to Milwaukee IP firm Ryan Kromholz & Manion, $489,660 to Portland-based Miller Nash, and $39,828 to Hogan Lovells in Baltimore, all for legal services.

Ryan Kromholz and Hogan Lovells are advising HemCon on its patent battle with Marine Polymer Technologies, represented by Jones Day, in U.S. district court in New Hampshire. HemCon has vowed to appeal a decision by a ten-judge federal appellate panel putting the debtor on the hook for $34.2 million in damages to Marine Polymer.

Solar Trust of America

Four months after Germany’s Solar Millennium went bust, its North American subsidiary, Oakland-based solar power company Solar Trust of America, filed for bankruptcy in Delaware on April 2. Solar Trust is preparing to sell its four solar-powered facilities at an auction later this month, according to the Daily Deal.

Solar power companies made frequent appearances in U.S. bankruptcy courts in recent years, and the solar power industry is now also at a crossroads in Germany, which swore off nuclear power last summer, according to our previous reports. (Court records show that Solar Millennium owns 70 percent of Solar Trust, with the remaining 30 percent stake in the company controlled by a subsidiary of German industrial conglomerate Ferrostaal.)

K&L Gates restructuring partner John Bicks in New York is serving as lead bankruptcy counsel to Solar Trust, with partner Michael Nestor of Delaware’s Young Conaway serving as local counsel to the debtor.

Young Conaway has received a $160,000 retainer for its services to Solar Trust, according to court records. Nestor ($650 per hour) and business transactions chair Craig Grear ($700) are leading a team from the Delaware firm working on the matter.

Court records show that K&L Gates has so far received about $110,000 for services rendered to Solar Trust. The lead lawyers assigned to the Solar Trust account are Bicks ($825), cleantech and alternative energy practice leader Dirk Michels ($695), bankruptcy partner John Delnero and labor and employment partner Thomas Petrides ($655), and corporate partner Aaron Schapiro ($555).

According to a list of Solar Trust's 30 largest unsecured creditors, the company owes more than $4.7 million to nine firms: Milbank, Tweed, Hadley & McCloy (almost $2.2 million), Paul Hastings ($993,409), McGuireWoods ($535,650), Morrison & Foerster ($503,137), Galati & Blek ($401,173), Orrick, Herrington & Sutcliffe ($65,267), Kaempfer Crowell Renshaw Gronauer & Fiorentino ($43,303), Ellison, Schneider & Harris ($37,638), and Wilson Sonsini Goodrich & Rosati ($23,361).

Vertrue

Norwalk, Connecticut–based direct marketing company Vertrue and several affiliates filed for bankruptcy in Delaware on April 2, claiming that the economic recession and new federal consumer protection laws decimated much of its business plan, according The Day of New London.

Dechert bankruptcy partners Michael Sage and Shmuel Vasser, who joined the firm in 2008, are serving as lead counsel to Vertrue in its Chapter 11 case. The firm has not yet filed billing statements with the bankruptcy court.

George Thomas serves as general counsel of Vertrue, which states in court records that it has also retained Quinn Emanuel Urquhart & Sullivan as special litigation and conflicts counsel.

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