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Corporate and Tax Law Probate and Estate Administration Bankruptcy The Supreme Court on Monday unanimously upheld part of the U.S. bankruptcy law that bars attorneys from advising clients to take on more debt while considering a bankruptcy filing.
The opinion by Justice Sonia Sotomayor reverses a ruling by a U.S. appeals court that a provision of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was unconstitutionally broad and violated free-speech rights.
The provision prohibits bankruptcy professionals like attorneys from advising their clients to incur more debt, such as mortgages or student loans, before filing for creditor protection.
The ruling is a victory for the U.S. Justice Department, which defended the provision. It said Congress adopted the law fight abuse of the bankruptcy system encouraged by lawyers.
Department attorneys also argued that the law can be interpreted narrowly to prohibit only advice that a client take new debt with the intent of abusing the bankruptcy system. Sotomayor agreed with that interpretation.
The Minneapolis-based bankruptcy law firm Milavetz, Gallop & Milavetz PA, two of its attorneys and two prospective clients sued in 2007, saying the law violated constitutional free-speech rights under the First Amendment.
A U.S. appeals court based in St. Louis agreed, ruling that the law prevented lawyers from fulfilling their duty to clients to give them appropriate financial advice.
A federal judge has approved Affiliated Media Inc's bankruptcy reorganization plan, clearing the way for the publisher of the Denver Post and San Jose Mercury News to emerge from Chapter 11 protection this month.
Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Delaware, at a Thursday hearing approved the plan, which he called "fair, equitable and reasonable," and warranted by "exceptional and unique circumstances."
Affiliated Media is holding company for MediaNews Group, which it said is the second-largest U.S. newspaper publisher by circulation, owning 54 daily newspapers and more than 100 non-daily newspapers.
The company has said all but one of its newspapers were profitable, but a restructuring was needed because of the slump in advertising, which generates about 80 percent of its revenue. It has said the current environment could not sustain what it called "yesterday's balance sheet."
Penton Business Media Holdings Inc, a publisher of 113 trade magazines such as Ward's AutoWorld, Restaurant Hospitality and National Hog Farmer, won court approval of its reorganization plan, and expects to emerge from bankruptcy within a few days.
Judge Arthur Gonzalez confirmed the New York-based company's Chapter 11 plan on Friday in Manhattan bankruptcy court.
The plan will eliminate more than $270 million of debt, with second lien holders recovering 15 cents on the dollar. Penton will get as much as $51.2 million of new equity from its owners, court records show. Management and the board of directors will remain intact.
Penton filed for a "pre-packaged" reorganization with the support of its lenders on Feb. 10, after the privately held company struggled with falling advertising sales as many readers shifted to digital media from print.
Many publishing rivals have faced similar pressures. Penton has said revenue fell 7.5 percent in 2008 and an estimated 26.2 percent in 2009.
The company is owned by private equity firm MidOcean Partners and by an investment fund sponsored by Wasserstein & Co, the buyout firm once controlled by the late Wall Street dealmaker Bruce Wasserstein.
A U.S. Bankruptcy Court judge Thursday approved the reorganization plan of the holding company of Denver’s MediaNews Group Inc., publisher of The Denver Post, the company said.
Confirmation of the “pre-packaged” plan by Judge Kevin Carey of U.S. Bankruptcy Court in Delaware will allow Affiliated Media Inc., parent of MediaNews, to emerge from Chapter 11 protection.
“We knew we had a good plan going in, and it had been approved by the lenders before it was filed,” William Dean Singleton, chairman and CEO of MediaNews Group, said in a statement. “We are pleased that it won confirmation, and that our company is now well-positioned for the changing days ahead.”
Affiliated filed under Chapter 11 on Jan. 22 and submitted a plan already approved by major creditors, allowing it to greatly reduce its debt from $930 million to $165 million in debt in exchange for equity in the company, while leaving Singleton and President Joseph “Jody” Lodovic in control of the Affiliated/MediaNews management.
Alvarez & Marsal LLC, the liquidator of bankrupt Lehman Brothers Holdings Inc., has collected $233 million in fees for “interim management” over 16 months, according to a regulatory filing.
The restructuring firm, which provided Lehman with its current chief executive officer, Bryan Marsal, has made more than any other adviser of the investment bank since the September 2008 bankruptcy filing, according to a Feb. 19 report with the Securities and Exchange Commission. Lehman said it paid all its lawyers and advisers $641.9 million through January.
Lehman’s payments to advisers haven’t faced major challenges like those in the case of bankrupt automaker Chrysler LLC, which is using U.S. Treasury loans to wind itself down. On top of reported fees, Marsal’s firm has started earning a so- called “success fee” that can run to 25 percent of the amount the firm gets for dismantling New York-based Lehman over the life of the case, according to court documents.
Morris Publishing Group's reorganization plan was confirmed in U.S. Bankruptcy Court in Augusta, Ga. Wednesday, clearing the way for the parent of The Florida Times-Union in Jacksonville and a dozen other dailies to emerge from bankruptcy as soon as March 1.
Under the plan confirmed by the court, Morris Publishing will reduce its debt from approximately $418 million to approximately $107 million.
Morris filed a "pre-packaged" bankruptcy reorganization plan in January that was approved in advance by the great majority of its bondholders and senior secured creditors.
Under the plan, Morris will swap $100 million of new second lien secured notes due in 2014 for the cancellation of about $278.5 million of outstanding senior subordinated unsecured notes that are due in 2013.
At the same time, entities owned and controlled by the Morris family will make a capital contribution of approximately $85 million and pay down intercompany debt amounting to about $25 million. That will cancel about $110 million of Morris Publishing's senior secured debt.
The nation’s second largest video chain submitted a Chapter 11 petition to the bankruptcy court in Richmond yesterday. Movie Gallery, which also owns Hollywood Video, has headquarters in Oregon.
Movie Gallery owns 16 locations in the Richmond area, and seven stores are currently having closing sales, according to its website.
In the new filing the company reported between $10 million and $50 million in assets, and $500 million to $1 billion in liabilities.
This is the second time the company filed for bankruptcy. The last time was in 2007, also filed with the U.S. Bankruptcy Court in Richmond.
Shareholders of Washington Mutual Inc will have a voice in the company's bankruptcy after a judge refused on Thursday to disband their committee, which Washington Mutual said would complicate the case.
The U.S. Trustee, who plays an oversight role in bankruptcy, appointed the committee earlier this month after being petitioned by 3,500 shareholders. The company immediately asked the court to disband it.
The committee will be able to speak with a unified voice and hire professionals, who would be paid by the company.
Washington Mutual has said since it filed for bankruptcy in 2008 that it is hopelessly insolvent, and therefore there is no need for an official committees of shareholders.
