In another blow to maintaining administrative solvency (much less any hope of recovery by the unsecured creditors on prepetition claims), on March 23, 2009, Cadence Innovation settled its $4,914,075 claim against GM for $2,830,000 ($2,000,000 cash and $830,000 GM loan reduction). For Cadence Innovation this result certainly represents a disappointment. The $4,914,075 certainly would have been viewed as “in the bank.”
Bankruptcy Cases of Interest to Suppliers, Landlords, Lessors, Bankruptcy Creditors
Posts and discussion of recent bankruptcy cases of interest from a supplier, commercial landlord, equipment lessor or other unsecured creditor standpoint.
Bankruptcy Preference Claims will Pay the Bills in Cadence Innovation Bankruptcy
Looking at the Cadence Innovation November 30, 2008 balance sheet, you would see total assets of $88 million. The December 31, 2008 balance sheet shows total assets of only $6.5 million. What happened?
Ritz Camera Centers Bankruptcy – Supplier Aspects
See the Ritz Camera Docsheet™ Report for subsequent developments in the Ritz Camera bankruptcy proceedings.
In a bankruptcy that may signal the opening of the 2009 floodgates of retail sector filings, Ritz Camera Centers, Inc. filed on February 23 Chapter 11 proceedings in Delaware in Case No. 09-10617. The focus in this bankruptcy will be on the store leases – how many and which ones are to be rejected, which ones are going to be renegotiated upon threat of rejection, and which ones are going to be assumed for assignment.
Foamex International Bankruptcy – Another Automotive Supplier Files
See the Foamex International Docsheet™ Report for subsequent developments in the Foamex International bankruptcy proceedings.
Feb. 23, 2009 – Foamex International, Inc., together with 7 affiliates, filed for Chapter 11 protection in Delaware on February 18, 2009. The affiliates are: Foamex, L.P.; Foamex Latin America, Inc.; Foamex Asia, Inc.; FMXI, LLC; Foamex Carpet Cushion LLC; Foamex Mexico, Inc.; and Foamex Canada Inc..
We have made the following preliminary observations:
- There is a high risk of bankruptcy preference claims in this bankruptcy;
- This is yet another automotive supplier casualty, although the press has not noted it as such;
- A very high amount, in both dollars and percentage, is being sought for payment of prepetition amounts to “critical cendors”;
- A realistic but expansive definition of “critical vendors” is being used;
- Inclusion on the critical vendor list is not immunity from a bankruptcy preference claim.
We discuss each of these observations in more detail below.
Sale of Cadence Czech Subsidiary to Magna Non-Contributing
Cadence Innovation has agreed to the sale of its interests in a Czech corporation “Cadence Bohemia” to Magna Presstec AG. Unfortunately, no dollars from this sale will find there way to Cadence Innovation.
How Much for that Equipment? The Cadence Innovation Liquidation
Feb. 20, 2009 – On February 12, 2009, another volley was fired in the onging Cadence Innovation LLC (“Cadence”) battle with GM. This time Cadence fired the volley. In an adversarial “Complaint to recover Money and to Enforce Accomodation Agreement and Stipulation and Consent Order”, Cadence alleges that GM is refusing to pay Cadence more than $4,914,075, including amounts due for equipment and raw material that GM purchased from Cadence. The purchase price was to be determined as a post-sale matter by an agreed appraiser. The designated appraiser firm was Hilco Appraisal Services, LLC. (“Hilco”).
The story is not the latest GM/Cadence fight. The story is the results of the appraisal, which was released on January 13, 2009 and attached to the February 12, 2009 Cadence complaint. This appraisal shows that the orderly liquidation value is $.10 on the dollar of fair market value.
Fluid Routing Solutions Bankruptcy – Summary Post
In our posts on the bankruptcy of Fluid Routing Solutions, we have discussed unique aspects of this case that made it worthy of study. These aspects include the following:
- apparent inability to get institutional financing despite strengths;
- sophistication of the overall bankruptcy strategy;
- first day motions that were specifically directed at keeping the supplier base in place;
- challenges of a bankruptcy of a supplier in the automotive sector;
- being part of the investment portfolio of a major, private equity player, Sun Capital Partners;
- DIP financing from a Sun Capital Partners affiliate;
- close scrutiny given the case by Chrysler, Ford and Toyota;
- presence of the UAW,
- speed at which the case was moving.
Fluid Routing Solutions Bankruptcy – Automakers are Paying Attention; DIP Financing Approved;
Feb. 10, 2009 – This case already is being closely followed by the automaker customers of Fluid Routing Solutions. Three notices of appearance have been filed – counsel to Ford Motor Company, counsel to Toyota Motor Engineering & Manufacturing North America, Inc. and counsel to Chrysler LLC. An even stronger demonstration of automaker interest is the attendance at Monday mornings’ hearing (February 9, 2009) of counsel for both Chrysler and Toyota.
We would expect that the automakers do not want to see a repeat of the disaster that occurred with Cadence Innovation LLC, where Chrysler and GM ended up in a race to see who could pull their tooling first, and Cadence was left with no alternative but a straight liquidation. While they would never admit it, the automakers are probably monitoring each other as closely as they are monitoring Fluid Routing Solutions to make sure that no one makes any sudden moves.
Fluid Routing Solutions Bankruptcy – A Picture Emerges – But Blurry
Feb. 09, 2009 – The portions of the docket available on Friday, February 6, 2009 presented an incomplete picture of the intended direction of the Chapter 11 Bankruptcy filing of Fluid Routing Solutions Intermediate Holding Corp., Fluid Routing Solutions, Inc., Fluid Routing Solutions Automotive, LLC a/k/a Mark IV Automotive, LLC) and Detroit Fuel, Inc.
The docket is now complete through close of business on Friday. One of the last motions filed on Friday was:
Fluid Routing Solutions Bankruptcy – First Day Motion to Pay Certain Supplier Administrative Priority Claims
Feb. 08, 2009 – Through two “First Day Motions”, Fluid Routing Solutions, Inc. and its affiliated filers (“Fluid Routing Solutions”) are taking steps to hold their own supplier base in place and avoid disruption to its manufacturing operations. The two motions are:
- Motion for Order Pursuant to Sections 105(a), 503(b), and 507(a) of the Bankruptcy Code Authorizing Debtors to Pay Certain Prepetition Claims of Suppliers and Vendors of Goods and Services Entitled to Administrative Priority
- Motion for Order Pursuant to Sections 105, 363 and 506(b) of the Bankruptcy Code for an Order Authorizing the Debtors to Elevate Certain Prepetition Claims of Certain Critical Vendors to Administrative Priority
This post addresses the first of these motions.