Upcoming Committee Formation Meeting:  Thursday, December 21, 2017 10:00 AM

Case Name: 17-12881 (LSS)

Location: The Double Tree Hotel, 700 King Street, Wilmington, DE 19801

Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. See the petition for relief.

Contact Norman L. Pernick and Nicholas J. Brannick for more information.

Upcoming Committee Formation Meeting:  Tuesday, December 19, 2017 10:00 AM

Case Name: 17-12906 (CSS)

Location: Sheraton Suites, 422 Delaware Avenue, Wilmington, DE 19801

Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. See the petition for relief.

Contact Norman L. Pernick and Nicholas J. Brannick for more information.

Upcoming Committee Formation Meeting:  Wednesday, December 20, 2017 11:00 AM

Case Name: 17-12890 (CSS)

Location: U.S. Trustee Office, 844 King Street, Suite 3209, Wilmington, DE 19801

Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. See the petition for relief.

Contact Norman L. Pernick and Nicholas J. Brannick for more information.

Mammoet-Starneth LLC, an international engineering company that designs and constructs giant observation wheels and structures, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 17-12925).  The Petition estimates the Debtor’s assets and liabilities to both be between $100 – $500 million.  Starneth made headlines earlier this year when it was terminated from its role in designing and constructing the “New York Wheel,” a planned tourist attraction on the north shore of Staten Island.  No First Day Declaration has been filed yet.  According to the DIP Motion, Starneth is no longer operating and intends to confirm a plan of liquidation.  Starneth has secured $5 million in DIP Financing from Mammoet USA North Inc., a non-debtor affiliate.  No claims and noticing agent has been proposed yet.  The case has been assigned to the Honorable Laurie Selber Silverstein.

Contact Norman L. Pernick or Nicholas J. Brannick for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

Orchard Acquisition Company, LLC, along with four of its affiliates and subsidiaries (including the J.G. Wentworth Company, LLC), has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 17-12914).  The Petition estimates the Debtors’ assets and liabilities to both be between $100 – $500 million.  According to the First Day Declaration, the Debtors enter Chapter 11 having reached a restructuring support agreement with holders of over 87% in outstanding principal amount of its term loan claims and over 99% of the ownership interests of the J.G. Wentworth Company, LLC.  The Debtors have filed a prepackaged Plan of Reorganization and Disclosure Statement, and will seek to have both approved at a (tentative) combined hearing on January 17, 2018 at 10:00 a.m. ESTPrime Clerk, LLC is the proposed claims and noticing agent.  The cases have been assigned to the Honorable Kevin Gross.

Contact Norman L. Pernick or Nicholas J. Brannick for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

Dextera Surgical Inc. (NASDAQ: DXTR), a designer and manufacturer of surgical devices based in Redwood City, CA, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 17-12913).  The Petition estimates that Dextera has $10 – $50 million in both assets and liabilities.  According to the First Day Declaration, Dextera enters Chapter 11 having carried out a prepetition marketing process and will pursue a 363 sale, with Aesculap, Inc. as the Stalking Horse Purchaser.  Dextera also seeks approval to borrow up to $1.5 million in DIP Financing from Aesculap, Inc.  Rust/Omni is the proposed claims and noticing agent.  The case has been assigned to the Honorable Kevin J. Carey.

Contact Norman L. Pernick or Nicholas J. Brannick for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

Charming Charlie Holdings, Inc., a fashion accessories retailer based in Houston, Texas, has, along with six of its affiliates and subsidiaries, filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 17-12906).  According to the Petition, Charming Charlie has an estimated $50 – $100 million in assets and $100 – $500 million in liabilities.  According to the First Day Declaration, Charming Charlie enters Chapter 11 having entered into a restructuring support agreement with 80% of its prepetition secured term loan lenders, and will pursue a comprehensive restructuring involving the closing of approximately 100 underperforming stores.  Charming Charlie has also filed a motion to approve up to $35 million in DIP Financing from a consortium of lenders with Bank of America, N.A., as administrative agent.  Rust/Omni is the proposed claims and noticing agent.  The cases have been assigned to the Honorable Christopher S. Sontchi.

Contact Norman L. Pernick or Nicholas J. Brannick for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

PhaseRx, Inc. (NASDAQ: PZRX), a Seattle-based biopharmaceutical company developing mRNA treatments for life-threatening inherited liver diseases in children, has filed a chapter 11 petition before the United States Bankruptcy Court for the District of Delaware (Case No. 17-12890).  The case has been assigned to the Honorable Christopher S. Sontchi.  The petition indicates assets of $4.1 million and liabilities of $5.6 million.  Donlin Recano will serve as the claims agent.  The company has issued a press release regarding its reorganization.

 

Contact Norman L. Pernick or Nicholas J. Brannick for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

Boston Herald, Inc., along with three affiliates and subsidiaries, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 17-12883).  The Herald’s Petition estimates both its assets and liabilities to be between $10 – $50 million.  Although First Day Motions have not yet been filed, the publisher of the Boston Herald, Patrick J. Purcell, announced earlier today that the Herald will be sold via the Chapter 11 process to Gatehouse Media, LLC.  No claims and noticing agent has been proposed yet.  The cases have been assigned to the Honorable Laurie Selber Silverstein.

 

Contact Norman L. Pernick or Nicholas J. Brannick for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

On November 28, 2017, Tidewater Inc. and its affiliated debtors (collectively, the “Tidewater Debtors”) withdrew their motion objecting to final allowance of rejection damage claims of Fifth Third Equipment Finance Company (“Fifth Third”).  The notice of withdrawal indicated that Fifth Third, the sole remaining non-settling vessel lessor, resolved its dispute with the Tidewater Debtors pursuant to which Fifth Third’s “Sale Leaseback Claim” was allowed in the amount of $67,500,000.

The Tidewater Debtors (and their non-debtor affiliates) own and operate Offshore Support Vessels (OSVs) that support offshore energy exploration and production activities worldwide.  The Tidewater Debtors commenced Chapter 11 proceedings on May 17, 2017 to implement a fully negotiated and consensual restructuring under a prepackaged plan of reorganization filed on the same day.

Before the bankruptcy filings, the Tidewater Debtors and Fifth Third (as well as the other vessel lessors, the “Lessors”) entered into sale-leaseback transactions pursuant to which some of the Tidewater Debtors (collectively, the “Charterers”) sold vessels to the Lessors, which then leased the vessels back to the Charterers under bareboat charter agreements (the “Bareboat Charter Agreements”).  The Bareboat Charter Agreements each provided that upon an Event of Default (as defined therein, but including the Tidewater Debtors’ insolvency and bankruptcy filings, confirmation of a plan and rejection), Lessors were entitled to recover a stipulated loss value (“SLV”) as liquidated damages.  Tidewater Inc. absolutely and unconditionally guaranteed the payment and performance of the Charterers’ obligations under the Bareboat Charter Agreements.

A bareboat charter agreement is one type of charter agreement that governs the terms and conditions for the lease of a vessel. A bareboat charter is an executory contract that can be assumed or rejected under Section 365(a) of the Bankruptcy Code.  Rejection allows a debtor to disavow contracts that are burdensome or no longer advantageous to its ongoing business operations.

On the petition date, the Tidewater Debtors filed a motion to reject the Bareboat Charter Agreements.  They asserted that rejecting the Bareboat Charter Agreements would save them approximately $171 million over the next seven years.  In the motion, the Tidewater Debtors preemptively also sought to disallow the Lessors’ rejection damage claims in the amount of the SLV stated in the respective Bareboat Charter Agreements as an “unreasonable and unenforceable liquidated damages provision.”  The Tidewater Debtors argued the claims should be limited to “the reasonable expectation damages incurred by the Lessors.”  They proposed the final damages claims to equal the total maximum amount owing under each Bareboat Charter Agreement discounted to present value.  With respect to Fifth Third, the difference in the parties’ positions was astronomical.  Fifth Third argued for an SLV claim of approximately $94 million, while the Debtors posited it should be $34 million.

Relying on two Third Circuit decisions (In re Transworld Airlines, Inc., 145 F.3d 123 (3d Cir. 1998) and In re Montgomery Ward Holding Corp., 326 F.3d 383 (3d. Cir. 2003)), on August 31, 2017, Judge Brendan Shannon of the U.S. Bankruptcy Court for the District of Delaware ruled that the SLV provision was an unenforceable penalty.  He scheduled an evidentiary hearing in late September to determine Fifth Third’s “actual and appropriate damages” from rejection of the Bareboat Charter Agreement.

As parties oftentimes do in bankruptcy proceedings, the Tidewater Debtors and Fifth Third sagaciously resolved their dispute.  Given the settlement of Fifth Third’s claim, Judge Shannon did not have to rule on Fifth Third’s argument that even if the SLV is an unenforceable penalty against the direct contract counterparty, under New York law, it is entitled to the SLV amount pursuant to Tidewater Inc.’s guaranty.  That was an argument with respect to which he reserved opinion at the August hearing. It is clear, however, that vessel lessors may not be able to enforce their contractual SLV provisions if the actual damages they incur from rejection of the charter agreement is less than the SLV.