Bally Total Fitness Files Requests for “First Day” Relief

As reported earlier, Bally Total Fitness of Greater New York, Inc. and its affiliates filed chapter 11 petitions today in New York.  This is the second time that Bally, which operates almost 400 fitness clubs, has filed for bankruptcy in less than two years.  As is customary in large bankruptcy cases, Bally immediately filed motions and applications seeking authority to, among other things, get financing and pay certain obligations.  A list of the motions and applications that Bally filed is included below, with links to the actual documents if you would like more information.

• Motion for Joint Administration of the Debtors’ Chapter 11 Cases
• Emergency Motion for (I) Entry of Interim and Final Orders (A) Authorizing the Use of Cash Collateral, (B) Granting Adequate Protection to Prepetition Secured Parties and (C) Granting Related Relief and (Ii) Scheduling a Final Hearing
• Motion for an Order (I) Authorizing Payment of Wages, Compensation, and Employee Benefits and (II) Authorizing and Directing Financial Institutions to Honor and Process Checks and Transfers Related to Such Obligations
• Motion of the Debtors for an Administrative Order Establishing Case Management Procedures
• Motion of the Debtors for an Order (I) Waiving the Requirement that Each Debtor File a List of Creditors, (II) Authorizing the Debtors to File a Consolidated List of the Fifty Largest Unsecured Creditors, (III) Approving the Form and Manner of Notice of the Commencement of the Debtors’ Chapter 11 Cases and (IV) Approving Publication Notice to Members
• Motion of the Debtors for Entry of an Order (I) Authorizing (A) Continued Use of Existing Cash Management System, (B) Maintenance of Existing Bank Accounts, (C) Continued Use of Existing Business Forms, and (D) Continued Use of Existing Investment Guidelines; and (II) (A) Granting Administrative Priority Status to Postpetition Intercompany Claims and (B) Authorizing Continued Performance Under Intercompany Arrangements and Historical Practices
• Motion of the Debtors for Entry of an Order (I) Authorizing the Debtors to Remit and Pay Sales, Use, and Franchise Taxes and Certain Other Government Charges and (II) Scheduling a Final Hearing
• Motion of the Debtors for Entry of an Order Authorizing the Debtors to Employ and Compensate Certain Professionals in the Ordinary Course of Business
• Motion of the Debtors for Entry of an Order Authorizing the Debtors to Honor Certain Prepetition Obligations to Customers and to Otherwise Continue in the Ordinary Course
• Motion of the Debtors for Order Extending the Time to File Schedules and Statements of Financial Affairs
• Affidavit of Michael W. Sheehan, Chief Executive Officer of Bally Total Fitness Holding Corporation, in Support of First Day Motions Pursuant to Local Bankruptcy Rule 1007-2

Note that the court has already entered an order approving the motion for joint administration of the bankruptcy cases.  A copy of that order can be viewed here.

Top Bankruptcy and Corporate Restructuring News for December 3, 2008

• From Bloomberg: Bally Files Bankruptcy for Second Time in 14 Months
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• From Bloomberg: Lehman Gets More Bids for Investment-Management Unit
• From Bloomberg: VeraSun Wins Approval of $196.5 Million in New Loans
• From Bloomberg: Chrysler’s ‘Back Is Against the Wall,’ Press Says
• From the Wall Street Journal: Lehman Bankers Get Prominent Positions at Barclays Capital
• From the Wall Street Journal: Detroit’s Latest Tale Of Woe and Want
• From Reuters: Tweeter shuts stores, seeks to liquidate
• From Reuters: U.S. consumer bankruptcy filings jump vs year ago

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Layoffs on the Rise (FOX Business Video)

Brian Levitt from Oppenheimer Funds weighs in on what to expect from the job reports.

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Detroit’s Forecast After a Bailout (Wall Street Journal Video)

A federal rescue package for U.S. automakers now seems likely, but it’s only going to buy the companies some time, S&P’s Robert Schulz says. Schultz tells MarketWatch’s Stacey Delo the outlook remains dire.

more about “Detroit’s Forecast After a Bailout (W…“, posted with vodpod

 

Bar Date for Filing of Claims Set in WCI Communities Bankruptcy

The bankruptcy court entered an order yesterday setting the deadline (or “bar date”) for the filing of certain claims against WCI Communities, Inc. and its affiliates.  The bar date for the filing of proofs of claim on account of prepetition claims is February 2, 2009 at 4:00 p.m. (Eastern).  Note that certain claims are excluded from the general bar date.

For more information on the claims that are excluded and where proofs of claim need to be sent, download a copy of the order here.

US Trustee Objects to Otterbourg, Steindler’s Retention in Value City Bankruptcy

Yesterday, the United States Trustee filed an objection to the application by the Official Committee of Unsecured Creditors in the Value City Holdings, Inc. bankruptcy cases to retain Otterbourg, Steindler, Houston & Rosen, P.C. as committee counsel.  The US Trustee notes that Otterbourg disclosed certain representations of adverse interests in the cases and argues that such conflicts will limit Otterbourg’s role in the cases so significantly as to limit its ability to “meaningfully represent the Committee.”  While Otterbourg has suggested that the situation can be ameliorated by conflicts counsel, the US Trustee argues that the conflicting interests are too significant for this solution to be acceptable.

Download a copy of the Otterbourg retention application and the US Trustee’s objection here.

Tweeter Opco Seeks Conversion to Chapter 7; Party Immediately Objects

Tweeter Opco, LLC filed a motion yesterday requesting that the bankruptcy court convert its chapter 11 cases to cases under chapter 7 of the bankruptcy code.  The debtors have requested a hearing on the motion today.  Tweeter stated that it has been informed by Wells Fargo Retail Finance, LLC that the conditions for termination of Tweeter’s right to use Wells Fargo’s cash collateral had been met and, as a result, Tweeter’s right to use cash collateral ceased on December 1, 2008.  Tweeter states that it needs the use of cash collateral to continue to operate its businesses and conduct an orderly liquidation.  Further, Tweeter asserts that its Second Lien Holders have refused to consent to the use of their cash collateral.  As a result, Tweeter closed its remaining stores and terminated its employees on December 1, 2008.  Therefore, Tweeter requests that the cases be converted to chapter 7 cases.

Also yesterday, SB Capital Group LLC, Tiger Capital Group, LLC, and Hudson Capital Partners, LLC filed an objection to the motion.  The parties request that any order entered by the court with respect to the motion be conditioned upon Tweeter first paying the parties the fees and expenses owed to the parties under a Consulting Agreement dated October 31, 2008.  The parties had been consulting Tweeter on the conduct of its “going out of business” sales.  The parties argue that they are owed approximately $1.7 million.

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Two Parties File Motions for Appointment of Trustee in Petters Company Bankruptcy

The United States Trustee and a group of parties (Ritchie Special Credit Investments, Ltd., Rhone Holdings II, Ltd., Yorkville Investments I, L.L.C., Ritchie Capital Structure Arbitrage Trading, Ltd., Ritchie Capital Management, L.L.C.) have each filed motions requesting that the court appoint a bankruptcy trustee.  Petters Company and its affiliates filed chapter 11 petitions after an investigation by the Federal Bureau of Investigation (FBI) and Internal Revenue Service (IRS) into the company and its sole owner which resulted in the filing of a federal criminal complaint against the company’s sole owner, Thomas J. Petters, and other company employees.  The complaint alleges that the defendants were involved in a fraudulent Ponzi scheme.  A receiver, Douglas A. Kelley, was appointed for Petters Company, Inc. and most of its affiliates.

The US Trustee argues that a trustee is necessary and appropriate because the receiver is only a custodian of the debtors’ property, not a debtor-in-possession, and as such can play only a limited role in the administration of the estates.  The US Trustee asserts that appointment of a separate bankruptcy trustee would therefore avoid standing and procedural issues related to the powers of a receiver.

By contrast, the Ritchie parties request that a trustee be appointed only for the Petters Group Worldwide, LLC bankruptcy case.  They argue that the receiver, Mr. Kelly, has a conflict of interest with respect to the PGW bankruptcy case and cannot properly discharge his duties as a fiduciary of PGW.  The Ritchie parties further assert that they hold a claim against PGW of at least $250 million.

Download both of the motions, as well as all of the other documents filed in the Petters Company bankruptcy, using netDockets.  Sign up now with no commitment, and you’ll receive your first $100 of usage free.

Two Parties File Objections to NetVersant’s Proposed Sale Procedures

Westcon Group North America, Inc. and the United States Trustee each filed objections to NetVersant Solutions’ proposed bidding and sale procedures yesterday.  NetVersant Solutions has sought authority to sell its assets to the highest bidder, which is currently its existing lenders (subject to higher or better offers). 

The US Trustee, in its objection, argues that the proposed procedures are inappropriate for the following reasons:

• The debtors have provided insufficient information to evaluate the value of their assets
• The debtors’ proposed timeline is too compressed to allow review by the creditors’ committee and others
• The debtors have not disclosed the role of insiders and management post-sale
• The debtors’ proposed expense reimbursement is inappropriate

Westcon Group, a supplier to the NetVersant and its second-largest creditor, objects to the sale procedures for the following reasons:

• The debtors’ proposed timeline is too compressed to allow consideration of the sale
• The proposed bidding procedures are designed to chill competitive bidding

View NetVersant’s proposed sale procedures and the parties’ objections using netDockets.  Try it for free and get $100 of free research.

Kimball Hill Files Plan of Liquidation and Disclosure Statement

Kimball Hill, Inc., a homebuilder, filed its proposed plan of liquidation and accompanying disclosure statement yesterday.  The company stated in the disclosure statement that the turmoil in the real estate markets has proven too much for the company to overcome and the company has decided, in consultation with its lenders and creditors’ committee, to liquidate and wind-down its operations.

The disclosure statement provides expected recoveries as follows:

• Senior Credit Agreement Claims: 37-48%
• Senior Unsecured Claims: 29-36%
• General Unsecured Claims: 17-20%
• Unsecured Senior Unsubordinated Note Claims: 1%

View the full disclosure statement and proposed plan of liquidation here.  Try our research system for free.