Black Angus Steakhouses File First Day Pleadings

As reported earlier, Pecus ARG Holding, Inc. and two affiliates (which operate the Black Angus Steakhouse restaurant chain) filed for bankruptcy today (more details on the bankruptcy filing can be found here).  As is customary in large corporate bankruptcy filings, the companies also filed motions and applications for relief from certain bankruptcy code sections and rules in order to allow them to continue to operate their businesses.  The following is a list of the companies’ first day pleadings filed thus far (follow the links to view the documents using netDockets):

• Chapter 11 Voluntary Petition
• List of Creditors
• Motion for Joint Administration
• Affidavit in Support of First Day Motions
• Application to Appoint Claims/Noticing Agent Kurtzman Carson Consultants LLC
• Motion to Maintain Bank Accounts (a) Authorizing Debtors to Maintain Existing Cash Management System, Bank Accounts, and Business Forms; (b) Granting an Interim Waiver of the Requirements Contained in Bankruptcy Code Section 345(b); and (c) Providing for Other Related Relief
• Motion to Pay Sales and Use Taxes
• Motion to Pay Employee Wages and Honor Prepetition Employee Policies and Benefits
• Motion Prohibiting Utilities from Discontinuing Service ; Deeming Utilities Adequately Assured of Future Performance, and Establishing Procedures for Determining Adequate Assurance of Payment
• Motion to Authorize Debtors to Honor Gift Cards and Customer Coupons in the Ordinary Course of Business
• Motion to Pay Critical Trade Vendor Claims
• Motion to Approve Debtor In Possession Financing ; Granting Liens and Security Interests and Providing Superpriority Administrative Expense Status; Authorizing Use of Case Collateral and Affording Adequate Protection; Modifying Automatic Stay; and Scheduling Final Hearing
• Motion to Approve Interim Compensation and Reimbursement of Expenses Procedures for Professionals
• Motion to Authorize Debtors to (1) Reject Nunc Pro Tunc Certain Executory Contracts and Unexpired Non-Residential Real Property Leases and Subleases Primarily Related to Non-Operating Restaurant Locations, and (2) Abandon Any Property that Remains on the Premises Covered by the Leases
• Motion to Authorize Debtors to Pay Prepetition Claims Under Perishable Agricultural Commodities Act and State Statutes of Similar Effect
• Motion to Authorize Debtors to Limit Creditor Access to Confidential Information or Privileged Information Pursuant to Bankruptcy Code Sections 105(a), 107(b) and 1102(b)(3) and Bankruptcy Rule 9019
• Motion to Authorize Debtors to Employ Professionals Used in the Ordinary Course of Business
• Motion to Approve Procedures in Connection With the Sale of the Debtors Assets; (B) Approving Form of Asset Purchase Agreement; (C) Scheduling Auction and Hearing to Consider Approval of Sale; (D) Approving Procedures Related to the Assumption of Certain Executory Contracts and Unexpired Leases; (E) Approving the Form and Manner of Notice Thereof; and (F) Granting Related Relief; and (II)(A) Authorizing the Sale of Such Assets Pursuant to the Asset Purchase Agreement Free and Clear of Liens, Claims, Encumbrances, and Other Interests; (B) Approving the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases Related Thereto; and (C) Granting Related Relief
• Motion to Assume the Master Distribution Agreement With Sysco Corporation
• Application to Employ KPMG Corporate Finance LLC and KPMG CF Realty LLC as Special Real Estate Advisors to the Debtors
• Application to Employ Landis Rath & Cobb LLP as Debtors’ Counsel, Nunc Pro Tunc to the Petition Date
• Application to Employ CRG Partners Group LLC to Perform Restructuring Services and Lisa M. Poulin as Chief Restructuring Officer, Nunc Pro Tunc to the Petition Date
• Notice of Hearing to Consider First Day Motions and Applications

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Northeast Biofuels Files First Day Pleadings

As reported earlier, Northeast Biofuels, LP and two affiliates filed for bankruptcy yesterday (more details on the bankruptcy filing can be found here).  As is customary in large corporate bankruptcy filings, Northeast Biofuels also filed motions and applications for relief from certain bankruptcy code sections and rules in order to allow the companies to continue to operate their businesses.  The following is a list of the companies’ first day pleadings filed thus far (follow the links to view the documents using netDockets):

• Chapter 11 Voluntary Petition
• Disclosure of Compensation of Attorney for Debtor
• Declaration of Douglas G. MacKenzie Pursuant to Local Bankruptcy Rule 2015-6
• Motion for Joint Administration
• Motion Pursuant to Sections 361 and 363 of the Bankruptcy Code and Fed. R. Bankr. P. 4001, For Entry of Interim Order: (1) Authorizing the Debtor to Use Cash Collateral; (II) Determining Adequate Protection Pending Final Hearing; and (III) Scheduling Final Hearing
• Motion Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code for an Order Authorizing Payment of Wages, Compensation and Employee Benefits
• Motion Pursuant to Sections 105(a), 363(c) and 364(a) of the Bankruptcy Code for Authorization to (I) Continue Using Existing Cash Management System, (II) Maintain Existing Bank Accounts and Business Forms, and (III) Waive Requirements of Section 345(b) of the Bankruptcy Code
• Motion Pursuant to Bankruptcy Rules 1007 and 2002(d) Seeking Extension of Time to File Schedules of Assets and Liabilities, Executory Contracts and Unexpired Leases and Statements of Financial Affairs

The court quickly entered orders with respect to several of the companies’ first day pleadings:

• Order Authorizing Debtor to Continue to use Existing Cash Management System, To Maintain Existing Bank Accounts and Business Forms, and Waive Requirements of Section 345(b)
• Order Granting Motion For Joint Administration
• Interim Order Authorizing Northeast Biofuels, LP to use Cash Collateral, Determining Adequate Protection Pending Final Hearing
• Order Authorizing Payment of Wages, Compensation and Employee Benefits, Authorizing Financial Institutions to Honor and Process Checks and Transfers related to such Obligations
• Order Granting Motion to Extend Deadline to File Schedules or Provide Required Information

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Goody’s Ad Hoc Creditors’ Committee Seeks Dismissal of New Bankruptcy Cases

Yesterday, an ad hoc committee of Goody’s, LLC’s unsecured creditors, represented by the firm that represented the Official Committee of Unsecured Creditors in Goody’s 2008 bankruptcy cases, filed a motion asking the bankruptcy court to dismiss Goody’s new bankruptcy cases, which were filed on January 13, 2009.  The motion argues that Goody’s is “attempting to run and hide from more than $10 million of accrued but unpaid administrative debt in the first Goody’s bankruptcy case.”  The group further argues that, because payments required under the confirmed plan of reorganization to be made to administrative, priority and unsecured creditors have not been made, that plan of reorganization from the first bankruptcy case has not been substantially consummated.

The motion posits that the primary purpose of the new bankruptcy cases, other than effectuating the liquidation of Goody’s remaining assets, is to “affect, modify or dodge claims” from the earlier bankruptcy case.  This motivation, the ad hoc committee argues, constitutes “bad faith” and warrants the immediate dismissal of the new bankruptcy cases.  Instead of the liquidation occurring as part of these new bankruptcy cases, the liquidation should occur either outside of bankruptcy or under the jurisdiction of the bankruptcy court as part of the earlier bankruptcy cases, which remain open.

For more details regarding Goody’s most recent bankruptcy filing, please see an earlier post available here.  You can also find more information about Goody’s “first day” pleadings here.

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Black Angus Steakhouses Files for Bankruptcy in Delaware

Pecus ARG Holding, Inc. (which operates Black Angus Steakhouses) and two affiliates filed for bankruptcy protection today in the United States Bankruptcy Court for the District of Delaware.  The company is headquartered in Los Altos, California and operates 69 restaurants located in Alaska, Arizona, California, Hawaii, New Mexico, Nevada and Washington.  The company leases its headquarters and 51 of its restaurants, but owns 31 buildings under long-term land lease agreements.

The companies are the successors-in-interest to American Restaurant Group, Inc. and its affiliates, which filed for bankruptcy protection in the United States Bankruptcy Court for the Central District of California in 2004.  A plan of reorganization was confirmed in those cases on June 23, 2005.  Pursuant to that plan, the companies spent over $30 million upgrading its restaurants and systems.

However, sales continued to decline following the companies’ emergence from the first bankruptcy cases.  Specifically, sales fell from $244 million in 2006 to an estimated $181 million in 2008.  The companies have been seeking a sale or restructuring since at lease March 2007, but those efforts were unsuccessful.  In addition, the companies have closed 13 restaurant locations since April 2008.

The companies are now using the bankruptcy cases as an additional attempt to sell their assets.  Their pre-petition lenders have agreed to provide debtor-in-possession financing and Pecus ARG Main, LLC and Pecus ARG Parallel, LLC have agreed to act as stalking horse bidders for the companies’ assets.  Pecus Main is wholly-owned by Versa Capital Fund I, L.P. and Pecus Parallel is wholly-owned by Versa Capital Fund I Parallel, L.P.  The Versa Funds are the ultimate owners of ARG Holding, Inc., which is the parent debtor entity.

UPDATE: The company has filed various “first day” motions and applications seeking relief from the bankruptcy court to allow the company to continue operating in the ordinary course.  Details of these motions and applications (and access to copies of the documents) can be found here.

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Northeast Biofuels, LP Files for Bankruptcy in New York

Northeast Biofuels, LP and two affiliates filed voluntary chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the Northern District of New York yesterday.  Northeast Biofuels has been developing and constructing a 100 million-gallon-per-year ethanol plant in Fulton, New York since June 2006.  The plant achieved “Mechanical Completion” on July 30, 2008 and “Interim Completion” on August 24, 2008.  The plant was supposed to have reached “Interim Completion” by December 15, 2007 pursuant to the company’s agreement with its contractor, Lurgi PSI, Inc.  The failure to meet construction milestones has led to significant disputes between the company and Lurgi PSI.

When fully operational, the facility is expected to use 36-40 million bushels of corn per year in producing ethanol, distiller grains (a high-protein animal feed), and crude corn oil.  According to the company, the facility will be the largest ethanol facility in the northeastern United States.  Fulton is located 25 miles northwest of Syracuse and 280 miles from New York Harbor.

UPDATE: The company has filed various “first day” motions and applications seeking relief from the bankruptcy court to allow the company to continue operating in the ordinary course.  Details of these motions and applications (and access to copies of the documents) can be found here.

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WorldSpace Seeks Approval of a Sale of its Satellite Radio Business

WorldSpace, Inc. has filed a motion with the bankruptcy court seeking approval of a to-be-detemrined sale of all or substantially all of the assets of it and its affiliates that comprise the companies’ satellite radio business.  Upon the sale of those assets, the companies would retain “no valuable . . . principal assets.”

WorldSpace currently has not identified a stalking horse bidder for the assets.  However, the company reports that it is in discussions with “a number of potential purchasers” consistent with bidding procedures that were previously approved by the bankruptcy court.  Nonetheless, no qualifed bids have yet been received for the assets.  The company is currently facing some time pressure to complete a sale, however, as its debtor-in-possession (DIP) financing facility matures on January 29, 2009.  In light of that time pressure, the company filed the motion seeking approval of a sale of the assets to the bidder or bidders that are determined to have submitted the highest or otherwise best bid(s) at an auction to be held.

The motion attaches a form of asset purchase agreement which the company proposes to document the sale of the assets to the winning bidder (subject, obviously, to negotiation with that bidder).  A copy of the motion, the previously-approved bidding procedures, and the form agreement can be accessed using netDockets.  Sign up now for a free trial account.

Circuit City Update: First Day of Auction Concluded, Discussions Continue

As reported earlier, Circuit City Stores, Inc. sought and received approval from the bankruptcy court to pursue an expedited auction process to sell some or all of its assets and/or secure additional funding to continue as a going concern.  More details regarding Circuit City’s proposed bidding procedures and the exigent circumstances facing the company can be found here.

Today, Circuit City completed the first day of its auction and announced that it was still in discussions with bidders regarding a potential sale.  Bloomberg has reported that Hilco Merchant Resources LLC, Great American Group LLC and Hudson Capital Partners planned to submit offers (as part of two separate bidding groups) for the liquidation of Circuit City’s assets.  It also reported that additional liquidators - Gordon Brothers Retail Partners LLC and Tiger Capital LLC – could possibly submit bids (the Bloomberg article can be found here).  It is presently unclear which, if any, of these parties has submitted bids in the auctions that have occurred thus far, as the auction process is not public and it does not appear that any parties have confirmed their bids.

UPDATE: Further updating the Circuit City auction situation, the Richmond Times-Dispatch today quoted Circuit City spokesman Bill Cimino to the effect that Circuit City is still in negotiations with a party or parties interested in a going-concern transaction, as opposed to merely a liquidation.  The full Richmond-Times Dispatch article can be found here.

UPDATE 2: A further update on the Circuit City sale process providing details on the apparent remaining bidders can be found here.

UPDATE 3: Circuit City announced today (January 16th) that it intends to liquidate all of its assets and go out of business.  More details are available here.

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VeraSun Creditors’ Committee Objects to US BioEnergy DIP Financing

As noted yesterday (earlier posting available here), on Monday VeraSun Energy Corporation filed an emergency motion seeking approval of a debtor-in-possession (or DIP) financing facility to fund operations at seven ethanol production facilities operated by a sub-set of the jointly-administered debtors (referred to in the motion as the “US BioEnergy Debtors”).  The Official Committee of Unsecured Creditors has objected to the motion on several bases.  The most significant objections appear to be the following:

• The Committee objects to the timeline for the sale of the US BioEnergy Debtors’ assets contained in the DIP financing agreements as being too accelerated and rigid.  The Committee notes that a failure to adhere to the sale timeline and meet each of the milestones in the timeline constitutes an incurable event of default and would terminate the companies’ access to cash collateral and accelerate the DIP obligations.
• The Committee further objects to the roll-up of pre-petition indebtedness in the DIP facility.  The Committee argues that $55.3 million of the availability under the DIP facility consists of a roll-up of pre-petition obligations under the companies’ pre-petition credit facilities.  This term, argues the Committee, should not be approved on an interim basis and should only be considered at the final hearing on the approval of the facility, particularly given that the motion was filed on only 48 hours of notice.
• Third, the Committee objects to termination of any of the US BioEnergy Debtors’ exclusive right to file a plan of reorganization constituting an event of default under the DIP financing agreements.  The Committee argues that such a provision is inappropriate because it would deprive parties-in-interest, including the Committee, of their statutory right to seek to file a plan of reorganization.

The Committee also seeks a number of other modifications and clarifications regarding the DIP facilities as a condition of the facilities being approved.  A copy of the Committee’s objection, as well as VeraSun’s motion and draft agreements, can be accessed using netDockets.  Sign up now for a trial account and get $100 of free research.

Recycled Paper Greetings’ Rejection of MCP Agreement Approved

Yesterday, the bankruptcy court entered an order approving the rejection of that certain Corporate Services Agreement dated December 5, 2005 between Recycled Paper Greetings, Inc. and Monitor Clipper Partners, LLC.  For a detailed summary of the agreement and the justifications provided by RPG for the rejection of the agreement, please see an earlier post regarding the motion, which is available here.

The bankruptcy court, in the same order, also approved an expedited timeline for the filing and adjudication of any claims asserted by Monitor Clipper Partners as a result of the agreement’s rejection.  Monitor Clipper Partners had objected to the expedited adjudication of its claims, arguing that the exigency of resolving the claims was manufactured by RPG and American Greetings Corporation, which is seeking to acquire the assets of RPG.  The order attaches a timeline of deadlines for the resolution of claims, which provides (among other things) that a proof of claim must be served by Monitor by e-mail no later than 5:00 p.m. on January 15, 2009 and that a final hearing on any asserted claims will commence on February 18, 2009 (subject to the court being available for a hearing on that date).

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Tronox Inc. First Day Orders Entered

Yesterday, the bankruptcy court entered a number of orders approving the relief sought by Tronox Incorporated in its first day motions and applications (for details of Tronox’s first day pleadings, please see an earlier post available here).  Tronox manufactures and markets titanium dioxide and electrolytic and other specialty chemicals and is the third-largest maker of titanium dioxide (a whitening pigment used in paper, plastics and paint).

The following is a list of the first day orders entered by the bankruptcy court yesterday (click on the titles to view the orders):

• Interim Order Signed on 1/13/2009 Authorizing the Debtors to Continue Using their Existing Cash Management System, Bank Accounts and Business Forms, and Paying any Related Fees; Transferring Funds Between the Debtors and their Foreign Subsidiaries; Use of Electronic Debit, Wire Transfers and Automated Clearing House Payments; Investing Excess Funds Pursuant to Section 345 of the Bankruptcy Code on an Interim Basis; Grant Postpetition Intercompany Claims Administrative Expense Priority and Continue Intercompany Arrangements in Accordance with Historical Practices
• Interim Order Signed on 1/13/2009 Authorizing, But Not Directing, the Debtors to Pay Certain Prepetition Compensation and Reimbursable Employee Expenses, Pay and Honor Employee Medical and Other Benefits and Continue Employee Wage and Benefit Programs
• Interim Order Signed On 1/13/2009, Authorizing Debtors (A) To Obtain Post-Petition Financing (B) To Utilize Cash Collateral (c) To Use Post-Petition Financing To Purchase Receivables Portfolio, (II) Granting Adequate Protection To Pre-Petition Secured Parties and (III) Scheduling Final Hearing for February 6, 2009 @ 10:00 a.m.
• Order Signed on 1/13/2009 Directing Joint Administration of the Debtors’ Related Chapter 11 Cases
• Order Signed on 1/13/2009 Granting an Extension of Time to File Statements of Financial Affairs and Schedules of Assets and Liabilities, Schedules of Current Income and Expenditures, Statements of Executory Contracts and Unexpired Leases and List of  Equity Security Holders
• Order Signed on 1/13/2009 Authorizing the Debtors to Prepare a List of Creditors in Lieu of Submitting a Formatted Mailing Matrix, File a Consolidated List of the Debtors’ 30 Largest Unsecured Creditors; and Mail Initial Notices
• Interim Order Signed on 1/13/2009 Authorizing, But Not Directing, the Debtors to Continue their Customer and Sales Commission Programs and Honor Prepetition Commitments Related Thereto
• Order Signed on 1/13/2009 Authorizing and Approving the Retention of Kurtzman Carson Consultants LLC as Notice and Claims Agent to the Debtors

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