United States: Top 10 Bankruptcies Of 2013

As in 2012, banking and financial services companies were conspicuously absent from the Top 10 List of public-company bankruptcy filings for 2013. Only one brokerage firm and a single bank holding company made the cut, further demonstrating that the chaff in the banking and financial services sectors has largely been winnowed in the aftermath of the 2008 financial crisis. Four of the Top 10 filings in 2013 involved publishing or advertising media companies still struggling to adapt to the rapid transformation from print to web- and phone-based forms of media. The remaining Top 10 filings were made by companies in the shipping, manufacturing, distilling, and entertainment industries. Each company gracing the Top 10 List for 2013 entered bankruptcy with assets valued at more than $1 billion. Seven of the 10 both filed for and emerged from bankruptcy in 2013.

Cengage Learning Inc. ("Cengage"), a textbook-publishing company based in Stamford, Connecticut, with 5,500 employees, grabbed the brass ring for the largest public-company bankruptcy filing of 2013. Cengage filed for chapter 11 protection on July 2, 2013, in New York with $7.5 billion in assets. The filing was part of a restructuring agreement with lenders that will eliminate approximately $4 billion of its $5.8 billion in debt, much of it incurred in connection with the 2007 acquisition of Cengage by a partnership led by private equity company Apax Partners LLP. One of the nation's largest publishers of textbooks and other educational content, Cengage also sought bankruptcy protection to support its long-term business strategy of transitioning from traditional print models to digital educational and research materials.

Plano, Texas-based Penson Worldwide, Inc. ("Penson"), a provider of financial clearing services and related products, traded into the No. 2 position on the Top 10 list for 2013 when it filed for chapter 11 protection in Delaware on January 11, 2013, with $6.2 billion in assets and plans to sell off its assets, including U.S. operating subsidiary Nexa Technologies, Inc. Once a major handler of securities trades for U.S. brokerages, Penson never recovered from the global financial crisis. The company stated that its bankruptcy filing was triggered by lower equity trading volume that, combined with historically low interest rates, led to a liquidity crisis. The Delaware bankruptcy court confirmed a liquidating chapter 11 plan for Penson on July 31, 2013.

Yellow Pages company Dex One Corporation ("Dex One") took the No. 3 spot on the Top 10 List for 2013 when it (re)turned the page into chapter 11 in Delaware on March 17, 2013, with $2.8 billion in assets. Dex One filed a prepackaged bankruptcy as part of a previously announced all-stock merger deal with rival SuperMedia LLC ("SuperMedia")— No. 9 on the 2013 Top 10 List. Dex One was created as the successor to directories-publishing giant R.H. Donnelley Corp., which emerged from chapter 11 protection in February 2010. Like the newspaper industry, the Yellow Pages business has not benefited from a broader advertising recovery, since more consumers and advertising dollars have migrated to the internet, accelerating the decline for the industry over the past few years. Now known as Dex Media, Inc., the merged companies exited from bankruptcy on April 30, 2013, as a marketing services company that helps local businesses reach potential customers. The merger brought together directory operations formerly part of Ameritech in Illinois, Qwest and Verizon, for the first time since the Bell System divestiture. Since merging, the two companies have continued to conduct business at the local market level under the SuperMedia and Dex One brands.

Athens-based Excel Maritime Carriers Ltd. ("Excel") steamed into the No. 4 berth on the Top 10 List for 2013 when it filed a prenegotiated chapter 11 case in New York on July 1, 2013, with $2.7 billion in assets to implement a restructuring with the help of a capital infusion of up to $50 million and the release of another $30 million in restricted cash. Excel owns and operates dry bulk carriers and provides worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal, and grain, as well as bauxite, fertilizer, and steel products. The company owns a fleet of 39 vessels with a total stowage capacity of approximately 3.6 million dead-weight tonnage (DWT). Secured lenders were vastly under water at the time of the filing due to volatility and overall declines in charter rates.

Under the chapter 1 1 plan originally proposed by Excel, secured lenders were to receive a restructured $771 million credit facility and 100 percent of the reorganized company's stock. Through a side agreement, 60 percent of that stock would be transferred to Ivory Shipping Co., which is controlled by Excel chairman Gabriel Panayotides, allowing him to retain control of Excel. Unsecured bondholders

initially challenged the fairness of the plan, which proposed a 3 percent recovery to bondholders while effectively allowing Panayotides to maintain control of the company. However, Excel and its bondholders agreed on the terms of a revised plan in late November, and a confirmation hearing was scheduled for January 27, 2014.

Madison, Wisconsin-based Anchor BanCorp Wisconsin Inc. ("Anchor BanCorp") vaulted into the No. 5 position on the Top 10 List for 2013 when it filed for chapter 11 protection in Wisconsin on August 12, 2013, with $2.4 billion in assets and $2.43 billion in debt. Anchor BanCorp filed a prepackaged chapter 11 case, the highlight of which is an agreement whereby investors infused $175 million of new capital into the company in exchange for 96.7 percent of new common stock in the reorganized company. Anchor BanCorp's sole preferred shareholder, the U.S. Department of the Treasury, received 3.3 percent of the new common stock in the restructured company. Anchor BanCorp owed $110 million in Troubled Asset Relief Program ("TARP") funds as of July 31, 2013, the fifth-largest outstanding TARP investment. The new capital infusion was the keystone of a chapter 11 plan that the bankruptcy court confirmed on August 30, 2013. The funding allowed Anchor BanCorp to recapitalize AnchorBank, its bank subsidiary and Wisconsin's third-largest depository, with 55 branches. AnchorBank did not file for bankruptcy.

Milton, Georgia-based lead-acid battery manufacturer Exide Technologies ("Exide") powered into the No. 6 spot on the Top 10 List for 2013 when it filed for chapter 11 protection for the second time in little more than a decade in Delaware on June 10, 2013, with $2.2 billion in assets. With nearly 10,000 employees, Exide manufactures and supplies lead-acid batteries for transportation and industrial applications worldwide under the Centra, DETA, Exide, Exide Extreme, Exide NASCAR Select, Orbital, Fulmen, and Tudor brand names, among others. Rising production costs, intense competition, and reduced access to credit drained the battery maker's earnings and liquidity in recent years. In addition, Exide was hurt by the global economic retraction and trouble with toxic substance regulators in connection with its battery-recycling facility in California. In 2002, Exide filed a chapter 11 case to deal with $2.5 billion in acquisition debt. Its confirmed chapter 11 plan in that case eliminated $1.3 billion in debt.

The No. 7 position on the Top 10 List for 2013 went to Warsaw-based (but Mount Laurel, New Jersey-headquartered) Central European Distribution Corp. ("CEDC"), one of the largest producers of vodka in the world as well as Central and Eastern Europe's largest integrated spirit beverages business. Headed by Russian billionaire Roustam Tariko, CEDC filed for chapter 11 protection in Delaware on April 7, 2013, with $2.1 billion in assets to manage heavy bond debt by means of a prepackaged restructuring plan aimed at cutting approximately $700 million in liabilities. The distiller lost nearly 50 percent of its market value in 2012 amid slumping sales, rising debt, and management transitions. On May 13, 2013, CEDC obtained confirmation of its prepackaged chapter 11 plan. Under the plan, Tariko received 100 percent of CEDC's newly issued stock in return for a new $277 million capital infusion. Confirmation of the plan created an alliance between CEDC and Russian Standard, the rival vodka maker also owned by Tariko.

No. 8 on the Top 10 List for 2013 was dog-eared by RDA Holding Co. ("RDA Holding"), a New York City-based company that, through its subsidiaries, produces, publishes, and sells print and digital magazines (including the iconic, 91-year-old pocket-sized publication, Reader's Digest, the highest-circulated paid magazine in the world), along with books, music, and videos, through various media channels. RDA Holding reopened its chapter 11 book when it filed for bankruptcy protection for the second time in four years in New York on February 17, 2013, with $1.6 billion in assets. Having emerged from an earlier bankruptcy in February 2010 with a healthier balance sheet and a smaller publication footprint, RDA Holding returned to chapter 11 in an effort to further pare down its debt. RDA Holding was also hurt by continuing changes in the print media industry that caused declines in its North American book and home entertainment businesses, as well as certain portions of its European business. RDA Holding reprised its exit from chapter 11 after obtaining confirmation of a plan on June 28, 2013, that ceded control of the company to bondholders in exchange for the cancellation of $231 million in debt.

SuperMedia LLC ("SuperMedia") (formerly Idearc Media LLC ("Idearc")), a marketing company based in Dallas that provides print, mobile, and internet advertising to small- and medium-sized businesses, snagged the No. 9 position on the Top 10 List for 2013. As discussed above, ninth-ranked SuperMedia, which emerged from the bankruptcy of Idearc in January 2010, filed a prepackaged chapter 11 case in Delaware on March 17, 2013, with $1.4 billion in assets for the purpose of consummating a merger with Yellow Pages company Dex One—No. 3 on 2013's Top 10 List. Since its merger with Dex One Corporation and exit from bankruptcy in April 2013, SuperMedia has operated as a subsidiary of Dex Media, Inc., the postmerger entity. Since merging, the two companies have continued to conduct business at the local market level under the SuperMedia and Dex One brands.

Atlantic City casino and resort owner Revel AC, Inc. ("Revel") folded into the final position on the Top 10 List for 2013 when it filed a prepackaged chapter 11 case in New Jersey on March 25, 2013, with $1.2 billion in assets. Built at a cost of $2.4 billion, Revel opened for business in April 2012 and began to falter almost immediately. Revel misread customer demand in the downtrodden New Jersey gambling mecca— consumers wanted inexpensive, fast, and simple options rather than over-the-top glamour. Revel exited bankruptcy on May 23, 2013, after the court confirmed a debt-for-equity-swap reorganization plan that pared more than $1.2 billion, or 80 percent, of $1.5 billion in debt from the company's balance sheet. Revel has 1,399 hotel rooms and a casino with more than 2,400 slot machines and 130 table games.

Other notable debtors (public and private) in 2013 included:

The City of Detroit, which became the largest U.S. city ever to seek bankruptcy protection when it filed a chapter 9 petition in Michigan on July 18, 2013. Detroit—which has lost 300,000 residents since 1995—is overwhelmed by as much as $18 billion in long-term liabilities, including $9.4 billion in special revenue bonds as well as debt related to the city's general fund and health-care benefits. Faced with a shrunken tax base, a 139-square-mile metropolitan area to maintain, and unsustainable health-care and pension costs, the city's expenditures have exceeded revenues in each of the last four years by an average of $100 million annually.

STX Pan Ocean Co. Ltd. ("STX"), a South Korean cargo-shipping company on behalf of which a chapter 15 petition was filed in New York on June 20, 2013, seeking recognition of the company's South Korean rehabilitation proceedings shortly after four STX vessels were detained in Washington, California, and Texas. The chapter 15 petition for STX, which suffered from a decrease in cargo traffic volume and ocean freight fares due to the global financial crisis, as well as an increased supply of ships from Chinese shipbuilders, listed $6.0 billion in assets and $4.4 billion in debt. The U.S. bankruptcy court entered an order recognizing STX's Korean reorganization as a "foreign main proceeding" on July 12, 2013.

Privately held Taiwanese (but Houston-headquartered) shipping company TMT USA Shipmanagement ("TMT"), which filed for chapter 11 protection in Texas on July 20, 2013, listing $1.5 billion in assets and $1.46 billion in debt, after the holders of $800 million in bank debt seized seven of its 17 vessels in ports from Antwerp to China. Owned by Taiwanese shipping magnate Nobu Su, TMT has suffered from the same drop in shipping rates that has plagued the entire industry since 2008.

Hoku Corp. ("Hoku"), a Pocatello, Idaho-based company that operates as a solar energy products and services company primarily in the U.S. Hoku filed a chapter 7 petition on July 2, 2013, in Idaho for the purpose of liquidating assets listed at $670 million. With Chinese backing, Hoku invested more than $600 million in a polysilicon plant in Pocatello that was never completed and has now been abandoned. Two failed auctions in the bankruptcy court yielded bids of no more than $5 million for the mothballed facility until the court sanctioned an $8.3 million offer for the plant on December 23, 2013, by a Washington State construction company.

St. Louis-based Furniture Brands International, Inc. ("Furniture Brands"), one of the largest U.S. furniture manufacturers— its brands include Broyhill, Lane, Drexel Heritage, and Thomasville. The company filed for chapter 11 protection in Delaware on September 9, 2013, with $618 million in assets and a plan to sell all but its Lane business to investment firm Oaktree Capital Management for $166 million. Like other domestic furniture manufacturers, Furniture Brands has been hurt by the lingering effects of the recession and by foreign competition. The company had sales of approximately $1 billion in 2012, roughly half of what it generated a decade ago, and has not made a profit since 2006. After an auction, the

bankruptcy court approved the sale on November 22, 2013, but to a different purchaser, private equity firm KPS Capital Partners LP, for $280 million.

Oklahoma City-based independent oil and natural gas exploration and production company GMX Resources Inc. ("GMX"), which filed for chapter 11 protection on April 1, 2013, in Oklahoma with $542 million in assets. GMX was a victim of depressed natural gas commodity prices and needed capital expenditures for oil and gas operations. It has proposed a chapter 11 plan whereby new common stock would be exchanged for approximately $500 million in bond debt, ceding control of the company to creditors.

Global Aviation Holdings Inc. ("Global Aviation"), a Peachtree, Georgia-based company that, through its subsidiaries, World Airways and North American Airlines, provides customized, nonscheduled passenger and cargo air transport services worldwide (both military and civilian). Global Aviation reprised its role as chapter 11 debtor for the second time in less than a year when it filed for bankruptcy on November 12, 2013, in Delaware, listing between $500 million and $1 billion in assets. The company traced its most recent financial difficulties to decreased demand for military cargo and passenger services and the shutdown of the U.S. government in October 2013, which significantly delayed payments owed to the carrier for military flights.

Fairport, New York-based newspaper publisher GateHouse Media, Inc. ("GateHouse"), which filed for chapter 11 protection in Delaware on September 27, 2013, with $470 million in assets and a prenegotiated plan to restructure approximately $1.2 billion in debt. At the end of 2012, GateHouse owned and operated 406 publications located in 21 states, including daily and weekly newspapers, shoppers, and Yellow Pages directories, as well as locally focused websites and mobile sites. On November 6, 2013, the bankruptcy court confirmed GateHouse's chapter 11 plan, which canceled existing stock and ceded control of the company to creditors. The plan, however, awarded warrants to old shareholders to purchase shares in New Media Investment Group Inc., a new holding company that also includes Local Media Group, a chain of 33 local papers in seven states run by GateHouse.

Boca Raton, Florida-based FriendFinder Networks, Inc. (f.k.a. Penthouse Media Group) ("FriendFinder"), publisher of the late Bob Guccione's iconic Penthouse magazine and the operator of numerous adult-entertainment and dating websites, which filed for chapter 11 protection in Delaware on September 17, 2013, with $452 million in assets to consummate a deal with noteholders that would reduce debt by $300 million in exchange for ownership of the company. While social media sites like Facebook and LinkedIn have boomed in recent years, FriendFinder has not turned a net profit since at least 2008. FriendFinder obtained confirmation of its debt-for-equity-swap chapter 11 plan on December 16, 2013, and emerged from bankruptcy, now known as PMGI Holdings Inc., on December 20, 2013.

Privately held, Mexico City-based telecommunications company Maxcom Telecomunicaciones S.A.B. de C.V. ("Maxcom"), which, together with 14 affiliates, filed for chapter 11 protection in Delaware on July 23, 2013, with $400 million in assets and $402 million in debt. Maxcom proposed a prepackaged plan for recapitalization and debt restructuring involving a $45 million cash infusion and tender offer for all its shares from private equity firm Ventura Capital Privado, S.A. The bankruptcy court confirmed Maxcom's prepackaged chapter 11 plan on September 10, 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Mark G. Douglas
Similar Articles
Relevancy Powered by MondaqAI
Jones Day
Jones Day
Jones Day
Jones Day
Jones Day
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Jones Day
Jones Day
Jones Day
Jones Day
Jones Day
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions