Delaware Business Bankruptcy Report : Delaware Business Bankruptcy Report : Morris James LLP Lawyers & Attorneys

On March 30, 2010, Eigen, Inc. a developer of imaging tools and products for healthcare professionals, filed for chapter 11 protection in Delaware. The petition lists assets and liabilities of between $10-50 million each.

According to the declaration filed in support of the case by Richard Edick, Chief Restructuring Officer of the debtor, Eigen products have, for more than 30 years, allowed physicians to obtain high-definition views of moving image studies. Mr. Edick counts the debtor’s intellectual property for such products as perhaps its most valuable asset.

Mr. Edick indicates that the debtor’s lender had attempted to commence an asset sale prior to the filing under Article 9 of the UCC. Certain of the debtor’s former employees were able to obtain a temporary restraining order blocking the sale. Under the circumstances, the lender was unwilling to fund the debtor any further and the debtor was unable to obtain any equity investment which prompted the filing.

The case has been assigned to The Honorable Peter J. Walsh, and has been docketed as Case No. 10-11061.

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Early this morning, March 30, 2010, Xerium Technologies, Inc. and 15 affiliated debtors filed Chapter 11 in Delaware. The petition lists total assets exceeding $1 billion, and liabilities between $500 million and $1 billion. The main case number is 10-11031 and Judge Kevin J. Carey has been assigned to the case.

According to the declaration in support of the filing made by Stephen Light, CEO and Chairman of the Board of Xerium Technologies, the debtors are “a leading global manufacturer and supplier of two categories of consumable products used in the production of paper products and roll technology products installed in paper-making machines.”  Mr. Light’s declaration points to “decreased demand for [paper producers’] products . . . due to the increasing prevalence of electronic media” as part of the reason for the filing. “The drop in global demand for paper products has resulted in a surplus of paper inventory at paper-making companies and corresponding curtailments and idling of paper-making machines. In addition, as Xerium’s customers have experienced difficulty raising funds in the capital markets, customers’ demands for Xerium’s products and services has [sic] necessarily contracted.”

On March 2, 2010, the debtors commenced a pre-petition solicitation of votes in favor of a pre-packaged plan and disclosure statement. Mr. Light’s declaration indicates that the plan has been overwhelmingly supported by the two classes entitled to vote. Accordingly, the debtors will be seeking to exit bankruptcy in mid-May, 2010.

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On February 3, 2010, Spheris Inc. and 5 direct and indirect subsidiaries filed chapter 11 cases in the Bankruptcy Court for the District of Delaware. The case has been assigned to the Honorable Kevin Gross and is designated case no. 10-10352.

Mr. Robert L. Butler, CRO of the debtors, notes in his first day affidavit that the debtors “provide clinical documentation technology and services to health systems, hospitals and group medical practices located throughout the United States.” Events leading to the filings included changes in the clinical documentation industry including “significant technology developments as well as accelerated price pressures.” This resulted in declining revenues in the second half of 2008 and into 2009.

The debtors initiated a marketing strategy to sell all or substantially all of their assets. At the conclusion of that process, the debtors determined that a sale to CBay, Inc. and Medquist Transcriptions, Ltd. was the best opportunity and commenced the filing to consummate that sale transaction.

A Wall Street Journal article about the proposed sale can be found here.

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On February 3, 2010, Neenah Enterprises, Inc. and 17 of its affiliates sought chapter 11 bankruptcy protection in Delaware. The case has been assigned to Judge Mary F. Walrath, and has been designated case no. 10-10360.

According to the first day affidavit of Robert E. Ostendorf, Jr., President and CEO of the debtors, the debtors are one of the largest independent foundry companies in the U.S. and are one of the leading suppliers of castings to the domestic municipal products markets.

According to Mr. Ostendorf, reasons for the filing include “dramatic cyclical declines in some of the Company’s most important markets including trucks, railroad, construction, and agricultural equipment.” Additionally, there was a slow down in the orders placed by manufacturers in the residential segment leadings to lower demand for HVAC equipment, and increasing pressure from competitors and customers leading to reduced prices.

Prior to filing the bankruptcy cases, the debtors entered into a lock-up agreement with certain creditor constituencies to support a pre-negotiate plan that contemplates, among other things, according to Mr. Ostendorf, payment in full or reinstatement of the Prepetition Working Capital Lenders, exchange of Secured Notes for 97% of new common stock to be issued by the company, exchange of the Subordinated Notes for 3% of the company’s new common stock on the terms set forth in the Plan Term Sheet. Claims of general unsecured creditors are contemplated to be either reinstated or paid in full. Claims and interests of the company’s existing equity holders will be cancelled and extinguished.

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Today, January 20, 2010, Specialty Packaging Holdings, Inc. and five direct and indirect debtor subsidiaries commenced Chapter 11 bankruptcy proceedings in Delaware. 

According to the declaration of Michael J. Musso, CRO and Interim CEO of the Debtors, the Debtors are collectively an industry leading global developer and manufacturer of color cosmetics. They entered chapter 11 proceedings as a result of “extreme liquidity pressure” occasioned, in part, by “efforts to expand into new market segments, pricing and margin difficulties, lack of expense management, inadequate working capital planning, and initiatives that were not balanced with cash flow requirements.”

Among other matters, the certain of the debtors are seeking expedited consideration of bid procedures in connection with a contemplated sale of certain of the Debtors’ assets.

This case has been assigned to The Honorable Kevin Gross, and has been docketed at Case No. 10-10142.

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On January 15, 2010, California developer, Anaverde LLC, filed for chapter 11 protection in Delaware. In conjunction with the filing, Anaverde also filed a chapter 11 liquidating plan and disclosure statement. In addition, Anaverde is seeking approval of a sale process for its assets.

According to the declaration of John Miles in support of the filing, Anaverde owns a master-planned, partially entitled residential development in Palmdale, California. The project includes approximately 3500 undeveloped lots and an adjacent development known as Chandar is planned for 157 single family homes. Mr. Miles notes that the project is partially graded and has had some landscaping done, but is otherwise incomplete.

 The sub-prime crisis of 2008 is listed as one of the bases for the filing. Notes Mr. Miles: “there is very little market appetite for the homes which were to be built on the project site.”

According to a motion filed with the Bankruptcy Court, Anaverde seeks to sell substantially all of its assets to a stalking horse, New Anaverde LLC, an entity formed by some of Anaverde’s equity investors.

The Honorable Mary F. Walrath has been assigned to the case. The case number is 10-10113-MFW.

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On January 11, 2010, Haights Cross Communications, Inc. and four affiliates filed for chapter 11 protection in the United States Bankruptcy Court for the District of Delaware.  The case was filed as a pre-packaged bankruptcy.  A link to a press release announcing Haights' pre-petition solicitation results is here.

According to a declaration filed in support of the petition, the debtors are leading developers and publishers of products for the Kindergarten through Grade 12 education and public library markets.

The case has been assigned to The Honorable Brendan Linehan Shannon.

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On January 4, 2010, International Aluminum Corporation (IAC) and 11 affiliates filed for protection under Chapter 11 of the Bankruptcy Code in Delaware. According to the supporting declaration filed by Jeffrey B. Park, CFO of certain of the debtors, IAC is an integrated manufacturer of quality aluminum and vinyl products for use in commercial and residential applications.

The Park declaration notes that the bankruptcy cases were commenced primarily because of the decline in the commercial and residential construction activity in the U.S.

According to the Park declaration, the Debtors, and certain “Required Supporting Holders” entered into a restructuring support agreement on December 31, 2009. In accordance with the restructuring support agreement, the Debtors filed their bankruptcy cases and a Plan and accompanying Disclosure Statement on January 4, 2010. The proposed plan – if confirmed – provides for payment in full of general unsecured claims. 

The case has been assigned to the Honorable Mary F. Walrath, and the main case number is 10-10003.

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Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2009:

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Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2008:

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Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2007:

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