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Movie Financier Hedge Fund Files for Chapter 11 Over Increasing Litigation Costs

by Justin A. Saporito, Law Clerk

Aramid Entertainment Fund, Limited filed for Chapter 11 protection in the Bankruptcy Court for the Southern District of New York on June 13, 2014.  Debtor has declared assets of $237.3 million and consolidated debt of $11.5 million.  Debtor was assigned case number 1:14-bk-11802, a judge has yet to be assigned.  Approximately 96 creditors were listed in the petition; among them are several other Aramid entities including Aramid Liquidating Trust, Ltd. and Aramid Entertainment, Inc. which jointly filed with the Debtor and were assigned consecutive case numbers.

aramid-logo-618x400                    Aramid Entertainment Fund, Limited is part of Aramid Capital Partners, LLP, a London based hedge fund that specializes in financing movies.  According to their website, Aramid Capital has provided financing for thirty-two (32) movies including Paranormal Activity, W., and How to Lose Friends & Alienate People.  Please click here for a list of their productions.

                   Debtor filed for Chapter 11 protection due to the cost of ongoing litigation against several of its borrowers who failed to repay loans or violated film-financing agreements.  One such suit began in February 2012 and is over an alleged $44 million in losses.  Debtor invested $22 million in a financing deal between Relativity Media, LLC and Sony Pictures.  Debtor alleges that executives from Fortress Investment Group, LLC used Aramid’s confidential information, which was allegedly obtained during a 2010 portfolio review as part of a proposed purchase of Debtor’s assets, to make a deal with Sony that destroyed Debtor’s investments.

                     Debtor and its affiliates are represented by James C. McCarroll, a partner at Reed Smith, LLP who specializes in Financial Industry, Commercial Restructuring, and Bankruptcy.

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NJ Janitorial Firm Bradford and Byrd Tries to Clean House with a Chapter 11

By: Justin A. Saporito, Law Clerk

Bradford & Byrd Associates, Inc. filed for voluntary Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of New Jersey on May 23rd, 2014.  The case has been assigned to the Honorable Christine M. Gravelle under case number 3:14:bk-20478.

b&bmopper400Debtor claims assets of less than $50,000 with liabilities ranging between $500,000 and $1 million.  Among debtor’s 21 creditors are the Internal Revenue Service, New Jersey Department of Labor, New York State Workers Compensation Board, Mercedes Benz, and several other companies and private individuals.  Debtor is represented by Bunce Atkinson of Atkinson & DeBartolo, PC from Red Bank, New Jersey.

Debtor is a janitorial firm that was founded in 1989 and headquartered in Freehold, New Jersey.  Debtor provides janitorial services clients in New York, New Jersey, Pennsylvania, Georgia, and North and South Carolina.  Some of debtor’s more notable clients include UPS, the Social Security Administration Headquarters, and Public Service Electric and Gas Company.  In debtor’s more than 20 years in business, it has achieved some noticeable accomplishments including servicing the Statue of Liberty in 1996 and being contracted to clean vintage chandeliers at West Point Military Academy in 2001.

Quiznos Turns to Bankruptcy Amidst Increased Competition

quiznosBy: Stephen Krug, Law Clerk

The various entities that comprise the Quiznos sandwich chain (“debtors”) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware on March 14, 2014.   A motion filed by debtors for joint administration of the cases was granted on March 17, and the case has been assigned to the Honorable Peter J. Walsh.

While debtors’ liabilities range from $500 million to $1 billion, the assets are only estimated to fall between $0 and $50,000.  However, Debtors maintain that, although assets are low and 10,001 to 25,000 creditors exist, funds will be available for distribution to unsecured creditors. U.S. Bank National Association, as administrative agent and collateral agent under debtors’ second lien financing facility, is the largest unsecured claimant with a claim for approximately $174 million.  Horizon Media Inc., MG-1005, LLC, and ESPN Inc. also hold substantial unsecured claims.

Debtors have proposed a pre-packaged reorganization plan that would slash debt by more than $400 million and would permit the handful of company-owned sandwich shops to remain operational.  Sandwich stores operated by franchisees are not part of the bankruptcy proceedings and thus are not provided for in the pre-packaged plan.

Debtors hope to emerge from bankruptcy more viable than ever. Moving forward, debtors hope to reduce food costs and place more of an emphasis on advertising.

Debtors are represented by Mark D. Collins of Richards, Layton & Finger, P.A. 

Freedom Industries, Inc. Files for Chapter 11 Bankruptcy Following Historic WV Chemical Spill

By: Justin A. SaporitoMAZURKRAEMER Law Clerk

The following case is of particular interest to Salene since she is  originally from Weirton, West Virginia and attended West Virginia University.

freedom_industries

Freedom Industries, Inc. filed a voluntary petition for Chapter 11 bankruptcy on January 17, 2014 in the United States Bankruptcy Court for the Southern District of West Virginia.  The case has been assigned to the Honorable Ronald G. Pearson.  Both assets and liabilities are estimated to be between $1 and $10 million.  Approximately 700 creditors are listed in the petition including multiple WV state agencies, service companies, and private individuals.  Multiple motions were filed along with the petition including motions to allow payments to essential trade vendors and to pay $2.4 million in unpaid taxes to the IRS.  A summary of debtor’s filings can be found here.

Debtor is a specialty chemicals manufacturer founded in 1986 and located in Charleston, WV.  It manufactures chemicals for the mining, steel, and cement industries and is wholly-owned by Chemstream Holdings, Inc.  The Charleston chemical plant is located along the Elk River and has recently been widely publicized as the cause of a chemical spill that contaminated the Elk River on January 9th, 2014 which led to state and federal states of emergency being declared.  The spill left 300,000 residents without running water for several days.  The chemical that leaked into the river is used in coal processing.  The local water supply is currently said to be safe for residents in the nine affected counties except for residents in certain towns.  Additionally, pregnant women in the affected areas are advised to drink only bottled water at this time.

Debtor is represented by Mark E. Freedlander of McGuire Woods LLP and Stephen L. Thompson from Barth & Thompson.  Debtor also filed a motion to Employ Pietragallo, Gordon, Alfano, Bosick, and Raspanti, LLP as Special Litigation Counsel.  

“Dance Moms” Instructor Abby Lee Miller Files for Chapter 11 Protection: Public Disclosure of Private Facts

By: Justin A. Saporito, MAZURKRAEMER Law Clerk and Salene Mazur Kraemer

Salene’s Preface: I was in Bankruptcy Court last week in Pittsburgh and noticed Abby walking into Court.  (She is a stunning woman by the way and you can understand why she is on TV).  I had to ask myself, “How do I know her?”  I did figure it out pretty quickly.   I was surprised to see her on my turf (that is in the world of commercial bankruptcy) and was not aware that Abby had filed for Ch. 11.  My daughter is a dancer and I watch the show! 

Abigale Lee Miller filed for Chapter 11 relief on January 3rd, 2011.  The petition was filed in the United States Bankruptcy Court for the Western District of Pennsylvania under petition number: 10-28606 TPA and has been overseen by the Honorable Judge Thomas P. Agresti.

Debtor is better known as Abby Lee Miller, the host and instructor for the popular Lifetime reality television show Dance Moms.  The show follows a group mothers and their young daughters who are participating in the world of young competitive dance.  The show takes place in Pittsburgh, PA at the debtor’s studio, the Abby Lee Dance Company, and follows the ladies as they travel across the country to various competitions.  Dance Moms is currently holding open casting calls for its 4th season.

dance-moms-banner-85373The Abby Lee Dance Company was formed 27 years ago as a not-for-profit organization and is an audition only program.  It is located at 7123 Saltsburg Road, Pittsburgh, PA, 15235.  Debtor is also the owner of Reign Dance Productions, which shares the building with The Abby Lee Dance Company.

Debtor has declared approximately $325,500 in assets with approximately $356,500 in liabilities.   Thirty-four creditors are listed in the petition, with Chase Mortgage holding the largest unsecured claim in the amount of $50,000.   This debt is the unsecured portion of what appears to be a $200,000 undersecured mortgage on a home of Ms. Miller’s in Florida valued at $150k.   Ms. Miller’s dance studio has a $96,000 mortgage on it; the studio is valued at around $150,000  Ms. Miller owes about $27,000 in back taxes (which are unsecured priority claims).  Her unsecured debt only totals $32,000, many of whom are vendors for her business.

The Second Amended Disclosure Statement was approved on January 18th, 2013 and the Order Approving Disclosure Statement and Scheduling Hearing on Plan Confirmation was entered into on October 21st, 2013.  Please click here to for a copy of the order.  The debtor is represented by Donald R. Calaiaro of Calaiaro & Corbett, P.C.  The Confirmation Hearing to approve her Plan of Reorganization is set for December 12, 2013 at 1:30 p.m. EST.  Please click here for a copy of the Disclosure Statement.  A summary of the Chapter 11 plan can be found here.

Salene’s comment:   We purposefully do not often write blog posts about individual Chapter 11 cases (usually filed by very wealth individuals.  Most folks file a Chapter 7 or Chapter 13).  When a company or person files for bankruptcy,  I warn my clients that you are subjecting yourselves to a “financial autopsy”; you are making a public filing of all of your assets and liabilities.  So, information seekers can look up what your home is worth, what kind of car you drive,  how much credit card debt you have, whether you own a fur coat, how much your wedding ring costs, and whether you have any money in an IRA/401k.  Anyone can see how much money you have made in the last three years and they get to read what your monthly budget is for expenses.   While there are certainly benefits to the privilege of filing for bankruptcy, public disclosure of private facts is certainly one of the drawbacks.

Fairmont General Hospital of Fairmont, WV Files for Chapter 11 Protection

By:  Justin A. Saporito, MAZURKRAEMER Law Clerk

On September 3, 2013 Fairmont General Hospital, Inc. of Fairmont, WV and affiliate company Fairmont Physicians, Inc. (“debtors”) filed voluntary petitions for bankruptcy relief under Chapter 11 of the bankruptcy code with Fairmont General Hospital, Inc. as the lead debtor.  The petitions were filed with the United States Bankruptcy Court for the Northern District of West Virginia with the assigned case numbers 1:13-bk-01054 and 1:13-bk-01055 respectively.  The cases were assigned to the Honorable Judge Patrick M. Flatley (who is originally from Salene’s hometown of Weirton by the way) and consolidated (by debtors’ request) under case number 1:13-bk-01054.

fghThe Debtors’ Chapter 11 Plan and Disclosure Statement are due by January 2, 2014.  Schedules A-J were originally due on September 17, 2013 as were a Statement of Financial Affairs, Statement of Operations, Federal Income Tax Return, and other filings.  (Please see the docket summary for a complete list of due filings.)  At the time of filing, the debtors made multiple motions including motions to extend the time before the required Schedules and other would become due, maintain existing financial institutions and practices, pay pre-filing debts and obligations, and maintain utility services.  All of these motions were granted.  For a complete breakdown of the case please refer to the docket summary.  The Meeting of Creditors has been set for Thursday, October 31, 2013 at 10:00 AM.

Fairmont General Hospital (FGH) is a private, non-profit, community hospital that was originally founded in 1939.  FGH offers a variety of health services including surgical, rehabilitation, mental health, wellness/testing, emergency services, and more.   For a complete list of the services they offer please click here.

The debtors claim assets and liabilities between $10 and $50 million.  Notably, the debtors are currently seeking a strategic partner to take over its facility.  The debtors are represented by Rayford K. Adams, III of Spilman, Thomas, & Battle, PLLC.   Spilman, Thomas, & Battle, PLLC has seven offices spread across West Virginia, Pennsylvania, Virginia, and North Carolina with three of their offices located in West Virginia.

Fat Lady May Sing for the Last Time: The New York City Opera Files Chapter 11

By:  Justin A. Saporito, MAZURKRAEMER Law Clerk and Salene Mazur Kraemer, Owner

New York City Opera, Inc. filed a petition for Chapter 11 bankruptcy protection on October 3rd, 2013.  The petition was filed in the United States Bankruptcy Court for the Southern District of New York.  The case was assigned to the Honorable Judge Stuart M. Bernstein under case # 1:13-bk-13240.  Among the motions filed with the petition was a motion to authorize debtor to refund pre-paid tickets.  Please click here for a docket summary.

New York City Opera, Inc. was dubbed “The People’s Opera” by former NYC Mayor new_york_city_opera_zoom945Fiorello LaGuardia.  It has hosted and performed traditional and contemporary operas since its founding in 1943.  Debtor filed for Chapter 11 protection due to a projected $44.1 million deficit for 2012 and a combination of a troubled economy, decreased donations, and increasing pension obligations.  The debtor raised approximately $1.5 million from an online fund-raising campaign (Kickstarter), but required $7 million by the end of September in order to fund itself through the end of the year.  The board and management have begun necessary financial and operational steps to wind down the company with no plans to borrow in order to fund the 2014 season.

Debtor claims assets and liabilities of between $1 and $10 million and 93 creditors including New York City Ballet, Inc. and the New York City Dept. of Finance.  Please refer to the docket summary for a complete list of creditors.  The debtor is represented by Kenneth A. Rosen and Nicole Stefanelli of Lowenstein Sandler LLP.

Debtor's Attorney Nicole Stefanelli


Salene and NYC Opera Debtor’s Attorney Nicole Stefanelli

Salene had the privilege of hanging out with Nicole over the weekend in NYC.   Nicole and Salene had met at the American Bankruptcy Institute this past Spring.  They were also friends via Twitter.   Nicole said that this Chapter 11 filing has been published in newspapers all over the world.  She also said that her firm was doing the representation PRO BONO.  She will be handling first day motions on Thursday!

This will definitely be an interesting case to watch.

New Jersey Residential Developer Hovbilt, Inc. Seeks Chapter 11 Relief

By:  Justin A. Saporito, MAZURKRAEMER Law Clerk and Salene Mazur Kraemer, Owner

bank. court of nj seal                Hovbilt, Inc. filed a voluntary petition for bankruptcy relief under Chapter 11 of the bankruptcy code on September 17th, 2013.  The case was filed in the Bankruptcy Court of New Jersey and the case was assigned to the Honorable Judge Michael B. Kaplan under case number 3:13-bk-30341.  For a summary of the docket please click here.

Debtor claims assets between $0 and $50,000 with liabilities of $1 to $10 million.  In its petition, it lists 10 creditors including Home Depot and Sovereign Bank.  (Please see the docket summary for a complete list of creditors.)  Sovereign Bank filed for a Notice of Appearance and Request for Service of Notice by its duly appointed counsel in response to Debtor’s voluntary petition for Chapter 11 relief.  The petition, as filed, was incomplete and the Attorney Disclosure Statement, Statement of Financial Affairs, Summary of Schedules, and Incomplete Filings are due by October 1st, 2013.

This Chapter 11 Debtor’s exclusive right to file a plan of reorganization expires on January 15, 2014.

CHAPTER 11 DEBTOR TIP: Every Chapter 11 Debtor should know that upon the commencement of a chapter 11 case, Bankruptcy Code section 1121 gives a debtor-in-possession (“DIP”) the exclusive right to file a plan of reorganization for 120 days (4 months).  The DIP also has the exclusive right to solicit acceptances (votes) for a plan filed within that 120-day period until 180 days (6 months) after filing for chapter 11.  (A debtor may file a plan but creditors may not actually vote on the plan until an accompanying approved Disclosure Statement and set of ballots are served).  No competing plans may be filed during this period of exclusivity.  A creditor, a creditors’ committee, or another special interest committee may be one of the parties filing a competing plan.   Sometimes various parties join together to file a “jointly proposed” competing plan.  See helpful article regarding exclusivity written by Salene’ brother-in-law’s fine law firm Jones Day.

This Debtor is a property developer specializing in residential housing developments located at 1 Dag Hammarskjold Blvd. Freehold, NJ 07728.  Hovilt, Inc. was established in 1969 as a private company categorized as a speculative building of single-family houses and primarily operated in Monmouth and Ocean Counties in New Jersey. (source)

Debtor is represented by James G. Aaron of Ansell Grimm and Aaron PC located at 1500 Lawrence Avenue CN 7807 Ocean, NJ 07712.

Stonefront Witch Way Inn Files for Chapter 11

BY: Katie Imler, Law Clerk

On July 26, 2013 , TAM of Allegheny LLC d/b/a Stonefront Witch Way Inn filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the Western District of Pennsylvania (assigned No. 13-23143-GLT). The Stone Front Witch Way Inn, located at 2827 California Avenue, Pittsburgh, PA 15212, was a local café and bar that was padlocked by police on June 28, 2013 for not paying the Allegheny County drink taxes totaling more than $22,390. The Allegheny County Treasurer, John Weinstein, has been cracking down on businesses that are not paying the alcoholic beverage tax.

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The case has been assigned to the Honorable Judge Gregory L. Taddonio. Norma Hildenbrand has filed an Notice of Appearance and Request for Notice on behalf of the United States Trustee. A summary of the docket can be found here.

The Debtor listed $50,000-$100,000 in Assets and $0-$50,000 in Liabilities, which are primarily business debts. Although there are less than 50 creditors, the top creditors holding unsecured claims include: Allegheny County ($21,864), BMI ($658.07), Chase Bank ($2,723.39), Dietz Electronics, Inc. ($438.98), IRS ($8,058.44), Joseph J. Brunner, Inc. ($407.80), and Trudy L. Schmitt, President of TAM of Allegheny LLC. All Schedules and Attorney Disclosures are due on August 9, 2013. The Chapter 11 Plan and Disclosure Statements are due November 25, 2013. However, the Government Proof of Claims Bar Date is set for January 22, 2014.

The Debtor is represented by J. Michael Baggett of McCann Garland Ridall & Burke, 11 Stanwix Street, Suite 1030, Pittsburgh PA, 15222. Jodi L. Hause filed a Notice of Appearance on July 29, 2013 to represent Creditor Duquesne Light Company. A Status Conference will be held on October 20, 2013 at 10:00am.

“FORE!” – Beulah Road Land Company Files for Chapter 11

BY: Katie Imler

On July 26, 2013 Beulah Road Land Company filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the Western District of Pennsylvania (Case No. 2:13-bk-23148).  The Debtor, located at 800 Beulah Road, Pittsburgh, Pa 15235, is the new majority owner of the land on which the Churchill Valley Country Club sits.  The Debtor has been fighting with creditors of the club, as to who owns the 147-acre property.   These creditors forced Churchill Valley Country Club into a Chapter 7 bankruptcy (Case No. 13-23122 filed July 25, 2013).  At the same time, Zokaites Properties, Inc. recently purchased the outstanding $1.2 million mortgage held on the club and property from PNC Bank.  A local lawyer and ex-business partner of Zokaites is challenging this transfer.Image

The Beulah bankruptcy case has been assigned to the Honorable Judge Carlota M. Bohm. In the petition signed by the Debtor’s President Richard Hersberger, the Debtor listed $1-$10 million in assets and $1-$10 million in liabilities.  All Schedules are due August 9, 2013.  The Chapter 11 Plan and Disclosure Statement are due November 25, 2013.  On August 1, 2013, creditor Zokaites Properties, Inc. by and through its attorney Jeffrey Hulton, made a motion to dismiss the bankruptcy case.  There will be a hearing regarding the motion to dismiss on August 9, 2013 at 3:00pm.

The largest creditors include several law firms, the Penn Hills School District, PNC Bank, and the Woodland Hill School District.

The Debtor is represented by Donald R. Calaiaro of Calaiaro & Corbett, P.C. located at 310 Grant Street, Suite 1105, Pittsburgh, PA 15219. The US Trustee is represented by Norma Hildenbrand located at Suite 970 Liberty Center, 1001 Liberty Ave., Pittsburgh, PA 15222.