JSC BTA Bank ‚Äď A recent post appearing here discussed JSC BTA Bank (BTA)‚Äôs petition for recognition in the Southern District of New York‚Äôs U.S. Bankruptcy Court.¬† BTA, reportedly Khazakstan‚Äôs second-largest bank, sought recognition of its state-sponsored restructuring in Khazakstan as a ‚Äúforeign main proceeding.‚ÄĚ¬† On March 2, Judge James Peck in Manhattan granted the bank’s request. ¬†A copy of Judge Peck‚Äôs ruling is available here.
White Birch Paper Co.¬† ‚Äď The second-largest newsprint company in North America ‚Äď Greenwich, Conn.‚Äôs White Birch Paper ‚Äď followed the largest (Montreal‚Äôs AbitibiBowater Inc.), into bankruptcy in both Canada and the US on February 24.
White Birch and 10 affiliates, which together operate paper mills in Gatineau, Quebec; Riviere-du-Loup, Quebec; and Quebec City filed their request for protection under the Canadian Companies’ Creditors Arrangement Act in Montreal, and a concurrent request for recognition of 6 of those proceedings in Virginia‚Äôs Eastern District before Chief Bankruptcy Judge Douglas O. Tice, Jr.¬† They were joined by US affiliate Bear Island Paper Co. of Ashland, which sought protection under Chapter 11.
Pleadings filed in White Birch‚Äôs cases claim that the companies controlled approximately 12% of the North American newsprint market as of last December.¬† The filings were triggered by the continued shift from print to digital media and the attendant decline in revenues.¬† In addition, the widening spread between the Canadian and US currencies also hurt operations, as payables are frequently accepted in US dollars, while expenses are paid in Canadian dollars.¬† Finally, the companies‚Äô operational woes were compounded by the burden of a January 2008 purchase of SP Newsprint Co. for approximately $350 million.
Cost-cutting efforts commenced in late 2009 were not sufficient to prevent White Birch‚Äôs default on first- and second-lien credit facilities.¬† Attempts to restructure the debt out of court were likewise unsuccessful.¬† Judge Tice‚Äôs Order granting recognition and entering a preliminary injunction was entered yesterday.
JSC Alliance Bank ‚Äď Khazakstan‚Äôs sixth-largest bank followed BTA‚Äôs lead, seeking similar recognition in Manhattan‚Äôs Southern District less than 2 weeks after the larger Kazakh institution did so.¬†
Like BTA, Alliance sought relief from creditors and litigation in the US while it restructures itself out of debt defaults and liquidity problems arising, in part, from its need to foreclose on bad loans and its subsequent difficulty selling foreclosed assets.¬† In its papers, Alliance claims that last December, it obtained approval for a restructuring plan from creditors holding more than 94 percent of its claims.
Mega Brands Inc. ‚Äď Toymaker Mega Brands has sought recognition in Delaware before Bankruptcy Judge Christopher Sontchi for its Canadian restructuring, commenced in mid-February before the Superior Court of Quebec in Montreal.
The global supplier of construction toys, stationery and other children’s toys and activity instruments plans to implement a global restructuring, which is reportedly supported by more than 70% of the company‚Äôs secured debt holders and all of its debenture holders ‚Äď and on which lenders and shareholders will vote on March 16.¬† In pleadings¬†submitted with the petition, the company blames its need to restructure on the downturn in global demand, resulting stagnation in the North American toy industry, and fluctuations in raw materials prices.
Japan Airlines ‚Äď On January 19, Japan Airlines (JAL), Asia‚Äôs largest airline, sought Chapter 15 protection in New York in furtherance of its reorganization in the Tokyo District Court under Japan‚Äôs Corporate Reorganization Act.¬† Bankruptcy Judge James Peck ‚Äď the same judge presiding over BTA Bank‚Äôs Chapter 15 proceeding (see above) ‚Äď recognized the Japanese proceeding in mid-February.¬† According to JAL‚Äôs Court pleadings, US assets protected by the Chapter 15 recognition order include aircraft and real estate interests in New York and Los Angeles.¬† Judge Peck‚Äôs Order granting JAL‚Äôs recognition is here.