The Distressed Debt Report - July 21, 2006

Trend Against Lender Safeguards May Grow in Middle Market

Large companies, taking advantage of the competitive lending market, are increasingly able to borrow without agreeing to financial covenants. It is a trend that some lenders expect to work its way into the middle markets. Full Story

2nd Lienholders to Get Control of Car Parts Maker, No Cash

Meridian Automotive Systems and its main creditors agreed to a plan of reorganization that will pay second lien debtholders in stock valued at less than one-fourth of $179.8 million in face value of their debt. First lienholders, meanwhile, will receive at least 80% of their $300.6 million in claims in cash. Full Story

Johnson, now of Citigroup, Claims to have brought in $1.2B in Capital

A former managing director of big secured lender Stanfield Capital Partners is suing the firm for more than $13 million in allegedly unpaid wages. Richard Johnson, the former head of business development at the New York hedge fund, filed the lawsuit on June 20 in the U.S. District Court for Manhattan. He claims that Stanfield did not pay him adequate bonus compensation for having raked in $1.2 billion in new investments during his tenure from September 2002 until he was terminated in March. Full Story

• Churchill Financial Hires Veteran Banker Scwhimmer
• CIT, Piper Jaffray Partner on Debt Offerings
• Harbinger Pressures SeraCare to Accept Reorg Plan
• Zwirn Sues First American, West Bank Over Thwarted Investment
• U.S. Appeals Payment to CapitalSource

CIT Group provided $430 million for a medical device company to make an acquisition and GE Commercial Finance loaned $190 million for the leveraged buyout of an amusement park operator in two significant recent middle market debt financings. Full Story