The Distressed Debt Alert

Remedial Offshore Files Chapter 11

Remedial PCL, the Cyprus-based parent company of Remedial Offshore, filed for Chapter 11 bankruptcy after failing to settle claims from two unsecured lenders in its restructuring.

Remedial, whose U.S. subsidiary Remedial Offshore builds elevating support vessels for offshore oil drilling platforms, had come to terms with its bondholders on a restructuring agreement in connection with a $210 million secured callable bond issue. The restructuring was conditioned on Remedial obtaining a settlement of no more than $1.5 million for unsecured claims from lenders Swedbank AB and SEB Ensilda AB.

Both Swedbank and SEB Ensilda rejected Remedial's proposal. Swedbank is owed more than $7.1 million and SEB Ensilda $2.6 million, according to Remedial's Chapter 11 filing.

The company and the bondholders will not implement the restructuring plan and will instead arrange a wind-down of Remedial's affairs that could lead to either a liquidation or sale of the company.

Remedial will seek $5 million in debtor-in-possession financing to fund operating costs and completion and delivery of offshore oil drilling equipment as the company works through the Chapter 11 process.

Source: Press Release

A domestic employee of Harbinger Capital Partners Chief Investment Officer Philip Falcone and his wife is suing the couple, claiming sexual harassment and discrimination, the New York Daily News reported.

The Falcones said in a statement that the lawsuit's claims are false and baseless, and that they have "zero tolerance for discrimination of any kind," the newspaper reported.

Source: News Story

The International Council of Shopping Centers said it will present a proposal to Congress that would provide temporary tax incentives to investors who pump new equity into existing commercial real estate projects to help pay down underwater loans.

Under the proposal, commercial real estate investors who provide new equity to a property could depreciate their shares over a 15-year period instead of the current 39 years for nonresidential real estate investment and 27.5 years for residential. The 15-year depreciation period would also apply for purposes of the alternative minimum tax and earnings and profits of REITs. The investors could also deduct losses associated with the investment without regard to passive-loss limitations under section 469 of the Internal Revenue Code.

Investments would have to be made before 2013 and at least 80% of the invested equity would have to be directed to reducing the outstanding balance of commercial real estate debt. The remaining of the balance could go for new tenant improvements and energy efficiencies.

Source: Proposal

Delinquencies on commercial real estate loans packaged in collateralized debt obligations rose by .7 of a percentage point to 13% in January due in large part to the Peter Cooper Village/Stuyvesant Town apartment project in New York, Fitch Ratings said.

Five mezzanine loans secured by the Peter Cooper/Stuyvesant complex, which total $1.4 billion, became delinquent in January. The five delinquent loans affected five different CDOs and totaled .77% of Fitch's CREL CDO delinquency index.

The index recorded other new delinquencies including three maturity defaults, seven term defaults, and seven credit impairments of assets rated by Fitch, consisting of a mix of commercial mortgage-backed securities, commercial real estate CDOs and bank loans. The index also included a B-note repurchase and the repurchase of two low-rated commercial real estate CDO assets.

All 35 Fitch-rated commercial real estate CDOs reported delinquencies in January, ranging from 1.3% to 42.4%. Additionally, 13 Fitch-rated commercial real estate CDOs are failing at least one overcollateralization test, which leads to the cutoff of interest payments to subordinate CDO investors.

Source: Press Release

The delinquency rate on loans packaged in commercial mortgage-backed securities increased the most in January of any other month of the economic crisis, rising by .52 of a percentage point to 5.42%, Moody's Investors Services said.

The Moody's Delinquency Tracker report tracks all loans in conduit and fusion deals issued since 1998 which still have balances. The firm said 409 loans were newly delinquent in January, adding $3 billion to the delinquent balance.

The delinquency rate on loans backed by hotel properties rose .75 of a percentage point reaching 9.82%, which is the highest increase of any property type.

The delinquent rate on loans on retail properties rose by .72 of a percentage point to 5.24%. Retail loans, which account for 30% of the outstanding delinquent balance, amounted to 40% of all new delinquent loans in January.

The apartment loan delinquency rate jumped 63 of a percentage point to 8.77%, with 116 new delinquent loans accounting for 22% of the outstanding balance.

Source: Press Release

Lykins Enterprises, the Maysville, Ky., parent company of gasoline distributor Lyco Fuels and Gasoline Alley convenience stores, filed for Chapter 11 bankruptcy, the Maysville Ledger Independent reported.

Source: News Story

Correction: An earlier version of this article included a misspelling of Lyco Fuels.