The Distressed Debt Alert

CDO Sale to Test Distressed Debt Market Recovery

A liquidation sale of nearly $1.5 billion in collateralized debt obligations at a New York auction next week may determine whether a recovery of the distressed debt market has begun, Dow Jones Newswires reported.

The liquidation sale that includes commercial mortgage securities, asset-backed securities, subprime residential mortgage securities and prime residential mortgage securities, could bring distressed debt sales back to the forefront after a market lull that began toward the end of 2009.

Source: News Story

NewOak Capital, an advisor, asset management and capital markets firm, hired former E*Trade Financial CEO Donald H. Layton to lead the development of a private equity vehicle to invest in bank recapitalizations.

Layton will be senior advisor and co-chairman of NewOak's investment committee, the company said in a statement.

Layton was named chairman of E*Trade in November 2007 and chief executive in March 2008, before stepping down in December 2009. Previously, Layton had been chairman of J.P. Morgan Chase before retiring in 2004.

Source: Press Release

Extended Stay Inc. has switched its support of reorganization plans to a group led by Barry Sternlicht's Starwood Capital Group, the Wall Street Journal reported.

Extended Stay had accepted a reorganization plan from Centerbridge Partners and Paulson & Co. earlier this month, but the hotel company's board changed its mind and will support the Starwood bid.

The offer will still require bankruptcy court approval and Starwood could still be outbid.

Source: News Story

John Krupar joined restructuring advisory firm Loughlin Meghji + Co. as a managing director to lead the company's performance improvement practice.

The performance improvement practice provides services including strategy development and business consulting.

Krupar, who will be based in New York, was previously a partner with the Oliver Wyman consultancy, where he co-led the operational excellence practice and collaborated with the firm's corporate finance unit. He led reengineering teams in health and life sciences, financial services, insurance, heavy equipment manufacturing, and commercial real estate.

Krupar created transformation plans for and advised 25 major companies, Loughlin Meghji said. He also held the position earlier in his career of head of reengineering for Citigroup.

Source: Press Release

Sullivan & Worcester hired a five-member team of bankruptcy lawyers for the Boston-based law firm's bankruptcy, reorganization and creditors' rights group, led by partners Richard Hiersteiner and Jeanne P. Darcey, both formerly with Edwards Angell Palmer & Dodge.

Also joining the firm are associates Amy A. Zuccarello, Judy A. Groves, and Charlotte Bodell.

Darcey was most recently co-chair of Edwards Angell's restructuring and insolvency department. Hiersteiner was a partner.

Source: Press Release

Some $700 billion in high-yield corporate debt is coming due over a three-year period beginning in 2012, potentially bringing a wave of defaults and bankruptcies, the New York Times reported.

Bond analysts expect $155 billion in high-yield debt to mature in 2012, $212 billion in 2013, and $338 billion in 2014. For comparison, only $21 billion in high-yield debt is due this year.

Source: News Story

Deloitte appointed Guy Langford to lead the firm's U.S. distressed asset and debt practice, succeeding Dorothy Alpert, who was named as the accounting and consulting firm's Northeast deputy regional managing partner.

Langford is responsible for the company's tax, audit, consulting, and financial advisory services for distressed assets and debt. He also serves as mergers and acquisitions leader for Deloitte's real estate practice, a position he has held since 2005. He has been the firm's Northeast real estate leader since 2008.

Source: Press Release

The U.S. House of Representatives overwhelmingly passed the Bankruptcy Judgeship Act of 2010, which would create 13 new bankruptcy judgeships, convert 22 temporary judgeships to permanent and allow two temporary judgeships to continue for five years.

The House voted 345 to 5, with 80 not voting, in favor of the bill, according to congressional records. The bill, authored by Rep. Steve Cohen (D-Tenn.) will now move to the Senate for consideration.

In addition to adding judgeships and making temporary judgeships permanent, the bill would raise Chapter 11 filing fees from $1,000 to $1,042, and raise Chapter 7 and 13 filing fees by $1 each from $245 to $246 and $235 to $236, respectively.

Source: Congressional Record

Shelley C. Chapman, previously a partner in Willkie Farr & Gallagher's business reorganization and restructuring department, was sworn in as a judge for the U.S. Bankruptcy Court in Manhattan, the law firm said in a statement.

Source: Press Release