The Distressed Debt Alert

Rock & Republic Files Chapter 11

Rock & Republic, a maker of high-priced denim and other apparel, filed for Chapter 11 bankruptcy, the Los Angeles Times reported.

The Culver City, Calif.-based company said that it secured debtor-in-possession financing from CIT Group.

Source: News Story

The number of commercial bankruptcies rose almost 52% last year, according to credit reporting company Equifax Inc.

The number of Chapter 7 and Chapter 11 filings increased from 77,638 in 2008 to 117,659 in 2009. That's almost four times the all-time low of 32,293 bankruptcies that were filed just three years earlier in 2006.

Source: Press Release

Brookfield Asset Management and two other major creditors will hold an offer to recapitalize mall owner General Growth Properties until Dec. 31, as long as the Brookfield-led group is granted stalking horse status at an April 28 bankruptcy court hearing, The Wall Street Journal reported.

Brookfield could get some competition for its $6.5 billion recapitalization plan from rival mall owner Simon Property Group, which has bid $10 billion to purchase all of General Growth.

Source: News Story

Seven U.S. subsidiaries of Grant Forest Products, a Canadian maker of oriented strand board for residential construction, filed for Chapter 15 bankruptcy in the U.S. Bankruptcy Court in Wilmington, Del., Bloomberg reported. Grant had filed for bankruptcy in Canada last year.

Source: News Story

Bayside Capital expects to close its $1 billion H.I.G. Bayside III distressed debt fund by the end of April, Private Equity Insider reported.

Bayside Capital will amass the fund in a single closing following its launch last January. Bayside closed its $3 billion predecessor fund, H.I.G. Bayside II in June 2008.

Source: News Story

Starwood Capital Group closed fund raising for its $1.8 billion Starwood Global Opportunity Fund VIII, which will target distressed debt and assets, Bloomberg reported.

Starwood also raised $1 billion for its Starwood Hospitality Fund II, which will invest in hotels.

Source: News Story

Private equity-backed companies fared better than non-private equity-backed companies during the recession, as they defaulted on debt less than half as often as comparable companies, a Private Equity Council study said.

The study found that the annualized default rate for more than 3,200 private equity-backed companies acquired from 2000 through 2009 was 2.84% compared to a 6.17% annualized rate by non-private equity-backed companies. The study's methodology defined default as a missed payment or bankruptcy filing.

The Private Equity Council said in its statement that the study was consistent with other independent research studies conducted in the past few years, including a 2008 report from the Bank for International Settlements and 2009 reports from the University of Chicago's Steven N. Kaplan and the Stockholm School of Economics' Per Stromberg.

The Private Equity Council study also disputed Moody's and Standard & Poor's research suggesting that private equity-backed company default rates were higher than the council's data.

Source: Press Release

Lenders to the bankrupt Philadelphia Newspapers will appeal a 2-1 ruling from a three-judge panel of the U.S. Court of Appeals for the 3rd Circuit, Reuters reported. The ruling blocked secured lenders from credit bidding for the publisher of the Philadelphia Inquirer and the Philadelphia Daily News.

The secured lenders requested a hearing from the full panel of judges from the 3rd Circuit to review the court's 2-1 ruling handed down earlier this month. The ruling prevents the lenders from bidding what they are owed at the bankruptcy auction. Philadelphia Newspapers argued that bids must be in cash to determine the fair market price of the company.

Source: News Story

United Kingdom banks have among the biggest exposure to a European commercial real estate debt refinancing shortfall that could reach €115 million ($155 billion) in the next two years, the Wall Street Journal reported.

Commercial property adviser DTZ Holdings said that the refinancing gap for the U.K. over the next two years is estimated at €42 billion.

Source: News Story

Sky King Inc., a Sacramento, Calif.-based charter airline with a fleet of nine Boeing 737 jets, filed for Chapter 11 bankruptcy, the Sacramento Business Journal reported.

Sky King has seen its revenue cut in half over the past six years from $25 million to $12 million. At the same time, the company expanded from five jets and 80 employees to nine jets and 130 employees.

Sky King was founded by Greg Lukenbill, a former co-owner of the Sacramento Kings basketball team.

Source: News Story