The Distressed Debt Alert

Olympus Partners Buys Middle Market Lender Churchill Financial

Olympus Partners, a Stamford, Conn.-based private equity firm, said it acquired Churchill Financial Holdings, a New York-based middle market commercial finance company.

Olympus affiliate Olympus Growth Fund V acquired the lender and agreed to refinance its debt and invest additional capital to support Churchill's lending business.

Olympus Partners said in a statement that it had been looking to invest in the middle market senior lending industry to complement its middle market private equity investment activities.

Churchill has more than $3.25 billion in assets under management and about $1.25 billion in committed capital. Olympus Partners manages more than $3 billion on behalf of corporate pension funds, endowment funds, and state sponsored retirement funds.

Source: Press Release

The delinquency rate for loans packaged in commercial real estate collateralized debt obligations fell by 70 basis points to 12.1% in April from the previous month as more asset managers disposed of credit impaired assets through loan sales instead of modifying the loans, Fitch Ratings said.

The delinquency rate would have increased to 16.9% if loans that were removed from the CREL CDO delinquency index over the last year at a loss were included in the rate, Fitch said.

The ratings agency said that an increasing number of distressed loan buyers in the market may be leading asset managers to sell loans at a loss instead of considering loan modifications. This strategy may have yielded a third straight month of higher realized losses, as a total of $153.5 million in realized losses were recorded in April.

Source: Press Release

Former Lehman Brothers Asia executives Fredric Teng and Leon Hindle launched a hedge fund, Oracle Investment Fund, that aims to raise $50 million to invest in distressed structured credit assets, Reuters reported.

Source: News Story

Tenants of the Stuyvesant Town and Peter Cooper Village apartment complex, who are seeking to purchase the distressed property, have approached the California Public Employees' Retirement System about forming a partnership to bid for the complex, the Wall Street Journal reported.

Source: News Story

Matthew P. Austria was promoted to partner in Werb & Sullivan's commercial bankruptcy practice.

Austria's practice at the Wilmington, Del.-based law firm will focus on representing individuals and corporate clients in commercial bankruptcy cases and related adversary proceedings. He regularly represents defendants in preference and avoidance actions brought in bankruptcy court. He also represents creditors on various issues in commercial bankruptcy proceedings.

Austria managed the public disclosure department of the National Association of Securities Dealers prior to being hired as an associate at Werb & Sullivan.

Source: Press Release

An arbitration panel ordered two former Mesirow Financial Holdings employees and the company they formed, Strategic Wealth Partners, to pay Mesirow $1.9 million for alleged breach of contract and theft of trade secrets, Dow Jones Newswires reported.

A Financial Industry Regulatory Authority arbitration panel ruled 2-1 in favor of Mesirow and rejected former employees David Copeland's and Neal Price's counter claim seeking $615,000 for deferred compensation and unpaid wages.

Source: News Story

A U.S. District Court decision that invalidated a Wisconsin Indian casino's obligations to repay a $50 million bond to a private investor has raised concerns with lenders to other Indian casinos, the Wall Street Journal reported.

The court upheld an earlier ruling that a bond deal between the Lac du Flambeau Band of Lake Superior Chippewa Indians of northern Wisconsin and Saybrook Capital violated federal Indian casino law. A judge ruled that the deal's language gave Saybrook the equivalent of a management contract with the tribe's casino, which required approval from the National Indian Gaming Commission.

Source: News Story

Correction: An earlier version of this article misstated the value of the Indian casino's bond.

Rick Antonoff joined the law firm of Clifford Chance as a partner in its U.S. financial restructuring practice. Antonoff was previously with Pillsbury Winthrop Shaw Pitman, where he was a partner in that firm's restructuring practice.

Source: Press Release

The delinquency rate on loans included in U.S. commercial mortgage-backed securities continued to climb in April, rising by 60 basis points from the previous month to 7.02%, Moody's Investors Service said.

The balance of delinquent loans had a net increase of nearly $3.7 billion in April, as 415 loans totaling $5.9 billion became delinquent.

At the same time, 230 loans totaling about $2.3 billion became current or were worked out, Moody's said.

The hotel sector recorded the highest delinquency rate of any commercial property type in April, rising 171 basis points to 12.98%. The multifamily housing sector was close behind with a 12.87% delinquency rate following a 68 basis-point increase.

The retail sector's delinquency rate increased by 29 basis points to 5.86%, while the industrial sector's delinquency rate jumped 67 basis points to 5.24%. The office sector had the lowest delinquency rate, rising 46 basis points to 4.58%.

Source: Press Release

Chem Rx Corp., the third largest long-term care pharmacy in the U.S., said it filed for Chapter 11 bankruptcy.

Chem Rx, based in Long Beach, N.Y., is a major institutional pharmacy serving more than 400 facilities in New York, New Jersey, Pennsylvania and Florida.

The company said in a statement that its management team of Chief Executive Officer Jerry Silva and Chief Operating Officer Steve Silva will continue to manage the company's day-to-day operations. Investment bank Lazard Middle Market will help facilitate Chem Rx's restructuring.

Source: Press Release

NewOak Capital said it appointed Mark R. Ruh as managing director and senior portfolio manager of financial services investments. Ruh will serve as head of NewOak's bank recapitalization investment team.

Prior to joining NewOak, Ruh was a director at Castle Creek Capital, a private equity firm specializing in financial services company investments. While at Castle Creek, he held two operating and board member positions in distressed portfolio companies.

Source: Press Release

Anpath Group, a Mooresville, N.C.-based manufacturer of cleaning and disinfecting products, said it reached an agreement with its senior secured note holder and will file a prepackaged Chapter 11 bankruptcy.

Under its reorganization plan, Anpath proposes to exchange $2.4 million in debt for 61% of the common stock in the reorganized company. The plan also calls for the company to allocate 34% of the common stock to holders of the company's subordinated unsecured notes valued at $1.7 million, with the remaining 5% of the stock allocated to existing shareholders.

The company has arranged debtor-in-possession financing through several lenders, including the senior secured note holder. Anpath said it expects operations of its wholly owned subsidiary EnviroSystems to continue as usual.

Source: Press Release

Hedge funds investing in distressed assets outperformed hedge funds of all other major strategies in April, according to hedge fund advisory firm Hennessee Group.

The Hennessee Distressed Index, which tracks the performance of hedge funds that mainly invest in distressed assets, gained 4.13% last month. The distressed performance was more than triple the 1.30% gain in the Hennessee Hedge Fund Index, which tracks hedge funds with many different strategies.

The Hennessee Distressed index has gained 11.7% for the year through April, which is more than double the 4.61% gain in the Hennessee Hedge Fund Index.

Source: Press Release