The Distressed Debt Alert

CIT Group's Credit Default Swap Auctions Set

Auction administrators Markit and Creditex will hold auctions November 20 to settle credit default swaps insuring CIT Group's debt, Reuters reported.

Source: News Story

Majestic Star Casino, owner of casinos in Las Vegas, Colorado, Indiana and Mississippi, might file for Chapter 11 bankruptcy after defaulting on nearly $580 million worth of senior secured notes, senior notes and a senior secured credit facility, the casino operator reported in Securities and Exchange Commission filings.

Source: SEC Filings

Former Simmons Bedding Co. CEO Charlie Eitel and former Wachovia Securities banker Jeff Armstrong launched an operational and financial advisory firm for middle market companies. Eitel & Armstrong's services will include financial restructuring and advisement of restructured companies.

Source: Press Release

Hackett's Stores, an upstate New York department store chain that was established in 1830, filed for Chapter 11 bankruptcy, Reuters reported.

Source: News Story

Saad Investments Finance Co. (No. 5), a private equity firm owned by Maan Al-Sanea and his family, filed for Chapter 15 bankruptcy, which protects a foreign company from U.S. creditors while it reorganizes, Bloomberg News reported.

Source: News Story

Premium Protein Products, a Lincoln, Neb.-based meat packer which has furloughed over 300 of its workers since June, filed for Chapter 11 bankruptcy, the Lincoln Journal Star reported.

Source: News Story

San Francisco landmark clothing retailer Wilkes Bashford filed for Chapter 11 protection and was immediately bought by another apparel company.

Source: News Story

GSC Group is having so much trouble servicing $210 million in loans that it may go under, Bloomberg News reported. GSC manages about $18 billion in mezzanine, CLO, and distressed debt assets.

Source: News Story

PennyMac Mortgage Investment Trust plans to buy distressed real estate loans as a short-term investment and later package them into bonds guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae, Bloomberg News reported.

CEO Stanford Kurland was formerly with Countrywide Financial. Kurland left Countrywide in 2006, moving on to raise capital for PennyMac from institutional investors such as BlackRock.

Source: News Story

Nasdaq granted a waiver allowing InfoLogix to engage in a restructuring with Hercules Technology Growth Capital—without the shareholder approval typically required.

The enterprise and mobile technology provider would eliminate $5 million in debt owed to Hercules in exchange for warrants. Debt to other lenders would be restructured in an arrangement that would provide InfoLogix with new financing in the form of two term loans totaling $10.5 million and a $12 million revolving credit facility.

Hercules or an affiliate would ultimately own 55% of the company.

Source: Press Release

A report compiled by middle market investment bank Morgan Joseph & Co. says that debtor-in-possession lending rates this year have averaged 800 basis points over LIBOR, up from a 500-point spread last year.

Hedge funds have stepped back from the DIP market, according to the report, which found that one-third of the most recent DIP financings featured spreads of 1,000 or more points over LIBOR.

Source: Press Release

The number of corporate bankruptcies filed in Japan declined to 1,261 cases last month, down 11.7% from a year earlier, RTT News reported, citing Tokyo Shoko Research.

Source: News Story

The number of bankruptcies filed with prepackaged reorganization plans has tripled this year, Reuters reported, citing Bankruptcydata.com

Source: News Story

Greenlight Capital founder David Einhorn, an early adopter of credit default swaps, is now calling for a CDS ban, according to the Financial Times.

Investors who rely on CDS credit insurance in the form of basis packages often have an incentive to see companies fail or actively participate in their failure, according to Einhorn. Basis packages include both the insurance swap and the insured instrument, so investors may profit from default.

CDS's are "anti-social" because of their potential for abuse that can contribute to wider financial destruction, Einhorn wrote in a letter to investors, that also said regulation of the CDS market will only lead to more trouble.

Source: News Story

Goldman Sachs Group is underwriting $400 million in bonds issued by Beachwood, Ohio-based Developers Diversified Realty, Bloomberg News reported.

The bond issue, which is collateralized by 28 Developers Diversified properties, is the first to tap the government's Term Asset-Backed Securities Loan Facility program, or TALF, which was created in June.

Bank of America Corp. and Fortress Investment Group are involved in another $650 million offering backed by commercial property in Florida.

Source: News Story

Digeo Inc., controlled by Microsoft co-founder Paul Allen, filed for Chapter 11 bankruptcy protection last week, the Wall Street Journal reported. Digeo made digital video recorders.

Source: News Story

RLJ Western Asset Management completed an initial fundraising to participate in the Legacy Securities Public-Private Investment Program, the Treasury Department said.

Source: Press Release

Lazy Days RV Center filed for Chapter 11 bankruptcy on Thursday, The Deal reported. Seffner, Fla.-based Lazy Days plans to exchange $137 million in bond debt for equity under a prepackaged reorganization plan.

Source: News Story

A federal court judge is considering an appeal of a bankruptcy court's approval of a plan that would allow lenders to take control of the bankrupt Philadelphia Inquirer and Philadelphia Daily News, KYW Newsradio 1060 in Philadelphia reported.

Source: News Story

Denver-based oil and gas explorer Teton Energy filed for bankruptcy and said it will auction off its assets.

Source: Press Release

Small business credit card lender Advanta Corp. filed for Chapter 11 bankruptcy protection.

Source: Press Release

Tennenbaum Capital Partners said it completed the second closing of the $330 million Tennenbaum DIP Opportunity Fund.

Source: Press Release

Regulators shut down five banks in California, Georgia, Michigan, Minnesota and Missouri on Friday, bringing the total number of banks closed this year to 120, Zacks Investment Research reported on its blog.

Source: Article