Bankruptcy & Restructuring 2012 Review and 2013 Outlook

bANKRUPTCY &
RESTRUCTURING
2012 Review &
2013 outlook
January 2013

01.03.13 www.bloombergbriefs.com Bloomberg Brief | Bankruptcy Restructuring 2

Contents year in review
click on orange triangles for interactive features

Voices
Bankruptcy professionals expect restructuring activity for retailers, res- MONTH ACTIONS
taurants, real estate businesses and coal companies in 2013. Problems
in Europe could bring about more Chapter 15 petitions. Jan. 11: Hostess Brands’ second bankruptcy lists debt of more than $1 billion.
Jan. 17: Enron creditors get 53% payout.
Page 3 & 4 JAN Jan. 17: Fitch says Greece is insolvent and it will default.
Jan. 19: Eastman Kodak files Chapter 11 in New York’s southern district.
Bond and Loan recoveries Jan. 19: Energy Future Holdings swaps show 91 percent chance of default.
General Maritime had the biggest disparity in recovery rates for lend-
ers and bondholders among companies filing disclosure statements in Feb. 6: AMR CEO says willing to weigh acquisitions after bankruptcy exit.
2012. Feb. 8: Lancaster Maritime New York Chapter 11 lists $500 million in debt.
Pages 5 & 6 Feb. 14: Teamsters warn of strike if Hostess imposes “unfair contract terms” as part
FEB
of its bankruptcy process.
Map of 2012 Chapter 11 Activity Feb. 17: WaMu judge says she will confirm Chapter 11 plan.
Feb. 20: Grubb & Ellis agrees to sell itself in bankruptcy.
California, Florida and Texas bankruptcy courts were the most active
venues for bankruptcy filings for businesses with debt of more than $1
Mar 14: A&P exits as private grocery chain.
million. Mar 20: Humpuss Sea Transport files Chapter 15.
Page 7 MAR
Mar 26: Nancy Hershey Lord sworn in as a judge in the Eastern District of New York.
Paul R. Warren sworn in as Rochester judge.
LARGEST CHAPTER 11 PETITIONS
Page 8 & 9 April 5: Phil Falcone says bankruptcy an option for LightSquared. Detroit accepts
state plan to head off bankruptcy.
Single Asset real estate activity APR April 27: FGIC plan confirmed. Cash distribution to unsecured creditors said to be
Single asset real estate petitions made up a quarter of all bankruptcy between 5.5 percent and 6 percent.
April 30: Ally says losses could reach $1.25 billion if ResCap goes bankrupt.
petitions from businesses involving debt of $1 million or more in 2012.
Page 10
May 11: Houghton Mifflin says it will file prepackaged bankruptcy to eliminate $3.1
billion worth of debt.
Chapter 9 Petition ACTIVITY May 14: Residential Capital files bankruptcy in New York’s southern district.
Bankruptcy filings from local governments declined in 2012 from 2011. MAY
May 16: Harrisburg city counsel loses effort to reinstate bankruptcy.
Page 11 May 29: U.S. Supreme Court rules a secured creditor can force a bankrupt company
to hold an auction where lenders may bid secured debt rather than cash.
Chapter 15 filings
Canada was the largest source of Chapter 15s in 2012.
June 6: Stockton city council authorizes bankruptcy.
Page 12 JUN
June 11: AMR says it wants to restructure as independent business.

Post petition bond prices
Charting the performance of MF Global, American Airlines, NewPage July 3: Mammoth Lakes, Calif., says it plans Chapter 9 filing.
and Patriot Coal bonds in 2012. July 3: Hawker Beechcraft files bankruptcy.
JUL
Page 13 July 10: San Bernardino city council votes to authorize Chapter 9 petition.
July 16: Judge approves Tribune exit.

Aug. 1: San Bernardino files Chapter 9.
Aug. 11: Lehman files papers for Archstone IPO, plans to raise $100 million.
AUG
Aug. 17: Kodak says digital patent sale uncertain.
Bloomberg Brief Bankruptcy & Restructuring 2012 Review & 2013 Outlook Aug. 20: ATP Oil & Gas files bankruptcy, listing debt of $3.5 billion.
Newsletter Ted Merz Bankruptcy & Aleksandrs Rozens
Executive Editor tmerz@bloomberg.net Restructuring arozens@bloomberg.net Sep. 5: AMR wins approval to reject pilot contracts.
+1-212-617-2309 Newletter Editor 212-617-5211 SEP Sep. 7: Central Falls, Rhode Island, bankruptcy plan approved.
Bloomberg News Patrick Oster Sep. 11: Digital Domain files Chapter 11 in Delaware.
Managing Editor poster@bloomberg.net
212-617-4088
Oct. 1: Dynegy implements merger and reorganization plan.
Contributing Editors Oct. 9: Creditors of Mervyn’s LLC win $166 million LBO suit. Creditors said a 2004
Deirdre Fretz Nathaniel Baker buyout was fraught with fraudulent conveyances.
OCT
dfretz@bloomberg.net nbaker14@bloomberg.net Oct. 16: A123 Systems files Chapter 11 in Delaware.
212-617-5166 212-617-2741 Oct. 22: Solyndra wins bankruptcy plan approval.
Oct. 24: U.K. supreme court says won’t recognize U.S. bankruptcy judgements.
Analysts

John Veidis Rob Restaino Nov. 2: Bain’s Contec implements prepackaged plan.
jveidis2@bloomberg.net rrestaino2@bloomberg.net NOv Nov. 14: Overseas Shipholding files in Delaware, listing debt of $2.67 billion.
609-279-3802 609-279-4344
Nov. 29: Hostess wins approval to liquidate business.
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This newsletter and its contents may not be forwarded or redistributed without the prior consent of Dec. 21: Stifel Financial acquires 100 percent of Miller Buckfire.
Bloomberg. Please contact our reprints and permissions group listed above for more information DEC
Dec. 27: AMR pilots say US Air merger may not occur in bankruptcy.
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outlook 2013: Voices click on orange triangles for interactive feature

Coal, Retail, Restaurants and Real Estate to Dominate 2013 Restructurings
Bankruptcy professionals expect coal companies, retailers, restaurants and real estate to be the biggest source of restructuring activity
next year. Problems in Europe could spur more Chapter 15s as non-U.S. companies look to protect U.S. assets from creditors and Euro-
pean banks likely will sell off non-core assets such as non-perfoming loans. - Aleksandrs Rozens

Chapter 15s are going to continue to If you look at the largest universal banks,
multiply if they don’t solve the eurozone you could continue to see some asset sales
problem and it will be complicated by a but there’s not a lot of pressure to do that
U.S. failure to deal with the fiscal cliff. right now. The reason for that is because
You may start to see some insurance a lot of the assets are earning pretty good
holding companies file Chapter 15s. returns. If you sell that asset, what do you
A lot of events, like Sandy, are going replace it with? The universal banks – I think
to put a big strain on insurance com- we’ll see Citi continue or maybe accelerate
Harvey Miller panies. The holding companies may Fred Cannon some of the dispositions of their troubled
partner find themselves in difficulties. They will managing director, assets. Most regional and small banks feel
Weil Gotshal & probably end up in the Cayman Islands equity research they get a better price from a slow workout
Manges or someplace and then file a 15 here to KBW situation and selling the loans one off, than
protect their assets. they do in bulk sales.

In my experience, the pendulum swings What’s going to happen next year is
one way hard and then it swings the other in Europe – a combination of sover-
way hard. At some point, not only will dis- eign issues hovering over Europe and
tressed credits be forced to restructure, but Basel 3. As a result of that there will
even “decent” credits will face restructuring be a cautious deleveraging by financial
pressure when the capital spigot tightens institutions of non-core assets, primarly
past “medium” to “very tight” At that point
. non-performing loans, and some portfo-
we will see a huge amount of restructuring lios with single name corporates.I don’t
Jeffrey Werbalowsky opportunities given the amount of leverage Daniel Ehrmann think it is going to be the wave people
co-CEO placed into the system over the last three managing director have been expecting for the last three
Houlihan Lokey years. There is nothing in sight that will Alvarez & Marsal years but I do think there is going to be
push restructuring activity up materially, but activity in Europe. Banks – while they
I do know this easy credit can’t last and we have been prone to amend and extend –
are headed for a material downturn and a want to get the stuff off of their balance
lot of restructurings. It is not going to be as sheet at some point. Single name posi-
rapid a downturn nor will it be as dramatic tions of loans – they are going to start
as 2008. Our next downturn will be more selling them off. All of the hedge funds
sustained. It will be less defaults per unit are gearing up in Europe. They have too
of time, but more defaults over time. It will much money to spend and not enough
extend over a three-year period. opportunities right now.

There is a tremendous amount of activity If we have some major exogenous shock,
and effort going on in Europe where the in- for instance the euro complex is no longer
vestment, buyside community is working to able to sustain the fiction of sovereign
build up a very extensive infrastructure to solvency for Greece and Spain and some
buy portfolios – real estate loans, corporate of the other weaker countries, then we’re
loans, consumer loans. Whether the big going to have a major liquidity drop that will
banks are ready to transact will depend on change the tone and increase the amount
a case by case basis. Technology contin- of restructuring activity we see here. The
David Ying ues to change very rapidly. You constantly Durc Savini euro issue is probably the one that is the
senior managing see creative destruction going on in the managing director biggest risk. They just keep kicking the
director technology industry. You have the whole Peter J Solomon can down the road. The fiscal cliff issue
Evercore Partners cell phone industry and the telecom equip- is a crisis to which markets will respond
ment ecosystem is changing very rapidly. negatively if you can’t get a deal done here.
It will shut off the spigot of credit.
continued on next page

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outlook 2013: Voices...
continued from previous page

Shipping is still going to be the one Real estate bankruptcies will continue at
industry that continues to generate a this high level. People can’t repay loans and
significant amount of activity. We repo- they cant refinance them. That’s happening
sitioned the firm for that so we are do- with CMBS and conventional bank loans.
ing quite a lot of work in shipping right We’ll see moderately higher levels in bank-
now and I think that will continue. We ruptcies and restructurings will continue
are actually working with people who over the next several years until the 2016,
are acquiring ships and we are also 2017 time frame. Lodging still shows plenty
Kenneth Buckfire advising some companies with respect Mark Richardson of signs of difficulty along with industrials,
CEO to their balance sheets. The major fac- principal general commercial office and retail. While
Miller Buckfire tor in shipping is the surplus of ships. Huntley, Mullaney, interest rates are low, financing is definitely
In 2007 and 2008 the banks basically Spargo & Sullivan harder because underwriting is more strin-
gave a loan to anybody who wanted to gent. There is less CMBS volume out there.
build a ship. Banks are a lot more conservative.

Companies that might have been Coal is going to continue to struggle. I do
wobbling previously are able to refi- expect coal companies to file Chapter
nance in this market. Almost anybody 11s this year. We will continue to see
that wasn’t in deep financial stress problems in retail when people have a
is able to refinance or has already lot less disposable income, and I think
been refinanced. This should help the on that front that restaurants are going to
default rate for high-yield debt stay take a hit right with them. A lot of people
below 2 percent for 2012. I don’t see are going to be worried about their
Timothy Coleman any reason why 2013 should be any Kelly Stapleton income shrinking in 2013 with the fiscal
senior managing different, putting aside major exog- managing director cliff. I think this year we might start wor-
director enous events. Alvarez & Marsal rying about rising unemployment again.
Blackstone Group LP

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2012 Review: Bond & Loan Recoveries
General Maritime, Broadview Networks Show Disparity of Payouts Upon Chapter 11 Exit
General Maritime had the largest disparity between recovery rates for lenders and bondholders among the 37 companies that
filed disclosure statements this year upon exiting bankruptcy. Broadview Network’s creditors received full payments, illustrating
the wide variety of outcomes from the chapter 11 process.
General Maritime filed for bankruptcy in November 2011 and exited six months later. Three classes of secured loan claims were
paid in full, according to data compiled by Bloomberg. Two claims totaling $858 million received $75 million cash and $783 million
in new loans upon emergence. Creditors for the $175 million third class of loans opted for equity in the post-bankrupt company.
Bondholders and other general unsecured claimants, owed a total of $362 million to $383 million, received warrants for an estimat-
ed 2 percent recovery.
Broadview Networks’ lenders and senior noteholders received 100 percent recovery. The company filed for bankruptcy in August
2012 and exited three months later. Lenders owed $14 million under an asset-based loan were repaid in full upon exit. Senior se-
cured noteholders with a $317 million claim received a 100 percent estimated recovery in the form of a $150 million bond that pays
10.5 percent until 2017 and 97.5 percent of equity in the post-bankrupt company.
The chart below shows the recoveries from 37 companies among those that issued disclosure statements in 2012. The red
bubbles represent bonds, those in blue show loans. The size of the bubble indicates the relative face value of the debt at issue.
Estimated recoveries on loans, usually secured, are usually higher and less volatile than estimated recoveries on bonds, usu-
ally unsecured. Most loans are estimated to recover 100 percent through either repayment, exchange or other settlement via the
bankruptcy process. Most bonds are estimated to recover less than 50 percent.
The following page shows recovery rates since 2000. Though generally uncorrelated and having fewer recent observations, the
current trendline for loan recoveries breached its longer-term average following the latest bankruptcy peak in 2009. The current
trendline for bond recoveries is rising towards its longer-term average. The illustrations represents about 500 loan claims and 600
bond claims with amounts and recoveries culled from nearly 900 disclosure statements captured in Bloomberg’s current database
of nearly 2,000 bankruptcies.
– John Veidis and Rob Restaino, Bloomberg analysts. They can be reached at jveidis2@bloomberg.net and rrestaino2@bloomberg.net
continued on next page

2012 Disclosure Statement Recoveries
120% Loans Bonds
General Maritime Broadview
100% Networks
Loans & Homer City
Reddy Ice 1st Lien Bonds
80%
Estimated Recoveries

Loans & Bonds Houghton Legends Gaming
WaMu Senior Bonds Mifflin Hawker
60%
Buffets Loans & Beechcraft
Loans Bonds Allowed Secured Hawker
40%
Bicent Bond &
WaMu Jr Bonds
General Maritime 1st Lien Loan Deficiency
20%
Reddy Ice 2nd Lien & Claim
2nd Lien Unsecured Contec
0%
Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
-20% Date of Disclosure Statement
Source: Bloomberg LP
Recovery rates from 37 companies that issued disclosure statements in 2012. Loans are shown in blue and bonds are shown in red. The size of the
bubble represents the face value of the debt at issue.

1 2 3 4 5 6 7 8 9 10 11 12 13


Bond & Loan Recoveries...

Loan Recoveries
120%

100%

Trendline
80%

Average
60%

40%

20%

0%
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
-20% Date of Disclosure Statement
Recovery rates of about 500 loans made to companies that issued disclosure statements since 2000. The size of the bubble represents the face value of
the loans at issue.

Bond Recoveries
120%

100%

80%

60%

40%
Average
Trendline
20%

0%
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
-20%
Date of Disclosure Statement
Recovery rates of about 600 bonds made to companies that issued disclosure statements since 2000. The size of the bubble represents the face value of
the bonds at issue.

1 2 3 4 5 6 7 8 9 10 11 12 13


2012 review: Chapter 11 Petitions By State
California, Texas and Florida Businesses Lead Chapter 11 Filing Activity
Two hundred and eighty-two California businesses with debt of $1 million or more sought bankruptcy protection in 2012, making it the
most active state for such filings. Florida was the second-most active with 205 filings, followed by Texas with 204 and New York, where
154 businesses filed Chapter 11 petitions listing liabilities of $1 million or more.

Top 12 Most Active Venues, Distribution of Filings by Liabilities
Total Number 2012 Filings 2012 Filings 2012 Filings 2012 Filings 2012 Filings 2012 Filings
of 2012 Filings With Liabilities With Liabilities With Liabilities With Liabilities With Liabilities With
Venue With Liabilities Between $1 Between $10 Between $50 Between $100 Between $500 Liabilities
of $1 Million or Million to $10 Million to $50 Million to $100 Million to $500 Million to $1 of $1 Billion
More Million Million Million Million Billion or More
Central District of California 154 122 25 3 3 0 0
Middle District of Florida 122 94 26 0 1 0 1
Southern District of New York 88 49 23 3 13 2 10
District of Arizona 86 62 17 3 4 0 0
Northern District of Texas 75 56 11 5 1 1 0
Northern District of Georgia 72 59 11 2 0 0 0
Southern District of Florida 72 55 16 0 0 0 1
District of Nevada 71 57 10 1 2 0 0
Eastern District of New York 64 49 10 3 2 0 0
Northern District of Illinois 64 52 9 3 0 0 0
Southern District of Texas 59 50 5 2 1 0 1
District of Delaware 58 10 17 12 15 2 2

1 2 3 4 5 6 7 8 9 10 11 12 13


2012 review: Largest filings
Largest Chapter 11 Petitions in 2012 (Filings listing liabilities of $500 million or more)
Date of Industry or
Debtor Liabilities Debtor Counsel Judge Venue
Filing Debtor Type
Residential Capital LLC $15.3 billion 5/14/2012 Morrison & Foerster LP Martin Glenn Mortgage Finance Southern District of New York
Film and Technology
Eastman Kodak & Co. $6.75 billion 1/19/2012 Sullivan & Cromwell Allan L. Gropper Southern District of New York
Producer
Dynegy Inc. $5.13 billion 7/6/2012 White & Case LLP Cecilia Morris Energy Southern District of New York
Edison Mission Energy $5.09 billion 12/17/2012 Kirkland & Ellis Jacqueline P. Cox Energy Northern District of Illinois
Hawker Beechcraft Inc. $3.74 billion 5/3/2012 Kirkland & Ellis LLP Stuart M. Bernstein Private Jet Maker Southern District of New York
Houghton Mifflin $3.54 billion 5/21/2012 Paul Weiss Rifkind Wharton Joan N. Feeney Publisher District of Massachusetts
ATP Oil & Gas $3.5 billion 8/17/2012 Mayer Brown LLP Marvin Isgur Oil and Gas Southern District of Texas
Patriot Coal Corp. $3.07 billion 7/9/2012 Davis Polk & Wardwell Kathy A. Surratt-States Coal Miner Eastern District of Missouri
Overseas Shipholding Group $2.67 billion 11/14/2012 Morris, Nichols, Arsht & Tunnell LLP Peter J. Walsh Shipping District of Delaware
Arcapita Investment Holdings $2.55 billion 3/19/2012 Gibson, Dunn, & Crutcher LLP Sean H. Lane Private Equity Southern District of New York
Ocala Funding LLC $2.3 billion 7/10/2012 Stichter, Riedel, Blain & Prosser Jerry A. Funk Mortgage Finance Middle District of Florida
LightSquared Inc. $2.29 billion 5/14/2012 Milbank, Tweed, Hadley & McCloy Shelley C. Chapman Telecommunications Southern District of New York
IBC Sales Corp. (Hostess) $1.4 billion 1/11/2012 Jones Day Robert D. Drain Baker Southern District of New York
Pinnacle Airlines Inc. $1.4 billion 4/1/2012 Davis Polk & Wardwell Robert E. Gerber Airline Southern District of New York
WP Steel Venture (RG Steel) More than $1 billion (1) 5/31/2012 ASK Financial Kevin J. Carey Steel Mills District of Delaware
Franklin Credit Holding Corp. $827.3 million 6/4/2012 McCarter & English Donald H. Steckroth Mortgage Finance District of New Jersey
Vertis Holdings $814 million 10/10/2012 Cadwalader Wickersham & Taft Christopher S. Sontchi Magazine Inserts District of Delaware
Velo Holdings Inc. (Interactive
$713.3 million 4/2/2012 Dechert Martin Glenn Insurance Southern District of New York
Media Group)
$500 million to $1 billion
Bicent Holdings LLC 4/23/2012 Young Conaway Stargatt & Taylor Kevin Gross Energy District of Delaware
(2)
Source: Bloomberg Briefs
1. WP/RG Steel’s exact total liabilites of more than $1 billion have not been disclosed. Liabilities include $400 million senior revolving credit facility, $218.7 million outstanding on a
second-lien revolver, and $131 million in subordinated notes owed to parent Renco.
2. Bicent’s first and second lien lenders are owed $276 million. Additional liabilities have not been disclosed.

Largest Fourth Quarter 2012 Bankruptcy Filings (Filings listing liabilities of $100 million or more)
Date of Industry or
Debtor Liabilities Debtor counsel Judge Venue
filing debtor type
Edison Mission Energy $5.09 billion 12/17/2012 Kirkland & Ellis Jacqueline P. Cox Energy Northern District of Illinois
Overseas Shipholding Group $2.67 billion 11/14/2012 Morris, Nichols, Arsht & Tunnell LLP Peter J. Walsh Shipping District of Delaware
Vertis Holdings Inc. $814 million 10/10/2012 Cadwalader Wickersham & Taft LLP Christopher S. Sontchi Magazine Inserts District of Delaware
Lifecare Holdings $576 million 12/11/2012 Skadden Arps Slate Meagher & Flom kevin gross Hospital Operator District of Delaware
A123 Securities $376 million 10/16/2012 Latham & Watkins LLP Kevin J. Carey Electric Car Batteries District of Delaware
Auto and Motorcylces Central District of
American Suzuki $346 million 11/6/2012 Pachulski Stang Ziehl & Jones LLP Scott C. Clarkson
Distributor California
Interfaith Medical $341 million 12/3/2012 Willkie Farr & Gallagher LLP Carla Craig Hospital Operator Eastern District of N.Y.
Young Conaway Stargatt & Taylor,
THQ Inc. $248 million 12/19/2012 Mary F Walrath Video Games Maker District of Delaware
LLP
Inspiration Biopharmaceuticals $241 million 10/30/2012 Murphy & King William C. Hillman Drug Developer District of Mass.
Pat E. Morgenstern-
South Franklin LLC $166.3 million 10/24/2012 McDonald Hopkins LLC Retirement Community Northern District of Ohio
Clarren
HMX LLC $120 million 10/19/2012 Proskauer Rose LLP Allan L. Gropper Apparel Southern District of N.Y.
AMF Bowling (1) $100 million - $500 million 11/13/2012 McGuireWoods LLP Kevin R. Huennekens Bowling Alley Operator Easttern District of Va.
Metex Manufacturing (2) $100 million - $500 million 11/9/2012 Reed Smith LLP Burton R. Lifland Floor Tile Maker Southern District of N.Y.
Monitor Co. (3) $100 million - $500 million 11/8/2012 Ropes & Gray LLP Christopher S. Sontchi Consulting Group District of Delaware
1. Schedule of assets and liabilities to be filed on Jan. 10, 2013.
2. Liabilities include unquantified asbestos claims.
3. Precise total for debt owed not available continued on next page

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2012 Review: Largest Filings, Chapter 9 Petitions, breakdown of chapter 11 cases

Filing Activity by Month Large Filings by Industry

Monthly Petition Activity Large Petitions By Industry Type
900
2009 Filings ($500 million or more)
800
2010 Filings Financials
700 6%
2011 Filings 6%
6%
Number of petitions

600
2012 Filings Industrials
500
29% Energy
400

300 Consumer Staples
24%
200
29% Technology and
100 telecommunications
0 Consumer discretionary
Jan. Feb. Mar. Apr. May Jun. July Aug. Sept. Oct. Nov. Dec.
Affiliated cases have not been consolidated.
Source: Bloomberg Briefs Source: Bloomberg Briefs

Bankruptcy activity in 2012 was eclipsed by 2011 petitions during seven In 2012, financial and industrial businesses each accounted for 29 percent
months; it exceeded the previous year’s pace during five months. of all Chapter 11 petitions listing liabilities of $500 million or more.

Petitions Listing $1M-$10M Dominate ‘12 Filings California Municipalities Drive Chapter 9 Activity

2012 Chapter 11s, By Liabilities Listed 2012 Chapter 9 Activity By State
1,600

1,400 California
9%
1,200 Six Chapter 11
petitions involved Arkansas
9%
Number of Petitions

1,000 liabilities of
$500 million to 37% Nebraska
800 $1 billion.
9%
600 New York
400
Georgia
200 18%
0 Oklaholma
$1 million to $10 million to $50 million to $100 million to $500 million to $1 billion or 18%
$10 million $50 million $100 million $500 million $1 billion more

A majority of the Chapter 11 bankruptcy cases involved debtors listing In 2012, California was the biggest source of Chapter 9 petitions; in 2011
liabilities of $1 million to $10 million. Nebraska led Chapter 9 filings and accounted for 4 of 13 such cases.

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2012 Review: Single Asset REal Estate
Single Asset Real Estate Petitions Were Concentrated in California, New York and Texas

Majority of Single Asset Real Estate 2012 Petitions Involved Debt Less Than $10 Million
Single Asset Real Estate Petition Activity Single Asset Real Estate By Size of Listed Debt
1% 1%
All other debtor types Single asset real estate
$1 million - $10 million
In 2012, a quarter
13%
of the 2,042 new
Chapter 11 filings $10 million - $50 million
with assets and
75% liabilities greater
25% than $1 million
$50 million - $100 million
involved single
asset real estate. 85%
All cases
have been $100 million - $500 million
consolidated.

Source: BLAW & Bloomberg Briefs Source: Bloomberg Briefs

One fourth of all Chapter 11 bankruptcies listing debt of $1 million or more Eighty-five percent of all single asset real estate businesses filing Chapter
in 2012 involved single asset real estate. Seventy-eight single asset real 11 petitions in 2012 listing liabilities of $1 million or more had debt of
estate businesses were based in California, 57 such businesses were under $10 million. Thirteen percent of single asset real estate petitions
from New York and 52 single asset real estate filings were based in Texas. involved debt of $10 million to $50 million.

1 2 3 4 5 6 7 8 9 10 11 12 13


2012 Review: municipal bankruptcy Petitions
Chapter 9 Bankruptcy Petitions of 2012
Debtor Venue Liabilities Debtor Counsel State Date of filing
Mendocino Coast Health Care District N.D. Calif. $10 million - $50 million Friedman and Springwater LLP Calif. 10/17/12
Siloam Springs Municipal Property Owners' Improvement District No. 1- W.D. Ark. $100,000 - $500,000 John T. Lee Ark. 10/4/12
Sanitary and Improvement District No. 270 of Sarpy County, Nebraska Dist. Of Nebraska $10 million - $50 million Ronald W. Hunter Neb. 8/28/12
City of San Bernardino C.D. Calif. Greater than $1 billion Stradling Yocca Carlson & Rauth Calif. 8/1/12
Town of Mammoth Lakes* E.D. Calif. $50 million - $100 million Klee Tuchin Bogdanoff Calif. 7/3/12
City of Stockton, California E.D. Calif. $500 million - $1 billion Herrington & Sutcliffe Calif. 6/28/12
Suffolk Regional Off-Track Betting Corporation E.D.N.Y. $10 million - $50 Million McKenna Long & Aldridge N.Y. 5/11/12
Hospital Authority of Charlton County S.D. Ga. $1 million - $10 million McCallar Law Firm Ga. 4/30/12
Sylamore Valley Water Association Public Facilities Board of Izard County E.D. Ark. $1 million - $10 million Davidson Law Firm Ark. 4/19/12
Rural Water District No. 1, Cherokee County E.D. Okla. $500,000 - $ 1million Gable & Gotwals Ok. 1/23/12
Sanitary and Improvement District No. 268 of Sarpy Dist. Of Nebraska $1 million - $10 million Fullenkamp, Doyle & Jobeun Neb. 1/23/12
*Case dismissed after city settled suit.

Pace of Chapter 9 Petitions Declines in 2012 From 2011 Level
Eleven Chapter 9s were filed last year,
down from 13 in 2011. One of 2012’s cases
was dimissed after the town of Mammoth Chapter 9 Activity By Year
Lakes, Calif., settled a lawsuit. 14
California municipal entities were the
biggest source of petitions. The four 12
Chapter 9s came from California were
Mendocino Coast Health Care District, the 10
Number of filings

city of San Bernardino, the city of Stock-
ton and Mammoth Lakes. 8
San Bernardino, which listed liabilities
of greater than $1 billion, was the largest 6
petition of the year.
- Aleksandrs Rozens 4

2

0
2008 2009 2010 2011 2012

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2012 review: Chapter 15 Activity click on charts for interactive features

Top 10 Chapter 15 Petitions
CORPORATE Debtor COURT DEBTOR COUNSEL JUDGE LIABILITIES DATE OF FILING
BTA Bank JSC Bankr. S.D. N.Y. White & Case LLP James M. Peck Greater than $1 billion 16/07/2012
Centrais Eletricas Bankr. S.D. N.Y. Shearman & Sterling Shelley C. Chapman Greater than $1 billion 09/11/2012
Elpida Memory Bankr. D. Del. Davis Polk & Wardwell LLP Christopher Sontchi Greater than $1 billion 19/03/2012
Catalyst Paper GP Bankr. D. Del. Skadden Arps Slate Meagher & Flom Peter J. Walsh Greater than $1 billion 17/01/2012
JSC Astana-Finance Bankr. S.D.N.Y. Sidley Austin LLP Allan L. Gropper Greater than $1 billion 02/10/2012
The Sanko Steamwhip Co. Bankr. S.D.N.Y. Allen & Overy LLP James M. Peck $500 million - $1 billion 02/07/2012
Lehman Brothers Australia Ltd. (aka Grange Securities) Bankr. S.D. N.Y. Kirkland & Ellis LLP James M. Peck $500 million - $1 billion 06/01/2012
Cinram International Inc. Bankr. D. Del. Young, Conaway, Stargatt & Taylor Kevin Carey $500 million - $1 billion 25/06/2012
Humpuss Sea Transport Bankr. S.D. N.Y. Stroock & Stroock & Lavan LLP Shelley C. Chapman $100 million - $500 million 19/03/2012
Arctic Glacier Inc. Bankr. D. Del. Young, Conaway, Stargatt & Taylor Kevin Gross $100 million - $500 million 22/02/2012

Canadian Firms Drive Chapter 15s
Chapter 15 Activity By Nation
Canadian businesses accounted for 37
percent of all Chapter 15s filed in 2012. Canada All other nations
These businesses included Norgate
Metal, Catalyst Paper, Domfoam Interna-
tional, Natura World and Arctic Glacier. Canada was the
Delaware served as the venue for three biggest source of
of these Canadian filings. England was Chapter 15 filings
the second biggest source of businesses in 2012. Thirteen
looking to protect their U.S. assets with of the 35 Chapter
a Chapter 15. Five companies from Eng- 63% 37%
15 cases filed last
land filed Chapter 15 petitions and three year involved
of these cases are being handled by New Canadian businesses.
York’s southern district.

All cases have been consolidated.

New York’s Southern District Busiest Venue Financial Industry Leads 2012 Chapter 15 Activity
Chapter 15 Activity By Venue Chapter 15s By Debtor Type
Bankr. D. Mass.
Bankr. N.D. Ohio All other debtor types Financials
Bankr. D. Nev.
Bankr. E.D.Va.
Bankr. N.D. Ala. Ten of the 35
Bankr. E.D. Mich. companies that 29%
Bankr. E.D. La. filed Chapter 15s
Bankr. D. Az. in U.S. courts fell
into the category
Bankr. C.D. Calif. of financial
Bankr. N.D. Iowa services businesses. 71%
Bankr. S.D. Tex.
Bankr. D. Del.
Bankr. S.D. N.Y.
All cases have been consolidated.
0 5 10 15

New York’s southern district served as the venue for 16 of the 35 Chapter Financial services businesses that filed Chapter 15s included JSC Asta-
15 petitions filed in 2012. Delaware took on six such cases. na-Finance, Gerova Financial, Octaviar and Lehman’s Australian affiliate.

1 2 3 4 5 6 7 8 9 10 11 12 13


2012 REview: Post Petition Bond Price Moves click on charts for interactive features

American Airlines and MF Global benchmark bonds appreciated this year as traders’ expectations for recovery rates increased. New-
Page debt prices declined as the merger with Verso became less likely.

MF Global Bond Price Increased 78% in 2012 AMR Bond Price Increased Four-Fold in 2012
MF Global 6.25% Due 2016 American Airlines 9% Due 2016
70 90
65 MF Global Files for Bankruptcy Oct. 31, 2011 AMR Corp Files for Pilots ratify contract
80
Bankruptcy Nov. 29, 2011
60
70
55
KPMG estimates
UK payout of up to 60
50 $3.2 billion
50 AMR and US
Price (Cents)

Price (Cents)
45
Approved to AMR posts Airways
40
40 payout claims of quarterly merger said
less than $50,000. 30 profit to progress,
35 US Airways said to
These claims total may come as
30 $22.7 billion. 20 discuss AMR soon as
takeover with January
25 10
creditors
20 0
1/1/2012 4/1/2012 7/1/2012 10/1/2012 1/1/2012 4/1/2012 7/1/2012 10/1/2012
Source: Bloomberg LP Source: Bloomberg LP

NewPage Bond Price Declined 37 Percent in 2012 Patriot Coal Bond Gained 38% Since Bankruptcy

90
NewPage 11.375% Due 2014 110
Patriot Coal 8.25% Due 2018
NewPage Corp files for
85 bankruptcy Sept. 7, 2011 100
80 Restructuring plan 90
NewPage seeks relaxation of covenants approved
75 Patriot Coal petitions for bankruptcy
80
protection July 9
70
Rate set on 70
Price (Cents)
Price (Cents)

65 exit loans Seeks $625 million in
60 loans to refinance
60
50 debt
55
Verso Paper says it will not
40
50 pursue buyout Cuts met coal
30 production goals on
45
low demand
40 20
1/1/2012 4/1/2012 7/1/2012 10/1/2012 1/1/2012 4/1/2012 7/1/2012 10/1/2012
Source: Bloomberg LP Source: Bloomberg LP

Largest Active Chapter 11 Bankruptcy Cases
Debtor Liabilities Date of filing Debtor counsel Judge Industry or debtor type Venue
MF Global Holdings Ltd. $39.7 billion 10/31/2011 Skadden Arps Martin Glenn investment bank Southern District of New York
AMR Corp. $29.6 billion 11/29/11 Weil Gotshal Sean H. Lane airline Southern District of New York
Residential Capital LLC $15.3 billion 5/14/2012 Morrison & Foerster Martin Glenn mortgage lender Southern District of New York
Eastman Kodak Co. $6.75 billion 1/19/2012 Sullivan & Cromwell Allan L. Gropper film and camera manufacturer Southern District of New York
Dynegy Holdings LLC. $6.18 billion 11/7/2011 Sidley Austin Cecilia Morris power producer Southern District of New York
Hawker Beechcraft Inc. $3.74 billion 5/3/2012 Kirkland & Ellis Stuart M. Bernstein private jet manufacturer Southern District of New York
ATP Oil & Gas $3.5 billion 8/17/2012 Mayer Brown Marvin Isgur oil and gas development and Southern District of Texas
Patriot Coal Corp. $3.07 billion 7/9/12 Davis Polk Shelley Chapman production Southern District of New York
Arcapita Investment Holdings $2.55 billion 3/19/2012 Gibson Dunn Sean H. Lane private equity firm Southern District of New York
LightSquared Inc. $2.29 billion 5/14/2012 Milbank, Tweed, Hadley & McCloy Shelley C. Chapman telecommunications Southern District of New York

1 2 3 4 5 6 7 8 9 10 11 12 13

Bankruptcy & Restructuring 2012 Review and 2013 Outlook

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Bankruptcy & Restructuring 2012 Review and 2013 Outlook