Maybe there is hope for change:
“The U.S. Trustee, a Justice Department agency that oversees bankruptcies, objected to documents filed by bankrupt U.S. cable TV operator Charter Communications (CHTRQ.PK) explaining its reorganization plan, court documents show.
In a filing with the U.S. Bankruptcy Court for the Southern District of New York on Thursday, the U.S. Trustee said the Charter’s disclosure statement is “deficient” and “fails to contain adequate information.”
I’ve included a link to the company’s Chapter 11 bankruptcy filing filed with the U.S. Bankruptcy Court in Southern New York. The most interesting disclosure was the number of subsidiaries.
It would seem to me that a company like Charter which isn’t a conglomerate like General Electric, a company that basically provides a limited number of services to its customers wouldn’t need to have so many subsidiaries.
I’m sure its done for tax purposes but I wonder if the cost of administering that many different entities and the lack of efficiency that would involve outweigh whatever the financial or tax benefits that accrue from forming so many subsidiary entities.
After posting about the details on Charter Communications Chapter 11 filing announcement, I read this post from the Bankruptcy Beat which is from an ongoing bankrutpcy conference where Harvey Miller a top bankruptcy attorney talked about how recent changes to the Chapter 11 rules have worked against companies filing for protection. Miller said, ““Companies are avoiding Chapter 11 as the plague. It is the last option.”
I got the answer to my question about what happens with the Charter’s missed $74 million interested payment. The company was working to get a group of creditors together to agree on the terms of the bankruptcy to insure a smooth Chapter 11 filing. Part of that agreement appears to be that the two Charter subsidiaries that had missed the interest payment will make it within the “grace period” which I assume is between their announcement of the filing and date when they actually file.
Charter Communications announced it is filing Chapter 11 bankruptcy. While they claim they will file before April 1st, I wonder if the announcement is enough to stay their interest payment which they missed and which was to cause them to default on Feb. 15th? The company is looking to shed $8 billion in debt but that still leaves them with reportedly another $13 billion.
Despite creating a brand name almost ubiquitous as Kleenex, Muzak is burdened by nearly $500 million in debt so the 75 year old company (that old?) is filing for Chapter 11 bankruptcy protection. The good news is that Chapter 11 will allow the company to restructure and the bad news is that we may have to endure elevator rides listening to the all-string version of “Smells like Teen Spirit” for another 75 years.
Buried in this article about Charter Cable hiring a corporate turnaround expert, is an interesting tidbit. Charter had missed its $73 million interest payment on Jan 14th which was widely announced. It was subsequently announced that the company had hired a bankruptcy law firm and banker to handle their filing. It seemed such a filing would happen immediately. However, now the article suggests that Charter was sitting on $900 million in cash when it missed its interest payment and avoided payment in order to have enough cash to entice creditors to allow it file a prepackaged chapter 11 with the major creditors on board. It goes on to say that Charter has until Feb. 15th before it defaults on the loan. I wonder if just before the default, Charter will announce its chapter 11 filing.
In September of this year in the midst of the financial meltdown and Charter Communications own financial difficulties, that company’s board of directors boosted CEO Neil Smit’s pay $300k for the year. And this month, the company’s Executive Cash Award Plan, which had been scheduled to vest on Dec. 31, 2009, was partially distributed this month to top executives. Under that plan, Smit received $1.19 million on Jan. 13.
Meanwhile, the company has hired the law firm of Kirkland and Ellis as well as investment bank, Lazard Ltd. to handle their possible bankruptcy filing which this article suggests will be a chapter 11 re-organization.
Good post at creditslips.org about the under-reported Chapter 11 bankruptcies. In 2007, there were 6,200 of these rising to more than 10,000 in 2008. While the media has focused on the Circuit City bankruptcies, the greater number of them are filed by small businesses.
Looks like JP Morgan isn’t going to get it as the Tribune’s total assets are $7 billion according to the bankruptcy filings. Can I just ask, how did one lender get that much in the hole to a newspaper chain, not a highly profitable line of business in the Internet age?
Bankruptcy filing summary courtesy Courthousenews
Reading Tea Leaves by Randy Wilson 