Debtor’s Financials—An Unsecured Creditor’s “Wish List” for 2005
by Douglas G. Fox, CCE
Upon a bankruptcy filing, the debtor is required to provide its schedules of assets and liabilities (“schedules”) and statement of financial affairs (“SOFAs”).
In reviewing a large debtor company’s (“debtor”) schedules and SOFAs, it is always disappointing not to find a statement of cash flows. The statement of cash flows is one of the primary financial statements required under U.S. Generally Accepted Accounting Principles (“GAAP”). However, there appears to be no requirement that the debtor provide this statement in its reporting.
Shopping Center Lease Assumption
by David B. Wheeler; Moore & Van Allen PLLC; Charleston, S.C.
In the case of Trak Auto Corp. the West Town Center LLC (In re Trak Auto Corporation), the court was asked to resolve the conflict between §365(f)(1) and 365(b)(3)(C) of the Bankruptcy Code relating to the enforceability of shopping center lease restrictions. The debtor, an auto parts company, filed bankruptcy in Virginia in 2001 at which time it opted to close a number of its retail outlets and thereafter assign the leases for these outlets to third parties through a lease-bidding process. The debtor’s lease and its abandoned site in the West Town Shopping Center in Chicago provided, among other things, that the use of the property was limited to “sale at retail of automobile parts and accessories and such other items as are customarily sold by tenant at its other Trak Auto stores.” When the West Town lease was offered for assumption and assignment, no bids were entered by competing auto parts retailers. The best bid received for the site came from a discount clothing merchandiser.
Minutes from the 2004 Winter Leadership Conference
The meeting of the Unsecured Trade Creditors Committee was held at the Winter Leadership Conference in Scottdsale on Dec. 4, 2004. The meeting was highlighted by a well-attended presentation concerning the preservation of reclamation claims in the Fleming Companies, Inc. bankruptcy case. The outstanding panel, describing what began as an informal reclamation committee designed to preserve the eroding treatment of reclamation claims proposed by the debtor and which was ultimately recognized by the court as the Reclamation Committee, included S. Curtis Marshall (Credit Manager for Sara Lee), Bernie Katz and Kevin Clancy of J.H. Cohn LLP (the financial advisors to the Reclamation Committee), Daniel Carrigan, Mark Friedman and Janice Duban (partners at Piper Rudnick, the RC counsel) and Sandra Schirmang (Senior Credit Manager for Kraft Foods Inc.). The panel described the trials and tribulations encountered by the informal committee in organizing a reaction and response to various first-day orders likely to impact the rights of reclaiming creditors, conflicts arising with the unsecured creditors’ committee as it became more and more clear that the rights of reclaiming creditors were being reduced to non-priority unsecured claims and the eventual recognition of a formal Reclamation Committee.
The presentation was followed by a brief committee meeting. Committee Co-chair Deborah Thorne announced the pending Preference Defense Handbook was in the process of a final edit draft, with a target final publication date of no later than the 2005 Annual Spring Meeting. Co-chairs Doug Fox, Deborah Thorne and Berry Spears are presently discussing the compilation of a committee meeting presentation for the Annual Spring Meeting in April 2005, in Washington, D.C. Please contact one of them if you have any suggestions.