As if there weren't sufficient causes already to refer to CIT Group (NYSE: CIT) as "beleaguered," the list just got longer. This morning, the financial services firm delayed filing its second-quarter report with the Securities and Exchange Commission (SEC), citing the ongoing restructuring of its debt as a mitigating factor.

Specifically, CIT told the regulatory agency that it could not meet Monday's 10-Q deadline "without unreasonable effort and expense," since executives have been spending most of their time lately attending to restructuring needs. The company is expecting a second-quarter loss in excess of $1.5 billion, thanks in large part to a loss totaling $2.1 billion from its discontinued home-lending operations.

Continue reading CIT Group plummets on going concern doubts, Chapter 11 threat

CIT Group plummets on going concern doubts, Chapter 11 threat originally appeared on BloggingStocks on Tue, 11 Aug 2009 09:50:00 EST. Please see our terms for use of feeds.

Downtrodden General Motors (OTC: GMGMQ) is throwing in the towel on its 2010 hybrid-electric Chevy Malibu, according to a report in The Wall Street Journal (subscription required). Due to weak demand among retail customers, dealers have stopped ordering the car, and the automaker is currently choking on a backlog of the unpopular hybrids.

To drive home the point, the Journal quotes Joe Menegos, the sales manager at a National City, Calif., dealership, as saying, "We could care less" that the hybrid Malibu is being deep-sixed.

Continue reading General Motors yanks the hybrid Malibu, warns common shareholders

General Motors yanks the hybrid Malibu, warns common shareholders originally appeared on BloggingStocks on Thu, 11 Jun 2009 10:45:00 EST. Please see our terms for use of feeds.

US bankruptcies in the first quarter were the highest since 2005. You might ask what happened in 2005 to cause a high bankruptcy rate? In that year there were a rush of bankruptcies ahead of a new bankruptcy law that was designed to curb abuses. The law took effect in October 2005.

Now to the present. Let's look at the numbers:

• There were 330,477 filings in the first quarter, up 10% from the previous quarter and up 35% from a year earlier.
• The Administrative Office of the US Courts reported that consumer filings were up 33%, while business filings were up a whopping 64%

Continue reading US bankruptcy filings are still climbing at the highest rate since 2005

US bankruptcy filings are still climbing at the highest rate since 2005 originally appeared on BloggingStocks on Tue, 09 Jun 2009 16:50:00 EST. Please see our terms for use of feeds.

Early this morning, the Associated Press reported that talks between Chrysler's lenders and the Treasury Department had "disintegrated." The parties were trying to lower Chrysler's $6.9 billion in secured debt, a move that many hoped would stave off bankruptcy.

It appears that the hedge funds (roughly 40 of them) that hold roughly 30% of Chrysler's debt are looking for a deal better than the one struck between the banks and the government. The four banks that hold 70% of the automaker's debt agreed to erase that debt for $2 billion -- the hedge funds want more.

Continue reading Hedge funds break off talks with Treasury Department about Chrysler debt

Hedge funds break off talks with Treasury Department about Chrysler debt originally appeared on BloggingStocks on Thu, 30 Apr 2009 08:20:00 EST. Please see our terms for use of feeds.

Continue reading General Growth Properties files for bankruptcy protection

General Growth Properties files for bankruptcy protection originally appeared on BloggingStocks on Thu, 16 Apr 2009 07:00:00 EST. Please see our terms for use of feeds.

Continue reading General Growth Properties: Too bad to fail and possible happy ending?

General Growth Properties: Too bad to fail and possible happy ending? originally appeared on BloggingStocks on Mon, 23 Feb 2009 09:00:00 EST. Please see our terms for use of feeds.

Well, according to a report today in the Wall Street Journal, GGP's deadline to renegotiate a $900 million loan on two luxury malls in Las Vegas came and went Thursday with no resolution. The mall mogul is still in talks with its lenders to negotiate a new deal -- but it's now haggling outside the confines of its forbearance agreement, which means those lenders, led by Deutsche Bank (NYSE: DB), can demand payment at any time.

Continue reading Is General Growth Properties bankrupt yet?

Is General Growth Properties bankrupt yet? originally appeared on BloggingStocks on Fri, 13 Feb 2009 13:40:00 EST. Please see our terms for use of feeds.

"This was a difficult but necessary decision," CEO Matt Booty said in a press release. "We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure."

Continue reading Midway Games files for bankruptcy

Midway Games files for bankruptcy originally appeared on BloggingStocks on Fri, 13 Feb 2009 08:40:00 EST. Please see our terms for use of feeds.

Sirius XM (NASDAQ: SIRI) is up against debt payments that its management has been saying would not be a problem.

According to The Wall Street Journal, "Sirius XM Satellite Radio Inc. is facing an important test of its viability this month: how it handles $174.6 million in debt coming due Feb. 17." Since the company has not reported its fourth quarter, no one knows for certain how much cash Sirius has. More debt payments are due later in the year.

Could the debt problem this month push Sirius into Chapter 11? It is impossible to tell, but the obligation has not been renegotiated or replaced with new debt.

Continue reading For Sirius (SIRI), chapter 11 looms

For Sirius (SIRI), chapter 11 looms originally appeared on BloggingStocks on Mon, 02 Feb 2009 09:20:00 EST. Please see our terms for use of feeds.

Some big companies have already gone bankrupt. The Tribune Company is the most recent. But, one of the trend's earliest victims was Lehman.

At the economy goes deeper into Hell with each passing month, bankruptcy attorneys will become the richest lawyers in America.

According to MarketWatch, "A sour economy and tight credit market clearly are just the right ingredients to bring about a wave of bankruptcies." There is no shame in it. Airlines have been doing it for decades.

Chapter 11 is actually a nifty way to stiff debt holders and employees. If a company can find an investor who wants to gamble they can get most of a bankrupt firm's assets in court, a debtor-in-possession, a judge can void loans and employment contracts in the name of keeping a troubled firm alive.

All of that may be good for the operations who seek court protection, but the trend would do further damage to the economy. Many of the firms who financed companies that are in trouble are banks. More losses for them will lead to more write-downs. And, that leads to more shareholder dilution and more government aid. On the employment side, cutting big numbers of people increases joblessness. That, in turn, ratchets down consumer spending and pushes up government costs to support those without work.

Otherwise, Chapter 11 is a great idea for companies in peril.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Bankruptcy becomes exit of choice originally appeared on BloggingStocks on Tue, 09 Dec 2008 11:11:00 EST. Please see our terms for use of feeds.

Perhaps it was inevitable, but the car companies fought it. Congress, and perhaps General Motors (NYSE:GM) and Chrysler, are discussing pre-packaged bankruptcies as a way to cut debt and labor costs while the companies get back on their feet.

It is probably a bad idea.

According to Bloomberg, "Staff for three members of Congress have asked restructuring experts if a pre- arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the industry without liquidation."

Why won't it work? Several reasons. The first is that a bankruptcy plan takes time, the one thing Detroit does not have. A pre-packaged program means getting deals from labor, lenders and suppliers. That can't be done in a day, a week, or a month.

Next, some car parts suppliers are already near bankruptcy themselves. Asking them to take less money from GM and Chrysler could push them into Chapter 11.

Last, and perhaps most important, the UAW may not be willing to give up more than it has offered. It believes that it has done enough by saying it will defer car maker contributions to its VEBA plans and sharply reduce job banks. A proposal for them to take less may cause a series of strikes that could push GM and Chrysler into Chapter 7 liquidations.

Otherwise, the idea of pre-packaged bankruptcy is just fine.

Douglas A. McIntyre is an editor at 247wallst.com.

Detroit: Chapter 11 finally on the table originally appeared on BloggingStocks on Thu, 04 Dec 2008 09:03:00 EST. Please see our terms for use of feeds.

What's with Steve & Barry's and why should we care? originally appeared on BloggingStocks on Mon, 21 Jul 2008 15:02:00 EST. Please see our terms for use of feeds.

Goody's Family Clothing, a retailer of lower priced clothing, filed for Chapter 11 bankruptcy protection this week. To this end, the company will shut down 103 stores (about a quarter of the total) as well as a distribution center. Goody's is located primarily in the southeast and has been around since 1953.

It was back in 2005 that Robert Goodfriend (the son of the founder of Goody's) agreed to a $327 million buyout (the private equity sponsors included Prentice Capital Management and GMM Capital). Unfortunately, since then Goody's has been consistently losing money -- perhaps because of the heavy debt load and competition from the like Wal-Mart (NYSE: WMT). According to the bankruptcy filing, the company has $313 million in assets and $443 million in debt.

Actually, there have been a variety of recent bankrutpcies for retailers, such as Lillian Vernon Corp., Linens 'n Things Inc., Sharper Image and Levitz Furniture Inc. And, as the economy continues to slow down, I'm sure we'll see more.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Goody's filing for bankruptcy: Not-so-good private equity deal originally appeared on BloggingStocks on Tue, 10 Jun 2008 12:12:00 EST. Please see our terms for use of feeds.

Grocery store chain Winn Dixie Stores Inc. (NASDAQ: WINN) is emerging from bankruptcy with remodeled stores, better shopping conditions and product mix, improved customer service, and strict attention to cost management. Same store sales for 1Q 2008 are essentially flat, but the company posted a huge reduction in net loss, $800,000, down from $24.6 million net loss one year ago, a $23.8 million improvement. Net income for 1Q 2008 was $1.6 billion, up $11 million. Gross profits increased $22 million to $446.4 million, and the 30 remodeled stores have registered increased foot traffic. Winn Dixie plans to remodel a total of 75 stores in 2008.

Winn Dixie is also focusing on cost control as it emerges from Chapter 11. Administrative and promotional expenses have been slashed, as have costs at the company's distribution facilities. Winn Dixie still faces significant capital expenditures for store remodeling, at least $140 million. Legal costs to emerge from bankruptcy will run in the $5 million to $7 million range.

Even in the midst of a difficult and complex multi-year turnaround, Winn Dixie has acted to gain the goodwill of consumers and investors. Winn Dixie remodeled and reopened one of the first full-service grocery stores in lower east side New Orleans to help the city rebuild. The company is on the front lines in the fight against breast cancer, providing educational materials in its stores and sponsoring free mammograms for women without access to health care services.

The stock currently trades around $19. Given the success of the company's turnaround thus far, this is a stock for bargain hunters to investigate.

Winn Dixie (WINN) emerging from bankruptcy originally appeared on BloggingStocks on Tue, 20 Nov 2007 15:50:00 EST. Please see our terms for use of feeds.

Hollywood Video parent Movie Gallery files for Chapter 11 bankruptcy originally appeared on BloggingStocks on Tue, 16 Oct 2007 15:19:00 EST. Please see our terms for use of feeds.

Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

Bally Total Fitness Holdings Inc. (Other OTC: BFTH), which I suggested shorting back in November, has filed for bankruptcy. According to Reuters, Bally listed $396.8 million of assets and $761.3 million of debts as of December 31. Its bankruptcy plan would wipe out common shareholders reduce debt by $150 million and provide $90 million of capital through a rights offering. Bally also lined up $292 million of financing to fund operations during and after bankruptcy proceedings. Today's announcement is confusing since it reportedly filed for bankruptcy in June, as well.

When I first suggested shorting Bally, I thought it was losing so much money that it would not be able to pay back its debts. It also had lots of accounting problems and was in violation of the terms of its lending agreements. But I was concerned that JPMorgan Chase & Co. (NYSE: JPM) had offered a rescue finance package and that hedge fund guru, Stevie Cohen was a big Bally investor.

But I turned out to be right and investors who had followed my advice and covered today would be 709% richer since Bally dropped from $2.59 to $0.32.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Bally.

Short Stories: Bally collapses on the mat originally appeared on BloggingStocks on Wed, 01 Aug 2007 13:00:00 EST. Please see our terms for use of feeds.

Northwest's Addition by Subtraction originally appeared on BloggingStocks on Tue, 03 Jul 2007 15:30:00 EST. Please see our terms for use of feeds.

Delta Airlines Inc. (OTC:DALRQ) Chief Executive Gerald Grinstein isn't expecting a pat on the back when the airline emerges from bankruptcy. In fact, he's not expecting much of anything.

Grinstein, who is planning to step down when Delta emerges from Chapter 11, declined all management equity awards, payments or severance that he otherwise would be entitled. When asked why he's forgoing the money, Grinstein told the Wall Street Journal (subscription required) that Delta "is a terrific company, and I wanted to see it succeed if I could help." He will continue collect a base salary of $338,000.

How refreshing to find a CEO that understand that it's not all about him. The Journal points out that Grinstein already has amassed a fortune from his business career.

Of course, Delta's employees deserve to be rewarded for their sacrifices.

When Delta emerges from bankruptcy in May about 39,000 workers will share $480 million in lump-sum payouts and equity, according to the Associated Press, adding that 1,200 management employees will hold a 2.5 percent stake in the company valued at $240 million. Pilots and flight dispatchers, who are represented by unions, will not receive lump sum and equity payouts but will participate in profit sharing and rewards program in exchange for wage concession.

Once Delta emerges from bankruptcy, investors should avoid the stock for a long time. The future remains as cloudy as ever for the airline industry.

Delta's CEO takes one for the team originally appeared on BloggingStocks on Tue, 20 Mar 2007 08:45:00 EST. Please see our terms for use of feeds.