Daily Archives: November 22, 2012

Happy Thanksgiving!

Happy Thanksgiving to all of my JL readers and followers. Enjoy your holiday. Will be back on Friday.

Goodbye Hostess: Hostess wins approval to close, judge denies U.S. Trustee to convert the case to Chapter 7

  • HOSTESS JUDGE APPROVES MOTION TO WIND DOWN COMPANY
  • HOSTESS WINS APPROVAL TO CLOSE AND BEGIN SELLING ASSETS

From Leveraged Loan:

U.S. Bankruptcy Judge Robert Drain this afternoon approved Hostess Brands’ emergency wind-down plan, as well as an amendment to its debtor-in-possession credit agreement that will allow Hostess to access the full amount of its $75 million DIP loan during its liquidation.

Drain also denied a motion filed by the U.S. Trustee to convert the case to Chapter 7, though he did not rule out the prospect of a conversion at a later date.

Hostess returned to the bankruptcy courthouse in White Plains, N.Y., this morning after a last-minute mediation yesterday between the company and its main bakers’ union failed to produce a settlement to halt liquidation of its assets. The hearing began Monday afternoon, but was delayed shortly thereafter to give the company and the Bakery, Confectionary, Tobacco and Grain Millers Union a final opportunity to engage in mediation to avert the strike the BCT began last week. But by Tuesday evening, Hostess announced that the mediation was “unsuccessful.”

Judge Drain opened today’s hearing with a brief, private chambers conference to discuss the mediation, the details of which remain confidential.

Back in open court, Hostess financial advisor Joshua Scherer, of Perella Weinberg, took the witness stand to discuss the company’s failed efforts to sell the company as a whole, and the status of its newly launched liquidation strategy.

During its Chapter 11, Hostess fielded six bids for the sale of the company as a whole, none of which passed muster, Scherer said.

In the past five days, however, since Hostess officially launched its liquidation process, the company has received “a flood of inquiries,” said Hostess lawyer Heather Lennox, of Jones Day. The company expects to file a number a number of stalking-horse bids for its assets within the next few weeks, she said.

“The number of inbound calls has been surprising, on a number of fronts,” Scherer said. Those inquiries fall into four “buckets,” he explained. Offers have come from regional bakeries, national competitors, customers (such as Wal-Mart, Kroger and Giant Eagle), and a fourth catch-all category, including large consumer products companies. Scherer said the liquidation sale has generated “very significant interest” from international buyers as well.

Many of the buyers were uninterested in the assets when Hostess was weighed down by its union liabilities, he said. “We have very significant momentum right now with, from a selling perspective, positive press,” Scherer said. “It’s critical to maintain momentum and a competitive dynamic.”

“Every day our product is off the shelf, it’s diminishing in value. Our customers get used to selling goods without our brands, and the end-users learn to live without Twinkies and Wonder Bread.”

On the stand, Hostess CEO Gregory Rayburn said he needs to terminate about 15,000 employees today so that they can collect unemployment benefits. Drain approved an employee retention plan that would keep about 3,200 employees on the job during the wind-down process.

In contrast, Chapter 7 governs the process of a liquidation bankruptcy.  That filing means that the business ceases operations unless continued by the Chapter 7 Trustee. A Chapter 7 Trustee is appointed almost immediately, with broad powers to examine the business’s financial affairs. And of course, Hostess wouldn’t want their business under Chapter 7 because the bankruptcy trustee would have to examine the executives’ proposed plan for retention bonuseses and the creditors’s filing of execs’ proposed plan back in July.

 

GMAC/Ally Financial: Same kind of schemes and another Lorraine Brown

See this key section, from the “Factual Basis” of the plea of former DocX exec Lorriane Brown to DOJ:

“Brown represented to clients that DocX had robust quality control procedures in place to ensure a thorough and proper signing, notarization, and recordation process. As a result of these representations, clients hired DocX […]

Unbeknownst to DocX’s clients, the Authorized Signers were instructed by Brown and other DocX employees to allow other, unauthorized, DocX employees to sign, and to have the document notarized as if the actual Authorized Singer had executed the document.”

The idea that the big banks were just duped by Lorraine Brown’s claim of “robust quality control procedures” makes no sense whatsoever. If the big banks were duped by Brown as said in the plea, why did GMAC  filed a fraudulent document with New York City authorities signed by a robosigner who actually works for GMAC Mortgage Corp? This document was uncovered by Propublica last year:

And so GMAC, which was bailed out by taxpayers in 2008, began looking for a way to craft a document that would pass legal muster, internal records obtained by ProPublica show.

“The problem is we do not have signing authority—are there any other options?” Jeffrey Stephan, the head of GMAC’s “Document Execution” team, wrote to another employee and the law firm pursuing the foreclosure action. No solutions were offered.

Three months later, GMAC had an answer. Itfiled a document with New York City authorities that said the delinquent Ameriquest loan had been assigned to it “effective of” August 2005. The documentwas dated July 7, 2010, three years after Ameriquest had ceased to exist and was signed by Stephan, who was identified as a “Limited Signing Officer” for Ameriquest Mortgage Company. Soon after, GMAC filed for foreclosure.

An examination by ProPublica suggests this transaction was not unique. A review of court records in New York identified hundreds of similar assignment documents filed in the name of Ameriquest after 2008 by GMAC and other mortgage servicers.

And more about robosigner Jeffrey Stephan. Click here.

Forgerers and homewreckers: Stealing houses is still far too easy in Philadelphia

LEON PINKNEY says Dwayne Stewart has made his life “purely hell.”

Pinkney, 70, spent his entire savings to fix up three of 11 properties he owned in North Philadelphia.

He planned on giving at least one house to his son and renting out another. But when he went to City Hall to change the title of one of the houses, “I found out it wasn’t even in my name,” Pinkney said.

The new owner of the two-story brick house on Newkirk Street near Allegheny Avenue was 41-year-old Stewart, a convicted sex offender who has been arrested four times for alleged offenses related to forgery and theft by impersonation and other scams, including as recently as September.

Pinkney says that he has never met Stewart and that the signature on the deeds to three of his properties transferring them to Stewart in September 2009 are forgeries.

Not so, says Stewart.

“Mr. Pinkney sold me those properties,” Stewart told the Daily News, adding that the properties were dilapidated and Pinkney owed thousands in back taxes that he paid. “One thing I don’t do is lie.”

Police said they are investigating complaints against Stewart by Pinkney and others, who allege that Stewart collected money for rental units and then refused to turn over the keys.

Pinkney’s story is not a new horror tale. Years after the Daily News spotlighted the issue in 2001 and lawmakers tried to fix the problem, it is still far too easy to steal a house in Philadelphia.

Victims are usually poor, elderly or immigrants.

The problem, says City Councilman Bill Greenlee, is that the city’s Department of Records makes no attempt to determine if deeds are fraudulent.

Read on.

Madoff trustee asks court to reinstate $30 billion in claims against JPMorgan Chase & Co and other banks

NEW YORK, Nov 21 (Reuters) – A lawyer for the trustee seeking money for Bernard Madoff’s victims asked an appeals court on Wednesday to restore nearly $30 billion in claims against JPMorgan Chase & Co and other banks, saying it would force those who furthered the fraud to “pay their fair share.”

In arguments before the 2nd U.S. Circuit Court of Appeals, the trustee’s lawyer sought to overturn lower court rulings that only Madoff victims themselves — not the trustee — could sue third parties such as banks for damages.

The trustee has said JPMorgan, Madoff’s main bank for two decades, and other banks ignored numerous warning signs about Madoff’s business — allegations the banks have denied.

Read on.

Florida attorney Matt Weidner: My Most Devastating and Disturbing Appellate Loss….Florida’s 2nd DCA Rejects Entirely The AHMSI v. Hassell Appeal….

Florida lawyer Matt Weidner posted on his blog his appearance at Florida’s 2nd District Court of Appeals. Click here to watch video. And here is the court document. Click here.

Big Banks Line Up To Block Elizabeth Warren’s Appointment to Senate Banking Committee

Yup, the banksters are at it again! Via Mother Jones:

 

But the big banks are not fans of Warren, and their representatives in Washington have her in their crosshairs. Aides to two senators on the banking committee tell Mother Jones the industry has already moved to block Warren from joining the committee, which is charged with drafting legislation regulating much of the financial industry. “Downtown”—shorthand for Washington’s lobbying corridor—”has been going nuts” to keep her off the committee, another Senate aide says.

Sen. Jack Reed (D-R.I.), a banking committee member, has been angling to get Warren on the committee, “but there are many bank lobbyists pushing to keep her off,” a top Democratic Senate aide toldPolitico‘s Morning Money tipsheet. But the aide added, “If she really wants banking, it will be very tough politically to keep her off.”

Several banking trade groups—including the American Bankers Association, Securities Industry and Financial Markets Association, and the Mortgage Bankers Association—declined or didn’t respond to requests for comment. A spokesman for Warren also declined to comment.

The big banks’ opposition to Warren, a fierce consumer advocate, is no shocker. She supported the Dodd-Frank financial reform law, and she blasted Brown, who did vote for Dodd-Frank, forlaunching a “guerrilla war” to undermine its implementation. She backs the Volcker Rule, a limit on how much banks can trade with their own money. What may trouble the big banks most is Warren’s call for revisiting the Glass-Steagall Act, which separated riskier investment banks from more staid commercial banks. Reinstating Glass-Steagall would mean breaking up sprawling Wall Street institutions such as JPMorgan Chase, Citigroup, and Bank of America.