Bankruptcy News

We've summarized the latest docket activity and news for publicly traded companies currently operating under U.S. Bankruptcy Court protection.

Bankruptcy/Chapter 11 / Bonds

Cengage Learning Plan Filed

Cengage Learning filed with the U.S. Bankruptcy Court a revised Joint Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, “The Debtors believe that members of the Consenting Holders, who hold greater than 50 percent of the Debtors’ largest secured and unsecured creditor constituencies (due to the Consenting Holders’ unsecured deficiency claims), support the Plan and the Debtors’ expeditious emergence from chapter 11. Among other things, the Plan contemplates the following: An approximate $4.3 billion reduction of funded debt; A post-reorganization capital structure consisting of (i) a new first-out revolving credit facility of no less than $250 million and up to $400 million to be raised from third-parties on market terms and (ii) no less than $1.5 billion first lien term loan facility…; Holders of First Lien Secured Claims will receive their pro rata share of (a) 100% of the New Equity less any New Equity transferred to the Disputed Unsecured Escrow and any New Equity used for the First Lien Deficiency Claim Distribution, if any (subject to dilution for the Management Incentive Plan), (b) the New Debt Facility Consideration, (c) the Excess Cash, and (d) the Disputed Unsecured Escrow Surplus, in each case as allocable to Holders of First Lien Secured Claims as determined in accordance with the Plan; Holders of First Lien Deficiency Claims will receive their pro rata share of Cash and/or New Equity in an amount equal to the First Lien Deficiency Claims’ allocable share of the value of the Disputed Assets as determined in accordance with the provisions of the Plan; Generally, unsecured creditors of CLAI and CLI (including Holders of First Lien Deficiency Claims) will receive their Pro Rata share of the value allocable to Holders of such claims on account of the value of Disputed Cash and Disputed Copyrights, respectively, to the extent judicially determined to be unencumbered by valid liens or security interests, and the value, if any, of 35% of the Debtors’ international operations, the value of the Debtors’ non-wholly owned subsidiaries (Hampton Brown and CourseSmart), and the value of a certain parcel of unencumbered real estate.” The Court will consider the Disclosure Statement on November 20, 2013 and scheduled a February 24, 2014 hearing to confirm the Plan.

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Is there value in bankrupt PG&E’s stock?

In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.

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EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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Turnaround Letter Stock Pick Named Top Performer of 2017


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What Last Year's Top Stock Pickers Are Buying in 2018


This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.


George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."