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

OCZ Technology Group Chapter 11 Petition Filed

OCZ Technology Group and two affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 13-13126. The Company, which designs, manufactures and distributes high performance computer components, is represented by Michael R. Nestor of Young Conaway Stargatt & Taylor. The Company announced that it has signed an asset purchase agreement with Toshiba, under which Toshiba will acquire substantially all of OCZ Technology Group’s assets for $35 million. Under this agreement Toshiba will acquire the Company’s client and enterprise solid state drive business. Toshiba has agreed to provide the Company with D.I.P. financing to ensure that there is adequate capital and flash supply to support the business during the contemplated sale period. Consummation of the asset purchase agreement is subject to an auction and approval by the U.S. Bankruptcy Court. Ralph Schmitt, C.E.O. of OCZ Technology Group, states, “Over the past year, OCZ has dealt with numerous issues which have stressed the company’s capital structure and operating model, posing a challenge to achieving near term profitability. The combination of NAND flash supply constraints and credit issues have impacted our ability to satisfy the demands of our customers; this combined with increased pricing pressure in our industry have contributed to our on-going operating losses. On an operational basis, we completed a complex investigation, several restructurings and a multi-year restatement that added significantly to our working capital requirements. We have been working diligently on this partnership with Toshiba and we believe that this is the best outcome under our current corporate conditions.” This transaction has been approved by the board of directors of OCZ Technology Group, and the Company anticipates that the sale will close within approximately 60 days.

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Tupperware: Not a Good Fit as a Turnaround Stock

At first glance, the shares have decent appeal as a turnaround investment. Looking deeper, however, the fundamentals are not as strong and stable as they appear. Surplus cash flow is tight, a key driver is weakening, it is increasingly reliant on China and has other nagging issues. We don’t see the new CEO as a catalyst for change. Despite the “first glance appeal”, Tupperware isn’t a good fit as a turnaround stock. Read More.

Comparing Stocks Vs. Bonds

While the common stock of a turnaround candidate usually has the greatest upside potential, other classes of securities, such as bonds or preferred stock, may offer attractive profit possibilities with less risk. Many turnaround companies have only one class of securities available to investors but where there are different classes to choose from, it can pay to do a little extra analysis of the various options.

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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."