Bankruptcy News

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

Bonds / Energy

Edison Mission Energy Plan Filed

Edison Mission Energy (EME) filed with the U.S. Bankruptcy Court an Amended Joint Chapter 11 Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, “The Plan provides for a sale (the ‘NRG Transaction’) of substantially all of EME’s assets, including its direct and indirect equity interests in the Debtor Subsidiaries and the Non-Debtor Subsidiaries (other than any Homer City Debtor and any subsidiary of any Homer City Debtor), to NRG Energy Holdings Inc. (‘Purchaser’ or ‘NRG’), a subsidiary of NRG Energy, Inc. (‘Parent,’ together with Purchaser, the ‘Purchaser Parties’), a Fortune 500 company and the largest competitive power generation company in the U.S., with approximately 47,000 MW of fossil, nuclear, solar, and wind generation capacity. In exchange for this transfer, Purchaser will provide EME’s estate with the Sale Proceeds of $2,635 million (comprised of $2,285 million payable in cash and $350 million payable in Parent Common Stock) to be distributed by the Debtors in accordance with the Plan and assume certain liabilities of the Debtors, including the leveraged leases for Debtor Midwest Generation, LLC’s Powerton and Joliet facilities. The Debtors, the Purchaser Parties, the Committee, the Supporting Noteholders, and the PoJo Parties entered into the Plan Sponsor Agreement, which was approved by the Bankruptcy Court on October 24, 2013, to implement the NRG Transaction pursuant to the Plan. More specifically, the Plan, which will effectuate the NRG Transaction, contemplates the following distributions to Holders of Claims and Interests, among other recoveries: Holders of Allowed Other Priority Claims against EME and Allowed Other Priority Claims against Debtor Subsidiaries shall receive payment in full, in Cash; Holders of Allowed Secured Claims against EME, Allowed Secured Claims against Debtor Subsidiaries, and Allowed Secured Claims against Homer City Debtors shall receive (a) payment in full, in Cash, or (b) such other treatment such that the Holder shall be rendered Unimpaired; Holders of Allowed General Unsecured Claims against Debtor Subsidiaries shall receive payment of principal in full in Cash; Holders of Allowed General Unsecured Claims against EME (Assumed Liabilities) shall receive payment in full in Cash from the Purchaser pursuant to the terms of the Purchase Agreement; Holders of Allowed General Unsecured Claims against EME (Not Assumed Liabilities) and Allowed Joint-Liability General Unsecured Claims shall receive (a) a Pro Rata distribution of the Net Sale Proceeds, and (b) a Pro Rata distribution of the New Interests; and Holders of Allowed Claims against the Homer City Debtors shall be paid in absolute priority from the Homer City Wind Down Proceeds for the applicable Homer City Debtor.” The Court scheduled a December 18, 2013 hearing to consider the Disclosure Statement.

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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."