Mr. Mark Berman

GLG News by Mr. Mark Berman, Partner

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Economy down, bankruptcies up

September 15, 2008

Analysis of:Bankruptcy filings up 28.9 percent | www.dispatch.com

This story is  being repeated all over the country.  In 2005, when the US economy was humming along and there was a perception that individuals who could afford to repay at least some of what they owed to creditors were taking advantage of overly generous bankruptcy laws, the Bankruptcy Code was amended in major part to make it more difficult for individuals to file chapter 7 bankruptcy cases.  As a result, personal bankruptcy filings skyrocketed in advance of the effective date of the amendments.  Also, and because of additional burdens mandated by the amendments, the cost of filing a personal bankruptcy increased both for the court system and the individual.  Now, with the economy tanking, layoffs increasing, gasoline for the car and home energy costs escalating, real estate values declining thereby eliminating the ability of the homeowner to tap home equity loans for needed cash, and the problems with home mortgages, the incidence of personal bankruptcy filings is increasing.

Second-lien financings pose bankruptcy risks

December 28, 2006

Analysis of:Judge OKs Performance Transportation's bankruptcy plan | www.mlive.com

Second-lien financings have been enjoying a meteoric rise in popularity in recent years. They typically involve loans by both senior and junior syndicates to a common borrower, secured by a common collateral pool. Second-lien financing is attractive to borrowers because the second-lien lenders charge lower interest rates than are generally available from mezzanine or high-yield debt lenders, and the second-lien lenders do not receive equity in the form of warrants or a conversion right. They are also attractive to lenders because second-lien loans get a higher rate of interest than the first lien loan, to compensate for the increase in risk, but they also enjoy the security of a junior lien on assets, a feature not available in a mezzanine or high-yield debt deal. The second-lien loan features lien subordination, i.e. the lien securing the second-lien loan is junior in all respects to the lien held by the first lien lender. However, there is no debt subordination as is the case with mezzanine or high-yield debt structures.

 

The Bankruptcy Side of the Equation

November 27, 2006

Analysis of:US Air makes $8 billion bid for Delta | money.cnn.com

Increased pressure to improve Delta's stand-alone plan.

Creditors likely to weigh how much better they will be treated under the US Airways bid.

Fireworks before 2/15/07 deadline.

Tower Records Will Auction Assets

September 15, 2006

Analysis of:Tower Records files for bankruptcy again | today.reuters.com

-Initial Speculation about Tower Records Chapter 11 case.
-Identifies some key players including CIT as the secured lender.

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