Inforuptcy Blog Archives September 2014

Seeking Stalking Horse Bidders

Posted by Michael on September 25, 2014

We are delighted to announce a pilot program that provides notice of bankruptcy assets sooner than ever before! As part of our pilot program, we are working directly with several trustees to identify assets for sale where the trustee is seeking a stalking horse bidder. Below are the first batch of our assets:

Three Bed and Two Bath Home in Florida

Four beds, three baths, 2,213 sqft in Florida

Three beds and 2.5 baths townhouse in Florida

3 bed, 3 full bath, 1,149 sqft Single-Family Home in Florida

6 beds, 4 baths, 2,780 sqft in Florida

4 bed and 3 bath Single Family Home in Florida

All real estate and fixtures, as well as all Oil and Gas Interests

Farm ground and various equipment

As you may know, our current database consists of all sale motions, which in most cases means that a stalking horse bidder has already been identified. We heard loud and clear from our current subscribers that they wanted even earlier notice of assets. As such, we have been diligently working behind to scenes to deliver greater value.

During the pilot program and after this initial announcement, we will provide only our subscribers access to these stalking horse opportunities. 

To search and hunt for all asset sales across the country, you can sign up for $99 / month (cancel any time).

If you prefer, you can also schedule a 15 minute web demo so you can see for yourself how to get started.

Schedule a Demo

P.S. If you are a trustee and would like us to showcase your deals in our newsletter, please email us at assets@inforuptcy.com.

P.P.S. Sign up to our free newsletter to learn about more bankruptcy asset sales.

Asset Deal of the Week: Royalty Payments from a Landfill Agreement

Posted by Michael on September 12, 2014

This week we're highlighting the sale of royalty payments from a landfill agreement. You can read the entire sale motion for free and contact the seller to learn more about bidding on these assets or others that we have on our site for subscribers.

Royalty Payments 
Snippet from the Sale Motion

I. FACTUAL BACKGROUND
On May 3, 2012 (the “Petition Date”), the Debtors filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”).

On December 21, 2012, following a hearing on a motion of the United States Trustee to convert or dismiss the Debtors’ case, the United States Trustee appointed Joseph H. Baldiga Chapter 11 trustee of the Debtors’ case.

On January 2, 2013, upon the Trustee’s motion and with the Debtors’ assent, this Court converted the case to Chapter 7, and the Trustee was subsequently appointed the Chapter 7 trustee of this Estate.

On February 14, 2013 and March 27, 2013, the Trustee conducted the initial meeting of creditors pursuant to Bankruptcy Code § 341(a) in the Chapter 7 case.

Since his appointment, the Trustee has worked expeditiously to liquidate certain real and personal property of the Debtors, as identified by the Debtors on their Schedule A and Schedule B, both as amended, for the benefit of the Estate.

Upon review of the Debtors’ Schedules, as amended, and discussions with Mr. Hannon and with Debtors’ counsel, the Trustee determined that Mr. Hannon claims an ownership interest in the Royalties.

II. THE SALE ASSETS
Prior to the Petition Date, on or about October 5, 1999, Mr. Hannon entered into the Taunton Landfill Agreement. The Taunton Landfill Agreement was subsequently amended on April 13, 2000. A copy of the Taunton Landfill Agreement, as amended, is attached hereto as Exhibit B.

Pursuant to Section 9.20 of the Taunton Landfill Agreement, as amended, WMMA agreed to pay to Mr. Hannon an amount equal to seven dollars ($7.00) for each ton of solid waste deposited in a certain landfill located in Taunton, Massachusetts (the “Taunton Landfill Site”) greater than the capacity of 835,000 tons of waste (i.e., the Royalties).

Pursuant to an Agreement for Judgment dated on or about December 11, 2009 and filed in Civil Action No. 2008-1265 before the Massachusetts Superior Court for Norfolk County (the “Agreement for Judgment”), WMMA is required to pay the Royalties in the manner and in the order set forth in the Agreement for Judgment (the “Royalties Payment Waterfall”). A copy of the Agreement for Judgment is attached hereto as Exhibit C.

Specifically, in accordance with Section 4 of the Agreement for Judgment, after full satisfaction of (i) certain monies due to ACSTAR Insurance Company and (ii) $95,969.22 to WMMA, WMMA is required to pay the Royalties as follows:

a. first, $600,000.00 to Stoughton Recycling Technologies, LLC f/k/a T.W. Conroy 5, LLC (“Conroy”);

b. second, $600,000.00 to Boston Environmental and Trucking Corporation (“BEC”);

c. third, $650,000.00 to Conroy;

d. fourth, $650,000.00 to BEC;

e. fifth, $1,000,000.00 in equal amounts to Conroy (50%) and BEC (50%);

f. sixth, after full satisfaction of the payments described in Section 4(a) through (e), any remaining Royalties up to $1,000,000.00 to The McLaughlin Bros., P.C., as Escrow Agent (“Escrow Agent”) to be held for the benefit of Mr. Hannon pursuant to a certain Escrow Agreement dated contemporaneously with the Agreement for Judgment (the “Escrow Agreement”); and

g. seventh, all remaining Royalties to the Escrow Agent in equal amounts to Conroy (50%) and BEC (50%).

In accordance with the Agreement for Judgment and the Royalties Payment Waterfall established therein, the Escrow Agreement directs WMMA to pay Mr. Hannon’s interest in the Royalties to the Escrow Agent and, upon the payment of such Royalties to the Escrow Agent, governs the release of the Royalties to Mr. Hannon. A copy of the Escrow Agreement is attached hereto as Exhibit D.

The Sale Assets are Mr. Hannon’s interest in the Royalties that are payable or become payable pursuant to Section 9.20 of the Taunton Landfill Agreement, as amended, and subject to the Agreement for Judgment and the Escrow Agreement. The Debtors listed the Sale Assets on the Debtors’ Schedule B, as amended, with a current value of “Unknown”. A copy of the Debtors’ Schedule B, as amended, is attached hereto as Exhibit E. Pursuant to Bankruptcy Code § 541(a), the Sale Assets are property of the Debtors’ Estate. The Debtors list no exemptions in the Sale Assets.

During the Debtors’ Chapter 7 case, the Trustee investigated the nature of Mr. Hannon’s interest in the Royalties and learned that WMMA had exceeded the delivery of 835,000 tons of waste to the Taunton Landfill Site, which, in turn, triggered the $7.00 royalty payments for each additional ton of waste delivered. Specifically, to better assess the value of the Sale Assets, in addition to his discussions with Mr. Hannon and his counsel, the Trustee contacted the Escrow Agent, WMMA, Conroy and BEC to determine the status of the Royalties Payment Waterfall and to request an accounting of WMMA’s payment of the Royalties to the Royalties Payment Waterfall recipients.

Routinely throughout the Debtors’ case, WMMA has provided the Trustee with monthly reports of the waste tons delivered to the Taunton Landfill Site which are subject to the royalty stream and the amount of the resulting Royalties. Copies of the relevant reports provided by WMMA and updated through July 2014 (the “WMMA Reports”) and a topographic survey of the Taunton Landfill Site dated June 26, 2013 are attached hereto as Exhibit F.

As part of the Trustee’s marketing efforts, the Trustee compiled a detailed package of information related to the Sale Assets and the status of the Royalties Payment Waterfall for dissemination to potential purchasers, including the Taunton Landfill Agreement, the Agreement for Judgment, the Escrow Agreement and the WMMA Reports. To date, in addition to the Buyer’s offer to purchase the Sale Assets for $70,000.00, the Trustee has also entertained other inquiries from potential purchasers regarding the nature of the Sale Assets and the proposed Private Sale.

Relying on the WMMA Reports, it appears that the royalty stream has generated $2,889,974.29 from May 2008 through July 2014. Upon information and belief, WMMA has distributed the Royalties generated to date in accordance with the Agreement for Judgment as follows:

a. $902,068.08 to ACSTAR Insurance Company;

b. $95,969.22 to WMMA; and

c. remainder to Conroy and BEC (as set forth in Section (4)(a) through (d)

of the Agreement for Judgment).

Currently, upon information and belief, and based on the Trustee’s review of the WMMA Reports, it appears that WMMA is currently paying the monies generated from the Royalties to BEC as the “fourth-level” recipient of the Royalties Payment Waterfall in accordance with the Agreement for Judgment. See Agreement for Judgment, Sec. 4(d).

To search and hunt for all asset sales across the country, you can sign up for $99 / month (cancel any time).

If you prefer, you can also schedule a 15 minute web demo so you can see for yourself how to get started.

Schedule a Demo

P.S. If you are a trustee and would like us to showcase your deals in our newsletter, please email us at assets@inforuptcy.com.

P.P.S. Sign up to our free newsletter to learn about more bankruptcy asset sales.

Asset Deal of the Week: Clean Energy Can Lead to Clean Profits

Posted by Michael on September 4, 2014

This week we're highlighting the sale of seven (7) hydro-electric plants in upstate New York. You can read the entire sale motion for free and contact the seller to learn more about bidding on these assets or others that we have on our site for subscribers.

Hydro-Electric Plants in New York
Snippet from the Sale Motion

PROCEDURAL BACKGROUND
On or about August 27, 2001 (the "Petition Date"), the above-captioned Debtors each filed individual cases under Chapter 11 of title 11 of the Bankruptcy Code in the United States Bankruptcy Court of the Eastern District of North Carolina, Raleigh Division (the "North Carolina Bankruptcy Court"). The cases are being jointly administered.

Pursuant to an Order entered in the North Carolina Bankruptcy Court on or about December 13, 2001, the cases were transferred to this Court.

No trustee has been appointed for the Debtors.

In 1987, Trafalgar developed seven (7) hydro-electric plants in upstate New York. TPI owns six (6) hydro-electric plants that are located in Ogdensburg, Forestport, Adams, Kayuta Lake, Cranberry Lake and Herkimer; and a seventh facility is owned by Christine Falls (collectively, the "Facilities" or the "Assets"). Trafalgar is the sole shareholder of Christine Falls.

The Algonquin entities have been responsible for maintaining, operating, repairing and managing the Facilities for almost two decades. Algonquin Power Corporation ("APC") is the named manager and operator of the Facilities. APC engaged its subsidiary, Algonquin Power Systems, Inc. ("APS"), to operate, maintain and arrange for necessary repairs to the New York Facilities. Algonquin Power Income Fund ("APIF") asserted a claim in this case alleging that it acquired a note secured by the Facilities and cash collateral (APIF, APC, and APS are collectively referred to as "Algonquin").

The Algonquin claims are subject to objections that are pending before the Court (See Dkts. 546, 564, and 567). As such, the validity and scope of Algonquin's claimed security interest is undetermined at this time.

Several of the Facilities are not operating, and the cost of maintaining the Facilities is far exceeding their income. In addition, there is an active market of qualified buyers who are interested in pursuing acquisition of the Facilities. Thus, the Debtors believe the sale of the Facilities at this time would be in the best interests of the estates.

As a result of the foregoing, in May 2014, Harris Beach PLLC, as counsel to the Debtors, began contacting various parties involved in the hydroelectric power industry that previously expressed an interested in purchasing the Facilities. While continuing the due diligence process with those parties, the Debtors determined that the retention of an investment banker to assist with the sale process was necessary to maximize the sales price of the Facilities while still moving expeditiously in light of the diminishing funds in the Debtors' debtors-inpossession account (the "DIP Account").

The Debtors have hired Clearbid Capital, LLC ("Clearbid") as an investment banker, subject to approval by the Court, whose fees and costs will be paid from the proceeds of the sale.

Clearbid will market the Facilities on a national and international basis to maximize the value of the Facilities, but will accomplish those efforts on an expedited basis to allow a sale to occur in September 2014, with a closing date before the end of 2014.

THE PROPOSED SALE OF DEBTORS' ASSETS
As noted above, the Debtors are experiencing significant financial difficulties. Several of the Facilities are not currently operating and the expenses incurred in maintaining the Facilities far exceed the Debtors' income. As a result, the funds in the DIP Account have been diminishing and will be completely depleted in the near future.

Given the current state of the Facilities and the Debtors' financial situation, the Debtors have determined that it is in the best interests of the estates, their creditors and other parties in interest to sell the Assets to a Purchaser or Purchasers as soon as practicable. The Debtors believe that the approval of a sale of the Assets is critical to preserving their value for the benefit of all creditors.

The Asset Purchase Agreement contemplates a sale of the Assets, free and clear of Encumbrances with all such interests to attach to the proceeds of the sale in the order of priority and with the same validity, force and effect that such interest has against the Assets.

The Asset Purchase Agreement
At this time, the Debtors do not have a selected stalking horse bidder, although they believe a stalking horse bidder will be forthcoming by August 8, 2014. However, the Debtors have prepared the Asset Purchase Agreement to serve as a template for the anticipated sale of the Assets. The proposed terms of the Asset Purchase Agreement are generally as follows:

(a) The Parties. The Debtors are the "Seller" and Purchaser is to be determined.

 (b) The Assets. The Assets to be sold pursuant to the Asset Purchase Agreement are all of the Debtors' operating assets consisting of all seven (7) of the Facilities.

(c) Purchase Price. To Be Determined.

(d) Required Cash Deposit. Ten percent (10%) of the Qualified Bid (as defined below) is the required cash deposit.

(e) Conditions. The Proposed Sale is subject to several conditions set forth in the Asset Purchase Agreement, including: (i) the Purchaser must apply within five (5) days after being designated as the Successful Bidder at the Sale Hearing, to the Federal Energy Regulatory Commission ("FERC") for expedited consideration of the transfer of the Debtors' licenses and for other regulatory approvals to allow a 'closing to occur on or before December 23, 2014; and (ii) approval by the Bankruptcy Court.

(f) Termination. The Asset Purchase Agreement terminates under certain circumstances set forth therein.

(g) Higher and Better Offers. As set forth in further detail below, the Sale of the Assets is subject to the submission by "third parties of higher and/or better offers.

(h) Bid Increments. Any initial competing bid shall be announced at the Auction. It is anticipated that a competing bid higher and/or better than the initial Stalking Horse Bid shall be three percent (3%) plus $100,000 higher, with other competing bids thereafter to be in increments of $50,000. In the event there is no Stalking Horse Bid, a competing bid higher and/or better than the initial bid shall progress in increments of $50,000. Debtors expressly reserve the right to modify these movements at the Auction.

To search and hunt for all asset sales across the country, you can sign up for $99 / month (cancel any time).

If you prefer, you can also schedule a 15 minute web demo so you can see for yourself how to get started.

Schedule a Demo

P.S. If you are a trustee and would like us to showcase your deals in our newsletter, please email us at assets@inforuptcy.com.

P.P.S. Sign up to our free newsletter to learn about more bankruptcy asset sales.