A hearing will be held tomorrow, June 14, in the Point Blank Solutions bankruptcy. There are numerous issues, including an attempt by the unsecureds to probe further into the bankruptcy financing.
There are two other issues of interest to equity holders.
Equity Committee
Shareholder Ryan Levenson (Privet Capital) filed a paper today (DI 333), which states the US Trustee is soliciting for interest in serving on a Point Blank Solutions equity committee. It seems self evident there will be interest. I think that would be most "fair" in this case, because the company has been so badly managed and shareholders have long suffered. Current management and the unsecured creditor committee appear to have no outright equity stake in the parent.
My one concern with the viability of an equity committee is that the company does not appear to be solvent, absent recovery from David Brooks. If the company is not solvent, and the entirety of the residual estate belongs to the unsecured creditors, there simply should not be an equity committee, as the cost would be pay by the unsecured creditors.
However, there are also public policy issues with the David Brooks settlement and I think some kind of equity committee would be appropriate.
Cohen Motion to Lift Stay
David Cohen filed a supplemental reply (DI 301) asking for the court to lift the stay motion on Cohen's appeal of the settlement of a derivative suit filed against David Brooks.
This was the subject of a court hearing in June. The unsecureds had argued for a limited lift of the stay, on the issue of the Brooks' indemnification only. I don't know why Mr. Cohen was not amenable to that, and I do not know if that is even an option for the bankruptcy court, to rule for a limited lift.
The court had asked the parties to attempt to resolve the situation, and apparently that was not successful.
I think it is very interesting that only Mr. Cohen has made a filing prior to tomorrow's hearing. And the schedule shows it will proceed. In June, a Federal lawyer (from the SEC, I think) made an appearance, though the SEC did not file. There was no federal filing this time either, which I find curious.
Net, there did not appear to be any new argument in Mr. Cohen's supplement. He continues to argue the estate may recover a great deal of money with a successful appeal, and the normal bankruptcy stay will protect the estate from any negative consequences of the lifting of the stay.
I think the appeal deserves to be heard, and I hope there is some way the court can make it happen. However, as with the equity committee, the primary focus is likely to be on the unsecureds. My guess is if the limited lift were a viable option, Mr. Cohen and the unsecureds would have reached agreement. If there is any risk to the estate from a lift, I would expect the the stay will remain until the Brooks criminal trial is resolved, and it is known whether Mr. Brooks would have the capacity to pay any SOX civil liability.
EDIT: A few hours after writing this, I learned the testimony in the Brooks trial ended. I do not think the court will lift the stay now, it will prefer to wait for a ruling.
http://www.fuzzyaccounting.com
There are two other issues of interest to equity holders.
Equity Committee
Shareholder Ryan Levenson (Privet Capital) filed a paper today (DI 333), which states the US Trustee is soliciting for interest in serving on a Point Blank Solutions equity committee. It seems self evident there will be interest. I think that would be most "fair" in this case, because the company has been so badly managed and shareholders have long suffered. Current management and the unsecured creditor committee appear to have no outright equity stake in the parent.
My one concern with the viability of an equity committee is that the company does not appear to be solvent, absent recovery from David Brooks. If the company is not solvent, and the entirety of the residual estate belongs to the unsecured creditors, there simply should not be an equity committee, as the cost would be pay by the unsecured creditors.
However, there are also public policy issues with the David Brooks settlement and I think some kind of equity committee would be appropriate.
Cohen Motion to Lift Stay
David Cohen filed a supplemental reply (DI 301) asking for the court to lift the stay motion on Cohen's appeal of the settlement of a derivative suit filed against David Brooks.
This was the subject of a court hearing in June. The unsecureds had argued for a limited lift of the stay, on the issue of the Brooks' indemnification only. I don't know why Mr. Cohen was not amenable to that, and I do not know if that is even an option for the bankruptcy court, to rule for a limited lift.
The court had asked the parties to attempt to resolve the situation, and apparently that was not successful.
I think it is very interesting that only Mr. Cohen has made a filing prior to tomorrow's hearing. And the schedule shows it will proceed. In June, a Federal lawyer (from the SEC, I think) made an appearance, though the SEC did not file. There was no federal filing this time either, which I find curious.
Net, there did not appear to be any new argument in Mr. Cohen's supplement. He continues to argue the estate may recover a great deal of money with a successful appeal, and the normal bankruptcy stay will protect the estate from any negative consequences of the lifting of the stay.
I think the appeal deserves to be heard, and I hope there is some way the court can make it happen. However, as with the equity committee, the primary focus is likely to be on the unsecureds. My guess is if the limited lift were a viable option, Mr. Cohen and the unsecureds would have reached agreement. If there is any risk to the estate from a lift, I would expect the the stay will remain until the Brooks criminal trial is resolved, and it is known whether Mr. Brooks would have the capacity to pay any SOX civil liability.
EDIT: A few hours after writing this, I learned the testimony in the Brooks trial ended. I do not think the court will lift the stay now, it will prefer to wait for a ruling.
http://www.fuzzyaccounting.com
