Secured notes: 500 million plus is the perceived amount, but Dish has their name on the notes…Total Blockbuster debt equals zero for the secured notes.
Unsecured notes: have Dish’s name on them as well, so in this case it is zero as well.
Studios are the only significant post petition creditor that is unpaid, but their claims are covered by the assets held in the Canadian Trust, so this debt comes to a big zero as well.
Taxing authorities were carefully paid out of the sale proceeds, so this amounts to zero debt.
Lastly are the amounts all the various creditors were owed by Blockbuster on the day they entered court, the pre petition creditors claims. To examine what this total might be, we can look to what took place with the post petition creditors after the auction. After the sale the debtor began to reconcile these claims which were filed during the administration of the case. The debtor began by making long lists of these claims and filing of claims rejection filings with the court, and set a time limit for creditors to challenge the rejection off their claim by the judge. Some creditors did challenge, and many chose not to for one reason or another. Those that failed to challenge the rejection simply lost their claim. Unlike the post petition claims, the pre petition claims have never been reconciled, so we have no real total. However based on the number of administrative claims that were extinguished, I would imagine the total is no where near as high as it appears.
Boiler Room Billy letting the lies flow off his keyboard like the ebb tide out the Gate. Besides stuff he just makes up, his whole premise is that BB Liquidating has been lying to and withholding material facts from the SEC, The DOJ (US Trustee's office), a federal judge and all it creditors. According to to BRB, the statement about the bonds on the KCC cover page is also a lie. The latest lies from BB Liquidating according to him are in the CH & motion, in direct contradiction to his statements not to mention the distribution motions, discussion of what percent the post BK creditors got paid in the various settlement filings and non and on and on. Now let's add Grant Thornton in Canada lying to a Canadian court on how that money was disbursed and for what. And lastly, we now have Dish lying in its 10Ks and 10qs by not listing these large BB Liquidating obligations in its very detailed sections about debts and guarantees and other liabilities. Why are all these guys lying and filing false and/or incomplete statements? because Boiler Room Billy says so! HFG!
stooge,you should add some scripture quotes or throw out that "your on your way to church right now" or remind everyone again that you are involved in no less than 5 trusts. Not that you're a self promoter or anything of the sort, you're just an "honest' guy that likes to point out your "honesty" all the time. You would post under your real name but then we would know who you are. Keep up the good work! I bet you just ran from your private jet to get to your laptop so you can help the people who need it.
A conservative estimate of the number of words Bill has posted in the past five years = 1,000 words a day (very conservative estimate) x 365 days x 5 = 1,825,000 words expressing why folks should buy BLIAQ shares. That's approximately 2 million words and Bill has yet to be right even once!
I have a few points i'd disagree with you on:
re: about the secured debt/// which remains "secured" even if the underlying assets are appraised lower, reduced in value. I should clarify that if the appraised assets (or sold assets), go up in value, the sr. are not then entitled to more. Conversely, if they go down in appraised value, they cannot then increase the potential ownership ratio by claiming they need more of the slice of the pie to be made whole. In other words , the debtor's pledged assets are in a ratio of appraised value relative to the bond. Not in ratio to the other debt. In other words, say half of an pledged asset gets sold (for whatever amount). Then half of the secured debt by it is taken care of. regardless of what that amount is. So, when assets are lower in value to the face of the debt, an "appraisal" by way of an auction, effects what is considered to be by the court, the fair market value in money, and the debt is reduced by that amount as well. It stays in the 1 to 1 ratio and so is considered fair to the sr. lender. What happens though to the balance of the debt? If there is no asset underlying it anymore? what then is the security? Well, it's =ownership of the company. The sr. noteholders would get the company (old shares cancelled and new shares would all go to them). So, the Sr. Debt remains as a 'securitized' debt, and does not become an un-secured debt.
the other thing i disagree with you about, is that DISH could be somehow 'guaranteeing' some of the debt. This wouldn't be allowed by the court as it would change the credit rating of the debt, and so change it legally, structurally. Debt can only be re-structured by the court approval. Now, debt can be bought and sold.
Jerry, A secured party can not have an allowed secured claim that is greater than the valuation of the assets securing the notes. Although they are entitled to a claim in the amount of their notes, including accrued interest. If the appraised value of the assets is less than the total indebtedness on the notes, then they get a secured claim in the amount of the appraisal, and a high priority unsecured claim in the amount of the difference. If the Assets have deteriorated in value while in administration, the secured get a high priority administrative diminution claim for the amount of deterioration in value, which they can support by the evidence.
Since the estate has no assets now, there are no more secured claims.
See: THE VALUATION OF SECURED CLAIMS IN BANKRUPTCY:
"In this framework, one provision of the Code—§506(a)—is of paramount importance.
Section 506(a) sets up a process of “bifurcating” secured claims. If a creditor has a
claim against the debtor, secured by collateral that is property of the bankruptcy estate,
and the value of the collateral is not sufficient to pay the entire claim, then the creditor
is seen as having two claims in the bankruptcy case: first, a secured claim, to the extent
of the value of the collateral (or, in the language of §506(a), “the extent of the value of
such creditor’s interest in the estate’s interest in such property”) and second, an
unsecured claim, to the extent that there is a deficiency in the value of the collateral
(“the extent that the value of such creditor’s interest [in the estate property] . . . is less
than the amount of such allowed claim.”). Thus, §506(a) is directly relevant whenever
a secured creditor is “undersecured,” but it has an even broader impact, since courts
use the principles of valuing interests of creditors developed under §506(a) for
purposes of valuation generally."
If Blockbuster is re launched using a hybrid sat terra distribution pipe, the potenital is unlimited. that's why it doesn't really matter if our shares are diluted to weak tea, just so we remain. And i think we will, for the reason of the the tax credits and in order to launch lightsrd as a public company. And if that happens, we're looking at all of north america and latin america, canada, as the demographics. that's a lot of folks renting a lot of movies.
If the NOL's are to be utilised than the dilution will not be that bad as the shareholders on the BB side need to remain 51% majority. Two things that stand out in this whole saga are the aproval of issuing up to 900mil more shares at the begining of the bk and the shares NOT being suspended indefinately after the halt. If the halt was to prevent confusion by changing the ticker than suspending the shares would have eliminated confusion. As we know, they still trade and bad news has not caused anyone to dump. Still not one person has complained about buying at 34 cents and now " holding the bag".
poor girl you got the short straw to work the weekend oh well remember go light on the cheap wine and popcorn girl cuz you know how you black out and forget that you own 10k shares of a company you go girl nol nol
Now, what is the fulcrum debt? Fulcrum debt is that which is most likely to convert to equity. in our case that would be the jr. un-secured. What is that worth? not 300 mil obviously. nothing, if no POR. but if the debtor is refinanced and the equity has potential? what would it cost to monetize Lsqrd? a lot, if you do an IPO. how much if it is merged with us? how much equity would the fulcrum debt need?
Now this: Debt in bankruptcy has a 'value' as to control. If you have 2/3 of the aggregate amount of the debt, you have control of the voting of that class. In a POR the impaired classes vote yay or nay on the plan. So debt has a tactical "value" in that it can be bought and used to influence the outcome of the bankruptcy. you can see how the politics of this could get pretty wild pretty quickly. In the thing about DISH being on the bonds, i think that is a notation that DISH owns the debt. There cannot be any change in the actual notes themselves.
Jerry, I agree with what you say, and would add that in the eyes of the court the secured portion of the debt is secured only to the amount of the appraised value of the collateral named in the security agreement.
At this time there is no remaining secured assets, therefor there is no more secured debt. The only debt that remains is unsecured and authorized by timely filed claims of various priorities levels. Per the agreed to waterfall, those priorities are defined, but are essentially meaningless, as there is no pot of money to pay even the highest priority of claims.
Now we get to what someone would take for their now worthless claim. I would guess just about anything worth the time it takes to sign and return and agreement to sell a creditors claim, or a release form. So releases from creditors shouldn't be hard to acquire, and would take very little money.
However, in other cases I have read about, it appears that in some cases where a debtor is insolvent, the UCC negotiates, on behalf of all unsecured creditors, a general release of claims. In some of those cases, the agreement reached is the result of the secured ponying up some of their recoveries to share with the unsecured, in return for a general release of claims.
In our case where it is obvious that Dish is guaranteeing the secured and the 2012's notes. It should be also obvious that the secured could part with some or all of the 125 million plus, that they received from the proceeds of the asset sale, if Dish will take care of them another way.
So if it is important to the secured to get this debtor out of court, perhaps because they also own the existing shares, Icahn can get this done by securing releases one way or another.
Once out of court, with apparently valueless shares in hand, the secured, lead by Icahn will make things happen.
Thanks for a new topic of real importance. Let me throw out a few thoughts. First though, let me say that I'm not a bankruptcy lawyer, and so my opinion is only that; i cannot 100% pronounce what "The Law" is, only give my take on it. Ok, so the disclaimer has been made, ha ha!
What is 'debt'? One way of looking at it is that it is money owed, and is therefore a concrete sum, a negative, and must be 'paid' back. We are all familiar with this; I have to pay my bills, and need money in the bank to do this. On a different level, debt is a change in cash flow, and a change in the function of return on investment. So, on that level, the debt is not an amount so much as a variable which is influenced by how the debt is used. to give a real-world (albeit very 'street' example), let's say joe six-pack owes a shylock $ 5000 dollars. to joe, the money debt is concrete, it's $5000 exactly. But to the lender, who can sell it to another lender, it has a variable value based on supply and demand, and an un-certainty variable (risk), of Joe skipping town. This example, taken to more sophistication, goes all the way up to bond valuation formulas. The value of the debt also has to be compared to other available debt. i.e., what if i borrowed from someone else in the open market how much would i pay? so debt has to be looked at specifically in relation to who owes it, and in relation to what others in the general market owe. So: this is 'distressed' debt. Now, shift to what are the legal constraints, of bankrupcy? (cont)
Legally, the secured debt is really the main thing. when assets are sold, the $ raised is the new collateral. however, courts have also held that the ratio can't skew toward the secured unjustly. i.e.: joe owes the bank $10,000, (which was secured by his new truck), and another 10,000 to the hardware store. He goes bk. & the truck gets sold and brings $5000. In a liquidation the bank gets all the 5000. But in ch. 11 they might not, because the courts have held that if the underlying asset devalues, then so too does the amount of debt secured by it.
so the sr. might just get $2500 of it. (the bank had 1/2 of the debt secured in the beginning, so they can't then later take it all)
Now, hat happens to $ though, secured, that has already been shifted to being collateralized by the money itself? Well, the courts have held that the interest payment to the lender can be changed
to reflect a refinancing of the debt. The debt then, i= the present value of cash flow of the note. That number is then refinanced. Now, what is that # as a cost? Well, it would depend on the purchasor of the debt's situation!
So: it is naieve when the bash team says there is x amount of debt. In some situations I can see that the debt might in effect be nothing. In others, such as liquidation, it is very high. It all depends
on who comes in and wants to rehabilitate the company shell and what use they have for the shell. Then you can 'value' the debt. But absent another party, just in a vacuum, it is really meaningless to try and put a concrete number on what the debt is. The bash team does this all the time, but of course I seriously doubt any of them have had any real world financial dealings with debt of any magnitude, or been involved with borrowing of any large amounts of money or deals involving large debts.
Should the debtor chose to make omnibus claims rejections of pre petition claims, we would end up finding out which creditors challenged the rejections and thus have a realistic total. Of course as we saw with the administrative claims, even those who challenge the debtors rejection can, in the end be much smaller than the initial amount of the claim. There is likely another way the debtor could establish a very low number on these claims or extinguish them entirely ending up with no real debt at all.
I think it is possible for the Unsecured Creditors Committee to accept a settlement of these claims baring any action from individual creditors who might hire representation. If the debtor made an offer to the UCC of some very small percentage payment on each claim that was in fact a valid claim, it might be enough that the UCC, as the court appointed representative of the unsecured creditors, would have standing to give a general release of claims to the extent individual creditors didn’t represent themselves.
I think this would be the basis for a negotiated structured dismissal which would follow the securing of a general release. Essentially a release from every creditor, either individually negotiated, as in the case of Hughes Networks, or a general release for the UCC would leave Blockbuster in a position where thee court would have no choice but to dismiss the case.