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Krispy Kreme Doughnuts, Inc. Message Board

  • lawboy27dli lawboy27dli Oct 19, 2005 1:28 PM Flag

    BK consolidation

    While this is not my area, it appears we are being misled. Here's a bit of analysis for you:

    <<(I)n recent years, bankruptcy and appellate courts have split with respect to the circumstances in which substantive consolidation is available. One line of cases held that substantive consolidation was appropriate where a substantial identity existed between entities and consolidation would avoid some harm or achieve some benefit. The other line of cases allowed consolidation where creditors dealt with the entities as a single economic unit and the affairs were so entangled that consolidation would benefit all creditors. In the Owens Corning case, the Third Circuit, in essence, adopted the latter line of cases with some additional parameters.>>

    If KKD filed, you might be able to bring in the smaller units, but not the other way round.

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    • <<<< I guess they're not as bad off as we thought. Otherwise, they would have filed. >>>>

      Where have I seen that statement before?

      Funny how bullish price action helps the shorts "see the light."

      ArbThis

    • <<<< While this is not my area, it appears we are being misled. Here's a bit of analysis for you:

      <<(I)n recent years, bankruptcy and appellate courts have split with respect to the circumstances in which substantive consolidation is available. One line of cases held that substantive consolidation was appropriate where a substantial identity existed between entities and consolidation would avoid some harm or achieve some benefit. The other line of cases allowed consolidation where creditors dealt with the entities as a single economic unit and the affairs were so entangled that consolidation would benefit all creditors. In the Owens Corning case, the Third Circuit, in essence, adopted the latter line of cases with some additional parameters.>>

      If KKD filed, you might be able to bring in the smaller units, but not the other way round. >>>>

      I agree. The shorts on this board do mislead.

      I am still waiting for Di_Ver_Se_fi to support has statement that some factory stores in Chicago have converted to satellite stores.

      I asked him to post the link and/or give us addresses so that I can verify his statement. He hasn't given us any of this information. It appears that he fabricates information to support his short case.

      ArbThis

    • Just thinking aloud:

      What could KKD possibly do with the territories now 'owned' by the franchisees? The brand and the product both failed in these regions. A new business model is quite unlikely to reverse that result. [I happen to think that the product itself is the problem: after a few months most people recoil from the overly sweet, overly gooey concoction. True, the story is different in the Southeast. Why? I don't know, but I can point to another, similar culinary preference in the same region: grits. Further, even in Texas, the KKD product failed.]

      Is it possible that Kooper is not really after the territories but he's trying to stave off the law suits? Or, at least, to discourage the contingency lawyers from pursuing the suits seriously? One way to do that is (?) saddle KKD with even more debt, which, after all, is the net result of the California bankruptcy. [Kooper did not have enough time to persuade the other ADs, but he must be confident that it's only a matter of a short period of time before they, too, capitulated. I also hear that, for businesses, the new BK rules are not nearly as onerous as for individuals.]
      One clue that there may be something to this thought: the lenders are remarkably quiet about the assumption of a substantial new debt by the comany.

    • Same difference - third circuit laws (and Mary W., by the by) are not as friendly as second circuit laws and judges. I haven't really been paying attention to this filing, but it would surprise me if someone with Cooper's experience would take the chance on relation back via administrative consolidation in the 3rd Cir. I would have advised against.

    • What about the 50-100 leases between Dallas, NoCal, Glazed, Michigan, etc...?


      I guess they're not as bad off as we thought. Otherwise, they would have filed.

    • No, it's a possibility. I don't understand bankruptcy nearly well enough to figure out what these guys are doing. It appears to me that KKD and the area developers are trying to wait each other out. I suspect that KKD wants the area developer territories and the area developers are hoping they'll get damages in court against KKD.

    • How did the Enron bankruptcy get into the New York court?

    • As long as all parties are in bankruptcy, they can be substantively consolidated (absent objection by a particular creditor, which leads to the cases) regardless of who went first. No way KKD will file in PA - will file elsewhere and ask main court to remove previous filings to new court (probably SDNY).

 
KKD
16.96-0.28(-1.62%)Aug 27 4:03 PMEDT

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