Bankruptcy Roundup: Argentina, GM, Radio Shack, Revel

US District Judge Thomas Griesa held Argentina in contempt of court September 29, a rare though not unprecedented move, in connection with the troubled nation’s ongoing sovereign debt disputes. Argentina had been ordered previously to make payments to two US-based hedge funds before other bondholders, but has yet to do so. The Argentinean government responded defiantly by placing $161 million in bond interest payments into a state-run financial institution that is not subject to US control and by declaring that the payment showed its commitment to its bondholders.

General Motors returned to an investment grade rating with Standard & Poor’s (S&P) for the first time since its bankruptcy and subsequent government bailout last decade. S&P analysts believe that the recent auto recall and scandal that ensued from allegations of withheld information regarding auto defects, some blamed for fatalities, will have only a small impact on the company going forward. GM tried to use its earlier restructure to shield itself from financial responsibilities stemming from safety incidents occurring around the time of the bankruptcy.

Radio Shack received good news, a rarity for anyone in the retail electronics field of late, as a hedge fund with significant holdings in the company agreed to pump in needed financing to prevent the company from becoming insolvent in 2015. That sector and specifically Radio Shack, which was noted in an NACM Industries to Watch article in August 2013, is comprised of a high number of financially overleveraged retailers with a multitude of problems such as oversized stores, too many locations, an inadequate response to e-commerce strategy and notoriously poor management decisions. Radio Shack did try to trim its number of stores and hours of operations to save money, but has continued to rack up quarterly losses.

Revel Casino may have some life left after all. Its September bankruptcy auction drew at least two buyers, with a winning bid hitting $110 million for the two-year-old, lavish Atlantic City property that cost more than $2 billion to build. The winner, Brookfield Asset Management, seems intent on reopening the property as a casino even though Revel was one of one of four Atlantic City gaming operations to shutter its doors in 2014 because of oversaturation in the industry in the region and weakened demand in a still lackluster economy.

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