On this day in 1977, the Chicago, Milwaukee, St. Paul, and Pacific Railroad filed for bankruptcy. The firm represented the Milwaukee’s shareholders and, after the bankruptcy’s successful conclusion, the reorganized debtor, Heartland Partners. At the time of the Milwaukee’s bankruptcy filing, the line carried 18,000 commuters daily and operated a 9,251-mile system in 17 states, according to the Chicago Tribune. And it was the second Chicago-based railroad to file for bankruptcy within three years; the Chicago, Rock Island & Pacific Railroad – its largest shareholder also represented by Jenner & Block – filed in 1974.
On this day in 2008, the fourth largest investment bank in the country filed for bankruptcy protection. The collapse of 158-year-old Lehman Brothers Holdings Inc., the largest bankruptcy filing in U.S. history, was one event that precipitated the late-2000s global financial crisis. At the time, it was the largest failure of an investment bank in 18 years. “Throughout the day, employees carrying tote bags, suitcases and boxes packed with contents of desks and offices streamed out of Lehman's Times Square-area headquarters,” wrote the Chicago Tribune. In January 2009, the court appointed firm Chairman Tony Valukas as examiner, charged with investigating why Lehman had failed. Later that year, Chicago Lawyer magazine named Tony “Person of the Year,” in part because of his work on Lehman. In 2010, Tony presented his 2,200-page report, coined the “Valukas Report” and applauded for its clarity and usefulness in determining what brought about Lehman’s demise.
A team of bankruptcy lawyers led the post-bankruptcy sale of Chicago-based Archibald Candy Corporation, which included, among its assets, the Fannie May and Fanny Farmer brands of chocolates, recipes and 31 company-owned retail stores. Archibald had filed for bankruptcy in January 2004. In April 2004, Utah-based Alpine Confections Inc. completed the purchase of the brands and other assets for $38.9 million. The sale was selected as the “Transaction of the Year” by the Chicago chapter of the Turnaround Management Association. And the firm’s Bankruptcy, Workout and Corporate Reorganization Practice was honored by M&A Advisor Magazine for leading the “U.S. Middle Market Deal of the Year.”
The firm played a key role in placing Louisiana’s only land-based casino on solid ground. The history of the casino dates back to the 1990s, when several developers – Harrah’s, now part of our firm’s client Caesar’s; a prominent real estate developer; and a group of Louisiana investors– conceived of the facility near the foot of Canal Street in New Orleans. They formed a joint venture, and Harrah’s Jazz Casino opened as a temporary facility in May 1995. Unfortunately, luck was not with the casino, and by that November, it filed for bankruptcy – its first. As a debtor in bankruptcy, Harrah’s Jazz was represented by a Jenner & Block team that included Dan Murray, Ron Peterson, Larry Wolfson and Tim Chorvat. The casino subsequently emerged from a Chapter 11 bankruptcy proceeding and reopened on October 28, 1999 under the name of Jazz Casino Co. According to the New Orleans Times-Picayune, it lost $130 million in its first year of operation and fell short in its obligations to pay creditors. It filed for bankruptcy again, with a team including Dan, Vince Lazar and Tom Monson representing the debtors. In March 2001, the Louisiana legislature met in special session and agreed to give the casino a number of concessions, among them, cutting its minimum tax liability from $100 million a year to $50 million the first year and $60 million thereafter. On this day in 2001, the bankruptcy court in New Orleans confirmed the casino’s plan of reorganization, and the state gambling board officially approved its new contract with the casino as it emerged from its secondbankruptcy. Harrah’s New Orleans Casino, as it is now called, has remained open ever since – save for a brief period following Hurricane Katrina when the facility served as a command center for the federal government’s rescue operations in New Orleans.
On this day in 1995, Bankruptcy Judge John Squires granted a judgment in favor of firm client Northwest Airlines in a bankruptcy lawsuit brought by the trustee of Midway Airlines. Midway had entered bankruptcy in 1991. Northwest expressed interest in buying the airline, but when Northwest later broke off discussions, Midway sued Northwest for more than $100 million. Northwest was represented by David Sanders, Richard Franch, Dan Murray, Larry Schaner, Randy Mehrberg, Bob Markowski, and Jim McKenna, among others.
On this day in 1982, the U.S. Supreme Court ruled in favor of our client Henry Crown, the largest bond holder in the Chicago, Rock Island and Pacific Railroad Co., in Railway Labor Executives' Assn. v. Gibbons. The case arose out of the railroad’s bankruptcy reorganization, which commenced on March 17, 1975. In 1980 -- three days before the bankruptcy court would order the railroad abandoned, with no obligation on the part of the railroad to pay employee labor protection out of its assets -- Congress passed special legislation called the Rock Island Railroad Transition and Employee Assistance Act (RITA), which required the railroad to pay employee benefits of up to $75 million, to the detriment of its secured bond holders, including Col. Crown. In oral argument before the Supreme Court, Dan Murray argued that RITA represented an uncompensated taking of private property and an unconstitutional non-uniform law in bankruptcy. The Supreme Court declared RITA “repugnant to … the Bankruptcy Clause of the Constitution” because it was a non-uniform bankruptcy law. In its unanimous opinion authored by then-Justice William Rehnquist, the Court called RITA “nothing more than a private bill such as those Congress frequently enacts under its authority to spend money.”