Attorneys from Parker, Hudson, Rainer & Dobbs are handling the Chapter 11 legal work for the bank whose failure has been dubbed the largest of 2009: Montgomery, Ala.-based Colonial BancGroup Inc.

In June, Colonial had approximately $22 billion in assets and $20 billion in total deposits. Earlier this month, Winston-Salem, N.C.-based BB&T purchased about $20 billion of those assets, with the Federal Deposit Insurance Corp. retaining the remaining assets. By the time Colonial filed for reorganization in U.S. Bankruptcy Court for the Middle District of Alabama on Tuesday, it reported $45 million in assets and $380 million in liabilities.

Parker, Hudson lawyers listed on the bankruptcy filings are C. Edward Dobbs and Rufus T. Dorsey IV. W. Clark Watson of Balch & Bingham in Birmingham also represents the bank.

Dobbs said this is the first time his firm has represented Colonial, and that he believes that was one of the criteria for the firm’s selection. “That’s not uncommon in bankruptcy cases because of the potential for conflicts of interest,” he said.

Though he said he is not certain why his firm was selected over other firms, he did say that Colonial’s general counsel David Byrne, now with BB&T, told him he knew of the firm because of a case Parker, Hudson handled in Montgomery some years ago. The firm handled the reorganization legal work for Enstar Group, a bank holding company which Dobbs said was much like Colonial BancGroup.

Dobbs called the Enstar case, in what might be termed an understatement, a “fairly successful” one: creditors received 100 cents on the dollar, plus interest; security holders kept their stock and saw its value rise dramatically.

"The shareholders went from expecting nothing in the bankruptcy case to post-confirmation and reissuance of the shares with a market capitalization of between $35 million and $50 million," he said. Then, he added, several years later, Enstar merged with a Bermuda-based company called Enstar Group Ltd. The merged company's shares were valued at about $100 each, he said. "And that was just 50 percent of the merged entity, so the total merged entity [had] an over-a-billion-dollars market capitalization." 

That kind of result, he said, isn't likely with Colonial. Colonial, according to news reports, suffered in the credit crisis because of higher charge-offs and rising foreclosures in its Florida construction-loan portfolio.

The bankruptcy petition indicates that Colonial’s liabilities include $253.7 million in subordinated debt securities and more than $109 million in unsecured debt securities. Most of that debt is owed to the Bank of New York Trust Company N.A. and the Bank of New York Trust Co. of Florida.

Two of the company’s smaller unsecured creditors include Atlanta accounting firm Habif, Arogeti & Wynne, to which Colonial owes $2,265, and Bryan Cave, whose address on the unsecured claims list is its St. Louis, Mo., headquarters, for $1,574.

Colonial’s recent history is troubled. In early August, the bank’s mortgage lending division in Orlando, Fla., was raided at the behest of the Troubled Asset Relief Program on suspicion of misuse of federal bailout money, and the Securities and Exchange Commission subpoenaed the company seeking disclosures related to its relief program participation.

The Alabama State Banking Department closed Colonial on Aug. 14 and appointed the FDIC as receiver; three days later, the New York Stock Exchange suspended trading in the bank’s stock. After the closure, BB&T assumed most of the bank’s deposits, purchased most of its assets and began operating the bank’s more than 340 branches in Alabama, Florida, Georgia, Nevada and Texas.

The bank is also under investigation by both the U.S. Department of Justice and the Securities and Exchange Commission for accounting irregularities in its mortgage lending unit. There’s also a pending shareholder class action accusing the bank of failing to disclose that its receipt of $550 million in relief money was contingent on the company raising $300 million in private financing.

Chief Financial Officer Sarah Moore’s declaration, in the bankruptcy court file, indicates that Colonial’s pre-tax losses for the first six months of 2009 were approximately $638 million; in 2008, they were $1.128 billion.

DLA Piper lawyers are working to help their clients get a piece of the $7.2 billion in stimulus money targeted, in part, at efforts to increase broadband Internet access in rural areas.

The stimulus money is intended to bring high-speed Internet connections—via cable, DSL or satellite, as opposed to slower dial-up access—to areas of the country now served by, for example, just one provider or none at all.

Partner Joseph Silver said the firm has about a dozen clients in different states who are seeking funding from the Recovery Act program, as well as necessary matching funds from private
investors. Six Atlanta attorneys have worked on these funding requests, as well as other lawyers from the firm’s offices around the country.

“The firm has basically created a collaborative effort among our venture capital team, our telecommunications practice and our government affairs practice to identify clients and help them with their applications to various agencies … and to help them identify private sources of funding,” he said.

As the government programs are constructed, businesses seeking funding must get 80 percent of their money either from the Commerce Department’s National Telecommunications Information Administration, which is tasked with distributed $4.7 billion for broadband initiatives, or from the Agriculture Department’s Rural Utility Service, which will distribute $2.5 billion targeted specifically at rural broadband access. Businesses must then raise 20 percent of their funding from private sources, Silver said.

Funds must be distributed before Sept. 30, 2010, and used for projects that can be completed in two years.

Silver said clients don’t want their identities revealed at this point, but he added that the client list includes technology companies, emerging growth companies, companies backed by mezzanine lenders and businesses associated with state governments. The types of businesses include wireline and wireless providers and providers offering to construct a variety of facilites, including those that offer last-mile facilities, which connect the end-user to the Internet; middle-mile facilities, which offer the infrastructure needed to connect, among other things, data centers to one another; and long-haul facilities, which may provide long-distance fiber routes between, for example, Atlanta and Miami.

Silver said DLA lawyers have helped clients by working on executive summaries and business plans to attract private investors, handling all financing documentation, contracts and associated lobbying, and by helping with the government application process.

All application materials for funds targeted at unserved and underserved areas were due to the government on Aug. 20—a deadline extended from Aug. 14 because the response from interested companies was so great that it caused the government’s Web site, www.broadbandusa.gov, to crash, Silver said. All of DLA’s clients, he said, were applying for this type of funding.

“Hopefully we’re going to be certain to hear something in early November,” he said. “I think when people get news of positive responses and awards it may spur additional applications. … I think it’s going to lead to more work going forward as it becomes more public.”

Attorneys from Jones Day’s Atlanta office advised Bayer CropScience in its agreement to purchase Athenix Corp., an agricultural biotech firm whose founders helped produce the first genetically modified corn in 1995.

Led by Sanjiv K. Kapur, a corporate and M&A partner in the firm’s Cleveland office, other lawyers on the deal included Atlanta partner Lisa A. Stater and associate Daniel S. Fishbein, both of whom handle corporate and securities matters, and executive compensation partner Rory D. Lyons, according to information from the firm.

Stater referred comment to Kapur, who said, “It’s a large transaction, it’s an important transaction for Bayer.”

In part that’s true, he said, because the crop science field has changed from a chemical to a biotech focus in recent years. “It’s an affirmation of the change of focus of Bayer’s crop science business.”  

Bayer CropScience is a division of Bayer AG, a health care, nutrition and high-tech materials company founded in Germany and with operations worldwide. Bayer CropScience focuses on the marketing and development of seeds as well as insecticides, herbicides and fungicides, and that’s where Athenix comes in.  Athenix, a privately held company based in Research Triangle Park, N.C., genetically engineers corn and soybeans to resist insects and tolerate chemical herbicides. That expertise will help expand Bayer’s existing program of trait modification for core crops including oilseeds, cotton, rice and wheat.

The deal still is subject to regulatory approval under the Hart-Scott-Rodino Act, Kapur said. A final purchase price has not been disclosed, but the financial Web site Hoovers.com estimates 2008 annual sales at $4.5 million.

Athenix, represented in the deal by attorneys from Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan in Raleigh, was founded in 2001, has 65 employees and according to news reports, has raised at least $43 million in four venture capital rounds. Bayer CropScience has more than 18,000 employees worldwide, with about 450 in the Raleigh-Durham area. It contributed some $9 billion in revenue during 2008 to its parent, Bayer AG.

Despite reports that the economy is about to improve, bankruptcy filings across the United States and in Georgia continue to increase.

More than 1.3 million bankruptcy cases were filed nationwide in the 12-month period ended June 30, according to statistics from the Administrative Office of the U.S. Courts. That's a 35 percent increase compared with the 967,831 filed during the same period in 2008.

In the bankruptcy courts in Georgia's three districts, filings for the same comparison period rose 27 percent, growing by more than 15,000 to 69,980.

Filings in the U.S. Bankruptcy Court for the Northern District of Georgia remained high as well.

According to data compiled by the clerk's office, Chapter 7 filings spiked in the first half of 2009, when compared with the same period in 2008, rising 60 percent, from about 9,500 to more than 15,000. Chapter 11 reorganization filings increased as well, though not as dramatically, moving up 16 percent, from 170 to 197. Filings for Chapter 13 repayment plans remained fairly steady, growing 5 percent, from 8,370 to 8,768.

That data comes on the heels of several positive economic indicators and reports.

Earlier this month, the government reported that in July, for the first time in months, the United States suffered fewer job losses than in the prior month, with employers slashing 247,000 jobs compared with January's high of 741,000. Also, in the Blue Chip Economic Indicators survey of private economists, 90 percent of respondents said they believed the recession would be declared over in the third quarter of this year. The respondents also said they believed that the issues going forward were how quickly the recovery would occur and how strong and long-lasting it would be.

The most recent filings in Georgia's Northern District, which are not included in the 12-month statistical calculations compiled by the Administrative Office of the U.S. Courts, still show a continuing increase in bankruptcy activity.

In July alone, Chapter 7 filings rose 59 percent from the same month a year ago, from 1,741 to 2,767. Chapter 13s increased 39 percent, from 1,253 to 1,736. Chapter 11 reorganizations, while still not high when compared to much more active courts such as those in Delaware or the Southern District of New York, jumped from 19 to 36.

Alston & Bird is counseling Graphic Packaging International Inc. in its offering of $180 million in senior unsecured notes, according to information from the company and the firm.

Led by partner W. Scott Ortwein, a team of lawyers including partners Justin R. Howard, Richard W. Grice and Paul M. Cushing, along with associates Brendan P. McGill and Bethany L. Cooper, worked on the transaction for the Marietta-based subsidiary of Graphic Packaging Holding Co.

Ortwein declined to comment on the deal because it has not yet closed.

This transaction is a follow-on to the $245 million offering Alston & Bird closed for the company in June. The net proceeds from this new offering, according to information from Graphic Packaging, will be used to redeem the remaining approximately $180 million aggregate principal amount of the company's 8.5 percent senior unsecured notes due in August 2011, and to pay accrued interest, fees and expenses connected to both the redemption and the offering.

This will be a private offering pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, with the principal amount of the notes due in 2017. The notes will be guaranteed by Graphic Packaging Holding Co. and Graphic Packaging Corp.

When AGL Capital Corp. wanted to raise some cash, the Atlanta-based financing arm of gas distributor AGL Resources Inc. tapped Kilpatrick Stockton as its counsel for the second time in two years.

In the most recent deal, a $300 million offering of 10-year senior unsecured notes, Kilpatrick partner David M. Eaton captained the transaction, assisted by securities partners W. Benjamin Barkley and David A. Stockton, tax partner Lynn E. Fowler, and associates Adwoa M. Awotwi, Megan K. Callahan and Jessica L. Nash.

AGL’s internal counsel, William A. Palmer III, was the principal in-house attorney on the deal.

“If you look at investment grade corporate bonds, that has been the one bright spot in the market in the U.S. this year,” Eaton said, pointing out that publications such as the Wall Street Journal have reported this as a seller’s market for investment-grade corporate bonds. “What that means is the spread to treasuries—the cost of borrowing money—has gone down for issuers. So really AGL Resources did very well on their cost

of issuing the corporate bonds.”

The coupon rate on the bonds was 5.25 percent, although some were sold at an original issue discount, Eaton said. The last time his firm helped AGL with an issuance, in December 2007, he added, the rate was higher, at 6.375 percent.

Barkley said the deal moved quickly, taking just three weeks from start to finish.

“It was a take-down off of an already filed shelf registration statement,” he said. “These sorts of registered notes offerings happen pretty quickly, and the companies view this window as an attractive time to raise capital in the markets. Plus, the markets are being pretty receptive to these offerings at this time.”

According to information from AGL Resources, the company plans to use the net proceeds of the sale to repay a portion of its short-term debt.

The offering was underwritten by Goldman Sachs & Co., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC, operating as joint book-running managers. Troutman Sanders’ partners Marlon F. Starr and Patrick W. Macken represented the underwriters, with associates Erica B. Jackson and Brad R. Resweber.

This was an unusual deal in only two respects, Eaton said. First, the deal went through with virtually no hassles or hiccups, he said. Second, he added, the deal closed in August—a month that used to be bereft of deals because lawyers, investment bankers, underwriters and other professionals all were on vacation.

“Because of the volatility of the last few years,” Eaton said, the attitude on deal-making has changed to this: “Just do a deal when you can.”

A team of Sutherland lawyers is advising a Houston-based bank in what is reportedly the largest transaction of its kind in Texas this year.

The firm is helping Sterling Bank, a subsidiary of Houston-based Sterling Bancshares Inc., in its purchase and assumption agreement to acquire about $500 million in deposits and 19 Texas bank branches from First Bank, a Missouri state-chartered bank.

Though the deal team is led by Houston-based corporate and financial services partner Annette L. Tripp, two Atlanta lawyers also got in on the action: real estate partner Jennifer R. Van Ness and real estate associate Justin L. Earley. Van Ness could not be reached for comment.

First Bank is represented by Texas-based sole practitioner John S. Daniels.

The deal, which is expected to close in the fourth quarter, also will allow Sterling to purchase about $230 million in consumer and business loans from First Bank, according to information in the company’s filings with the Securities and Exchange Commission.

A U.S. Bankruptcy Court judge has issued the fastest approval of a Chapter 11 reorganization plan in the history of the Northern District of Georgia.

That’s according to information from King & Spalding, the firm that represented paperboard company Caraustar Industries Inc., in its reorganization.

The company filed its voluntary petition and its Chapter 11 plan on May 31, with some amended plans and plan supplements filed after that date; just 65 days later, on Aug. 4, Judge Mary Grace Diehl approved the plan, which allows Caraustar to reduce its debt by about $135 million. The company’s bankruptcy court petition indicates that its overall debt is between $100 million and $500 million, with between $50 million and $100 million in assets. Among the company’s largest unsecured creditors listed in the bankruptcy petition are Oracle USA, Food Lion LLC and E.I. du Pont de Nemours & Co. Caraustar owes the most money—$29 million—to unsecured creditor Bank of New York Mellon, according to the filing.

Caraustar, based in Austell, has nearly 3,000 employees and is one of the largest integrated manufacturers of 100 percent recycled paperboard and converted paperboard projects in North America.

Caraustar is represented by King & Spalding lawyers James A. Pardo Jr., Jessica S. Jackson, Mark M. Maloney and Michelle L. Carter. The company’s Ad Hoc Committee of 2009 and 2010 Noteholders is represented by Dennis J. Connolly at Alston & Bird, and by several attorneys from Stroock & Stroock & Lavan in New York.

Caraustar, a publicly traded company, reported $159.3 million in sales in the first quarter of 2009, compared with $216.5 million for the same period in 2008. The company also reported a net loss of $4.4 million in the first quarter of this year, or 15 cents per share, compared with $200,000, or $0.01 per share, for the same period in 2008. The company has not yet issued a report for the second quarter.

While a number of U.S. banks are floundering, some of those with access to Latin American markets still look attractive enough to lure foreign buyers.

That was the case last week, when Hunton & Williams client Banco de Sabadell, Spain’s fourth-largest bank, agreed to acquire Mellon United National Bank, the Miami outpost of Bank of New York Mellon Corp.

Hunton’s 12-lawyer team was led by Miami partner Fernando C. Alonso. Associate David R. Yates, second-in-command on the deal, was one of only two lawyers from Atlanta who worked on the matter, which was staffed primarily out of the firm’s Miami, Dallas, Richmond and New York offices. The other Atlantan was environmental partner, Catherine D. Little.

Sabadell could pay as much as $144 million for Mellon, according to a report in the Daily Deal.

Yates declined to comment on a specific dollar figure. “It’s really a variable number,” he said. “Even though this is a stock transaction, there are certain assets that will be spun out of Mellon United National Bank prior to closing.”

The final price, he said, will depend upon the size of the deposits on the closing date, and on the value of the loans retained by the bank.

This deal—coupled with Sabadell’s 2007 acquisition of Miami-based TransAtlantic Bank and 2008 acquisition of Spanish bank BBVA’s private banking business in Florida—will push Sabadell’s total U.S. business volume to approximately $6.4 billion.

Yates said he was involved in negotiating the price and structure of the deal, as well as coordinating various aspects of the transaction. Bank of New York Mellon Corp. was represented by in-house counsel Marcia Wallace and Becket Sorce; Hunton lawyers worked with Sabadell’s in-house counsel, including U.S. general counsel Anna Oestereicher and Spanish counsel Maria José Garcia Beato and Oriol de Nadal Alier on a host of issues in addition to the transactional aspects, including ERISA, regulatory and tax matters.

“One huge component was the regulatory work,” he said. “Their international presence is a branch of Banco de Sabadell, they have a chartered state bank called TransAtlantic Bank and Mellon is a fed-chartered bank. … Then, of course, from the ERISA point of view, Bank of New York Mellon has significant company-wide benefit programs, so attempting to carve out and transition a wholly owned subsidiary over to Sabadell was certainly challenging, and took a lot of work on both sides.”

The deal—from letter of intent to the signing of the purchase agreement—took a little more than 2½ months, Yates said, adding, “Both sides really wanted to move as quickly as possible.”

Yates said that a number of Spanish banks have operations in Miami and use the city as a gateway to South American business.

“As far as the economy is going, banks are certainly hurting, but there are some different metrics we have in the United States,” he said, referring to why the Spanish and Latin American bank business may not be as beleaguered as that in this country. “There’s maybe not as many loans, so a lot of the loan defaults and the troubles that the banks have experienced in the United States is not as present or as significant in Latin America.”

When King & Spalding advised Sprint Nextel Corp. in its agreement to acquire Virgin Mobile USA for a total equity value of about $483 million, Atlanta lawyers were in on the action.

The equity value of the deal includes Sprint’s current 13.1 percent fully diluted ownership interest in Virgin Mobile.

Though the deal was led by New York corporate partners E. William Bates II and Adam M. Freiman, nine members of the 18-member team were from Atlanta.

“The way transactions are done these days, it’s pretty seamless, particularly if you’re in the same time zone,” said King & Spalding Atlanta partner Robert G. Woodward, who led the tax aspects of the deal. “It was a firmwide effort, and we had lawyers, as we frequently do, from numerous offices.”

Woodward compared the staffing and structure of this deal to an earlier transaction King & Spalding handled for the company.

“We had a very large, complicated transaction that we handled in 2008 for Sprint Nextel, which was one of the joint ventures in the Clearwire Corporation entity, for example, and that similarly involved lawyers from lots of offices,” he said.

The deals’ structures were similar, he explained, because both involved a public company in which Sprint was an investor through a subsidiary partnership and various aspects of the formation of a public entity in connection with an initial public offering.

For example, Woodward said the tax aspects of the most recent deal included negotiations and documentation related to the termination of a tax receivable agreement that dated back to Virgin Mobile 2007 IPO.

“There were some payment obligations under that agreement,” he said. “It was a negotiation for a settlement for a determination of the amounts to be paid.”

That’s important, because Sprint Nextel has agreed to retire all of Virgin Mobile’s outstanding debt, which is in excess of $200 million, he said.

Other Atlanta lawyers working on the deal were: employee benefits partner Donald S. Kohla and consultant Jan G. Marsh; tax partner James H. Lokey Jr.; business litigation partners Daniel J. King and Michael R. Smith, and associate Shelby S. Guilbert Jr.; environmental partner Les A. Oakes; and corporate project attorney Donald E. Meyer.