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That loud noise you hear is the sound of some of South Florida’s most familiar business names tumbling one after another into bankruptcy court. Renaissance Cruises, ANC Rental, American Classic Voyages cruise line and broadband cable installer Viasource Communications have all given up the pretense of financial health and turned toward Chapter 11 relief from creditors in a bid to reorganize their operations. And Fort Lauderdale-based equipment leasing company NationsRent Inc. announced last week that it’s considering the reorganization option as well. But none of the debtors stepped into the Chapter 11 zone without the direct involvement — or at very least the tacit approval — of their lenders. The relationship between companies and their lenders is complex, and can be the factor leading companies into bankruptcy court, according to some industry insiders. “There are all sorts of reasons why a lender would force or allow a debtor to go into Chapter 11,” said David Levine, a bankruptcy partner with Tew Cardenas in Miami. The main reason a lender can force a company into Chapter 11 — or at least approve the move — is that lender feels insecure about management or what will happen to the proceeds of the company’s cash collateral, he said. When the lenders can’t take the uncertainty, he explained, they’re likely to start hinting at Chapter 11. For the South Florida companies filing for reorganization, lender insecurity combined with the effects of the Sept. 11 terrorist attacks. Some of the bankrupt companies such as car rental company ANC and cruise operators American Classic Voyages and Renaissance were linked to the tourism industry, which took a steep dive after 9-11. The others, Viasource and NationsRent, were already burdened by large debts before the attacks. The main advantage for the lender when a debtor files Chapter 11 is security. When a business reorganizes under Chapter 11, the lender can provide the business with secured financing and be assured that it will receive its money back. There’s no grace period, according to Levine. “Lenders may force a bankruptcy filing from a company that was already in trouble before Sept. 11,” he said. Indeed, most of the companies showed signs of weakness before the terrorist attacks. Take American Classic Voyages. The Miami-based cruise line company voluntarily filed for Chapter 11 protection on Oct. 19. “The tragic events of Sept. 11 dealt a devastating blow to our business that has made it impossible to continue our full operations,” said company chief executive Phil Calian in a statement. American Classic Voyages, which trades on the Nasdaq under the symbol AMCVQ, saw bookings decline by half while cancellations increased by 30 percent in the four weeks immediately following the attacks. But the company had been troubled before Sept. 11 by declining occupancy and per-passenger revenue. Although it continues to deny that it is going out of business, American Classic Voyages has ceased to operate four of its five Delta Queen ships. It said that it will continue to negotiate with Litton Ingalls Shipbuilding, the Pascagoula, Miss., shipbuilder it contracted to build two new cruise ships. The vessels would be the first cruise ships constructed entirely within American borders in nearly 50 years. According to the bankruptcy filing, American Classic Voyages is indebted $300 million to Litton Ingalls for the two ships. The company’s largest creditors include Litton Ingalls and Bank of New York. Neither creditor returned calls seeking comment. At the time of the bankruptcy petition, American Classic Voyages had $547,332 in secured debt, compared to nearly $300 million in unsecured debt. While American Classic Voyages is at least still trying to stay in business, one competitor is not afloat anymore. Renaissance Cruises, a privately held cruise line based in Fort Lauderdale, voluntarily filed for Chapter 11 protection on Sept. 25 in Fort Lauderdale and immediately ended all of its operations. Renaissance’s largest lenders are Germany’s Hamburgische Landesbank, and France’s Electro Banque and Credit Agricole Indosuez. The lenders were actually in talks with Renaissance about extending additional financing before the Sept. 11 attacks, according to Jim Fierberg, an attorney in the Miami office of Berger Singerman, and one of the attorneys representing the company. “But that financing didn’t come to fruition,” said Fierberg. Since the banks don’t have liens on all of the company’s assets, the company is selling off what it can. On Nov. 28, the company will auction its computer equipment, art, memorabilia and furniture in an attempt to raise funds to pay its outstanding debts. But freezing operations and selling off even the most inconsequential of assets only happens when a company is mired in most dire straits. According to Levine, while an insecure lender may find a company’s financial position so precarious that bankruptcy court seems the most preferable option, they may still want to keep the company in business (and not incidentally, get back the money the company owes). Such may be the case with Viasource Communications. The company voluntarily filed for Chapter 11 protection Nov. 15, but its principal lender, GE Capital, immediately offered $10 million in financing. Viasource had been restructuring for a few months “and was actually in an upswing,” when it filed for protection, according to company spokeswoman Tracy Greenberger. “Over the past several months, we have made significant strides toward, and essentially completed, a strategic restructuring to address administrative inefficiencies and better integrate and streamline the business. However, given our current cash position, filing for Chapter 11 protection is now a necessary step to complete the turnaround while continuing to support operations in the field and serve our customers,” said company president Colin McWay in a statement. The $10 million will be used to pay employees and creditors during the reorganization process. David Softness, a partner in the Miami office of Akerman Senterfitt, represents Viasource. He couldn’t be reached for comment. Judge Raymond B. Ray of Fort Lauderdale will hear the case. ANC Rental, which operates the Alamo and National chains, is another company that had been troubled before the terrorist attacks. “Business overall was slower before Sept. 11,” said Cathy Stephens the executive editor of trade publication Auto Rental News, primarily because a lot of the car rental companies had too many vehicles. When rental car companies have too many cars idle, they cut rates to get those cars on the road. ANC Rental was among those companies. In an Aug. 10 filing with the Securities and Exchange Commission, the company reported utilizing less of its fleet (76.9 percent) in June 2001 than it had in June 2000 (79.6 percent). Sept. 11 only heightened ANC Rental’s troubles. The first rumblings of trouble came in late September, when the company released a statement that said it was in discussions with creditors about options to improve its liquidity. In October, ANC Rental sought a buyer, to no avail, and reorganized its executive staff, bringing in former National Car Rental president Lawrence Raemakers as its new president and chief operating officer. It also shut down its 260-employee Charlotte, N.C., reservation center. It wasn’t enough. The company — the fourth largest in the industry — voluntarily filed for Chapter 11 protection on Nov. 13, but remains in operation. It had been scheduled to make a $70 million payment to its lenders, including its largest lender, Lehman Bros. Holdings Inc., on Nov. 15. Lehman Bros. hadn’t been happy with ANC Rental’s performance for quite some time. “They need to work on their cost structure and should especially improve brand equity with each of their divisions,” Nicholas Lobaccaro, a Lehman Bros. analyst, told the Review in February. Lobaccaro is now restricted from commenting on the company’s fortunes because ANC also hired Lehman Brothers to evaluate options for a possible sale of its businesses. Meanwhile, NationsRent Inc. is on the short-list of suspects for a future bankruptcy filing. The company reported Nov. 14 both a net loss for the quarter and that it doesn’t expect to make a $53 million loan payment due Dec. 1. The company says it’s able to continue its operations if its lenders agree to delay the payment. It also said it’s not in compliance with the terms of its loan agreement. In March, the company agreed to an amendment to a credit facility provided by a lender group that includes Bay View Financial Corp., Credit Lyonnais, Bank of Austria, Washington Mutual Bank, SunTrust Bank and Union Bank of California, none of which returned calls. The terms of the credit facility include a $400 million term loan due July 2006 and a $450 million revolving credit line due July 2004. The company acknowledged the possibility of bankruptcy, saying in a statement that it is considering all available options including a court restructuring. NationsRent reported a quarterly loss as of Sept. 30 of nearly $20 million, compared to earnings of $1.3 million for the same period a year earlier.

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