 | | Featured Premium Content | | | | | Debtwire: LME Season Stays Open After Serta Ruling
Financial sponsors are expected to pursue more creative ways to execute liability management exercises after an appeals court called into question common strategies sponsors have employed to deleverage distressed portfolio companies, according to a Debtwire analysis. “Borrowers will need to find some other language that might work or another creative way that could mean treating creditors ratably, yet differently,” said Deborah Kovsky-Apap, restructuring partner at Troutman Pepper Locke. Late last year the U.S. Court of Appeals for the Fifth Circuit overturned rulings by disgraced Judge David Jones in the bankruptcy case of Serta Simmons Bedding that blessed the company’s aggressive uptier LME that relied on a non pro rata distressed debt exchange effected through an “open market purchase.” READ MORE | | | | |  | | Editor's Picks | | | | | SEC Probes B. Riley Loan to Founder, Deals with Franchise Group
B. Riley Financial Inc. received more demands for information from federal regulators about its dealings with now-bankrupt Franchise Group as well as a personal loan for Chairman and co-founder Bryant Riley, Bloomberg News reported. The Los Angeles-based investment firm and Riley each received additional subpoenas in November from the US Securities and Exchange Commission seeking documents and information about Franchise Group, or FRG, the retail company that was once one of its biggest investments before its collapse last year, according to a long-delayed quarterly filing. The agency also wants to know more about Riley’s pledge of B. Riley shares as collateral for a personal loan, the filing shows. READ MORE | | Prospect Medical Faces Landlord Brawl, Cash Burn in Bankruptcy
Bankrupt hospital chain Prospect Medical Holdings Inc. won court permission to start drawing from its $100 million chapter 11 financing despite a challenge from landlord Medical Properties Trust Inc., Bloomberg News reported. Judge Stacey G.C. Jernigan said yesterday that she would authorized Prospect’s request after company advisers testified that the hospital operator’s cash dwindled to about $3 million before filing for protection on Jan. 11. MPT challenged the financing, saying that it improperly puts the new debt ahead of its liens. READ MORE | | Crafts Retailer Joann Files Second Bankruptcy in A Year
Crafts and fabric retailer Joann Inc. has filed bankruptcy for the second time in less than a year, as its sales continue to decline, Bloomberg News reported. The company had $615.7 million of funded debt obligations as well as £133 million of trade debt due and outstanding, according to Chapter 11 documents filed on Wednesday in a Delaware court. READ MORE
MORE NEWS BELOW | | |  | | Upcoming Events | | | | | ABI Consumer Practice Extravaganza | Part 2 January 21-24 | Online Conference | | ABI International Caribbean Insolvency SymposiumThe Westin Grand Cayman Seven Mile Beach Resort & Spa
January 23-25 | Grand Cayman, Cayman Islands | | | | |  | | Daily Roundup | | | | | Diamond Comics Files for Chapter 11 Protection
Diamond Comics Distributors, one of the biggest companies involved in getting graphic novels into physical retailers for purchase, is filing for bankruptcy and scaling its business back as the industry braces itself for a new wave of economic challenges, TheVerge.com reported. In a letter sent to comics retailers and publishers today, Diamond president Chuck Parker announced that the company has filed for chapter 11 protection and plans to sell off its Alliance Game Distributors arm to Universal in order to “protect the most vital aspects of our business.” READ MORE | | Capital One Accused of Misleading Customers on Savings Rates
Capital One Financial Corp. misled customers when it rolled out a new savings account with a higher interest rate it didn’t also give to existing savings accounts, the Consumer Financial Protection Bureau said Tuesday in a lawsuit against the bank, Bloomberg News reported. Capital One introduced the 360 Performance Savings Account in 2019, with an interest rate that eventually rose to 4.25%, according to the complaint. That was far higher than the 0.3% offered on the bank’s existing savings account product, called 360 Savings. The CFPB alleges that the bank promised existing customers one of the U.S.’s “top,” “best” and “highest” interest rates through their 360 Savings account, according to the lawsuit, filed in the U.S. District Court for the Eastern District of Virginia. READ MORE | | Cannabis Debt Crisis Looms as Billions in Loans Come Due in 2026
As much as $3 billion in debt will come due for major U.S. cannabis operators by the end of 2026, a “wave” of maturities that could portend a significant shake-up in the regulated industry, MJBizDaily.com reported. Most analysts contend that companies have enough time to craft solutions to refinance their debt on favorable terms. However, some factors not under the industry’s control — such as major federal or state reforms that could open new markets and ease operations for existing companies, or a total lack thereof — will also determine whether companies are forced to sell assets, disappear entirely or cede more control to their lenders, observers told MJBizDaily. READ MORE | | Inflation Ticks Up to 2.9%, but Underlying Price Gains Are Muted
U.S. inflation picked up last month as gas prices rose sharply, though price gains for other goods were more muted, the Wall Street Journal reported. The consumer price index rose 0.4% in December from November and finished the year up 2.9%. So-called core prices, which exclude those categories, rose 0.2% from November and finished the year up 3.2%. (Subscription required.) READ MORE | | Preliminary-Round Brief Graders and Judges Needed for the Duberstein National Bankruptcy Moot Court Competition!
The Duberstein National Bankruptcy Moot Court Competition, now in its 33rd year and widely recognized as one of the nation’s preeminent moot court competitions, will be held in New York March 1-3, 2025. Fifty-three teams from law schools across the country will compete through written briefings and oral argument. Please find the fact pattern by clicking here. Volunteers are needed to grade briefs (sign up here) and to judge the preliminary rounds (sign up here) of the competition. Click here for more information and to volunteer. | | | | |
