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Homebound shoppers may put going-out-of-business sales out of business for a while, Bloomberg News reported. Creditors are facing lower potential recovery values from bankrupt chains like Pier 1 Imports Inc. and Modell’s Sporting Goods Inc., where liquidation sales are underway. More failed chains also risk running out of money during the court process and shifting from a reorganization to a full liquidation of the business. Coronavirus restrictions and self-isolation have hit when many retailers are in bankruptcy or on the brink of it. Proceeds from store closings are among the most important assets bankrupt companies use to pay back their creditors, but all bets are off when consumers are staying at home. “Your lenders are not going to get out of it what they thought they were going to get out of it,” said Joseph Malfitano, founder of New York-based turnaround advisory firm Malfitano Partners. “Nobody has coronavirus built into an appraisal.” The fallout from consumers staying at home will affect companies and their lenders both in and out of bankruptcy. Asset-based loans that use inventory as collateral are an important means of financing for retailers. “If they’re not able to liquidate off the shelves, creditors are going to suffer,” said Eric Horn, a restructuring attorney at A.Y. Strauss. Creditors may demand higher rates or become reluctant to lend at all. “I don’t see any ABL lenders making new retail loans at this point,” Horn said. “I think that’s going to stagnate for a while. You have no choice but to work with your current borrowers.”

Health-care company Strategic Global Management Inc. said it would pay $50 million in cash for two bankrupt Bay Area hospitals owned by Verity Health System of California Inc. but is being blocked by the owner from bidding on the properties, WSJ Pro Bankruptcy reported. SGM, a California-based for-profit health-care company owned by orthopedic surgeon and real-estate investor Dr. Kali Pradip Chaudhuri, said an affiliate has made a written offer to Verity for the 357-bed Seton Medical Center in Daly City, Calif., south of San Francisco.The $50 million offer doesn’t include accounts receivable or additional revenue, which SGM estimates at another $30 million. But SGM said that the efforts to participate in the process have been “blocked” by Verity, according to papers filed on Monday in U.S. Bankruptcy Court in Los Angeles. A Verity representative couldn’t immediately be reached for comment. The $50 million bid also includes the 116-bed Seton Coastside, in Moss Beach, Calif. SGM’s renewed interest in Seton Medical comes as California prepares to take dramatic steps to slow the spread of the novel coronavirus. Some 6.7 million people in the Bay Area have been ordered to stay at home for three weeks except for essential needs, authorities said Monday. The legal order includes San Mateo County, where the Seton medical facilities are located.

Shale driller Alta Mesa Resources Inc. won permission from a bankruptcy judge to market its assets again now that a potential buyer is seeking to change a $320 million sale offer, WSJ Pro Bankruptcy reported. The once-vaunted oil company requested putting itself back on the market after a venture between Bayou City Energy Management LLC and Mach Resources LLC failed to get the financing it needed and sought a cheaper purchase price. The proposed buyer, BCE-Mach III LLC, has indicated “they aren’t prepared to perform at the contractually agreed price,” Alta Mesa lawyer Paul Genender said at a hearing Thursday in the U.S. Bankruptcy Court in Houston. The buyer said on Monday that it couldn’t close on its purchase because of the turmoil roiling U.S. energy markets, which have plunged over the past week as the coronavirus pandemic and a price war between Saudi Arabia and Russia spooked investors. BCE-Mach said it couldn’t lock down a financing package with UBS AG or with alternative capital sources to fund the Alta Mesa buy. Alta Mesa has asked for a court order finding that BCE-Mach had breached its obligations and compelling it to close on the deal. U.S. Bankruptcy Judge Marvin Isgur said that he wouldn’t consider whether BCE-Mach broke its word until March 26.

The turmoil roiling U.S. energy markets has thrown the planned $320 million bankruptcy sale of Alta Mesa Resources Inc. into doubt after the company’s asset values collapsed and financing dried up, WSJ Pro Bankruptcy reported. The proposed buyer, a joint venture of private-equity firm Bayou City Energy Management LLC and energy company Mach Resources LLC, has said a financing offer from UBS AG fell through because of the market turbulence and plunging oil prices, according to papers filed yesterday in the U.S. Bankruptcy Court in Houston. Energy assets have plummeted in value over the coronavirus epidemic and a price war driven by Saudi Arabia, wiping out tens of billions of dollars in stock market value and slashing bond prices. The judge overseeing Alta Mesa’s bankruptcy approved the proposed sale in January over a competing offer from the company’s bondholders. Alta Mesa yesterday accused BCE-Mach of breaching its obligations under the sale, which includes the company’s Kingfisher Midstream LLC pipeline business, and sought a court order compelling the buyer to close. The company and the buyer are scheduled to appear in court on Thursday.

Health-care company Strategic Global Management Inc., which failed in an earlier bid to purchase a number of Verity Health System of California Inc.’s hospitals out of bankruptcy, wants to buy two of the system’s Bay Area hospitals for $60 million, WSJ Pro Bankruptcy reported. SGM, a California-based for-profit health-care company, said it has presented a written offer to Verity for the purchase of the 357-bed Seton Medical Center in Daly City, Calif., south of San Francisco, according to papers filed Wednesday in U.S. Bankruptcy Court in Los Angeles. The $60 million bid also includes the 116-bed Seton Coastside, in Moss Beach, Calif. SGM had previously bid $610 million for the two hospitals along with the Los Angeles-area St. Francis Medical Center and St. Vincent Medical Center. Verity terminated the purchase late last year after saying SGM was unable to close the deal. SGM said in court papers that it “can verify that, for purposes of the acquisition of Seton, it has the ability to obtain the cash necessary to close the sale” within 45 days either through a private sale or through an auction process. In either case, SGM said it will be a competitive bidder.

Melinta Therapeutics, Inc., a commercial-stage company focused on the development and commercialization of novel antibiotics to treat serious bacterial infections, confirmed that Deerfield Management Company, L.P., the lenders under the company’s senior credit facility, has been designated as the highest and best offer for the company and its assets following the completion of a formal marketing process, according to a press release. The auction scheduled for March 6, 2020 will not proceed, as no party submitted a higher and better bid in accordance with the bidding procedures established by the U.S. Bankruptcy Court for the District of Delaware. Under the terms of the previously announced restructuring support agreement, Deerfield will acquire the company as a going concern by exchanging its secured claims arising under its senior credit facility for 100 percent of the equity to be issued by the reorganized Melinta pursuant to a pre-negotiated chapter 11 plan of reorganization. Melinta will seek court approval to assume its agreement with Deerfield on March 13, 2020, and expects that the chapter 11 plan implementing the Deerfield transaction will be confirmed by the court on April 2, 2020.

Officials with St. Alexius Hospital are exploring whether to put its Jefferson campus on the market in a bid to pay down debts related to its chapter 11 bankruptcy, the St. Louis Business Journal reported. The sale would include the property at Jefferson Avenue and Miami Street in Gravois Park, as well as its bariatric center at 1400 Lemay Ferry Road in south St. Louis County. Both properties are vacant. The sale would not include the hospital's main campus on South Broadway. It's also not likely to include the Lutheran School of Nursing property, which sits adjacent to the Jefferson campus hospital, sources said. St. Alexius' new CEO, Dr. Sonny Saggar, would not confirm the possible sale but said hospital officials are "considering all options." Saggar, who founded urgent care clinics in downtown St. Louis and Creve Coeur, was appointed CEO of St. Alexius about two weeks ago, after having served as its emergency room director. A bankruptcy judge on Feb. 20 appointed Carol Fox, principal with GlassRatner, a financial advisory services and consulting firm in Florida, to be trustee for the hospital's parent company, Americore. That followed word from an official in the case that Americore's then-CEO, Grant White, was under criminal and civil investigation and could not properly manage St. Alexius and other facilities. The judge removed White as CEO. Read more. (Subscription required.) 

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