The financial unraveling of a once-thriving company called SupplementWarehouse.com Inc. has created headaches for lots of people. True Life Church, located in Waukesha, Wis., received $756,000 from Supplement during the four years before it filed for bankruptcy reorganization, the Milwaukee Journal Sentinel reported yesterday. Now, the company’s unsecured creditors say that money should be returned and distributed to them. “That would be the end of the church,” said Daniel Stevens, an attorney representing the congregation of 200 to 300 people in its battle with the creditors. “This would just totally destroy them.” True Life received the generous donations because Supplement’s founder and owner, Robert J. Lauby, was a longtime member of the church.
Lynn Tilton’s Patriarch Partners took nearly $3 million out of ailing ambulance operator TransCare Corp. in the year before it collapsed into bankruptcy, leaving 1,700 workers suddenly jobless and many unpaid, the Wall Street Journal reported yesterday. Bankruptcy court reports don’t say why TransCare paid Patriarch $2.785 million. TransCare filed for chapter 7 bankruptcy liquidation in February 2016, without enough money in its bank accounts to cover outstanding paychecks and without the warning required under federal law in the event of mass layoffs. Patriarch has denied any wrongdoing.
Creditors of Abengoa Bioenergy US Holding, a unit of Spanish renewable energy company Abengoa SA, have reached an agreement over the distribution of asset sale proceeds, removing a key hurdle for the company to exit bankruptcy, Reuters reported yesterday. Abengoa Bioenergy was one of dozens of U.S. Abengoa subsidiaries that filed for U.S. bankruptcy protection last year while the Seville-based parent worked out a high-stakes plan to cut $10 billion of debt and avoid its own bankruptcy in Spain. The bioenergy company sold ethanol plants last year and raised roughly $140 million in cash, which was claimed by lenders of the Abengoa parent in Spain as well as the unit's unsecured creditors and suppliers in the United States. Under a deal reached this week, Abengoa's big bank lenders such as Santander will receive their pro rata share of $32.5 million of cash from the asset sale proceeds, while the rest will be distributed among the other creditors.
ABN Amro Capital USA LLC has been granted authority to issue subpoenas to the U.S. and Ecuadorian units of cocoa trading house Transmar Group Ltd, a court filing showed on Tuesday, as the bank searches for more than $300 million in assets, Reuters reported. The bank has widened its search on behalf of the company's lenders for assets that they say disappeared from Transmar Commodity Group Ltd before it filed for bankruptcy on Dec. 31, 2016, a court document showed. The lenders say the assets could have helped cover Transmar's debt. Transmar Commodity Group is a U.S. unit of Transmar Group, which is based in Morristown, N.J. ABN Amro Capital USA LLC, a unit of ABN Amro Group NV and agent for lenders to Transmar Commodity Group, was authorized to issue subpoenas to several companies, including Transmar Commodity Group, Transmar Holdings LLC, Transmar Ecuador S.A. and several directors, for documents and examination of witnesses, the court filing showed.
A group of South Dakota doctors has filed suit against four hospital administrators, claiming that they were defrauded out of millions of dollars in an investment that went belly up, the Argus Leader reported yesterday. The 12 doctors were investors in Progressive Acute Care, a company that in 2009 owned three rural hospitals in central Louisiana. The doctors were primarily orthopedic surgeons and neurosurgeons practicing at CNOS in Dakota Dunes. According to their complaint, the doctors owned about 40 percent of the preferred equity in Progressive Acute Care (PAC). Mike Hurlburt, a former CEO at CNOS and the chief operating officer for PAC, had introduced the doctors to the company. In 2012, Hurlburt and three others with PAC came up with a plan to buy a fourth hospital, also located in Louisiana. Hurlburt, the lawsuit says, “told the physicians that a return of three-to-four times their investment was assured, and that he was expecting a return of ten times their investment.” Based upon those assurances, the doctors invested an additional $3 million to purchase the fourth hospital and approved more than $10 million in additional debt for PAC to make the purchase. But the doctors claim in their lawsuit that the revenue numbers of the fourth hospital — called Dauterive Hospital — were falsified by the defendants. The lawsuit claims that in 2016, after PAC declared bankruptcy, a memo surfaced that showed PAC had deliberately falsified the profitability of the fourth hospital. The losses sustained by PAC after the purchase of the fourth hospital plunged the company into bankruptcy in 2016. Read more.
Energy Future Holdings Corp. yesterday outlined a deal that resolved the biggest disputes hanging over the company as it opened a trial to confirm its plan to exit bankruptcy and be acquired by NextEra Energy Inc. for about $18 billion, Reuters reported. Dallas-based Energy Future indirectly owns Oncor, the largest distributor of power in Texas, and is using the sale to NextEra to finance its plan to repay creditors. A lawyer for Energy Future told the court at the start of yesterday’s hearing that its noteholders had agreed to a discount of what they were owed to settle a dispute that erupted in the wake of a November ruling by a U.S. Appeals Court. The U.S. Court of Appeals for the Third Circuit had ruled that the company owed noteholders hundreds of millions of dollars in unanticipated payments for the early redemption of their securities, upsetting a prior exit plan. Energy Future's lawyer told the court the first-lien noteholders agreed to accept a 5 percent discount of the early redemption payment and second-lien noteholders agreed to a 12.5 percent discount. That freed up cash for junior creditors.
