A federal judge's motion filed on Saturday in federal bankruptcy court in Minneapolis may seal the fate of troubled Magnetation Inc., clearing the way for the company to "wind down operations" permanently and laying out terms to terminate the company's lingering bankruptcy, the Duluth (Minn.) News Tribune reported today. The motion by Judge William Fisher sets the stage for the final dissolution of Magnetation, which has been mired in chapter 11 bankruptcy proceedings since May 2015. The motion was filed one day after Magnetation announced it might shut down at the end of September. The judge, in approving the "global settlement agreement" to the Magnetation bankruptcy, set a Sept. 27 hearing to end the bankruptcy case and terminate the company, including selling off assets.
Sycamore Partners yesterday confirmed that it submitted a bid for Aeropostale Inc. after a judge issued an opinion rejecting the teen-focused retailer's attempt to block an offer and blame its bankruptcy on the private equity firm, Reuters reported yesterday. Aeropostale owes $151 million to two Sycamore affiliates, Aero Investors LLC and MGF Sourcing Holdings Ltd, and had sought to preempt a credit bid by them. A representative for Sycamore said the firm made an offer for Aeropostale at the retailer's auction yesterday but declined to say if the offer was a credit bid. Aeropostale in court papers last month argued for a court order denying Aero, a lender, and MGF, a supplier, an opportunity to credit bid their claims. Aeropostale charged the affiliates had caused liquidity and inventory troubles in an effort to strain the company's finances and drive it into bankruptcy.
Samson Resources Corp. has signed a revised restructuring pact with a group of creditors that calls for the oil-and-gas company to exit bankruptcy with its top-ranking loan paid off and equity in the hands of second-lien lenders, the Wall Street Journal reported today. Tulsa, Okla.-based Samson is battling junior creditors in bankruptcy court and must either defeat them or win them over in order to make the restructuring proposal a reality. The agreement signed on Friday pledges investors holding 39 percent of Samson’s second-lien loan claims to support a new chapter 11 plan that should be filed within days. When it filed for bankruptcy protection in September 2015, Samson was weighted down with about $4.9 billion worth of debt. It had a deal in hand, but falling energy prices continued to chop into the value of Samson’s assets and the pact fell apart. Read more. (Subscription required.)
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Caesars Entertainment Corp. won a short reprieve in its litigation with bondholders, once again hitting the pause button in its multibillion-dollar battle, the Wall Street Journal reported today. Judge Matthew Kennelly of the U.S. District Court for the Northern District of Illinois yesterday granted a motion that pushes back litigation in New York, which was slated to begin Tuesday afternoon, until Sept. 16. At issue is whether Caesars must honor more than $11 billion in guarantees for the debt of its bankrupt operating unit, Caesars Entertainment Operating Co. Last week, Bankruptcy Judge A. Benjamin Goldgar said that he wouldn’t renew the shield that protected Caesars from the lawsuits over whether it must honor the debt guarantees. Litigation was set to begin Tuesday on whether a $7.7 billion payment to bondholders would be made by Caesars. Meanwhile, another suit over $3.7 billion in debt guarantees was scheduled to be argued before a Delaware state court in September. CEOC has filed an appeal that will be heard by Judge Kennelly today.
A judge ruled that Caesars Entertainment Corp. must face bondholder lawsuits that could force it into bankruptcy alongside its main operating unit, Bloomberg News reported on Friday. The ruling by Bankruptcy Judge A. Benjamin Goldgar means Caesars could lose court cases by mid-September in New York and Delaware worth $11.4 billion. Judges in those states have scheduled court hearings to decide whether to rule immediately against the company, dismiss key parts of the suits, or send the cases to trial. The lawsuits are the biggest obstacle left to getting Caesars’s operating unit, Caesars Entertainment Operating Co., out of bankruptcy. Bondholders want to use the suits, which a court examiner found have a good chance of succeeding, to boost their recoveries above the 34 percent offered by the unit. Caesars bankruptcy lawyers vowed to appeal and asked the judge to halt the suits while a U.S. District Court judge reviews Goldgar’s decision. Judge Goldgar denied the request, which means CEOC must now seek an emergency order from a higher court overturning Goldgar’s ruling. Goldgar, who said that will be difficult, concluded that halting the lawsuits with an injunction wouldn’t help Caesars settle with bondholders.
Hedge fund manager D.E. Shaw & Co LP is weighing a bid for SunEdison Inc.’s controlling stake in TerraForm Power Inc., the bankrupt U.S. renewable energy producer's most valuable asset, Reuters reported yesterday. D.E. Shaw's emergence as a possible bidder for TerraForm Power indicates that the potential sale process for the so-called "Class B" shares of TerraForm Power, which was formed by SunEdison to buy and operate its solar and wind power plants, is likely to be competitive. Another hedge fund, Appaloosa Management LP, and asset manager Brookfield Asset Management Inc., have already announced plans to jointly bid on SunEdison's TerraForm Power Class B shares. D.E. Shaw and its affiliates already own some of the publicly traded common shares of TerraForm Power. They received them in an agreement announced last year after forgiving debt owed by SunEdison, regulatory filings show.
Energy Future Holdings Corp., Texas' biggest power company, won bankruptcy court approval on Friday for a plan that will allow the bulk of its operations to exit chapter 11 after two years of battling creditors, Reuters reported. "I am going to overrule all of the remaining objections,” said Bankruptcy Judge Christopher Sontchi. Dallas-based Energy Future filed for bankruptcy in April 2014 when weak electricity prices left it unable to service $42 billion in debt, mostly related to the company's creation through a 2007 leveraged buyout. The reorganized company will own TXU Energy, the state's largest retail electric utility, and Luminant, Texas' largest power plant operator and largest coal miner. The spinoff of the two divisions into the new company avoids a tax liability that had worried creditors. The potential for a "massive" tax liability was the "elephant in the room," Judge Sontchi said on Friday, adding that he believed the plan "was the best possible deal" to push the company out of bankruptcy.
A bankruptcy judge has dealt a big blow to Aéropostale Inc.’s bid to survive chapter 11, refusing to rein in the bidding rights of Sycamore Partners, a former big backer and now major critic of the retailer, the Wall Street Journal reported on Saturday. Bankruptcy Judge Sean Lane, in a decision signed Thursday but not made public until Friday afternoon, said that Sycamore is entitled to wield its $151 million loan as currency at the bankruptcy auction of the retail chain, a credit-bid that gives it an advantage in the competition. The ruling portends bad news for landlords and employees of the teen fashion retailer, which has been at odds with Sycamore since before it filed for bankruptcy protection in May. The private-equity firm has said liquidation may be the best outcome for Aéropostale and its stores, and scoffed at the company’s hope of a job-saving turnaround. The credit-bid means Sycamore can walk into the auction without cash, and demand rival bidders pay off the $151 million loan from Sycamore if they want to save, or liquidate, the company. During arguments, Aéropostale warned that allowing Sycamore to credit-bid makes it unlikely that anyone but liquidators will show up at the auction. Read more. (Subscription required.)
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