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Solar panel installer Vivint Solar Inc. said that it would participate in SunEdison Inc.’s bankruptcy case to maximize its recovery from claims against SunEdison, which terminated its agreement to buy Vivint in March, Reuters reported today. Vivint Solar has filed a lawsuit in Delaware against SunEdison alleging that the solar company willfully breached its obligations under their merger agreement and is seeking damages. SunEdison's bankruptcy filing on April 21 has created a temporary stay on the prosecution of Vivint's lawsuit, the company said in a regulatory filing today. SunEdison, once the fastest-growing U.S. renewable energy company, filed for chapter 11 protection after a short-lived but aggressive spate of debt-fueled acquisitions proved unsustainable. Investors began to lose confidence in SunEdison's expansion, when the company announced a $2.2 billion deal to acquire Vivint in July. The Vivint deal also led to a lawsuit by billionaire David Tepper's Appaloosa Management, which sued to block SunEdison's unit, TerraForm Power Inc., from buying some Vivint assets.

A bankruptcy judge in New Mexico has scheduled a confirmation hearing on the Diocese of Gallup's reorganization plan, signaling the possible end of a case that has spanned more than two years, the Sante Fe New Mexican reported on Friday. Attorneys for the diocese filed amended copies of the reorganization plan and a disclosure statement on May 3, and Bankruptcy Judge David T. Thuma scheduled the confirmation hearing for June 21. Clergy sex abuse claimants will have to accept or reject the plan by June 10. The abuse claimants have also been promised that they will be able to electronically access a read-only personnel file of their abuser. An attorney representing the claimants expressed concern that the provision will go away because the security details haven't yet been worked out.

A government watchdog warned that the restructuring plan of bankrupt Alpha Natural Resources could be held up because a unit of consulting firm McKinsey & Co. failed to fully disclose connections with potential buyers of the coal miner's assets, Reuters reported on Friday. Alpha hired McKinsey Recovery & Transformation Services to lead its turnaround plan after filing for bankruptcy in August, hit by a sharp drop in coal prices. The U.S. Trustee said in a court filing on May 3 that McKinsey RTS has not disclosed the names or nature of its connections to Alpha's lenders, creditors and competitors as required by bankruptcy law. In the filing, the U.S. Trustee said the lack of full disclosures may "cast a cloud" over Alpha's restructuring strategy.

Caesars Entertainment Corp. said on Friday that it appointed a retired bankruptcy judge to the new role of chief restructuring officer after it warned it could be forced into chapter 11 protection, Reuters reported on Friday. Caesars is facing billions of dollars of lawsuits by creditors of its bankrupt casino operating unit, Caesars Entertainment Operating Co. (CEOC), who have accused the parent of pillaging the unit before it filed for chapter 11 protection last year. Caesars has denied the allegations. However, it said in a statement on Friday that in the event it had an adverse court ruling or if CEOC lingered in bankruptcy, "it is likely that Caesars Entertainment would seek reorganization under chapter 11 of the bankruptcy code." Caesars said that due to mounting legal costs its independent director committee had recommended the appointment of Robert Gerber, who retired as a U.S. Bankruptcy judge for the Southern District of New York in January, for the new role. An independent examiner said in March that Caesars may be responsible for up to $5.1 billion for transactions involving CEOC prior to its bankruptcy. Read more. 

Learn more about a CRO’s responsibilities with ABI’s The Chief Restructuring Officers Guide to Bankruptcy: Views from Leading Insolvency Professionals.

Moody’s Investors Service said in a report that SunEdison Inc.’s bankruptcy threatens the dividend payments of the two TerraForm yieldcos it formed and controls, Bloomberg News reported yesterday. While the yieldcos haven’t been dragged into SunEdison’s bankruptcy proceedings, as many as 10 of TerraForm Power Inc.’s wind and solar farms and five of TerraForm Global Inc.’s face defaults because they have project-level debt with clauses linked to the health of the parent company, according to a report by Moody’s analyst Swami Venkataraman. These cross-default clauses reveal the complicated and interrelated structure of SunEdison, the world’s biggest clean-energy developer, and the two TerraForm companies it formed to buy power plants, along with the many wind and solar farms that typically are structured as their own corporate entities. “There might be a price to pay, and possibly a stoppage of distribution from these projects to the yieldcos,” Venkataraman said. “They will need some sort of settlement.” He estimates that the risk affects less than half of the cash flow at TerraForm Power because many of its projects have no debt.

Companies in bankruptcy are typically at the mercy of the lenders that hold the purse strings. Teen clothing retailer Aéropostale Inc. is trying to tip the scales in its favor, the Wall Street Journal reported today. The company immediately took aim at lender Sycamore Partners after filing for bankruptcy yesterday, saying that the private-equity firm directed a company it controls to cut off credit to the struggling retailer, hastening its demise. Sycamore, a private-equity firm that focuses on retail and consumer investments, owns MGF Sourcing, which manufactures clothing for Aéropostale and other retailers. MGF earlier this year demanded Aéropostale pay for goods in advance instead of allowing it to pay after delivery. Aéropostale in 2014 signed a 10-year supply agreement with MGF, formerly known as Mast Global Fashions, under the terms of a $150 million loan deal with Sycamore. In court papers, Aéropostale said that Sycamore essentially directed MGF to tighten Aéropostale’s payment terms to force it into bankruptcy. Read more. (Subscription required.) 

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