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A U.S. bankruptcy judge yesterday denied a request by Peabody Energy Corp. shareholders to order the appointment of an official equity committee in the coal miner's chapter 11 restructuring, crushing hopes of a recovery for investors, Reuters reported. Shareholders led by hedge fund Mangrove Partners had urged the creation of an official committee, which would receive money from Peabody for lawyers and advisers and could help craft a reorganization plan. At a hearing in St. Louis, Mangrove cited several paths for a potential recovery for Peabody shareholders given a rise in coal prices. In rejecting the request, U.S. Bankruptcy Judge Barry Schermer asked why more money should be spent on legal fees when unsecured creditors such as Aurelius Capital Management and Elliott Management accept that they will not be paid in full. The two funds, among the most litigious on Wall Street, spent years battling Argentina in U.S. courts over the country's 2001 default. Peabody hopes to exit bankruptcy in April, a year after filing for bankruptcy, with a plan to cut $5 billion of debt and raise capital from creditors with a $750 million private placement and a $750 million rights offering. Peabody shares will be canceled and replaced with new stock which will be owned by creditors, the majority of which support the reorganization plan.

Telecommunications company Avaya Inc. filed for chapter 11 protection yesterday to reduce its debt load of about $6.3 billion but said that it would not sell its call center business, which it had tried to do last year, Reuters reported. The bankruptcy underscores the challenges telecommunications companies face as they transition to software and services from hardware. Early last year, Avaya had planned to sell its call center business but did not reach a deal with buyout firm Clayton, Dubilier & Rice LLC, which had been in the lead to acquire it for about $4 billion. Avaya said that it must focus on its debt and that a sale of the call center would not maximize value for its customers or creditors. It is still negotiating deals to sell parts of its business. The company is hashing out terms of a restructuring deal with creditors. The original goal was to have one in place before bankruptcy, but an agreement was not reached. Avaya said an affiliate of Citigroup Inc. would provide a $725 million loan for up to a year to fund its operations during the reorganization.

BCBG Max Azria Group Inc., the glitzy fashion house founded by designer Max Azria, is looking to close stores and restructure as the company copes with a debt burden and a shift of many consumers online, Bloomberg News reported yesterday. The chain plans to reduce its focus on brick-and-mortar shops, concentrating instead on licensing, e-commerce and selling through other retailers, according to Seth Lubove, a spokesman for BCBG at Sitrick & Co. The fashion brand has operated more than 570 boutiques worldwide, including more than 175 in the U.S. BCBG has “too large a physical retail footprint,” Lubove said in an e-mailed statement. “In order to remain viable, the company — like so many others in its industry — must realign its business to effectively compete in today’s shopping environment.”

Bankrupt South Korean shipping line Hanjin Shipping Co. Ltd. won U.S. court approval yesterday at a hearing for the $78 million sale of its stake in U.S. terminal operator Total Terminals International LLC, overcoming objections of container companies, Reuters reported. "My decision is to approve the sale," Bankruptcy Judge John Sherwood said, adding that he would approve the transfer of the sale's proceeds to South Korea. The container companies are creditors of Hanjin and were concerned whether the shipping line was getting top dollar for its 54 percent stake in Total Terminals, which operates container terminals at the ports of Seattle and Long Beach, California, and was rushing to close the transaction. The container companies were also concerned about sale proceeds going to South Korea, where they argued their claims may not be treated fairly. Hanjin's sale of it stake in Total Terminals to Luxembourg-headquartered Terminal Investment Ltd, which includes Terminal Investment forgiving $54.6 million in debt owed by Hanjin, has already been approved in court in South Korea.

Bankruptcy Judge A. Benjamin Goldgar yesterday approved the restructuring plan for Caesars Entertainment Corp.’s operating unit, paving the way for the operator of the Caesars Palace Las Vegas and other casinos to emerge from chapter 11 protection later this year, the Wall Street Journal reported. Judge Goldgar yesterday confirmed the chapter 11 reorganization plan for Caesars Entertainment Operating Co.(CEOC) two years after the casino operator sought court protection. The plan, which will cut CEOC’s $18 billion debt load by about $10 billion, is the culmination of hard-fought negotiations among the company, its creditors, parent Caesars Entertainment and the parent’s private-equity backers — Apollo Global Management and TPG. At the heart of the plan is a settlement of CEOC and its creditors’ legal claims against parent Caesars and its private-equity backers related to a series of disputed asset transfers in the months leading up to CEOC’s Jan. 15, 2015, bankruptcy filing. In return for settling the claims, which an independent investigator said could be worth up to $5.1 billion, Caesars and its owners will contribute more than $5 billion to the CEOC financial restructuring.