%1

Utilities are closing U.S. nuclear-power plants at a rapid clip as they face competition from cheaper sources of electricity and political pressure from critics, the Wall Street Journal reported today. The tally of plants set to close by 2025 has expanded to four, including PG&E Corp.’s Diablo Canyon plant in California and Entergy’s Palisades unit in Michigan. Four others have already closed in the past four years, including Dominion Resources Inc.’s Kewaunee plant in Wisconsin. The retirements are poised to leave 61 nuclear plants in the U.S. by the middle of the next decade. That includes two facilities that are building new reactors. A small number of nuclear plants have closed in the past due to safety or the need for expensive repairs. What’s new is the number of plants closing that are licensed and operational, but no longer profitable in competitive markets. Nuclear plants everywhere are facing a powerful economic foe: fracking. The extraction technique has unlocked vast amounts of natural gas, making generating electricity from that fuel much less expensive and lowering power prices across the country.

Fashion Square Mall owners filed a Chapter 11 bankruptcy on Friday, while accusing its lender — The Bancorp — of cutting off promised funding for planned renovations, the Orlando Sentinel reported. The bankruptcy filing on Friday automatically halts a foreclosure lawsuit filed on Tuesday by The Bancorp against Orlando’s Fashion Square, which alleged that the mall owner had fallen behind on payments for its $42.2 million loan. Bankruptcy documents state that the mall owner, an affiliate of Tennessee-based UP Development, withheld payments on the loan because it learned that Bancorp was "misrepresenting" details of the renovation plans. But the bank has alleged that UP has "grossly mismanaged" the mall and failed to pay taxes.

Lensar, an Orlando-based developer of surgical ultrafast laser systems for cataract treatment, has filed for chapter 11 protection, Photonics.com reported yesterday. The company was acquired a year ago by social commerce business, Alphaeon, in a debt, cash and stock deal valued at around $59 million. Coupled with a restructuring, the bankruptcy filing will allow Lensar to cut its debt levels. PDL Biopharma, its senior secured creditor, supports the decision. With financial support from PDL, Lensar intends to continue to pay all employee obligations, including employee wages, provide health care and other benefits, and all current operating expenses without interruption. With the chapter 11 case expected to conclude in the second quarter of 2017, a Lensar representative said that the company will continue working with its vendors, suppliers and partners as normal during and after the bankruptcy process.

The combination of rising rates and a new political regime in the U.S. will bring about an uptick in corporate restructurings outside the energy space, creating new opportunities for investors in the riskiest parts of the debt market, Bloomberg News reported on Friday. That’s one of the conclusions from interviews with bond traders, bankruptcy lawyers, financial advisers and fixed-income analysts about the outlook for 2017. Investment options will become more diversified as the primarily energy-driven distressed market of recent years will broaden out, according to Tim Coleman, head of restructuring at PJT Partners Inc. Sectors to watch could include utilities, health care providers and more companies in the struggling brick-and-mortar retail sector. “We’re going to see more ordinary restructurings instead of just a lot of commodity-driven activity,” said Coleman, who has worked on major corporate restructurings including Ford Motor Co. and Delta Airlines Inc. “That’s probably better for the distressed space.” Restructurings will happen in certain pockets of pain where the broader economic trends exacerbate existing problems and “weed out very quickly those companies that have borrowed too much,” according to Mike Barnes, co-chief investment officer at Tricadia Capital Management, which oversees $2.8 billion.

C&J Energy Services Inc. emerged from chapter 11 protection on Friday, eliminating about $1.4 billion of debt from its balance sheet and more than $80 million of annual interest expense, the Houston Business Journal reported. The old C&J stock has been cancelled, and the reorganized C&J will have approximately 55.5 million outstanding shares. The new shares will be issued to certain debt holders as part of the restructuring plan’s debt-for-equity conversion provisions, a rights offering and a backstop commitment agreement. Former C&J stockholders received seven-year warrants to purchase up to a combined 2 percent of the company’s new common stock, and holders of legacy C&J unsecured creditor claims will get seven-year warrants to buy up to 4 percent. C&J also entered into a new $100 million revolving credit facility and paid off outstanding amounts under its prior debtor-in-possession facility with proceeds from a $200 million equity rights offering. The company exited restructuring with more than $220 million in total liquidity, including cash and its new credit facility. Read more. 

The featured keynote at ABI's 2017 Annual Spring Meeting will be Spencer Abraham, former U.S. Senator and former U.S. Secretary of Energy. Click here to register! 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

Struggling retailer Sears Holdings Corp. has bought itself some breathing room through maneuvers that include the sale of its Craftsman brand for $900 million and the closure of 150 additional stores as it grapples with a prolonged sales slump and mounting losses, the Wall Street Journal reported today. The company has suffered through several weak quarters and warned yesterday that same-store sales fell as much as 13 percent in November and December. Over the past five years it has booked $8.2 billion in cumulative losses. The moves by Sears Holdings this week coupled with the injection of $1 billion in financing from its controlling shareholder and chief executive, Edward Lampert, helped shares climb off recent lows and reassured suppliers, who had grown increasingly uneasy over the retailer’s prospects.

Bankrupt renewable energy company SunEdison Inc. has reached a deal with a spinoff company that helps clear the way for a $150 million sale of its solar materials business to a Chinese buyer, Reuters reported yesterday. Chinese solar equipment maker GCL-Poly Energy Holdings Ltd agreed to buy the business in August, part of SunEdison's drive to shed assets to raise money to repay its creditors. The sale ran into trouble due to an objection from SunEdison Semiconductor, which was spun off by SunEdison in 2014. The spin-off company argued in an October court filing that it had not consented to transfer of intellectual property licenses as part of the deal. SunEdison has resolved that objection to help close the sale and will extend a services agreement with its affiliate through September at reduced rates.

Despite an upward spike in businesses seeking refuge in bankruptcy court, the total number of bankruptcy petitions actually fell for a seventh straight year in South Central Texas in 2016, the San Antonio Express-News reported today. Overall, there were 3,015 consumer and business bankruptcy filings in the San Antonio division of the U.S. Bankruptcy Court for the Western District of Texas last year — a 3.6 percent decline from the 3,127 filings recorded in 2015. It’s also the lowest number of petitions recorded since 2006. Some 125 companies or partnerships filed for bankruptcy last year in the San Antonio division, an increase of about a third from the 93 that filed in 2015. The rise in business bankruptcies locally was almost in lock-step with what occurred nationally. The American Bankruptcy Institute, citing data from Epiq Systems Inc., reported commercial bankruptcy filings rose 26 percent last year in the U.S. A lot of the increase came from three sectors — retail, real estate and energy, said John D. Penn, a partner in the Dallas office of the Perkins Coie law firm. “Zero percent interest hides a multitude of sins,” Penn said. “Once interest rates start going up, a number of borrowers will have their cash flows squeezed and (they’ll) be in more challenging situations.”