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Creditors helping Linn Energy LLC raise $530 million in fresh capital to fund its restructuring stand to collect more than $20 million in fees for their efforts, Wall Street Journal Pro Bankruptcy reported yesterday. Bankruptcy Judge David R. Jones on Monday signed off on a deal between the oil and gas explorer and the bondholders that have agreed to buy unsold shares in a future sale of $530 million in new stock in the restructured company. Linn previously said in court papers that the fees were necessary to secure the commitments from certain junior bondholders and unsecured bondholders to backstop the stock sales. The success of its restructuring and future viability would be jeopardized if this agreement fell apart, Linn warned. Linn sought chapter 11 protection in May, one of dozens of oil and gas explorers to turn to bankruptcy as commodities prices took a nosedive. Through its restructuring, the Houston company is hoping to cut more than $5.7 billion off a debt load that tops $8 billion. Read more. (Subscription required.) 

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Federal Reserve Bank of Minneapolis President Neel Kashkari today recommended a hefty increase in capital requirements for the country’s biggest financial institutions, a de facto call for breaking up the big banks, the Wall Street Journal reported. The recommendations are part of a 50-page report that comes after a nearly yearlong effort by Kashkari to explore ways to end the problem of “too big to fail” banks, which could leave taxpayers on the hook if the financial system were to come under threat again. Kashkari said that if his “Minneapolis Plan” is implemented, “We will have fewer mega banks, and there will be far less concentration in the banking system….If there are any [too big to fail] banks left, they will be so well-capitalized that their risk of failure will truly have been minimized.” The consequences of the report, which is being sent to policymakers and to Congress, are unclear. President-elect Donald Trump stirred up anti-Wall Street sentiment but has also called for dismantling the 2010 Dodd-Frank regulatory-overhaul law that imposed tougher rules for the financial system. Kashkari’s plan calls for banks with more than $250 billion in assets to hold common equity equivalent to 23.5 percent of risk-weighted assets. The equivalent leverage ratio would be 15 percent.

American Apparel Inc. founder Dov Charney, who was ousted by his own board for misconduct in 2014, said the retailer’s latest bankruptcy filing shows that the company can’t stay afloat without him, Bloomberg News reported yesterday. The largest producer of American-made clothing filed for bankruptcy yesterday, just nine months after ending its first stint under court protection. Even with an injection of cash and a reduction in debt, a turnaround plan led by Paula Schneider, who replaced Charney as CEO, failed to revive American Apparel’s fortunes. The Los Angeles-based company plans to sell itself at auction to Gildan Activewear Inc., which has a leading offer of $66 million. Gildan will continue selling American Apparel’s basics, like plain T-shirts, to screenprinters and promotion companies. But the bid doesn’t include American Apparel’s almost 200 stores, so if it lives on as a consumer-facing brand under Gildan, it would have to be sold through other retailers. Read more. 

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