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The president of Los Angeles’s famed Roscoe’s House of Chicken and Waffles has been ousted by a federal judge who said she doesn’t trust him to run its four bankrupt restaurants “in accordance with the law,” the Wall Street Journal reported today. Bankruptcy Judge Sheri Bluebond said on Wednesday that under the management of President Herbert Hudson, who also founded the chain, Roscoe’s lost a $3.2 million employee discrimination lawsuit, faced immigration law sanctions, underpaid state taxes and kept informal accounting system with missing records. Judge Bluebond said that Hudson also inappropriately transferred money from Roscoe’s operations to his other businesses, returning it only after a court-filed report revealed the transfers to the court. Roscoe’s bankruptcy lawyer Vahe Khojayan didn’t respond to requests for comment on Judge Bluebond’s decision to put new management in charge. At Wednesday’s hearing, he argued that the bankrupt restaurants are profitable — making more than $200,000 a month — diffusing the need for outside leaders. Judge Bluebond rejected that argument.

Pacific Exploration & Production Corp.’s plan to wipe some $5 billion in debt from its books cleared a final hurdle on Wednesday, putting the company on track to emerge from bankruptcy within two weeks, the Wall Street Journal reported today. Following a hearing in Manhattan, Bankruptcy Judge James Garrity Jr. said that he would sign off on a global restructuring plan, which has already won approval in courts in both Canada and Colombia. Pacific, an oil and natural gas producer, is based in Canada but operates primarily in Colombia, where it is the largest independent oil and natural gas company, court papers showed. Much of the company’s mountain of debt, however, is held in the U.S. Judge Garrity, who is overseeing Pacific’s U.S. bankruptcy proceeding, had already agreed to formally recognize the Canadian court as Pacific’s primary restructuring venue, but he had asked lawyers for the company to return to his courtroom on Wednesday to present the final version of the plan before he would agree to discharge any debt. The restructuring plan, which the company says is one of the largest and most complicated restructurings ever attempted in Latin America, erases $5.3 billion, court papers showed. Pacific, which is continuing normal operations during the bankruptcy, said the strategy not only aims to cut debt but will also save it $253 million in annual interest expenses. Read more. (Subscription required.) 

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Sears Holdings Corp., Claire’s Stores Inc. and Nine West Holdings Inc. are among seven chains at high risk of defaulting within a year as shoppers shift to online merchants and spend more on experiences, according to a Fitch Ratings study of retail bankruptcies, Bloomberg News reported yesterday. The companies were named in a report yesterday that found retailers wind up liquidated almost three times more often than other companies in bankruptcy because customer defections are making turnarounds harder to execute. Other chains at risk include True Religion Apparel Inc., 99 Cents Only Stores LLC, Nebraska Book Co. and Rue21 Inc., Fitch said. The credit-grading firm studied 30 recent retail bankruptcies that involved $10.5 billion of debt. Fifty percent didn’t survive the process, compared with 17 percent across other industries, Fitch said. Grocery chains were an exception, with five of six emerging as operating businesses because they had strong locations, Fitch said. Read more. 

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Fast-casual restaurant chain operator Cosi Inc. and its units filed for chapter 11 protection yesterday and said that it would pursue a sale, Reuters reported. The Boston-based company, known for its homemade flat bread, has assets of $31.24 million and debt of about $20 million, according to a court filing. Cosi said that it had received about $4 million in post-petition debtor-in-possession financing to maintain operations during the chapter 11 process. The company said that it had entered into a non-binding agreement with lenders AB Opportunity Fund LLC, AB Value Partners LP and entities affiliated with Milfam II LP under which the DIP lenders offered to buy Cosi's assets and serve as a stalking-horse bidder in a sale process.

When oil prices began to plunge two years ago due to a global glut of crude, experts predicted U.S. shale producers would be the losers of the resulting shakeout. But the American companies that revolutionized the oil and gas business with hydraulic fracturing and horizontal drilling are surviving the carnage largely unbowed, the Wall Street Journal reported today. Though the collapse in prices caused a wave of bankruptcies, total U.S. oil production has only fallen by about 535,000 barrels a day so far this year compared with 2015, when it averaged 9.4 million barrels, according to the latest federal data. As the oil markets ponder where production will resume when prices pick back up, one clear answer has emerged: America. Goldman Sachs forecasts the U.S. will be pumping an additional 600,000 to 700,000 barrels of oil a day by the end of next year — making up for every drop lost in the bust. Read more. (Subscription required.) 

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. 

As Peabody Energy Inc. stumbled toward bankruptcy last year, its Wall Street adviser raised a red flag for management: Two powerful and litigious distressed-debt hedge funds held Peabody bonds, Bloomberg News reported today. “Both are bomb throwers and we should be very suspicious,” wrote Tyler Cowan, a restructuring expert at Lazard Ltd. Six months later, in April, the world’s largest private-sector coal company was in bankruptcy. The two New York hedge funds — Paul Singer’s Elliott Management Corp. and Mark Brodsky’s Aurelius Capital Management — soon became embroiled in a bitter $1 billion dispute as they sought to extract a bigger share of Peabody’s assets. In court filings, including emails and handwritten notes by Peabody executives, Elliott and Aurelius are shown to have privately lobbied management to make the accounting change that would shift $1 billion in collateral to benefit themselves and other holders of around $4 billion in unsecured bonds. The lenders led by Citigroup Inc., an agent to $2.8 billion in secured debt, contend that those assets rightly belong to them. Peabody caved to the demands of the hedge funds in their effort to “drive up their own recovery at the expense” of the secured creditors, Citibank says in court filings. Franklin Resources Inc., with 21 percent of one tranche of the debt, is among the biggest secured lenders.