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Energy Future Holdings Corp., Texas' biggest power company, yesterday urged a U.S. bankruptcy court to allow the bulk of its operations to exit chapter 11, Reuters reported. Energy Future filed for chapter 11 in April 2014 with $42 billion in debt, the largest bankruptcy since General Motors Corp's in 2009. Much of the debt had been taken on in 2007 when the Dallas-based company was formed through the $45 billion leveraged buyout of TXU Corp, led by KKR & Co., TPG Capital Management and the private equity arm of Goldman Sachs. Energy Future and its creditors have been engaged in expensive legal fights over a wide range of disputes. Other reorganization plans had failed to get support. Under the latest plan, the company would be renamed TCEH and own TXU Energy, the state's largest retail electric utility, and Luminant, Texas's largest power plant operator and largest coal miner. Leading the fight against the proposal are holders of about $650 million of notes issued by Energy Future. They argue that the plan would not fairly compensate creditors for tax benefits and back office operations that would be transferred to the new company. The noteholders estimated that the transfers would add more than $1 billion to the TCEH operations.

The House of Representatives is pushing to enact a bankruptcy act for banks that has several concerning features that could make bailouts more likely, not less likely, according to a commentary by Profs. Mark J. Roe of Harvard Law School and David A. Skeel Jr. of the University of Pennsylvania in the New York Times DealBook blog. It has passed a bankruptcy-for-banks bill, sent it to the Senate, and now embedded it in its appropriations bill, meaning that if Congress is to pass an appropriations bill this year, it may also have to enact the bankruptcy-for-banks bill. In concept, the professors say that bankruptcy for banks makes sense, even if it offers the benefits of government bailouts that industrial companies rarely receive. After all, a bank failure can bring down the economy, while an industrial failure cannot. But if banks can be reorganized in bankruptcy, the possibility of a win-win result is in the cards. It should be possible to restructure a big bank to stop it from damaging the economy without having to bail it out. First and most problematic about the bill, Roe and Skeel said that only the bank and not the regulator can make the bankruptcy happen. If the regulators think that a bankruptcy is needed, but that a bailout or alternative resolution process is not needed, they cannot directly force a filing.

Univision Holdings Inc won a bankruptcy auction on Tuesday to acquire U.S. internet publisher Gawker Media LLC for $135 million, outbidding media company Ziff Davis LLC, which had made an initial offer of $90 million, Reuters reported yesterday. Univision's winning bid for Gawker, which will go before a bankruptcy judge tomorrow, shows how the U.S. Spanish-language broadcaster is seeking to expand its digital media properties and is not shying away from a news brand that has often courted controversy to build a cult readership. Univision was the only challenger to Ziff Davis, whose stalking-horse bid had set the floor for others in the auction. Gawker sought bankruptcy in June after facing a $140 million court judgment following an invasion of privacy lawsuit from former professional wrestler Hulk Hogan over the publication of excerpts from a sex tape.

Performance Sports Group Ltd. fell as much as 66 percent to a record low after the athletic-equipment maker delayed filing its annual report because of an internal investigation, possibly resulting in a default on its credit lines, Bloomberg News reported yesterday. The shares tumbled to $1.18, the lowest since the stock started trading in 2011. Exeter, N.H.-based Performance Sports already had slid 64 percent this year through the end of last week. Performance Sports, a maker of baseball bats and hockey gear, said that its audit committee is conducting an investigation “in connection with the finalization of the company’s financial statements and the related certification process.” The committee has tapped independent financial advisers and retained Richards Kibbe & Orbe to provide independent counsel. The probe marks another blow for a company that already was reeling from the bankruptcy of Sports Authority Inc., one of its largest customers. In March, shortly after the retailer filed for chapter 11 protection, Performance Sports wrote down anticipated sales that it would have gotten from Sports Authority and slashed its financial forecasts. 

Chesapeake Energy Corp. is seeking a $1 billion loan as the company, battered by cratering fuel prices and credit downgrades, takes a step to address its $9 billion debt load, Bloomberg News reported yesterday. The natural gas producer hired Goldman Sachs Group Inc., Citigroup Inc. and Mitsubishi UFJ Financial Group Inc. to arrange the five-year secured debt, it said yesterday. Proceeds will refinance debt, including backing tender offers to buy back up to $500 million of its bonds, according to a separate statement. The tender offer has resulted in S&P Global Ratings lowering its grade for Chesapeake to 10 levels below investment-grade or CC, the company said in a statement. S&P views the move as a “distressed transaction" and a “selective default” for some longer-dated notes that may be exchanged at levels “significantly less than par value as part of the tender.” Chesapeake has been cutting production, reducing jobs and exchanging stock for debt as it seeks to weather plunging fuel prices and a shareholder revolt that culminated with the termination of the company founder’s job. Read more. 

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When it comes to defaulted bonds in China, there has been either full repayment or delays and diversions, Bloomberg News reported today. Of the 26 local public notes with failures since Shanghai Chaori Solar Energy Science & Technology Co. became the first company to renege on an onshore note payment in 2014, nine have been fully repaid and only one was partially made good, according to data compiled by Bloomberg. Most of the rest haven’t released information on repayment plans and Moody’s Investors Service bemoans the lack of a transparent restructuring process. As authorities allow more companies to collapse, domestic bond failures soared this year, bringing the total principal of defaulted notes to 22.5 billion yuan ($3.4 billion) since 2014. Given the short history of such failures, debtholders have no road map for recovering their investments. Moody’s says the country needs to establish bankruptcy protection law like chapter 11 in the U.S. to offer breathing space for struggling firms to negotiate with creditors and get back on their feet again.