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KaloBios Pharmaceuticals Inc. won bankruptcy court approval of a reorganization plan that shrinks former CEO Martin Shkreli’s stake to about 14 percent, Bloomberg reported on Wednesday. U.S. Bankruptcy Judge Laurie Silverstein agreed to the plan and the proposal was accepted by all classes entitled to vote and “all parties are receiving more than they would receive in a liquidation,” she said. The drugmaker filed for bankruptcy in December, shortly after he was arrested on fraud charges related to other businesses he was involved in. He denies the allegations. As a result of additional shares being issued, Shkreli’s stake in KaloBios would shrink to about 14 percent from about 47 percent. KaloBios also won approval of several settlements incorporated into the plan, including one with Shkreli. The bankruptcy is In re KaloBios Pharmaceuticals Inc., 15-12628, U.S. Bankruptcy Court, District of Delaware (Delaware).

Gawker.com will survive even if an acquirer of its parent company isn’t interested in continuing to publish the combative media and politics website, The Wall Street Journal reported yesterday. Gawker Media CEO Nick Denton said that “Gawker.com is as indestructible as a New York cockroach” and “more famous than ever.” Speculation has swirled that Ziff Davis, the publishing company that placed an opening bid of about $90 million as Gawker filed for bankruptcy last week, might shutter Gawker.com if it completes the deal. Denton confirmed that the legal woes had “undoubtedly depressed” the company’s valuation and had been “financially draining.” Denton added that the sale comes as the “media market is consolidating,” which created more acquisition interest for Gawker Media, which he called “the last sizable digital property that has not yet been folded into an established conglomerate.”

Oregon data center Peak Hosting has filed for chapter 11 amid a messy breakup with the developer of the "Game of War: Fire Age" videogame, Dow Jones Business News reported yesterday. Lawyers who put Peak Hosting into bankruptcy protection said videogame developer Machine Zone Inc. owes the data center more than $96 million for improperly terminating a deal to host the live runtime environment for "Game of War: Fire Age." Peak Hosting officials said the company should be able to operate profitably after downsizing in chapter 11 protection. Machine Zone's contract had accounted for 80 percent of Peak Hosting's business. It has shut down seven data centers, consolidating work into one remaining center in Santa Clara, Calif., and laid off all but about 50 of its 185 workers. Peak Hosting accuses Machine Zone of using its trade secrets to build a rival data center in Nevada, then unfairly terminating their contract because of a two-hour "Game of War: Fire Age" outage on Oct. 27. Machine Zone has denied wrongdoing and asserted that the contract's fine print gave it the power to cancel the agreement over outages. Machine Zone also said Peak Hosting's facilities didn't meet industry standards.

Arch Coal has filed an updated version of its plan to get out of bankruptcy, Wyoming Public Media reported yesterday. This legal wrangling is the company’s latest effort to get everyone to agree on a repayment plan. Arch Coal’s new restructuring plan outlines how various creditors would be paid, or not paid, if the plan is approved. Arch Coal stated that a group of its senior lenders do support the plan. But not all of the company’s creditors are on board. Some have even threatened to sue. Unsecured creditors are now being offered a share of some of the companies assets in the form of cash. However, this lack of widespread agreement could mean trouble for Arch's exit plan. Arch Coal has mines all over the country, including in Wyoming and Colorado. It has recently laid off workers in both states to restructure in response to declining demand for coal.

For the second time in just over a year, Cumulus, the mega-media company that is trying to stave off bankruptcy, fired the top boss in Rhode Island, GoLocalProv.com reported today. John Sutherland, Vice President/Market Manager has been let go just a year after his predecessor was fired. The once stable radio group that commands approximately 50 percent of an ever-shrinking local radio market, has seen a dramatic number of high profile shake-ups. According to The Street in a February 2016 article, “Cumulus touts about $2.5 billion in total debt through a combination of $1.9 billion worth of leveraged loans and $600 million in high-yield bonds, both rated several notches below investment grade by both Moody's and Standard and Poor’s.” Prior to coming to Providence, Sutherland worked in the Worcester and San Jose/San Francisco markets in radio. Cumulus stock is trading at close on Tuesday at $0.34 a share, down from two years earlier when the stock traded at $6.60 a share.

The judge overseeing oil and gas producer Penn Virginia LLC’s bankruptcy approved a restructuring deal that would enable the struggling company to take in $50 million by selling new common stock, The Wall Street Journal reported yesterday. Judge Keith L. Phillips cleared Penn Virginia officials to formally enter a restructuring agreement with a group of lenders, though the approval does not prevent Penn Virginia officials from continuing to negotiate with other stakeholders who have alternate ideas. Penn Virginia officials have also received a proposal from Republic Midstream, a company that has been hired to build a pipeline for nearly all of Penn Virginia’s crude oil pulled from Texas’ Eagle Ford drilling region. In court papers, Republic Midstream lawyers said that their own reorganization strategy is cheaper for Penn Virginia to execute and would provide $30 million for the company to restart drilling operations in Texas. Republic Midstream is indirectly owned by a fund managed by ArcLight Capital Partners LLC, a private-equity firm that manages $15.7 billion.

 

Gawker Media, driven into bankruptcy last week after losing an invasion-of-privacy lawsuit to Hulk Hogan, is seeking to wrap up an asset sale by early August, Bloomberg reported yesterday.  The digital media company filed court papers proposing a July 29 auction with an opening bid of $90 million from Ziff Davis. That company agreed to assume some liabilities, but not the $130 million in damages from the lawsuit brought by ex-pro wrestler Hogan and bankrolled by tech billionaire Peter Thiel. New York-based Gawker said it picked the Ziff Davis stalking-horse offer from two proposals submitted in May. The bid includes what Gawker called an “extraordinary provision”: An agreement to retain Gawker Founder Nick Denton under a two-year consulting contract that pays about $200,000 annually. Under the auction proposal, interested parties must submit documents by July 25 and bids by July 27. The auction would be held July 29 and a sale approval hearing Aug. 3. If outbid, Ziff Davis is entitled to a $2.47 million breakup fee, with expense reimbursement of as much as $1.25 million. A hearing to seek court approval of the sale procedures is slated for July 5. The case is In re Gawker Media LLC, 16-11700, U.S. Bankruptcy Court, Southern District of New York (Manhattan).