%1

Four additional casinos in Atlantic City, including the Trump Taj Mahal, could shutter if gaming expands in New Jersey beyond the cash-strapped resort town, Bloomberg News reported yesterday. A 10 percent decline in Atlantic City’s gross gaming revenue would put Donald Trump’s namesake casino at risk, according to a Fitch Ratings report released yesterday. Atlantic City, which once had a monopoly on gambling on the East Coast, has been veering toward insolvency since a third of its parlors closed in 2014 amid heightened competition. Its tax base has tumbled by more than two-thirds since 2010. New Jersey Governor Chris Christie last week signed two bills that will pull the 39,000-resident community from the brink of bankruptcy and give it about five months to right its finances. Under the agreement, the state would provide Atlantic City with a bridge loan. Some gambling proceeds that go toward marketing would flow to the city, which would also receive fixed payments from casinos instead of property taxes to prevent the assessment appeals that have strained its finances. The measures will infuse the gambling hub with enough cash to pay bills and workers through October.

UCI International LLC, a maker of replacement auto parts owned by New Zealand’s richest man, filed for bankruptcy protection late on Wednesday night, after talks with bondholders about a balance-sheet restructuring failed, the Wall Street Journal reported today. The Lake Forest, Ill., company, said that it was forced to file for chapter 11 protection after it was unable to reach an out-of-court deal with bondholders who include funds managed by BlackRock Inc., JPMorgan Chase & Co., and Credit Suisse Asset Management. UCI skipped a $17.25 million interest payment to the bondholders, who are owed $400 million, in February, according to Brian Whittman, the company’s chief restructuring officer. The bond debt is left over from a 2011 leveraged buyout led by New Zealand billionaire Graeme Hart, whose Rank Group acquired UCI a little more than five years ago in deal valued at $980 million.

Intervention Energy Holdings LLC faced off yesterday with lender EIG Global Energy Partners to defend its nascent reorganization, the Wall Street Journal reported today. Intervention’s May 20 chapter 11 filing was immediately met with opposition from EIG, which quickly asked Bankruptcy Judge Kevin Carey to dismiss the case. EIG, which invests in energy-related debt and equity, took ownership of a single share of Intervention last year in connection with a forbearance agreement. As part of the agreement, Intervention agreed to secure 100 percent shareholder approval before filing for chapter 11 protection. However, since it never signed off on the filing, EIG says the chapter 11 wasn’t authorized and should be dismissed. At Thursday’s hearing, EIG’s attorney focused on the forbearance agreement and its ownership stake, calling the bankruptcy filing “a breach of contract.” EIG has also argued in court papers that “there is no possibility for reorganization” and that a bankruptcy proceeding won’t benefit creditors.

Warren Resources Inc., an exploration and production company with operations in California and Pennsylvania, filed for bankruptcy protection yesterday, Reuters reported. The filing comes as a severe downturn in oil prices has forced scores of energy producers to file bankruptcy since the start of 2015. Up to a third of all producers may be at risk of bankruptcy if commodity prices remain weak, according to a study by consulting firm Deloitte. Warren Resources skipped a $7.5 million interest payment due Feb. 1 on its senior notes and the company defaulted 30 days later. The company listed assets of $230 million and debts of $545 million, as of Jan. 31, according to court documents. Read more. 

Listen to a panel of experts drill down through the issues involved in an oil and gas bankruptcy at ABI's 23rd Annual Northeast Bankruptcy Conference on July 14-17 at the Omni Mount Washington Resort in Bretton Woods, N.H. Register here.

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. 

Brisbane, Australia-based Linc Energy announced May 31 that its U.S. subsidiaries filed for Chapter 11 bankruptcy protection in Houston, the Houston Business Journal reported today. Linc USA GP and 10 other subsidiaries filed the voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas in Houston on May 29. The companies listed total assets of $50 million to $100 million and estimated liabilities of $100 million to $500 million. Linc Energy’s North American offices are in Houston and Anchorage, Alaska. Its oil and gas operations are located primarily in Texas, Wyoming and Alaska. Read more. 

Listen to a panel of experts drill down through the issues involved in an oil and gas bankruptcy at ABI's 23rd Annual Northeast Bankruptcy Conference on July 14-17 at the Omni Mount Washington Resort in Bretton Woods, N.H. Register here.

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. 

U.S. Congress members urged Treasury Secretary Jacob Lew to deny Caesars Entertainment Corp. a favorable tax ruling relating to the casino operator's plan to create a trust to own its hotels and resorts, saying that doing so would amount to a taxpayer subsidy, Reuters reported yesterday. Lawmakers said in a May 26 letter to Lew that Caesars' plans to reorganize its bankrupt main operating unit into a casino operator and creditor-controlled real estate investment trust (REIT) abuses the unit's original intent of allowing small investors to diversify into real estate. Caesars put the unit into bankruptcy early last year. The proposed REIT spinoff provides favorable tax treatment and such trusts are more highly valued by investors, increasing the recovery for creditors who are owed $18 billion. The company last year applied for what is known as a private letter ruling from the Internal Revenue Service to confirm that the REIT would be treated as a tax-free separation. Caesars has warned that if it fails to get tax-free status it could incur significant liabilities which could undermine the value of the reorganization. "The REIT would effectively shelter a considerable portion of the casinos' profits, thus functioning as a taxpayer-funded subsidy to one of the largest casino companies in the U.S. and its private equity owners," said the letter.

Irving-based HCA North Texas, one of the region’s largest health care providers, has agreed to buy Forest Park Medical Center in Dallas for $135 million in a deal set to close in mid to late June, the Dallas Business Journal reported today. HCA’s purchase of the now-closed hospital is subject to certain closing conditions, including court approval of the sale and other regulatory approvals. HCA’s nearby Medical City Dallas Hospital continues to expand clinical services for both adults and children, said Erol Akdamar, HCA North Texas Division president. The former Forest Park facility may operate under the Medical City Dallas license. Read more. 

For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore.

Under Armour Inc. cut its sales outlook for the year, citing the bankruptcy of Sports Authority, the Wall Street Journal reported today. Given the recent approval of Sports Authority’s liquidation, as opposed to a restructuring or sale of the continuing business, Under Armour said that it would realize only about a quarter of the revenue it had planned to receive from Sports Authority. In addition, the company said it would take a $23 million impairment charge in its current quarter. Under Armour Chief Executive Kevin Plank noted that the company still has strong brand momentum and pointed out that Sports Authority’s bankruptcy is a one-time event. Read more. (Subscription required.) 

In related news, the owner of the NFL’s Denver Broncos is seeking to end its stadium-sponsorship agreement with Sports Authority Holdings Inc., the Wall Street Journal reported today. The team’s request to scrap the deal comes after the bankrupt retailer skipped two payments this year and made an unauthorized attempt to sell the stadium naming rights in bankruptcy court. The Broncos claim Sports Authority owes them roughly $2.1 million for 2016. Read more. (Subscription required.)