%1

Only a tiny sign alerts visitors that they’re entering the headquarters for Christ’s Household of Faith, a religious commune in the heart of St. Paul, the Star Tribune reported yesterday. For 45 years, the nearly 500 members formed one of the oldest Christian communities in the nation but the outside world came crashing down late last year, when Christ’s Household filed for chapter 11. At risk are the 30-plus houses that are home to most members. The financial pressure looms even as the group’s spiritual director, 84-year-old Don Alsbury, is slowing down, yet he and others insist their worldly problems will be resolved. The future of those who stay is now up to a U.S. Bankruptcy Court. Christ’s Household filed for chapter 11 in December to reorganize its finances after an estimated $11 million in bank loans was sold to a private equity firm that then moved to foreclose on its housing properties. According to Alsbury, the school complex on Marshall Avenue was not used as collateral. Nor was the organic farm or the old resort. At risk are the 32 houses, with 56 dwellings, that are the homes to families. Those families are basically the sole employees of the businesses — the economic engines of the commune — and the entire staff at school. One commercial property is also at risk, court documents show.

A bankruptcy court judge on Friday approved Relativity Media LLC’s reorganization plan, clearing the way for the film company to emerge from chapter 11 protection, L.A. Biz reported on Friday. The ruling from the U.S. Bankruptcy Court for the Southern District of New York comes about a month after the judge conditionally approved Relativity’s reorganization plan, contingent on the company raising $80 million in new funding and getting a deal that would give actor Kevin Spacey and producer Dana Brunetti creative control of the studio. The Beverly Hills-based company secured $75 million in loans and debt financing and signed Brunetti as president of production, although Spacey has backed out of leading the studio, citing his busy schedule. Relativity says new financing will come in the form of a $40 million loan from Midcap Financial Trust and $35 million in convertible debt financing from hedge fund founder Joseph Nicholas.

The Indiana Department of Natural Resources is allowing Peabody Energy to potentially stick Indiana taxpayers with the company’s $163 million of mine reclamation costs, according to an editorial in yesterday’s Indy Star. For too long, Peabody Energy has been allowed to “self-bond” — a promise to provide future reclamation funds — instead of purchasing a surety bond or creating a trust fund to pay for the costs of cleaning up its mines, avoiding contamination and reclaiming the lands that the mining has marred. Peabody is now verging on bankruptcy. Indiana officials need to act decisively to ensure that taxpayers aren’t left holding the financial bag. Indiana and federal laws require mining companies to reclaim surface lands damaged by their operations and provide financial assurances that cleanup funds will be available. Companies often buy third-party surety bonds that act as insurance policies guaranteeing reclamation funds are available when needed. Peabody, however, uses “self-bonds” for its six coal mines in Indiana. Maybe that made sense five years ago when Peabody Energy’s stock price was about $74 and its market capitalization was billions of dollars. Peabody has since lost 99 percent of its market value and is radically restructuring its finances and selling assets to avoid bankruptcy. Peabody has essentially “maxed out its credit cards” by borrowing all remaining funds under its corporate debt agreement.

America’s coal industry is now facing another dark hour, but this time there are few financiers willing to save it, The New York Times reported yesterday. JPMorgan Chase announced two weeks ago that it would no longer finance new coal-fired power plants in the U.S. or other wealthy nations. The retreat follows similar announcements by Bank of America, Citigroup and Morgan Stanley that they are, in one way or another, backing away from coal. While coal has been declining over the last several years, Wall Street’s broad retreat is an ominous sign for the industry. Coal, like railroads, steel and other engines of the nation’s industrial expansion in the 19th and early 20th centuries, helped drive Wall Street’s profits for generations. More than a century later, the coal industry is in a free fall and the banks are pulling away. Some banks say they are trying to do their part to curtail climate change by moving away from coal projects and financing ventures that produce less carbon. But bankers also say there is a more basic reason for the shift: Lending to coal companies is too risky and could ultimately prove unprofitable. Coal companies are being squeezed by competition from less expensive energy sources like natural gas and by stiffer regulations — pressures that show no signs of letting up.

The future of Freedom Communications newspapers, the Orange County Register and Riverside Press-Enterprise, is set to be decided in bankruptcy court Monday, the Los Angeles Daily News reported yesterday. With only 10 days until Freedom Communications is expected to run out of cash, an attorney representing Freedom said that they will go with Digital First Media’s $52.3 million bid and will appear in court Monday “to confirm the sale.” A U.S. bankruptcy judge is scheduled Monday to rule on the bid but does not have the discretion to overrule Freedom’s wishes and go with Tribune’s bid instead, according to William Lobel with Lobel Weiland Golden Friedman LLP. The week since the initial bid was accepted has not been without its ups and downs. A letter sent by the U.S. Department of Justice’s antitrust division to Freedom’s bankruptcy lawyers on March 14 warned them that a Tribune win would create a monopoly, with 98 percent and 81 percent of all newspaper sales in Orange and Riverside counties, respectively, and Assistant Attorney General William J. Baer vowed to take action if that were to happen.

Some cash-strapped U.S. oil and gas companies are considering creating an unusual layer of debt as a way of surviving the rout in oil and gas prices, Maritime Professional reported today. Severely distressed companies may issue so-called 1.5-lien debt, sandwiched between the first- and second-liens, to raise new capital. Investors with a stomach for risk would get a better yield than for the top debt, and have a stronger claim than junior creditors if the company filed for bankruptcy. Companies could also create a new, middle layer of debt to swap with existing bondholders, offering them the option of giving up principal to jump the queue for repayment in the event of a bankruptcy. Only six companies have done 1.5-lien deals over the past several years, according to Moody's Investors Service. The swap would make sense for companies like Chesapeake Energy Corp. because its bonds maturing in 2017 and 2018 are trading at depressed levels, analysts said. However some credit-rating agencies view the exchange of new 1.5-lien secured notes for existing senior unsecured and 2nd lien secured notes as a distressed exchange and a limited default depending on their definition of default.

There’s a real possibility that every publicly traded coal company in the St. Louis region could wind up in bankruptcy court this year, the St. Louis Post-Dispatch reported yesterday. Just last week, Peabody Energy and Foresight Energy both disclosed they may have to file for chapter 11 protection as heavy debt loads weigh them down amid a long industry slump. They would join Creve Coeur, Mo.-based Arch Coal, which filed for bankruptcy protection in January. In addition, Patriot Coal Corp., formerly based in Creve Coeur, sold itself off in pieces after filing for bankruptcy a second time in 2015. For an industry that has long made St. Louis its corporate home, things aren’t looking good, but St. Louis surely won’t feel as much pain as the mining communities themselves. It’s far from most of the labor-intensive mines that have been shedding thousands of workers as demand for coal wanes. Near barge operators and railroad connections essential to transport vast quantities of the black rock, St. Louis long housed the offices of coal companies that operated the nearby mines of Southern Illinois. As coal production shifted west in the 1980s to the giant surface mines of Wyoming and Montana, St. Louis made sense for companies that operated mines both east and west of the Mississippi River.

New Source Energy Partners and its general partner New Source Energy GP LLC filed for bankruptcy liquidation this week amid the ongoing oil industry slowdown and a year-long lawsuit with an investor. The Oklahoman reported today. Oklahoma City-based New Source said that it has $5.1 million in cash and property and owes fewer than 50 creditors about $51.2 million, and reported gross revenues of $2.1 million so far in 2016, compared with $19.3 million in 2015 and $61.5 million in 2014. The filing caps more than a year of turmoil at New Source, including personnel changes, an ongoing lawsuit with an investor and shrinking credit lines because of tumbling oil prices.

The federal government filed an antitrust lawsuit Thursday in an attempt to block Tribune Publishing from buying the bankrupt Orange County Register and Press-Enterprise newspapers in Southern California, The Associated Press reported today. The suit was filed in federal court hours after Tribune, which publishes the Los Angeles Times and San Diego Union-Tribune, announced it had placed a winning $56 million bid for the two newspapers owned by Freedom Communications. The sale would give Tribune a monopoly over newspaper sales in Orange and Riverside counties and allow it to increase subscription prices and advertising rates, U.S. Justice Department said in a statement. A federal bankruptcy court judge still must approve the sale and has set a hearing for Monday. The Associated Press is among the creditors in Freedom's bankruptcy proceedings.

U.S. petroleum company Venoco Inc. filed for chapter 11 protection on Friday, joining more than 40 energy-related firms that have sought court protection from creditors since oil prices started plummeting 18 months back, Reuters reported today. Denver-based-Venoco listed assets worth between $100 million and $500 million and liabilities of between $500 million and $1 billion. Venoco, which was taken private in 2012, previously said that it was discussing debt restructuring options with its secured lenders after missing a $13.7 million interest payment on senior unsecured notes. At the time, the company said it had enough liquidity to continue normal operations, but that declining oil prices and a pipeline closure were presenting "significant challenges." The oil and gas exploration and production company said the shuttered pipeline had cut its output by more than 50 percent. The case is in U.S. Bankruptcy Court, District of Delaware, Case No: 16-10655.