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Molycorp has reached a settlement with the unsecured creditors’ committee in its chapter 11 case on the terms of a modified reorganization plan, Forbes.com reported yesterday. Under the proposed settlement, unsecured creditors (including deficiency claims arising from the 10 percent senior secured notes) would receive 7.5 percent of the reorganized company’s equity in the event of a standalone reorganization plan, with senior lender Oaktree Capital Management receiving 92.5 percent of the reorganized equity. If there is a sale of the entire company under the plan, unsecured creditors (again, including deficiency claims) would receive 7.5 percent of the proceeds of the sale, with Oaktree receiving 92.5 percent. Under the standalone option, the company’s reorganized equity value would be $417 million, meaning that the unsecured claim distribution would be valued at $31.3 million.

Fairway Group Holdings Corp., the New York gourmet grocery chain that once had ambitions of a nationwide expansion, is approaching default after years of red ink, Bloomberg News reported on Friday. After gorging on debt to finance its growth plans, the company is now at risk of breaching its credit covenants when its fiscal quarter ends on April 3, according to report by Moody’s Investors Service analyst Mickey Chadha. And even if Fairway gets a reprieve from its obligations, its capital structure remains unsustainable, Chadha wrote. To bring its operations in line, analysts are advising the company to halt its plans to expand beyond its New York base. The chain has already pulled out of leases in lower Manhattan and the new Hudson Yards complex under construction on Manhattan’s Far West Side. Of its 15 stores, seven are in Manhattan, Brooklyn and Queens, with the rest outside the city in places such as Pelham Manor, N.Y., and Paramus, N.J.

Carl Icahn is about to see something from his 15-year effort to revive XO Communications, which reached a deal to sell its fiber-optic network business to Verizon Communications Inc. for $1.8 billion, the Wall Street Journal reported today. The billionaire investor, who took control of the company after its 2002 bankruptcy filing, said that the deal “does not represent a significant annualized return on our investment.” Icahn started buying debt of network operator XO Communications in 2001, a year before the Internet bubble casualty ended up in bankruptcy. He ended up with control of the firm afterward as the company — and peers —– worked through the aftermath of building far more network capacity than was needed at the time. It’s been “a bumpy road” since XO emerged from bankruptcy in 2003, Icahn said. The Verizon deal represents “the best achievable outcome for the company’s customers, employees and owner” in today’s environment,” said Mr. Icahn, who in 2011 said he had spent more than a $1 billion buying XO preferred shares.

The U.S. government fears Alpha Natural Resources Inc.'s proposal to sell its "crown jewel assets" to its lenders won't provide for cleaning up pollution at Alpha's mines, posing a "serious threat to public health and safety,“ Dow Jones Daily Bankruptcy Review reported today. The coal miner's plan to sell key assets to its lenders, whose $500 million bid Alpha wants to test through an auction process, has drawn some two dozen bankruptcy-court filings from creditors raising various concerns with the proposal or objecting outright. Among them is the federal government. The lenders' credit bid---that is, not hard cash but rather a pledge to forgive $500 million in debt they are owed---puts Alpha at risk of becoming unable to comply with its obligations to reclaim the land and treat the water at its mines, the government said.

The judge in Energy Future Holdings' (EFH) bankruptcy case recently approved the latest interim professional fee applications totaling more than $77 million, which were presented to the court by the numerous professional firms involved in the litigation, Texas Lawyer reported yesterday. Bankruptcy Judge Christopher S. Sontchi approved the omnibus order awarding the interim allowance of certain professional fees and expenses. Originally filed on April 29, 2014, Texas-based EFH's mega-case involves an army of attorneys and other professionals. Judge Sontchi recently granted the interim allowance of compensation for services rendered and reimbursement of expenses largely, but not exclusively, for the fourth interim fee periods. His recent order gave a sizeable boost to the total professional fees and expenses that EFH has been ordered to pay during the bankruptcy.

Chesapeake Energy Corp., the worst-performing stock in the S&P 500 index last year, jumped the most since 2008 after a financial blog said the shale gas driller may be ripe for acquisition, Bloomberg News reported yesterday. The stock rose 20 percent to $2.39 yesterday for the biggest one-day increase since December 2008. Chesapeake has advanced for five consecutive sessions, racking up 50 percent in gains, after Bloomberg reported on Feb. 12 that the company plans to pay $500 million of debt maturing next month. Chesapeake, which pumps more U.S. natural gas than any producer other than Exxon Mobil Corp., is a “prime takeout candidate,” a contributor wrote on the Seeking Alpha blog Monday. Speculation that the heavily-indebted shale explorer may be headed for bankruptcy is unwarranted, the blog said. The company said earlier this month that it had no plans to pursue bankruptcy protection.

Craig Energy, a Denver-based oilfield services firm, filed for chapter 11 protection, the Denver Post reported today. Facing debt in excess of $45 million — more than $38 million of which is secured — Craig Energy listed assets of $26.2 million, primarily in equipment such as drill rigs, pumps and vehicles. Craig Energy's operations span formations as Bakken in North Dakota and Montana, Niobrara in Wyoming and Colorado, and Bone Spring in Texas. Court filings show that annual revenue sunk by more than 50 percent to $46.2 million in 2015 from the year before. Read more. 

Get an indepth look of what happens when an oil, gas or other natural resources company goes bankrupt with ABI’s When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy. 

Bankruptcy Judge Tamara O. Mitchell approved a deal to provide health care benefits to retired Walter Energy Inc. miners, Dow Jones Daily Bankruptcy Review reported today. Judge Mitchell on Friday signed off on the creation of a voluntary employees beneficiary association (VEBA) to pay the health care benefits of retired miners represented by the United Mine Workers of America, court papers show. The VEBA fills the gap left when Judge Mitchell authorized Walter to stop funding its retirees' health benefits in connection with the sale of its Alabama mines to its lenders. The lenders have agreed to contribute $25 million to the VEBA, which will be administered by the union, once the sale closes. The sale is expected to close by the end of the month.

Within weeks, two low-profile legal disputes may determine whether an unprecedented wave of bankruptcies expected to hit U.S. oil and gas producers this year will imperil the $500 billion pipeline sector as well, Reuters reported today. In the two court fights, U.S. energy producers are trying to use chapter 11 protection to shed long-term contracts with the pipeline operators that gather and process shale gas before it is delivered to consumer markets. The attempts to shed the contracts by Sabine Oil & Gas and Quicksilver Resources are viewed by executives and lawyers as a litmus test for deals worth billions of dollars annually for the so-called midstream sector. Pipeline operators have argued that the contracts are secure, but restructuring experts say that if the two producers manage to tear up or renegotiate their deals, others will follow. That could add a new element of risk for already hard-hit investors in midstream companies, which have plowed up to $30 billion a year into infrastructure to serve the U.S. fracking boom. Read more. 

For further analysis of oil, gas or other natural resources company bankruptcies, pick up a copy of ABI’s When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy.