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Rising financial stress in the U.S. energy sector has prompted some suppliers and vendors to take unusual legal action to collect unpaid debts: forcing struggling companies with billions of dollars in debt into bankruptcy, Reuters reported today. Since August, creditors have filed petitions for involuntary bankruptcy against three energy producers with nearly $2 billion in combined debt: Miller Energy Resources Inc., Black Elk Energy Offshore Operations and Energy & Exploration Partners Inc. During that period, there have been a total of seven bankruptcies involving energy companies with at least $200 million in debt. "Some producers are getting very, very far out there with what they owe their suppliers," said John Sparacino, a bankruptcy attorney with Vorys, Sater, Seymour and Pease in Houston, who represented driller National Oilwell Varco in the Miller involuntary filing. Lawyers expect more bankruptcies unless crude prices recovers. "If oil continues below $40 a barrel, we should expect to see even more energy filings, both voluntary and involuntary," said John Penn, a bankruptcy lawyer with Perkins Coie in Dallas.

The former operator of an ethanol plant in Hopewell, Va., is now planning to pay its debts under chapter 11 protection after several of its creditors tried to force the company to liquidate, the Richmond Times-Dispatch reported today. Vireol Bio Energy LLC received approval on Dec. 14 from the U.S. Bankruptcy Court in Richmond to convert its case to a voluntary chapter 11. Several of the company’s creditors, including Dominion Virginia Power, had filed a petition with the court in November to force the company into an involuntary chapter 7 liquidation of its assets. Dominion and three other creditors said together they were owed just more than $2 million.

The RoomStore furniture chain has filed for bankruptcy protection as company officials project the longtime Phoenix retailer will lose about $2 million this year, the Arizona Republic reported today. Officials with The RoomStores of Phoenix LLC blamed losses on spillover from the 2008 housing crash and increased competition among furniture retailers. The company sent notices to employees last week warning of layoffs and store closures. Co-owner Alan Levitz did not specify what stores were slated for shuttering but advised in the letter that layoffs could begin in February. Levitz said if planned promotional sales were successful and if executives were able to negotiate with creditors, the company could "retain its existing footprint." He also said the majority of customers waiting on orders will get them.

Millennium Health LLC is back on track to exit chapter 11 and pay off a $256 million settlement with the Justice Department, Dow Jones Daily Bankruptcy Review reported yesterday. Bankruptcy Judge Laurie Selber Silverstein on Friday lifted a stay of her order confirming the drug-testing company's chapter 11 plan, paving the way for Millennium's emergence from bankruptcy protection. The judge said that she found the threat to Millennium's survival and the preservation of 1,200 jobs outweighed the rights of Voya Investment Management to appeal her confirmation of the drug tester's plan at a hearing in U.S. Bankruptcy Court in Wilmington, Del. The Justice Department has accused Millennium of billing taxpayer-funded programs for unnecessary tests and giving physicians kickbacks to steer lucrative lab work its way. Millennium has admitted no wrongdoing, but agreed to the settlement. The company filed for chapter 11 protection to cement the settlement in place.

New Gulf Resources has filed for Chapter 11 bankruptcy protection, the Tulsa-based oil and natural gas company said on Thursday, the Oklahoman reported on Saturday. New Gulf filed a pre-arranged reorganization plan, including a restructuring support agreement with creditors representing more than 72 percent of the company’s second-lien notes and 22 percent of its subordinated notes. The creditors agreed to provide at least $125 million in new funding to help the company reorganize.

Unions representing the company's workers say they are in danger of being shortchanged, while shareholders of the old AMR Corp. get another generous payoff, Dow Jones Newswires reported on Friday. Hundreds of millions of dollars of valuable stock is still stored up in bankruptcy reserve accounts, waiting for a final reckoning of the accounts from the 2011 bankruptcy of AMR, parent of American Airlines. AMR's bankruptcy was a rare case that produced value to spare for shareholders. According to court papers, investors in the old equity received more than $9.5 billion of new American shares in the four months following AMR's bankruptcy exit. Unions representing pilots, flight attendants and other workers of AMR Corp. say that they are being asked to take a haircut when the remaining stock is handed out while investors in the old equity get more than their fair share. American spokesman Casey Norton said that the company will respond with a court filing and is reviewing a bankruptcy court motion the unions filed on Tuesday, criticizing the company's distribution plan.

Homejoy Inc., a house cleaning and repairs start-up that hired David Hasselhoff to star in a commercial, has filed for chapter 11 bankruptcy, the Wall Street Journal reported today. The chapter 11 case, filed on Tuesday in U.S. Bankruptcy Court in San Jose, comes about five months after the company announced that it would be shutting down via a blog post on its website. The San Francisco venture-backed startup was founded by siblings Adora and Aaron Cheung in 2013 and allowed users to book home cleaning and repair services. Homejoy raised $38 million in venture funding from investors including Google Ventures, as well as First Round Capital, Redpoint Ventures and others. Until July, the company was offering $25-an-hour house cleaners in five countries, as well as expanding into home repairs and carpet cleaning.

A chain of 24 local newspapers across western New York filed for bankruptcy protection on Tuesday, blaming last year’s mega-snowstorm that dumped more than seven feet of snow on the smaller towns that the publications cover, the Wall Street Journal reported today. Officials who put the publisher of the Hamburg Sun, Lockport Star, West Seneca Sun, Springville Journal Sun and other community papers into bankruptcy protection are coming up with a plan to repay the company’s debts without laying off any of its roughly 100 workers, said chief executive James Austin. The newspapers reach about 230,000 people, most of whom live in a region that was pummeled with snow during a series of storms in November 2014. Austin called the community newspaper industry “very strong” financially; his company would have been profitable but for the storm that cost roughly $700,000, he said.

Kids tech company Fuhu had a terrific Black Friday sales promotion featuring $149 Nabi-branded tablets for $99, but the tablets haven’t shown up, and customer emails and phone calls haven’t produced a refund or an explanation, the Wall Street Journal Bankruptcy Beat Blog reported yesterday. Fuhu sent out emails warning that the Black Friday sale was such a hit, deliveries could be delayed, though the company is hoping to catch up on orders soon. Fuhu filed for chapter 11 protection on Dec. 7, low on cash and inventory, and has since secured court approval on critical motions to ensure it can continue business as usual, said Chief Executive James Mitchell. Fuhu has product to sell and is shipping orders on an expedited basis, he said. In court, a lawyer for Fuhu’s main lender, Tennenbaum Capital Partners, said that it is making accommodations to ensure the company can get product to customers.

Millennium Health LLC’s chapter 11 plan was confirmed on Monday, but it was almost immediately challenged with an appeal from Voya Investment Management, the Wall Street Journal reported today. Voya, formerly ING’s U.S. arm, is one of dozens of financial institutions that bought into a nearly $1.8 billion financing for Millennium in April 2014. A little over a year later, the drug-testing company revealed it was threatened with the loss of the right to bill government-funded programs due to fraud accusations from the Justice Department. Voya didn’t buy into the chapter 11 plan that was designed to provide funds to pay Millennium’s settlement with regulators. The lender is seeking a fast trip to federal appeals court to argue the plan unfairly blocks Voya’s right to sue Millennium’s departing owners. During confirmation hearings last week, Millennium and the lenders that supported the plan said repeatedly that the company’s survival is on the line. If Millennium can’t come up with funds to cover a $256 million settlement of the fraud charges by Dec. 30, the Justice Department could move to strip the laboratory testing company of its government billing privileges, lawyers said.