Private jet company Wheels Up announced yesterday that its founder and CEO, Kenny Dichter, is stepping down from his post immediately as the company faces mounting losses and the potential for bankruptcy, CNBC.com reported. Board member Ravi Thakran will become executive chairman, while Chief Financial Officer Todd Smith will serve as interim CEO, the company said in a statement. Wheels Up didn’t give a reason for the executive changes, but thanked Dichter for his “vision and work” in growing revenue to over $1.5 billion a year and membership to over 12,000 customers. Dichter’s departure caps a dramatic fall for one of the private jet industry’s most high-profile startups. Wheels Up once promised to become the Uber or Airbnb of private jets. Dichter, who founded Marquis Jets in 2001 and later sold it to NetJets, launched Wheels Up in 2013 aiming to “democratize” private jets and make them more affordable and easier to book.
Indicted FTX founder Sam Bankman-Fried has renewed his attacks on the bankrupt cryptocurrency exchange’s law firm as he mounts his defense against a raft of fraud, money laundering and campaign-finance charges, Reuters reported. Bankman-Fried late Monday asked a judge to designate FTX’s current leadership and the exchange’s attorneys at law firm Sullivan & Cromwell as part of the “prosecution team” in the criminal case against him. FTX and Sullivan & Cromwell provided such extensive cooperation to the government that prosecutors had “effectively deputized the company to aid the prosecution,” Bankman-Fried argued. The 31-year-old ex-CEO is fighting charges that he stole billions of dollars in customer funds to plug losses at his Alameda Research hedge fund. Sullivan & Cromwell, a prominent Wall Street law firm with about 900 lawyers, represented FTX on transactions and regulatory matters before its collapse last year. The firm secured court approval in January to advise FTX in its bankruptcy, overcoming objections from some FTX creditors and U.S. lawmakers that its past work created a conflict of interest.
Bedding provider Tempur Sealy has agreed to acquire Mattress Firm in a cash-and-stock transaction valued at about $4 billion, the companies said yesterday, according to the Associated Press. Mattress Firm operates more than 2,300 brick-and-mortar retail locations and an e-commerce platfom. After the Tempur Sealy acquistion is complete, the two companies will have a total of some 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities and four research-and-development facilities worldwide. Tempur Sealy will pay about $2.7 billion in cash and $1.3 billion in stock to Mattress Firm, which is partially owned by Steinhoff International Holdings NV. That reflects the issuance of 34.2 million common shares, based on Monday's closing share price of $37.62. The companies expect to complete the transaction in the second half of 2024. After the acquistion is complete, Mattress Firm is set to operate as a separate business unit within Tempur Sealy, which received a request from the Federal Trade Commission for additional information and documents related to the transaction. The company plans to “work cooperatively” with the FTC to complete the acquistion. While Mattress Firm and Tempur Sealy have a long history as retail partners, the two have had a rocky relationship in recent years. The companies temporarily ended their partnership in January 2017 — in a move that notably removed popular Tempur-Pedic beds from Mattress Firm stores. The following year, in August 2018, Tempur-Pedic sued Mattress Firm for allegedly "selling confusingly similar products under the ‘Therapedic’ name, and copying the look and feel of the entire Tempur-Pedic brand and consumer experience." Tempur-Pedic also accused Mattress Firm of continuing to sell Tempur-Pedic mattresses beyond the 2017 end of their partnership. In October 2018, Mattress Firm filed for chapter 11 protection and closed hundreds of stores. At the time, the Houston-based company pointed to years of overexpansion that resulted in “cannibalization” of sales. Mattress Firm’s then-CEO Steve Stagner later resigned in April 2019. Months after Stagner's resignation, Tempur Sealy and Mattress Firm reconciled with a new, long-term supply agreement. In addition to announcing plans to acquire Mattress Firm on Tuesday, Tempur Sealy also reported a first-quarter profit of $85.3 million, or 48 cents per share. Excluding one-time items, earnings were 53 cents per share.
Bittrex and several affiliates went bankrupt on Monday after its U.S. operations were shut down at the end of April in response to a regulatory crackdown, Bloomberg News reported. The bankruptcy, which the Seattle company said doesn’t impact its non-U.S. operations, comes less than a month after the U.S. Securities and Exchange Commission accused the crypto platform of having flouted securities rules for years. Bittrex Global will continue operating as normal for customers outside the U.S., the company said. For users who didn’t withdraw their assets before the shutdown, Bittrex intends “to ask the court to activate those accounts as soon as possible so that customers meeting the necessary regulatory requirements will be able to withdraw them.” Bittrex listed assets and liabilities of as much as $1 billion each in its chapter 11 petition. Related entities Desolation Holdings LLC, Bittrex Malta Holdings Ltd. and Bittrex Malta Ltd. also entered bankruptcy, court papers show. The SEC sued Bittrex in federal court last month, alleging it broke the regulator’s rules from 2017 through 2022 while bringing in at least $1.3 billion in revenue. The SEC said Bittrex at times acted as a brokerage, exchange, and clearing agency, but didn’t register with the SEC.
Weight loss brand Jenny Craig has begun liquidating its operations in the U.S. after efforts to ease a cash crunch fell short, Bloomberg News reported. Jenny C Holdings LLC and affiliates filed for chapter 7 bankruptcy on Friday in Delaware, court papers show. The move means Jenny Craig will cease operating and see its assets sold off in pieces. Jenny Craig acknowledged the wind-down on its website. Customers’ auto-delivered subscriptions have been canceled, while coaching sessions and merchandise sales have ceased, the company said. Since founder Jenny Craig opened the company’s first brick-and-mortar location in 1983, diet fads have changed dramatically. Weight-loss drugs, at-home exercise machines and health-food stores have reshaped the industry landscape. The firm, backed by HIG Capital, struggled to maintain enough cash in recent months as it stared down a first-lien term loan due in October 2024. It has searched for a buyer and held active discussions with lenders in an attempt to rework roughly $250 million of debt.
Summit Restaurant Holdings, a group of CKE franchisees that operated over 145 Hardee’s restaurants in eight states at its peak, filed for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Colorado, on Thursday, court records show, RestaurantDive.com reported. Summit Restaurants recently closed 39 stores and said it currently operated 108 in its bankruptcy filings. Summit is a part of Capstone Restaurants, which owns and operates about 226 Carl’s Jr. and Hardee’s restaurants, according to its website and court records. In a statement emailed to RestaurantDive.com, CKE said that its “goal is to maintain the maximum number of stores continuing to operate, backed by a capital structure that is sustainable and poised for long-term growth and success, and we are working with all parties to achieve that goal.”
Tupperware Brands Corp., which has warned of a possible bankruptcy, said on Monday it signed on investment bank Moelis & Co LLC to help explore strategic alternatives, and added it has also found additional prior period misstatements in its financial reporting. Orlando, Fla.-based Tupperware in April raised doubts about its ability to continue as a going concern, as it struggled to contain a slump in sales amid a surge in usage of free restaurant to-go boxes and rising competition from cheaper food storage containers. The company said in a filing yesterday that it expects a "material decline" in revenues for the first quarter - estimated in the range of $280 million to $290 million for the quarter ended April 1. It reported net sales of $348.1 million a year earlier. While it was not immediately clear if the year-ago revenue was comparable, the company said that it was continuing its restatement of previously issued financial statements for the year ended Dec. 31, 2022.
Invacare announced yesterday that it successfully emerged from chapter 11 protection at the end of last week, MassDevice.com reported. Elyria, Ohio-based Invacare began financial restructuring activities that included filing for bankruptcy in February. This saw the company enter into a restructuring support agreement (RSA) that covers substantially all of its debt-holders. That includes its term loan lender, all holders of convertible senior secured notes and holders of a majority of convertible senior unsecured notes. The RSA included a reduction of Invacare’s funded debt by approximately $240 million. It also featured a backstop for a rights offering to holders of claims, providing Invacare with $60 million in equity capital.
A U.S. court of appeals has granted Venezuela a temporary stay, preventing six companies from joining a proposed court auction of shares in a Citgo Petroleum parent to enforce judgments for past expropriation of assets, Reuters reported. Since March, creditors, including a unit of O-I Glass, Huntington Ingalls Industries, ACL1 Investments, Koch Minerals, and mining firms Rusoro Mining and Gold Reserve, have been granted rights to seize shares in the parent of Venezuela-owned refiner Citgo, PDV Holding. The companies had won conditional attachments to a federal case in which the judge has approved a process to auction the shares to pay a $970 million judgment won by miner Crystallex. The six hold arbitration awards or judgments that total about $2.6 billion and wanted those awards to be included in the auction. The appeals court on Friday suspended the attachments until a panel could hear from Venezuela and the six companies to be filed with the court by June. The proposed auction, which could break up the seventh-largest U.S. refiner to pay creditors, took a giant step forward last month with a greenlight from the U.S. Treasury.
