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The San Francisco Art Institute has filed for chapter 7 bankruptcy protection, a move that will force the 152-year-old institution to liquidate its assets and abandon its legendary campus on the edge of Russian Hill, the San Francisco Chronicle reported. The Art Institute filed for bankruptcy on April 19. “It was a good run for 152 years and it is such a tragedy that it is gone,” said John Marx who served as co-chair of the institute's board. “The passion was there until the very end and up to the moment that we filed we were still trying to get a couple of billionaires on the East Coast to help us out but it just didn’t work out.” A meeting of the creditors will be held May 17. Most prominent among them is the University of San Francisco, which claims it is owed around $6 million for costs incurred in exploring a relationship between the two institutions in an attempt to save the art school. But USF ultimately decided not to go through with it in July 2022, and the Art Institute announced it would cease operations, ending a San Francisco tradition that dates back to 1871.

The SPAC boom took hundreds of risky companies to the stock market. The next stop for many is bankruptcy court, the Wall Street Journal reported. Dozens of companies that merged with SPACs are running out of cash, joining at least 12 that have already gone bankrupt after combining with special-purpose acquisition companies. More than 100 companies, including electric-scooter firm Bird Global Inc., smart-sock baby-monitor maker Owlet Inc. and electric-car startup Faraday Future Intelligent Electric Inc. are running out of cash, according to a Wall Street Journal analysis of the companies’ cash and cash flow from operations data disclosed in regulatory filings. Shares of many of these companies trade under $1, more than 90% below where they did when they went public, and are in danger of being delisted. Those that have raised cash typically have done it on onerous terms. Bird extended its runway by merging with its Canadian partner.

The founder of Bang Energy deleted Instagram comments disparaging advisers trying to sell the bankrupt energy drink maker after a judge said he would be fined $25,000 a day until he removed the posts, Bloomberg News reported. Jack Owoc, who was fired as Bang Energy chief executive officer last month, removed several Instagram comments criticizing company advisers after Bankruptcy Judge Peter Russin held him in contempt of court and ruled the posts violated a March order prohibiting him and his wife, Meg, from posting on Bang Energy-affiliated Instagram, TikTok and Twitter accounts unless told to do so by company advisers. Owoc made the comments under posts promoting the energy drink from a @BangEnergy.CEO Instagram account with 1 million followers. Company lawyers requested Owoc make the Instagram posts earlier this month and took the founder to court over the subsequent comments he made under the posts. “I (JACK OWOC) WAS FORCED BY THREAT TO POST THIS AGAINST MY WILL,” one comment under an April 10 post read. “THE FLORIDA BANKRUPTCY COMMUNITY MUST BE BROUGHT TO JUSTICE!” In another comment, Owoc wrote, “This post is a fraud on the American public. This post was made against my will and is a violation of my first amendment rights.” About 30 minutes before a 5 p.m. deadline imposed by Judge Russin to delete the comments, Owoc said in an email that he would follow the court’s instructions. The comments disappeared shortly thereafter.

Cancer victims on Monday urged a U.S. judge to dismiss a Johnson & Johnson subsidiary's second bankruptcy filing, saying the company is abusing the bankruptcy system in its renewed attempt to resolve tens of thousands of lawsuits alleging that J&J's baby powder and other talc products caused cancer, Reuters reported. The J&J subsidiary, LTL Management, this month filed for bankruptcy a second time, seeking to settle all current and future talc claims for a proposed $8.9 billion. LTL's first bankruptcy was dismissed after a federal appeals court ruled the company was not in financial distress and therefore not eligible for bankruptcy. Plaintiffs have filed more than 38,000 lawsuits that have been consolidated in federal court in New Jersey alleging that J&J talc products sometimes contained asbestos and caused ovarian cancer or mesothelioma. J&J has said its talc is safe, asbestos-free and does not cause cancer. The plaintiffs allege that J&J’s actions amount to a manipulation of the bankruptcy system by a multinational conglomerate valued at more than $400 billion and in little danger of running out of money to pay cancer victims or their family members. LTL could have made a honest settlement offer after its first bankruptcy failed, but instead allowed itself to be stripped of funding so that its second bankruptcy could impose the settlement on unwilling plaintiffs and future claimants, the plaintiffs' attorneys wrote in a Monday filing in U.S. bankruptcy court in Trenton, New Jersey.

Bed Bath & Beyond Inc. won permission on Monday to tap $40 million, money the retailer said it needs to cover payroll for its roughly 14,000 employees and buy management time to try and locate a buyer in chapter 11 bankruptcy to rescue some or all of its stores, Bloomberg News reported. Bankruptcy Judge Vincent Papalia in a hearing yesterday said the urgent funding provided by Bed Bath & Beyond’s lenders averts a potential “fire sale” and immediate liquidation of the 52-year-old retail chain. The financing approved Monday includes a May 28 deadline for bids on the company’s assets. But the money comes at a cost to junior creditors: in exchange for the $40 million, Bed Bath & Beyond agreed to roll-up $200 million in existing debt, moving that debt to the front of the chapter 11 repayment line. The retailer said in its bankruptcy petition it had roughly $4.4 billion in assets compared to more than $5.2 billion in total debt as of last year. Lawyers for lenders Sixth Street Specialty Lending Inc. and JP Morgan Chase Bank N.A. defended the roll-up, saying lenders went to extraordinary lengths to provide Bed Bath & Beyond runway as it pursued last-ditch equity raises in an ultimately failed attempt to avoid bankruptcy.

A decade ago, Bed Bath & Beyond was a brick-and-mortar star with a $16 billion market cap. With interest rates at near-zero for a decade, the company went on an acquisition binge, buying up companies such as Cost Plus World Market in 2012 and Decorist in 2017. Yet the big-box retailer was slow to adapt to the e-commerce era, according to a Wall Street Journal editorial. Target, Walmart, Home Depot and Lowe’s invested in improving their online and logistics operations, which enabled them to better compete with Amazon. Bed Bath & Beyond’s failure to do so was costly during the COVID government lockdowns as it racked up billions of dollars in losses. Investors indulged such losses as long as the Fed maintained its uber-accommodative policies, which made borrowing cheap and fueled speculative stock-buying. Bed Bath & Beyond’s stock price doubled between January 2020 and 2021 to $35 a share amid a rally in so-called meme stocks such as AMC and GameStop. But credit conditions tightened last year as the Fed raised rates, spurring the retailer last August to close 150 stores and cut its workforce by 20%. The belt-tightening enabled it to secure a $375 million loan to continue operating through the holidays, but it continued to struggle and reported another sales drop in the latest quarter. By the end of March, its market valuation had slumped to $70 million and its stock price had fallen below a dollar. The company could no longer raise capital or borrow to stay afloat, making bankruptcy all but inevitable. Thousands of workers may lose their jobs, but the good news is that plenty of companies are still hiring. Nobody celebrates a corporate bankruptcy and the human and financial harm that goes with it. But some companies inevitably fail in a dynamic economy, and the demise of unprofitable businesses enables labor and capital to move to more productive uses. Propping up so-called zombie companies suppresses economic growth and innovation. Read more. (Subscription required.)

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.