Bed Bath & Beyond Inc. secured a short-term agreement from key equity investor Hudson Bay Capital Management LP to keep their fundraising agreement intact despite a possible price failure that may have occurred because the stock dropped below $1 this week, WSJ Pro Bankruptcy reported. The temporary stock-price waiver will be until the morning of April 3, which will enable Bed Bath & Beyond to continue to raise money from its agreement with the hedge fund, which exercises warrants to continue purchasing preferred convertible shares. So far the company has raised at least $360 million through this arrangement and said that it expects to raise another $100 million in April.
Johnson & Johnson will seek the Supreme Court’s review after a federal appeals court declined to revive the company’s bid to use chapter 11 bankruptcy to freeze nearly 40,000 lawsuits linking its talc products to cancer, WSJ Pro Bankruptcy reported. J&J said that it would turn to the nation’s highest court after judges on the Third U.S. Circuit Court of Appeals in Philadelphia voted Wednesday against having the entire appellate court reconsider a January ruling by a panel of judges dismissing the chapter 11 case of J&J subsidiary LTL Management LLC. J&J created the LTL subsidiary in 2021 and placed it in chapter 11 to move mass talc-injury lawsuits the business faced to bankruptcy court for resolution. While the parent company didn’t file for chapter 11, LTL’s bankruptcy filing opened a path to freezing the talc lawsuits against its affiliates, including J&J itself. Other profitable companies have used the same strategy, known in legal circles as the Texas Two-Step, to try to address mass cancer litigation. Wednesday’s ruling means J&J’s hopes for reviving its talc subsidiary’s chapter 11 case now depend on the U.S. Supreme Court, which takes only a small fraction of the petitions it receives.
FTX Group will recover about $404 million that its disgraced founder Sam Bankman-Fried allegedly transferred to the investment fund Modulo Capital, according to a proposed bankruptcy settlement made public yesterday, Bloomberg reported. The agreement adds to the slowly growing pot of money FTX has been trying to collect since the crypto firm filed bankruptcy last year. Modulo Capital, managed by Xiaoyun “Lily” Zhang and Duncan Rheingans-Yoo, got $475 million last year before FTX collapsed into bankruptcy amid fraud allegations, according to the settlement, filed Wednesday afternoon in federal court in Wilmington, Delaware. Modulo has no other money it could use to repay the funds, FTX said. The proposed settlement avoids an expensive lawsuit in which Modulo would fight FTX for the cash, according to court records. FTX said the deal is worth $460 million because it would bring in $404 million in cash and require Zhang and Rheingans-Yoo to drop claims they have against the company for $56 million. The agreement must be approved by Bankruptcy Judge John Dorsey.
A cohort of TV Azteca SAB’s creditors filed a petition to force the Mexican broadcaster into involuntary bankruptcy in the U.S., the latest twist in drawn-out debt talks, Bloomberg News reported. Holders of about $63 million of unsecured Azteca bonds filed an involuntary chapter 11 petition against the company in New York, according to court papers on Monday. The move marks the second attempt by bondholders to get traction for their claims against Azteca after it defaulted on the $400 million of notes in 2021. Negotiations have been thorny between creditors and the media company, which is controlled by Mexico’s third-richest man, Ricardo Salinas Pliego. The defaulted dollar notes, which were set to mature in 2024, were trading at 42.25 cents as of March 14, according to Trace data. Shares of the company have fallen more than 11% so far this year, even as an MSCI Inc. gauge of Mexican stocks climbs about 14%. In a Tuesday statement, Azteca reiterated its commitment to negotiations with creditors and financial discipline. The company said it would respond “responsibly” to the legal proceedings and expected the authorities to side with Azteca. Involuntary bankruptcy cases require a company to either agree to put itself under court protection or fight creditors in court. Now that a petition has been filed, a judge will be asked to decide whether Azteca stays in bankruptcy, or if the case is dismissed. The creditors are identified as Plenisfer Investments SGR SpA, Cyrus Capital Partners LP and Sandpiper Ltd. in the petition.
Carvana Co.’s debt swap proposal launched on Wednesday doesn’t have support from the group of investors who own a majority of the company’s nearly $6 billion in unsecured bonds, WSJ Pro Bankruptcy reported. The used-car retailer is asking bondholders to swap some of their holdings at a discount into an up to $1 billion new secured bond, which would have a second-priority claim on collateral including certain assets and property owned by the Tempe, Ariz-based company, such as some of its vehicles. Even if fully subscribed, the deal would only result in reducing Carvana’s debt by at most a few hundred million dollars. The bondholder group, which includes Apollo Global Management Inc., Pacific Investment Management Co. and Ares Management Corp., owns at least 70% of the outstanding bonds.
The former owner of Silicon Valley Bank, seized earlier this month by regulators, will need to wait, possibly for several months, to know if it can get back about $2 billion in cash it would need to repay bondholders and other creditors, Bloomberg News reported. SVB Financial Group won provisional court approval Tuesday to spend only a fraction of the cash the company claims federal regulators must return. What happens with the rest of the money will need to be decided in the coming months, with lawyers for bondholders owed more than $3.3 billion saying they are concerned that the Federal Deposit Insurance Corp. will try to keep the cash. The FDIC’s decision to lock down the $2 billion “creates jeopardy” in the bankruptcy case, said Tom Lauria, a lawyer representing a large bondholder, Appaloosa LP. “It seems to be a more urgent issue than a latent one in the context of this case,” Lauria told Bankruptcy Judge Martin Glenn during a hearing in federal court in Manhattan. Under FDIC receivership rules it can take months for the agency to decide whether the money will be returned and then years if that decision is appealed, lawyers said during the hearing.
