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Chesapeake Energy and Southwestern Energy agreed to merge in an all-stock transaction valued at $7.4 billion that would create the largest natural-gas producer in the U.S., the Wall Street Journal reported. The deal is in large part a bet that booming liquefied-natural-gas exports from the shores of Texas and Louisiana will allow drillers to sell more of their product to Europe, Asia and other global markets craving American fuel. It also continues a wave of consolidation that has swept across the U.S. energy industry in recent months. With a market capitalization of more than $17 billion, the combined company would be endowed with a huge position in one of the U.S.’s largest gas basins in the Northeast, as well as in a big gas-producing region near the Gulf Coast. Huge terminals there have helped make the U.S. the world’s top LNG exporter. The deal, at $6.69 a share, values Southwestern at a 2.9% discount to its closing market value of about $7.6 billion on Wednesday. The deal enshrines Chesapeake’s return to its natural-gas roots. Co-founded in 1989 by flamboyant wildcatter Aubrey McClendon, Chesapeake was at the vanguard of the fracking boom, borrowing billions of dollars to nab millions of acres across Louisiana, Texas and Appalachia. When overproduction drove down natural-gas prices in the early 2010s, the company started diversifying into oil, a move that eventually backfired when crude prices faltered. The company was laden with debt as it entered the pandemic’s price spiral and in 2020 it filed for bankruptcy. The company emerged from chapter 11 having shed more than $7 billion of debt. It pivoted back to natural gas, making the $1.1 billion acquisition of Haynesville driller Vine Energy in 2021, and of Marcellus Shale producer Chief and associated assets the following year for about $2.6 billion.

The bankrupt parent company of Silicon Valley Bank plans to turn over its remaining venture capital business to a new, creditor-backed company while it continues to fight U.S. regulators' seizure of nearly $2 billion in cash, according to court documents filed on Tuesday, Reuters reported. SVB Financial Group reached a restructuring agreement with key creditors and has the support of a coalition of banks and investment funds that collectively hold more than $2.3 billion in SVB Financial debt and preferred stock investments, the documents filed in Manhattan bankruptcy court showed. The company filed for bankruptcy in March after Silicon Valley Bank collapsed, becoming the third-largest bank failure in U.S. history. SVB Financial has used its bankruptcy to sell assets, spinning off its investment banking unit in June, but the restructuring agreement ends its effort to find an outside buyer for the venture capital business. "We believe that retaining SVB Capital under a reorganized company is the best path forward to maximize its value in the current environment," SVB Financial Chief Restructuring Officer William Kosturos said in a statement.

Shares of EchoStar, which recently merged with Dish Network, surged after the telecommunications company said it has hired advisers to help evaluate potential strategic alternatives, WSJ Pro Bankruptcy reported. The company said it has hired investment bank Houlihan Lokey and law firm White & Case to assist the company in the evaluation process. Its shares recently were up 35% to $17.15. EchoStar, helmed by Chairman Charlie Ergen, recently closed its merger with its sister company Dish Network. The combined company encompasses pay-TV assets, Dish’s burgeoning wireless network and EchoStar’s satellite operations. The merger gave the combined company access to more cash to fund the build-out of Dish’s 5G network. EchoStar yesterday also said that Dish had transferred some of its unencumbered wireless spectrum licenses to a new subsidiary, called EchoStar Wireless Holding. Dish also created another new entity known as the DBS Subscriber Subsidiary, which now holds about 3 million Dish TV subscribers, EchoStar said.

The Annapolis founders of Tessemae’s salad dressing and condiments plan to move on if a pending sale of the company out of bankruptcy goes through this month, but the popular brand is expected to remain on the shelves of dozens of national and regional retailers under new ownership, the Baltimore Sun reported. Tessemae’s filed for chapter 11 reorganization last February to restructure debts and stop what it called costly and distracting litigation by a former lender. Panos Brands, a New Jersey owner of specialty food brands, has agreed to buy Tessemae’s for $4.5 million in a pending deal that requires approval of the U.S Bankruptcy Court in Baltimore. The new owners are expected to continue the full line of dressings and condiments at existing retailers, such as Whole Foods, Walmart, Kroger and Harris Teeter, said Greg Vetter, Tessemae’s CEO.

The U.S. Supreme Court yesterday heard oral arguments yesterday in the case of Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC on whether the federal government should refund additional fees collected from bankrupt companies under a fee-hike law that was later deemed unconstitutional, WSJ Pro Bankruptcy reported. In 2017, Congress passed a law raising the fees charged in bankruptcy cases overseen by the Justice Department’s U.S. Trustee Program, which covers 48 states. Two states — Alabama and North Carolina — fund their own bankruptcy administrators through the courts’ own budgets. The Supreme Court ruled in 2022 that the fee-increase law was unconstitutional because it applied to bankruptcy cases filed in only 48 states. By that time, Congress had already amended the law, making the higher fees applicable in Alabama and North Carolina as well. But the question remained as to whether the fees that had already been collected should be returned or not. John Q. Hammons Hotels & Resorts, a privately owned Missouri-based hotel company that filed for bankruptcy protection in 2016 in Kansas City, Kan., challenged the fees it had paid while in chapter 11, arguing that the higher amount that came into effect under the 2017 law should be refunded because the statute was unconstitutional. In 2022, the U.S. Court of Appeals for the Tenth Circuit ruled that the company and its affiliates should get a refund of $2.5 million from the federal government. The Justice Department challenged that ruling. In arguments before the Supreme Court on Tuesday, Masha Hansford, a Justice Department attorney, said Congress raised the fees to fund the U.S. Trustee Program under its belief that the bankruptcy system should be self-funded at no cost to taxpayers. Forcing the government to refund fees to companies that used the bankruptcy system goes against the intent of Congress, she said. If the high court sides with the hotel company, the decision is likely to put taxpayers on the hook for returning about $326 million in fees paid in roughly 2,100 bankruptcy cases, according to a DOJ court filing. Daniel Geyser, a lawyer representing the hotel group, told the justices that his client, along with thousands of other debtors, is entitled to receive a refund for the fees collected by the government during the time the original law was in effect. Read more.

Click here to read the transcript from yesterday's oral argument in Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC.

SVB Financial Group, the former parent company of Silicon Valley Bank, has struck a deal with key creditors in a step toward resolving its bankruptcy case, Bloomberg News reported. SVB Financial and a crucial bloc of senior bondholders agreed to a deal centered on forming a new company that would hold valuable assets like the firm’s venture capital arm — SVB Capital — and tax attributes potentially worth billions of dollars, according to court papers. The proposal is tentative and still needs court approval. The company explored selling the venture capital unit, but determined it’s likely worth more than what two leading bidders offered, according to court papers filed yesterday. Advisers pegged the present value of the VC business at as much as $572 million, some $55 million higher than their assessment of the best bid, the court papers show. The deal puts Wall Street heavyweights in a position to own stakes in the new entity. The bondholders that negotiated with the company include the likes of Davidson Kempner Capital Management, Pacific Investment Management Co. and King Street Capital Management, according to a July court filing, the group’s most recent disclosure. The restructuring deal calls for other assets, like cash and securities, to be placed in a trust for the benefit of creditors. The restructuring proposal must be worked into a bankruptcy-exit plan on which creditors can vote. Still, the biggest obstacle remaining for creditors is a fight with federal regulators about what should happen with nearly $2 billion in cash SVB Financial had on deposit at its own bank at the time of its failure. The Federal Deposit Insurance Corp. argued that SVB must go through a formal process controlled by the agency to get the money back. But last week, the agency formally denied the company’s claims for the deposits in a “mere two sentences,” according to court papers. A U.S. district judge decided in December that the question of who legally owns the nearly $2 billion goes beyond bankruptcy law and should be handled in district court.

Rite Aid is selling its Elixir pharmacy benefit management (PBM) company to another PBM, MedImpact Healthcare Systems for $575 million, the drugstore chain said yesterday, Forbes.com reported. Rite Aid, which filed for bankruptcy protection in October, said the U.S. Bankruptcy Court for the District of New Jersey approved the sale of the drugstore chain’s Elixir Solutions Business, which Rite Aid executives once described as the company’s “crown jewel.” MedImpact was the apparent winning bidder in an auction for Elixir, according to earlier reports. It’s the latest effort by Rite Aid to restructure the drugstore chain, which has already closed about 200 stores since its filing for chapter 11 protection with potentially more retail locations to close in coming weeks and months. The deal could move MedImpact into the nation’s top five PBMs, according to market share. In 2022, MedImpact was the sixth-largest PBM in the U.S. with 4% market share, according to Drug Channels.