%1

Private less-than-truckload carrier Estes Express Lines’ new bid of $1.525 billion for Yellow’s terminals is now the front-runner, court documents revealed on Wednesday, Freight Waves reported. A filing in a Delaware bankruptcy court showed the carrier entered a stalking horse offer eclipsing the $1.5 billion bid made by rival Old Dominion Freight Line. Estes started the bidding war in mid-August when it made a $1.3 billion offer. The motion showed Yellow has designated the Estes offer as the best so far and requested the court to rule on the matter by Sept. 22 to avoid the risk of it being withdrawn. The new bid exceeds all amounts owed to secured creditors. “We are pleased to have been designated as the real estate stalking horse bidder,” a representative from Estes told FreightWaves. “We believe our proposed transaction is mutually beneficial to both Estes and the Yellow bankruptcy estate. We look forward to participating in this process and working collaboratively with the parties in the case and appreciate everyone’s efforts to date.” Estes’ offer also includes “substantially below market” bid protections. It provides a maximum of $9.1 million in total, including a $7.5 million breakup fee and expense reimbursement up to $1.6 million. Read more.

In related news, Yellow paid bonuses totaling about $4.6 million to eight current and two former executives in the weeks before the company went bankrupt with plans to liquidate, according to corporate disclosures in Delaware bankruptcy court. The figure is higher than it would have been had Yellow managed to avoid a sudden bankruptcy filing, Bloomberg News reported. Of the bonuses disbursed, nearly $2 million paid on July 14 were approved by Yellow’s board in June — when the company was in trouble, but before it was considering filing for bankruptcy, according to the person. Yellow’s public feud with a union representing much of its workforce escalated days later when a strike notice prompted the company’s customers to take their business elsewhere, Yellow has said. The remaining bonuses paid on July 31 became necessary, then, as Yellow planned for a bankruptcy filing that would be used to repay creditors and wind down, according to the person, who asked not to be named discussing private deliberations. The company’s fleet of trailers, trucking terminals and other assets — all of which would need to be sold quickly and at the highest prices possible — had previously been valued at roughly $2.1 billion. A fire sale could seriously reduce the prices they fetched. Read more.

FTX objected to BlockFi’s bankruptcy plan Wednesday, claiming it “still suffers from certain fundamental shortcomings,” BlockWorks reported. FTX’s attorneys believe that “the Plan unfairly discriminates against the FTX Claims in certain respects” and have asked the court to deny the plan. The opposition comes after BlockFi claimed it fell victim to FTX’s former CEO Sam Bankman-Fried actions. FTX is accused of misappropriating and commingling customer funds with Alameda Trading, its sister firm, in a scheme to defraud investors. FTX is attempting to recover both loan repayments and collateral from the bankrupt crypto lender. “The FTX Debtors do not seek to impede the BlockFi Debtors’ efforts to return value to their creditors, but, in the absence of a consensual resolution, must ensure any plan is fair to the FTX Debtors’ creditors, who are the beneficiaries of the FTX Claims,” the Wednesday filing said.

Canada's Canopy Growth said yesterday that it would seek bankruptcy protection for its sports nutrition products' segment BioSteel, in the pot producer's latest attempt to rein in costs. Canopy's shares rose 9.6% in early trade after the company said it expects to lower debt by C$95 million over the next two quarters after starting legal proceedings under the Companies' Creditors Arrangement Act in a Canadian court in Ontario and seeking recognition under chapter 15 of the U.S. Bankruptcy Code. The company has been grappling with liquidity issues and has taken several steps to turn profitable including job cuts, exits from some international markets, store closures and divestiture of its retail business across Canada. Canopy first raised doubts about its ability to continue as a going concern in June and reiterated in August. The Smiths Fall, Ontario-based company had been exploring options for a while for BioSteel, which accounted for about 60% of its fiscal first-quarter adjusted core loss. Canopy had said in June it was facing an investigation from the U.S. Securities and Exchange Commission over the reporting of revenue from BioSteel.

As Alex Jones continues telling his Infowars audience about his money problems and pleads for them to buy his products, his own documents show life is not all that bad — his net worth is around $14 million and his personal spending topped $93,000 in July alone, including thousands of dollars on meals and entertainment, the Associated Press reported. The conspiracy theorist and his lawyers file monthly financial reports in his personal bankruptcy case, and the latest one has struck a nerve with the families of victims of Sandy Hook Elementary School shooting. They’re still seeking the $1.5 billion they won last year in lawsuits against Jones and his media company for repeatedly calling the 2012 massacre a hoax on his shows. In an Aug. 29 court filing, lawyers for the families said that if Jones doesn’t reduce his personal expenses to a “reasonable” level, they will ask the bankruptcy judge to bar him from “further waste of estate assets,” appoint a trustee to oversee his spending, or dismiss the bankruptcy case. On his Infowars show Tuesday, Jones said he’s not doing anything wrong. “If anything, I like to go to nice restaurants. That is my deal. I like to go on a couple of nice vacations a year, but I think I pretty much have earned that in this fight,” he said, urging his audience to donate money for his legal expenses. Jones’ spending in July, which was up from nearly $75,000 in April, included his monthly $15,000 payment to his wife, Erika Wulff Jones — payouts called “fraudulent transfers” by lawyers for the Sandy Hook families. Jones says they’re required under a prenuptial agreement.

In March, master distiller Les Beasley's company filed for chapter 11 bankruptcy — one of many commercial business failures in a year that’s seen an 18% surge in filings, the Dallas Morning News reported. Beasley’s limited liability corporation listed assets and liabilities that both totaled between $1 million and $10 million. As a result, Whiskey Hollow, and all of its property, are for sale — victims of an unforgiving business in an uncertain time. Owing thousands to investors, contractors and the county, Beasley estimates he could lose up to two-thirds of his life savings as he hands off his dream to a buyer and begins his retirement.

U.S. Auto Sales Inc., a car dealer that catered to consumers regardless of their credit history, quietly filed for bankruptcy late last month as more Americans fall behind on their car payments, Bloomberg News reported. The company listed assets and liabilities of as much as $100 million each in its bankruptcy petition, filed in Delaware. U.S. Auto filed for chapter 7 protection. The car seller, which had several dozen locations across the southeastern part of the country, closed its dealerships amid stresses in the auto finance market in April. The company had previously raised money by packaging auto loans held by consumers with lower credit scores into bonds, a process known as securitization. Last June U.S. Auto sold a $233 million bond. U.S. Auto’s bankruptcy follows the demise of American Car Center, another car dealer and finance company that focused on subprime customers. American Car Center filed for Chapter 7 bankruptcy in March after ceasing operations. Off Lease Only, a used-car dealer owned by Cerberus Capital Management LP, filed for Chapter 11 bankruptcy last week. The U.S. Consumer Financial Protection Bureau claimed in a lawsuit last month that USASF Servicing LLC, the company that serviced the loans originated by U.S. Auto, wrongfully repossessed dozens of cars and illegally disabled thousands more with starter-interruption devices.

The Senate Judiciary Committee has scheduled a hearing for Tuesday at 10 a.m. ET titled, "Evading Accountability: Corporate Manipulation of Chapter 11 Bankruptcy." Details about the hearing are forthcoming.

There were 634 commercial chapter 11 filings in August, a 54% leap from 411 such filings in August 2022, according to Epiq Bankruptcy, a provider of U.S. bankruptcy filing information, which released the new data last week. It was the 13th consecutive month of year-over-year increases — and not only for total commercial chapter 11 filings, according to CFO.com. Also seeing steady increases are small-business filings (for companies with less than $7.5 million in debt) under subchapter V of chapter 11, which were up 43% in August. Epiq had previously reported commercial chapter 11 filings jumped by 68% in the first six months of 2023, to a total of 2,793, compared with 1,776 in last year’s first half. (Even personal bankruptcies are up significantly this year, although companies are apparently faring worse than individuals, for whom bankruptcy filings increased by only 18% in August and 21% in the first half.) “Struggling companies looking to find their financial footing are increasingly turning to the established path of bankruptcy,” said ABI Executive Director Amy Quackenboss.

U.S. appeals court judges questioned a 2-1/2-year pause in a shareholder lawsuit against PG&E Corp officers and directors on Wednesday, suggesting that they could allow the case over statements about the utility's wildfire prevention measures to go forward, Reuters reported. A New Mexico pension fund sued 44 of PG&E's corporate leaders in 2018 on behalf of a proposed class of investors who lost money on the utility after its long-neglected electrical grid ignited wildfires in California that killed more than 100 people. U.S. District Judge Edward Davila paused the case in September 2022 until the end of PG&E's bankruptcy case. Though the company emerged from bankruptcy in 2020, the bankruptcy court is still handling claims, including 8,000 individual shareholder claims against the company. A three-judge panel of the U.S. Court of Appeals for the 9th Circuit questioned the need for those claims to be heard before investors can sue PG&E's officers and directors, who are not debtors in the bankruptcy. U.S. Circuit Court Judge Danielle Forrest called the stay "a little puzzling." "What is the efficiency that we are even gaining here? Other than the district court doesn't have to do any work right now," she said. Attorney Stephen Blake, arguing for the directors and officers, said the stay would help avoid inconsistent rulings between the bankruptcy court and the district court. Carol Villegas, an attorney for the shareholders, many of whom have not pursued claims against PG&E in the bankruptcy, said the class claims are worth billions of dollars and insurance proceeds that could cover damages have dwindled.