%1

A Salem Harbor, Mass., power plant backed by Oaktree Capital Management LP filed for bankruptcy protection to weather a $236 million arbitration award to its former contractor and pursue a dual-track restructuring to either sell itself or hand control to lenders, WSJ Pro Bankruptcy reported. Footprint Power Salem Harbor Development LP has proposed handing over 100% of its equity interests to lenders owed $290 million or selling itself out of chapter 11 if a suitable buyer emerges, court papers said. The Oaktree-backed company owns a 674-megawatt natural gas-fired plant located along Salem Harbor that has been embroiled in lawsuits and arbitration proceedings since 2018 with its engineering and construction contractor, Iberdrola Energy Projects Inc. Construction delays pushed back the project’s opening by 11 months and caused the plant to terminate its contract with IEP in 2018, according to papers filed late Wednesday in the U.S. Bankruptcy Court in Wilmington, Del., by chief restructuring officer John Castellano. A different contractor finished the construction. IEP filed an arbitration claim over the termination and last year was awarded more than $236 million, damages that were confirmed by a New York state court in January. Combined with the amounts owed to secured lenders, the IEP award put the plant at “significant risk of an inability to satisfy its debts,” Mr. Castellano said in court papers.

A whirlwind March 23 bankruptcy court hearing concluded with embattled Austin real estate investor Nate Paul losing control of five legal entities — each of which controls valuable real estate — to a chapter 11 trustee, the Austin Business Journal reported. Another three entities were placed under the control of a chief restructuring officer who will help shepherd them through bankruptcy. In total, eight entities were placed under some level of independent stewardship — with one overarching goal: "I don't want Mr. Paul to have control of the cash, period," said U.S. Bankruptcy Judge Tony Davis. Paul and his firm World Class, which describes itself on its website as a "multi-billion dollar holding company" for real estate, have faced a series of lawsuits, bankruptcies and foreclosures in the wake of a 2019 raid of its Austin headquarters by federal investigators. Though no charges have yet resulted from the raid, the company's "business reputation was severely damaged, and their business affairs were severely compromised," Paul alleged in a lawsuit filed against the FBI in October. The latest court actions were partially in response to a series of unexplained transfers out of company bank accounts. Casey Roy, a representatives from the U.S. Trustee's office, argued in at least one instance in favor of converting the case into a chapter 7 bankruptcy, which typically results in a liquidation of assets. Regarding a shell company called WC Met Center LLC, which owns roughly 48.5 acres in Southeast Austin most recently valued for tax purposes at more than $68 million, Roy said recent transfers appeared to show about $800,000 being moved out of the LLC to World Class Holdings. WC Met Center is one of the entities now under the control of a chapter 11 trustee.

Sexual-abuse survivors who signed up for a quick $3,500 payment option in the Boy Scouts of America’s bankruptcy case could get their money about 18 months after the youth group’s chapter 11 plan is approved, WSJ Pro Bankruptcy reported. That “achievable” timetable was disclosed Tuesday by a victims’ representative during a trial where the Boy Scouts are seeking approval to exit chapter 11 and leave behind a $2.7 billion compensation trust. James Patton, the legal representative for future claimants, testified in the U.S. Bankruptcy Court in Wilmington, Del., that the trust could require hundreds of thousands of hours to process the roughly 82,200 individual claims filed. Of those, more than 6,700 of those who supported the bankruptcy plan have opted for expedited $3,500 payments, rather than subjecting their claim to the general trust distribution procedures for evaluation. “I wouldn’t be surprised if they’re getting a payment within the next 18 months,” Mr. Patton said of those opting for speedier payments. “I think that is achievable.” For those who haven’t selected the expedited option, the process will take longer as the settlement trust values victims’ claims based on the severity, location and duration of the abuse, among other factors.

A court ruling allowing Johnson & Johnson to use a controversial bankruptcy strategy to force cancer victims into potential settlement talks has raised the odds that other companies facing costly product-liability claims like 3M Co., and Dow Inc. may follow suit, analysts and legal experts say, Bloomberg News reported. A judge in February cleared J&J to employ a legal tactic known as the Texas Two-Step in which it shunted almost 40,000 claims into a purposely created unit that then filed for bankruptcy under a business-friendly Texas law. The ruling temporarily halted the litigation over J&J’s iconic baby powder while the company tries to negotiate settlements. Some legal experts worry the ruling may set off a chain reaction of similar filings by otherwise solvent companies that could swamp the courts. J&J argues the move was its only way of corralling talc litigation costs. Advocates for cancer victims counter the filing is just a way for J&J to cap how much it has to pay out. Two victim groups have appealed the court decision to let the bankruptcy continue. On Monday, one of the groups said it will press to have the case dismissed because the chapter 11 petition was filed in bad faith and isn’t a legitimate attempt to reorganize a financially struggling company.

Boston Consulting Group filed a lawsuit against GameStop that seeks $30 million in damages over the retailer's alleged "bad faith refusal to pay fees" owed to the consultancy under a written agreement, Retail Dive reported. More specifically, the firm said in its complaint that, starting in mid-2020, GameStop has "refused to pay significant amounts" of BCG's fees and demanded discounts "with no justification," as well as refused to continue "contractually-obligated meetings" tied to its fees. According to BCG, the consulting firm started working with GameStop in 2019, when the company was "on life support" and "[h]emorrhaging customers." The retailer's then-general counsel, Daniel Kaufman, who later became GameStop's chief transformation officer, led the relationship. BCG was brought on to "evaluate its operations and develop solutions that would enable a corporate transformation to ensure its continued viability," according to the firm. BCG said the agreed-on fee structure for its work with GameStop was based on projected profit improvements resulting from the firm's recommendations. Its work revolved around growing revenue through a video game ecosystem and manufacturer partnerships; finding cost cuts and operational improvements; driving category improvement; growing a pre-owned electronics business; pricing; and GameStop's loyalty program, among other areas of the business.