%1

The taxpayers of Erie County will be out nearly $2.5 million due to the bankruptcy of the Greater Erie Industrial Development Corp., once touted as a premier economic engine for the region until it filed for chapter 7 liquidation in 2016, GoErie.com reported. The potential losses to the county and other GEIDC creditors, including Pennsylvania State University, owed $4.8 million, became clearer on Friday, when the trustee in the GEIDC case filed a long-awaited final report in the case in U.S. Bankruptcy Court in Erie. The report lists the proposed payments to GEIDC’s creditors, such as Erie County government, which had loaned $3 million to the GEIDC in 2005. The county filed a claim of $2.9 million against the GEIDC’s bankruptcy estate to recover the unpaid amount of the loan. But, GEIDC, the debtor, lacked the assets to pay its creditors anywhere near the full claimed amounts. The trustee for the bankruptcy estate, Erie lawyer Joseph Spero, is proposing that the county and the other unsecured creditors receive 14.3 cents for every dollar that GEIDC owes them. In the county’s case, it is due to $414,869 on the $2.9 million loan. The final loss to the county would be $2,485,131, according to the bankruptcy records. U.S. Bankruptcy Judge Thomas P. Agresti must approve the proposed distribution. On Friday, he scheduled a hearing for March 26. He will also review Spero’s request for about $118,000 in compensation. He has been paid about $18,300 to date in the case.

A deadline set this week to submit offers for the former Fansteel Metals industrial site adjacent to the Port of Muskogee, Okla., was extended for nearly two months, the Muskogee Phoenix reported. The site, most of which is owned now by Fansteel subsidiary FMRI Inc., was contaminated by a process used to extract tantalum and columbium from uranium and thorium ores and tin slag. The facility was shuttered in 1989 and slated for decommissioning and limited site remediation. Documents produced by state and federal regulatory agencies show the radioactive residue produced by the extraction process contaminated much of the site, including some of the buildings, the process ponds, surrounding soils and groundwater. Nuclear Regulatory Commission documents summarizing FMRI’s decommissioning efforts indicate remediation of the site’s contaminated areas was expected to be completed by 2023. Those efforts have been delayed due to unexpected environmental issues and a second attempt bankruptcy filing in 2016. Observers expressed doubts there will be any takers for the 110-acre tract that is being assessed now as a potential Superfund site. The immediate plan is to secure enough of the debtor’s assets through bankruptcy proceedings to maintain the status quo for the near future until a long-term solution can be delivered.

The Philadelphia Energy Solutions oil refinery site will be sold for $252 million and redeveloped under a plan approved yesterday in bankruptcy court, ending months of uncertainty over whether the idled plant would be restarted, court filings show, Reuters reported. Judge Kevin Gross signed off on the PES bankruptcy agreement, filed with the United States Bankruptcy Court for the District of Delaware, a day after indicating at a public hearing that he was likely to do so. Hilco Redevelopment Partners, which becomes the new owner of the roughly 1,300-acre (526-hectare) PES refinery site as part of the plan, is expected to build warehouses and other commercial projects on the land. While Judge Gross approved the purchase and sale agreement, PES and Hilco have not yet closed on the deal. PES shut its 335,000-barrel-per-day refinery in South Philadelphia, the largest and oldest on the East Coast, and filed for chapter 11 protection after a fire destroyed a section of the plant over the summer. Read more. 

In related news, Philadelphia Energy Solutions secured approval of a debt repayment plan, but action continues in bankruptcy court as the refiner tries to collect on $1.2 billion in insurance it said was triggered by the explosion that drove it into chapter 11, WSJ Pro Bankruptcy reported. In a lawsuit filed on Wednesday targeting a group of insurance carriers, Philadelphia Energy said its insurance companies’ attitude has been so “miserly” that they suggested that the oil refiner made money as a result of a June explosion that destroyed much of the facility. The incident put the Philadelphia refinery out of business, leading the company to file for chapter 11 with its future uncertain. Philadelphia Energy said it has $1.2 billion in coverage for property damage and business interruption losses but has received only $65 million. The company said that it has made clear to the insurers that its losses approach and will likely exceed the $1.2 billion in protection it paid for. Read more.

PG&E Corp. proposes to pay half of its $13.5 billion settlement with California wildfire victims in company shares, a move that would make victims the utility’s largest shareholders — and jeopardize payments if PG&E sparks future fires, the Wall Street Journal reported. As part of its plan to exit bankruptcy, PG&E would pay fire-victim claims through a trust funded with equal parts cash and stock. The trust would own 20.9 percent of PG&E’s shares upon the company’s emergence from chapter 11, PG&E has said, and would gradually sell the stakes over several years to compensate individuals who lost family members and property. While share-funded trusts have been used before to settle claims from asbestos victims and others, some legal experts say that the PG&E trust would pose an unusual set of risks for claimants, tying their payment prospects to a company still scrambling to reduce the threat that its aging electrical grid will start fires. Since the fall of 2017, state investigators have linked PG&E equipment to 18 wildfires that killed 107 people and destroyed more than 15,700 homes.

A trustee for Tops Markets LLC creditors filed a $375 million lawsuit against private-equity backer Morgan Stanley Investment Management and other former owners, alleging they took hundreds of millions of dollars in illegal dividends that drove the grocery chain into bankruptcy in 2018, the Wall Street Journal reported. The company took on so much debt to finance four separate dividends between 2009 and 2013 that it couldn’t fund its obligations under two underfunded union pension plans, according to the lawsuit filed Wednesday in the U.S. Bankruptcy Court in White Plains, N.Y. Tops Markets, an upstate New York grocery chain, filed for bankruptcy in February 2018. The Williamsville, N.Y., chain emerged from bankruptcy the same year, leaving behind two pension plans with hundreds of millions of dollars of unfunded liabilities. Alan Halperin, a trustee appointed in the Tops bankruptcy case to pursue claims against the company’s private-equity owners, filed the lawsuit on behalf of creditors, including workers and retirees under the pension plans.

A federal judge yesterday said that he was prepared to approve Philadelphia Energy Solutions’ bankruptcy plan which includes the sale of the largest East Coast oil refinery to a Chicago real estate developer for $252 million, Reuters reported. The refinery, which had capacity to process 335,000 barrels of crude oil per day into gasoline and other energy products, has been closed since June after a major fire. It would be permanently shuttered and redeveloped for warehouses under the bankruptcy plan. Bankruptcy Judge Kevin Gross delayed his confirmation of the plan until today to allow himself and stakeholders time to review the details. But Judge Gross said in a hearing yesterday that he was likely to approve the proposal. As part of the agreement, Chicago-based Hilco Redevelopment Partners will buy the more than 1,300-acre refinery site for $252 million, $12 million more than initially agreed upon.

Forever 21 Inc.’s clothing suppliers say they are left with $120 million in unpaid bills following the company’s bankruptcy sale to mall owners and brand-licensing firm Authentic Brands Group LLC, WSJ Pro Bankruptcy reported. Bankruptcy Judge Kevin Gross said on Tuesday that he would approve the $81 million purchase of Forever 21’s assets by a consortium of the retailer’s largest landlords, Simon Property Group Inc. and Brookfield Property Partners LP, and Authentic Brands. His decision overruled objections brought by Forever 21 suppliers based in China, Hong Kong and South Korea that are faced with minimal or no recoveries on goods they sold to the fast-fashion chain during the bankruptcy on the expectation they would be paid in full before the case closed. The sale price for the retailer doesn’t cover those vendor bills. Instead, the $81 million in cash proceeds will mostly go to lenders, Forever 21 advisers said in Tuesday’s court hearing. Tyler Cowan, a Lazard Freres & Co. managing director advising Forever 21, said the money will pay down a $75 million balance on the company’s bankruptcy loan, as well as a further $3 million in fees and expenses.

PG&E Corp. told a federal judge it opposes his proposals to intervene in the company’s wildfire prevention efforts after it admitted to not fully complying with the terms of its criminal probation, Bloomberg News reported. The bankrupt northern California utility’s pushback is a response to U.S. District Judge William Alsup, who last month threatened to order the company to hire more tree trimmers and restrict how management doles out bonuses. The San Francisco judge is overseeing PG&E’s probation after it was convicted in 2016 of gas-pipeline safety crimes. Failure to comply with any law is a violation of probation. Judge Alsup is testing how far he can push the utility to prevent its equipment from causing another devastating wildfire as it simultaneously navigates a complicated exit from bankruptcy. The judge has set a Feb. 19 hearing to determine what he should do after PG&E reported in January that it fell short on commitments to inspect and repair lines, and clear vegetation and branches to maintain safety standards in compliance with California law.

Robert Murray’s bankrupt coal producer Murray Energy Corp. has put additional coal mines into chapter 11 that produce a type of coal used in steelmaking, intending to sell them amid a continued price slump, WSJ Pro Bankruptcy reported. Murray Energy, which filed for chapter 11 in October, had tried to keep these metallurgical coal mines out of bankruptcy. Unlike the coal burned by utilities to produce electricity, metallurgical coal is used to make coke which is used to produce steel. But the company said that its metallurgical operations have also faced market headwinds and can’t meet their financial obligations without bankruptcy protection and access to emergency loans. Tuesday’s chapter 11 filing covers Murray Metallurgical Coal Holdings LLC, a subsidiary formed in April when Murray Energy acquired mines in West Virginia and Alabama out of the bankruptcy of another mining company, Mission Coal Co. Since Murray Met was formed last year, the price of met coal has fallen about 30 percent, according to court papers. Murray Met has signed a lender-backed restructuring support agreement designed to keep the business afloat as bankruptcy advisers work to sell its mines. If approved in bankruptcy court, the restructuring deal would provide Murray Met a $68.6 million financing package including up to $47 million in new money. The financing would give the business access to $28.9 million in new money loans and immediately repay $21.5 million in existing loans advanced by Murray Energy and lender MC Southwork LLC, according to court documents.