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Tough Mudder’s bankruptcy trustee is racing to save the company’s endurance event business with a sale to rival Spartan Race Inc., a deal that the company’s owners previously balked at closing, the Wall Street Journal reported. Bankruptcy trustee Derek Abbott has filed papers that say the sale to Spartan Race is market-tested and ready to go despite the refusal of owners William Dean and Guy Livingstone to follow through with it. He is asking a judge to sign off on a sale of the Tough Mudder assets to its rival, warning that the business, which shut down in December due to lack of cash, could be beyond saving if a deal takes too long. “As a result of the debtors ceasing operations, the events scheduled for the first three quarters of 2020 are no longer salvageable and will need to be canceled,” Abbott wrote in a filing on Feb. 7 with the U.S. Bankruptcy Court in Wilmington, Del. He wants to close the Spartan Race sale by the end of February. With the motto “Probably the Toughest Event on the Planet,” Tough Mudder goes city-to-city, erecting obstacle courses that draw endurance athletes to test their skills. Creditors that filed a bankruptcy petition against Tough Mudder in January are involved in building the courses, and say that they are out hundreds of thousands of dollars.

Wedding chain Noah’s Event Venue closed abruptly last week, leaving numerous engaged couples without a place to have their ceremonies, the Houston Chronicle reported. The Utah-based company filed for reorganization under chapter 11 protection in May 2019, according to the Better Business Bureau. A judge and a U.S. Bankruptcy trustee overseeing the case changed it to a chapter 7 liquidation last Thursday, the company's attorney Kenneth L. Cannon II, told other media outlets. he Better Business Bureau advises people with a monetary claim against Noah's, which includes couples who booked the venue, to obtain a proof of claim form from the U.S. Bankruptcy Court and submit it to the U.S. Bankruptcy Court.

The estate of Sears Holding Corp. is trying to take back payments it made to vendors — many of them small businesses — more than a year ago as it tries to shore up funds to wrap up its bankruptcy case, Bloomberg News reported. The company is seeking bankruptcy court approval of streamlined procedures for about 730 preferential transfer lawsuits it recently filed. The lawsuits, known as adversarial proceedings, were filed against creditors that received payments for services or products in the 90-day period immediately before the bankruptcy filing, called the preference period. While the motion is standard procedure in a bankruptcy, the size and scope is unusual, said <b>David Wander<b> a partner at Davidoff Hutcher & Citron LLP. “In Sears there are many more of them,” said Wander, who represents a number of Sears vendors and creditors. In addition to the recent filings, the estate filed about 400 in November and is expected to file additional lawsuits that in total will impact as much as 2,000 vendors, according to court papers. The Sears estate will use the funds to pay administrative expenses related to the bankruptcy. For the small businesses affected, it is a bit of a lose-lose situation, Wander said. While the vast majority will settle, many for a repayment far less than the bankrupt retailer originally asked for, the legal fees alone may be financially debilitating, he added. This is not the first time Sears estate has had issues with its vendors. In December, some companies that were owed money by the retailer, expressed concern that they would not receive payments. Read more.

Looking for more information on the Small Business Reorganization Act of 2019 (SBRA) before it becomes effective on Feb. 19? Want to stay updated on SBRA case developments? Be sure to bookmark ABI's "SBRA Resources" page!

A bankruptcy judge reprimanded a Houston manufacturer involved in a fatal explosion, criticizing the company for focusing on emergency financing instead of victims of the Jan. 24 blast, WSJ Pro Bankruptcy reported. Bankruptcy Judge Marvin Isgur on Monday rejected an emergency financing motion from Watson Grinding & Manufacturing Co. and a sister company, Watson Valve Services Inc., admitting he was angry about the maneuver. Two people were killed in the explosion and another death has since been linked to the event, which took place at a plant located in a heavily populated residential and commercial area of Houston. Lawyers representing 250 homeowners whose properties were damaged in the blast appeared at Monday’s hearing, as did lawyers for the families of those who died in the explosion. “The families who have lost a loved one, who are caring for an injured child, who have lost their homes or had damage to their homes are facing true emergencies,” Judge Isgur said at a hearing in the U.S. Bankruptcy Court in Houston. Watson Grinding had sought to use $3 million in insurance proceeds to pay off lender Texas Capital Bank and avoid a fight over the use of cash collateral. Judge Isgur said the bank created an artificial emergency by putting Watson Grinding on a tight deadline. “There is no emergency,” the judge said.

Beset by fires, bankruptcy and blackouts, PG&E Corp. now faces a marketing campaign from government officials in its hometown bent on replacing the utility giant, Bloomberg News reported. San Francisco has launched the “Our City, Our Power” campaign to rally public support for buying PG&E’s local wires and taking over electricity service within the city. It includes a website asking residents to sign up in favor of the effort, arguing the city can provide better service. “Local control of the entire San Francisco electric system will provide increased affordability, safety, reliability and accountability,” said Mayor London Breed. PG&E, which filed for chapter 11 last year facing $30 billion in liabilities from wildfires blamed on its equipment, has already turned down a $2.5 billion offer from San Francisco to buy the gear, saying that it’s worth more. Allowing communities to buy parts of the system could delay needed investments in California’s aging electric grid, the company said yesterday.

PG&E Corp. said it aims to shrink the breadth and duration of intentional blackouts during California’s wildfire season as part of a $2.6 billion plan aimed at improving safety, Bloomberg News reported. The bankrupt utility giant wants to reduce the average geographic reach of deliberate blackouts by one-third and will try to restore power to affected areas 12 daylight hours after unsafe conditions pass. The goals were outlined in a wildfire mitigation proposal that was filed with state regulators on Friday. PG&E, forced into bankruptcy after its equipment was blamed for sparking deadly wildfires, took the extreme measure of widespread shutoffs last year as a way to prevent blazes during dangerous weather. The blackouts resulted in more than 2 million people losing power at one point, provoking outrage as lives were disrupted and billions of dollars in economic activity were lost.

Bondholders crossed another hurdle in their years-long battle with distressed-debt investor Lynn Tilton, after a federal judge ruled that the financier can be forced to sell her portfolio companies to repay about $1.8 billion in bonds, Bloomberg News reported. U.S. Bankruptcy Court Judge Karen B. Owens rejected Tilton’s claim that a 2018 deal with bondholders only required Tilton to “monetize” the portfolio companies, not actually complete a sale. Tilton also claimed that under the deal, Owens did not have the power to force a sale without her consent. That interpretation “would lead to an absurd result,” Judge Owens said yesterday in court. “We have now crossed another speed bump on the road to monetize the portfolio,” Owens added. “I anticipate there will be more.” Starting in 2003 Tilton put together three collateralized loan funds called Zohar I, II & III that borrowed $2.5 billion in order to buy distressed companies and distressed loans. About $1.8 billion of that debt matured without being repaid, according to court documents. The bondholders, including Bardin Hill Investment Partners and bond insurer MBIA Inc., have been fighting Tilton in bankruptcy court, arguing that she is dragging her feet on the sale of the portfolio companies, which she controls. Tilton says that she has hired investment bankers to start the sale process, and won’t be rushed into a bad deal.

A recent inspection of a PG&E Corp. transmission line uncovered equipment issues similar to those cited as the cause of the deadliest blaze in California history, according to lawyers for wildfire victims, Bloomberg News reported. During a December inspection, an expert for the attorneys photographed worn and rusted c-hooks on a transmission line near the Caribou-Palermo line in Northern California’s Sierra foothills, the official committee representing fire victims in PG&E’s bankruptcy said in a statement. That’s the same line that failed and sparked the 2018 Camp Fire. Some of the hooks on the Cresta-Rio Oso line “appeared to be held together by black electrical tape,” the committee said. U.S. District Judge William Alsup, who oversees the utility’s criminal probation, has ordered the company to be prepared to address the findings at a hearing on Feb. 19. California investigators concluded last year that a worn c-hook on the Caribou-Palermo line broke and ignited the Camp Fire, which destroyed the town of Paradise and killed 85 people. State regulators said that PG&E could have prevented the catastrophic blaze if it had conducted proper inspections and repairs on the line.

Watson Grinding & Manufacturing Co and Watson Valve Services, Inc. yesterday filed for chapter 11 protection with the U.S. Bankruptcy Court of the Southern District of Texas, KHOU.com reported. The companies stated in a press release that once the court approves their filing it will allow the company to continue operation of its businesses and service to its customers while it works through a plan of reorganization. Watson Grinding & Manufacturing said it ceased operations after a massive propylene gas explosion on Jan. 24. The company also stated it was forced to terminate the employment of approximately 80 workers this week. Watson Valve also had its business near the explosion site and would contract with Watson Grinding to machine products for customers. The company said that it continues to operate at approximately 20 percent of normal capacity by utilizing other suppliers. The preliminary investigation into the deadly explosion at Watson Grinding points toward an accident, according to ATF Special Agent-in-Charge Fred Milanowski. He said that the suspected cause is an electrical spark that ignited a leaking propylene tank.