%1

Noble House Home Furnishings LLC filed for bankruptcy with plans to sell its assets after inflation and weakening consumer spending crimped its finances, Bloomberg News reported. The company — which counts Amazon.com Inc., Wayfair Inc., and Target Corp. among its customers — listed assets and liabilities of at least $100 million each in its bankruptcy petition. The filing allows Noble House to keep operating while it works to close a sale of itself to publicly traded GigaCloud Technology Inc. or another, higher bidder. GigaCloud has agreed to buy Noble House’s assets for $85 million, subject to a working capital adjustment, plus $4.1 million for equipment and the assumption of certain debts, according to court papers. The bid sets a floor for further offers and the deal with GigaCloud has an outside closing date of Oct. 31, court papers show. Chatsworth, Calif.-based Noble House was founded in 1992 and is a distributor, manufacturer and retailer of indoor and outdoor home furnishings. Its brands include Christopher Knight Home, LePouf and OkiOki. The company’s sales grew quickly during the COVID-19 pandemic as stuck-at-home customers bought more furniture. But as pandemic restrictions eased, total net sales started falling. They dropped from $671 million in 2021 to $491 million in 2022 and 2023 revenue is projected lower, court papers show. The decrease in sales coupled with persistent inflation and supply chain challenges pushed the company to financial instability. Noble House worked to cut costs in 2023, including reducing headcount, optimizing inventory management and vacating a facility in New Jersey, but those efforts failed to keep it out of bankruptcy.

The Boy Scouts of America's $2.46 billion sex abuse settlement is facing new legal uncertainty as the U.S. Supreme Court weighs how far bankruptcy courts can go to protect non-debtors, a fact acknowledged on Tuesday by the judge overseeing the youth organization's bankruptcy, Reuters reported. Chief U.S. Bankruptcy Judge Laurie Silverstein said at a court hearing in Wilmington, Del., that she would continue to hear disputes related to the Boy Scouts settlement without waiting for a Supreme Court decision in the case of Purdue Pharma. The drugmaker is seeking to resolve thousands of lawsuits related to its allegedly deceptive marketing of the addictive painkiller Oxycontin in bankruptcy. The high court agreed in August to hear a challenge by the Biden administration to the legality of Purdue's bankruptcy settlement, putting on hold a deal that would shield its wealthy Sackler family owners from lawsuits over their alleged roles in the country's opioid epidemic. They have denied wrongdoing. Abuse claimants opposed to the Boy Scouts' settlement on Friday had asked U.S. District Judge Richard Andrews to issue a stay that would stop the settlement from moving ahead until the Supreme Court ruling in Purdue, saying that the settlement should not cut off their ability to sue non-bankrupt organizations, such as churches who co-sponsored Scouting programs.

The Hospital at Westlake Medical Center filed for chapter 11 protection Friday, the Austin American-Statesman reported, but will not be closing. "Our commitment to being a dedicated partner to our patients and community remains unwavering, both during this process and beyond," the hospital said in its information sheet about the bankruptcy. Westlake Medical Center is physician-owned and offers an outpatient surgical center, orthopedic and spine surgeries, imaging, and an emergency room. The hospital is sending out notifications to its employees, vendors, patients and physicians about the chapter 11 filing. No creditors were listed on Friday afternoon on the bankruptcy's website portal. The American Hospital Directory shows the hospital as having 23 beds, and in 2021 it had a net income of minus $2.5 million. The hospital cited the pandemic and cost increases as the reasons for the need to file for bankruptcy. "Over the past 18 months, the healthcare industry has been dramatically impacted by the ongoing economic pressures of the COVID-19 pandemic, exacerbating financial challenges for many businesses in our sector, including us," the hospital said in its information sheet. "Our operations have also been severely impacted by increasing labor, supplies, and drug costs, as well as continued workforce shortage." Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

The same day in July that Mercy Iowa City’s largest bondholder asked for a receiver to take over the hospital’s operations — a move hospital officials said compelled them to file for bankruptcy protection days later — a pair of recently terminated Mercy executives also filed suit against their former employer, accusing the hospital of ghosting them and shorting them payments that were promised, the Cedar Rapids (Iowa) Gazette reported. “Mercy Hospital has not paid the additional payments that are due and owing Miller and Andronowitz under the offer letters and severance agreements,” according to the July 24 lawsuit. “Mercy Hospital has not responded to Miller and Andronowitz’s demand for payment or provided any explanation for its continued non-payment.” Dawna Miller and Judy Andronowitz were Mercy’s chief financial officer and clinic chief operating officer, respectively, until August 2022 — around the time the hospital told employees its search for a new strategic partner had come up dry and it would remain an affiliate of Des Moines-based MercyOne. In an email dated July 28, 2022 — obtained by The Gazette — Mercy’s then-acting President and Chief Executive Officer Mike Trachta, who since has returned to his primary MercyOne position as vice president of network affiliates, announced the failed search and other staff changes. “I wanted to update you on two leaders who are leaving Mercy Iowa City,” Trachta wrote then. “I want to thank Dawna Miller and Judy Andronowitz for their contributions to our organization. Please join me in wishing them well.” A year later, both women report in their lawsuit being terminated in August 2022 and entering into severance agreements “wherein Mercy Hospital agreed, among other things, to pay the 12 months severance pay initially promised in (their) offer letters.”

A former partner at three major law firms pleaded guilty on Tuesday to making false statements in U.S. bankruptcy court in an effort to keep his multi-million dollar house and luxury sports car, the Manhattan U.S. Attorney's Office said, Reuters reported. John Roesser, a former international arbitration lawyer who practiced as a partner at law firms Alston & Bird, Arnold & Porter Kaye Scholer and Dechert from 2013 to 2018, could face up to five years in prison after pleading guilty to one count of false oaths and claims in bankruptcy. Prosecutors said Roesser made false statements in his own personal bankruptcy proceedings in an effort to hold onto his assets, including his house and an Aston Martin luxury sports car, despite owing more than $3 million in unpaid income taxes. "The defendant — who used to be a lawyer and knew exactly what he was doing — manipulated and corrupted a system that helps so many," U.S. Attorney Damian Williams said in a statement following the plea.

Bankrupt cryptocurrency lender Genesis Global Holdco LLC sued its parent, Digital Currency Group, seeking to recover about $620 million in outstanding loans despite ongoing settlement talks, Bloomberg News reported. Genesis sued Barry Silbert’s DCG and DCG International Investments Ltd. on Wednesday in New York bankruptcy court but asserted that the companies will keep discussing a potential deal that could end the dispute. The lawsuits were filed after Genesis unveiled a $1.4 billion debt repayment plan backed by some of its customers but which isn’t supported by other key creditors. “Genesis has agreed to stay the turnover action so that we can move forward with documenting the deal in principle that was reached with Genesis, the UCC, and DCG,” a spokesperson for DCG said in an emailed statement. DCG will begin repaying the loans after a standstill agreement is filed with the bankruptcy court, the spokesperson said. The lawsuits concern loans to DCG that Genesis says matured in May. The outstanding debt includes a $500 million loan to DCG and loan to DCGI comprised of about 4,550 Bitcoin, according to the lawsuits. Genesis is also seeking to recover accrued interest and late fees.

Opponents of the Boy Scouts of America’s plan for a $2.4 billion sex-abuse settlement recently found fresh legal ammunition when the Supreme Court agreed to examine a similar plan drawn up by Purdue Pharma, WSJ Pro Bankruptcy reported. Some of the Boy Scouts’ insurers and a small group of sex-abuse victims have renewed calls in federal court to temporarily block the youth group’s chapter 11 plan, saying it shouldn’t advance any further until the Supreme Court weighs in on Purdue’s plan for mass opioid liabilities. Their attempt is the latest example of how the Supreme Court’s decision to hear a challenge to Purdue’s chapter 11 plan is rippling through the bankruptcy system. The Supreme Court last month said it would examine whether bankruptcy law can be used to resolve creditors claims’ against third parties that aren’t in chapter 11 without the consent of all claimants. Such releases are central to the bankruptcy plans crafted by both the Boy Scouts and Purdue. Purdue’s plan would release its Sackler family owners from opioid-related liabilities in return for up to $6 billion in settlement payments. In the Boys Scouts’ plan, local councils and partner organizations of the organization would be shielded from the claims of the sex-abuse claimants. In court papers filed Friday, the Boy Scouts argued that, unlike the Purdue case, the youth group’s plan can’t be halted as the wheels are already in motion to collect the settlement funds and distribute them to plaintiffs.

Clothing retailer Soft Surroundings has filed for bankruptcy with plans to close its 44 leased stores and to sell its online and catalog business to Coldwater Creek, WSJ Pro Bankruptcy reported. The St. Louis-based company, which caters to upper-middle-class women around the age of 60, sought protection from creditors Sunday in the U.S. Bankruptcy Court in Houston. Soft was founded in 1999 as a catalog company and opened its first retail store in 2005. Private-equity firm Brentwood Associates, backer of consumer businesses such as OrangeTheory Fitness and Blaze Pizza, became the majority owner in 2012. Soft recorded roughly $220 million in sales last year, of which two-thirds were made online. In the latter part of last year, it closed more than 20 stores. “Shifts in the competitive landscape, a move towards online channels, the Covid-19 pandemic, and increased costs of goods and services due to inflation all impacted the company’s financial position,” Chief Restructuring Officer Curt Kroll said in a sworn declaration. The company plans to close the remaining stores by late February 2024, according to a court filing.

Hog Father's Old Fashioned BBQ, a Washington County, Pa.-based restaurant that includes a total of three locations, has filed for chapter 11 bankruptcy protection from creditors in the United States Bankruptcy Court for the Western District of Pennsylvania, the Pittsburgh Business Times reported. Filed on Sept. 1, the legal action encompasses four separate filings for the local Washington County chain, which has locations in Washington, Canonsburg and Monongahela. The restaurants remain open and operating amid a chapter 11 filing that reveals estimated liabilities of between $500,000 and $1 million, the largest claim of which is for more than $683,000 by Reinhart Food Service LLC, a major food distributor. It's a restaurant that first opened in Washington County in the early days of the Marcellus Shale gas play in 2007, and the barbecue joint often thrived and expanded by serving the often Texas-based clientele who migrated to the region to work on the new natural gas rigs that expanded in western Pennsylvania at the time. So much so that the restaurant acknowledged that 40% of its business came from the oil and gas sector in the Pittsburgh Business Times in 2015, a period in which Hog Father's five locations included one in the lobby of the Washington County regional headquarters of Range Resources Corp., but for which two other restaurant openings were put on hold amid a decline in natural gas prices. It remains a very different world for natural gas production in western Pennsylvania, as the Marcellus play has evolved to more midstream activity and to the operation of the Shell cracker plant in nearby Beaver County. Other barbecue restaurants are expanding and opening in the region, including long-time North Side favorite Wilson's B-B-Q, which reopened recently on Perrysville Avenue after its previous location was lost in a fire in 2019.

A federal judge has ruled that the U.S. Consumer Financial Protection Bureau (CFPB) does not have broad authority to tackle discriminatory banking practices, handing a win to financial industry groups that sued the regulator, Reuters reported. The American Bankers Association, the U.S. Chamber of Commerce and several other industry groups in a lawsuit filed in federal court in Texas in September argued that Congress had not authorized the agency to root out discrimination. U.S. District Judge J. Campbell Barker ruled in favor of the groups on Friday, saying the Dodd–Frank Act, which created the CFPB, treats discrimination and unfairness as distinct concepts. The ruling bars the CFPB from enforcing the policy against the trade groups' members. The CFPB via a spokesperson on Monday said it was reviewing the decision and considering options for an appeal. Federal law prohibits unfair acts and practices that cause consumers "substantial and unavoidable harm," the CFPB said in a statement. The CFPB in March 2022 announced that it would examine consumer financial institutions' practices for illegal discrimination as part of its broader mandate to combat unfair practices. The industry groups said the CFPB unlawfully stretched that mandate to include discrimination, expanding its authority beyond existing fair lending laws.