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SEPTA may lose the $24 million it spent on structurally flawed Proterra electric battery buses now that the troubled manufacturer has filed for bankruptcy, the Philadelphia Inquirer reported. The 25 buses were pulled from Philadelphia’s streets in January 2020 after six months when SEPTA found cracks in their frames and other problems. One of the electric battery buses burst into flames late last year in a South Philly depot. The transit agency and Proterra had been negotiating over repairs that would get the EV buses back in service. Those talks have not produced a solution, and they were canceled abruptly after the Aug. 7 bankruptcy filing, SEPTA officials said. “At this point we don’t know what the path forward would be and what SEPTA’s [legal] remedies are, and we can’t say when the buses would come back into service,” said Andrew Busch, an agency spokesperson. The company says it intends to continue operating, seeking more capital or a buyer while holding creditors at bay. Some transit agencies say Proterra has told them buses they ordered will be delivered. SEPTA was an earlier purchaser of the company’s buses, and they were in use on several routes. Busch said there had been “progress” in talks over getting Proterra to fix the sidelined buses.

Four creditors on Thursday filed an involuntary bankruptcy petition against the owner of the shuttered South City Hospital in south St. Louis, the St. Louis Business Journal reported. The chapter 11 petition, seeking to put SA Hospital Acquisition Group LLC in bankruptcy, says that the four have claims totaling $3.8 million. They are Matthew Haddad of Los Angeles, $2.6 million; Goldberg Healthcare Partners LLC of Beverly Hills, $535,000; Frank Saidara of Los Angeles, $110,000; and Yoel Pesso of Los Angeles, $500,000. The petition was filed in bankruptcy court in Delaware by Chicago attorney Aaron Hammer. It lists a principal place of business for SA Hospital, tied to Lawrence Feigen and Jeff Ahlholm, of Newbury Park, Calif. A California bankruptcy judge last month tossed an attempt by SA Hospital to file for bankruptcy, since the hospital is in receivership. A former nurse at the facility sued SA Hospital in August, seeking class-action status over claims that it violated federal law by failing to timely file notice of the facility's closure that month. The closure impacted 563 employees, according to the hospital's filing with the state. 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 Mitchell Gold Co. has filed for protection under chapter 11 of the U.S. Bankruptcy Code listing assets and liabilities of between $10 million and $50 million, Furniture Today reported. The company, which suddenly shut down Aug. 23 telling its 533 employees the business couldn’t secure needed funding via a sign on the factory gate, said in the bankruptcy petition that funds would be available for distribution to unsecured creditors. The company estimated its number of creditors to be between 200 and 999. The filing said that the abrupt closure was necessary when PNC bank denied funding, and at that time the company ceased accepting customer deposits at all store locations. In its filing, the board of The Mitchell Gold Co. has approved the appointment of Dalton Edgecomb, senior managing director of Riveron, a consulting company, to act as chief restructuring officer.

Bankrupt electric vehicle manufacturer Lordstown Motors has proposed to pay nothing for Taiwan's Foxconn's preferred equity shares, saying it will prioritize other shareholders if an ongoing sales effort generates enough cash to repay other debts, Reuters reported. Lordstown Motors, named for the Ohio town where it is based, filed a chapter 11 plan on Friday in Delaware bankruptcy court, outlining how it intends to distribute proceeds from an ongoing effort to sell its assets. Lordstown's chapter 11 plan warned that the value of its assets is "necessarily speculative" at this stage in the bankruptcy and "could potentially be zero." Lordstown has set a Sept. 8 deadline for bids, with a Sept. 19 auction to follow. The company's shareholders would only be paid after its creditors and Lordstown's chapter 11 plan did not include an estimate of how much creditors are owed. Lordstown reported in earlier court filings that it owed about $20 million to 30 trade vendors, and recently agreed to pay $40 million to settle a trade secrets lawsuit filed by rival automaker Karma.

Mercy Iowa City has expanded an existing employee benefit and temporarily suspended three other benefit programs as it navigates its bankruptcy process, Becker's Hospital Review reported. In a statement shared with Becker's Sept. 5, the 234-bed, financially troubled hospital said its employee assistance program expanded to provide on-site and in-person support services by trained counselors. The benefit, which is designed to help employees experiencing mental health challenges, remains available to workers at no personal cost. Temporarily suspended programs include service awards (an Awardco corporate program), the temporary assistance program, and wellness assessments, Mercy Iowa City said. Flu shots, part of the wellness program, continue to be offered to workers. The changes come as Mercy Iowa City is going through bankruptcy. The hospital filed for chapter 11 bankruptcy on Aug. 7. The filing references a letter of intent between Mercy Iowa City and the state of Iowa that outlines the plan to transition the hospital to join University of Iowa Health Care. The affiliation must be approved by the university board of regents, the state of Iowa and the bankruptcy court. 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 U.S. Federal Deposit Insurance Corporation (FDIC) is seeking buyers for the $33 billion commercial real estate (CRE) loan portfolio of failed New York lender Signature Bank, Reuters reported. The majority of the portfolio comprises multi-family properties primarily located in New York City, the regulator said, adding that it would be marketing the asset over the next three months. The FDIC has been seeking to sell off portions of Signature, one of three larger banks that failed in the spring, since the bank was closed in March after an exodus of depositors seeking higher returns and safer institutions. Later that month New York Community Bancorp agreed to a deal with the FDIC to buy most deposits and certain loan portfolios along with all 40 of Signature's former branches. Within the CRE portfolio is about $15 billion of loans secured by residences that are rent stabilized or controlled. Since the FDIC has a legal obligation to preserve existing affordable housing for lower-income people, the agency said that it planned to place all those loans within joint ventures in which FDIC would retain a majority equity interest.

A recent decision made by U.S. District Judge Laura Taylor Swain in the bankruptcy proceedings of the Puerto Rico Electric Power Authority (PREPA) has profound implications, particularly for the fairness and efficiency of capital markets, as well as the access of state and local governments to municipal bonds, according to a Fox Business commentary by Matthew Whitaker, co-chair of the Center for Law and Justice at the America First Policy Institute and the former acting attorney general under the Trump administration. It is imperative that we comprehend the potential consequences of this ruling, as it could lead to escalated costs and hindered infrastructure development and also burden taxpayers with higher financial obligations, according to Whitaker. In the bankruptcy proceedings of the power utility, Judge Swain sided with borrowers and concluded that special revenue bondholders do not hold a secured claim on current and future net revenues. Furthermore, the ruling stated that the original legal obligation of the borrowers is not the face value of the debt, but rather what the borrower (in this case "PREPA") can feasibly repay. This ruling raises concerns regarding its broader implications for the municipal bond market. Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

The collapse in cryptocurrency prices last year forced a procession of major firms into bankruptcy, triggering a government crackdown and erasing the savings of millions of inexperienced investors. But for a small group of corporate turnaround specialists, crypto’s implosion has become a financial bonanza, the New York Times reported. Lawyers, accountants, consultants, cryptocurrency analysts and other professionals have racked up more than $700 million in fees since last year from the bankruptcies of five major crypto firms, including the digital currency exchange FTX, according to a New York Times analysis of court records. That sum is likely to grow significantly as the cases unfold over the coming months. Large fees are common in corporate bankruptcies, which require complex and time-intensive legal work to untangle. But in the crypto world, the mounting fees have sparked widespread outrage because many of the people owed money are amateur traders who lost their personal savings, rather than corporations with the ability to weather a financial crisis. Lawyers and other bankruptcy professionals argue that they are charging market rates for difficult work that will ultimately help recover the money that crypto investors lost. In the FTX case, Sullivan & Cromwell has said that it has scraped together more than $7 billion in assets, though it’s unclear how much of that total will go back to creditors. A spokesman for FTX’s new management said the bankruptcy was “extraordinary in almost every conceivable way,” requiring professionals to recreate records from scratch and track down missing funds. Andrew Dietderich, a partner at Sullivan & Cromwell, said in a statement that the lack of clear crypto regulations made the cases more complex and time-consuming, driving up costs.

The Baltimore Archdiocese is considering filing for bankruptcy as it anticipates a potential flood of lawsuits starting Oct. 1, when a new Maryland law will lift the statute of limitations on claims from those who say they were sexually abused as children, according to internal emails among church officials and a communications specialist, the Baltimore Sun reported. While many have expected the nation’s oldest archdiocese might file for bankruptcy as dioceses in other states have done in the face of child sex abuse lawsuits, an email chain obtained by the Baltimore Sun confirms this is an option under consideration. “I would suggest reverting back to the plan of not ‘announcing’ until the time of filing, and only confirming, if the media picks up on our internal conversations, that we are sharing information about the upcoming law change,” wrote Sean T. Caine of Caine Communications on Friday, “what it means, how it might impact the various agencies of the Church, and how the Church may respond. “The issue of bankruptcy was raised among many optional responses,” he wrote. Asked about a potential bankruptcy, Christian Kendzierski, the spokesman for the archdiocese, said in an emailed statement that officials are “preparing for the impact of the new law” and “considering how to best respond to it.

Investment management firm CoVenture said it was preparing to discuss restructuring options for Benitago, a struggling e-commerce startup it funded, when it was surprised to learn the business which rolls up popular brands sold on Amazon.com Inc. instead filed bankruptcy, Bloomberg News reported. CoVenture lawyer Oscar Pinkas said on Friday during a bankruptcy hearing in New York the firm consented to waivers and forbearances on a loan it provided Benitago to aid the startup’s turnaround efforts. CoVenture invested in Benitago and is owed roughly $85 million in principal and deferred interest payments on its loan, according to court documents.