%1

Texas fracking services provider FTS International Inc. filed for chapter 11 bankruptcy on Tuesday, citing slumping oil and gas prices caused by a severe dropoff in demand during the coronavirus pandemic, FreightWaves.com reported. Fort Worth-based FTS International listed assets totaling $517.2 million and debts totaling $535.3 million. The company filed for chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas in Houston. In its chapter 11 filing, FTS noted between 200 and 999 creditors. The company’s funded debt obligations totaled $446.7 million, according to FTS CFO Lance Turner in the filing. FTS International and two of its subsidiaries, FTS International Services LLC and FTS International Manufacturing LLC, “will continue to operate in the ordinary course of business during the restructuring, supported by the consenting creditors’ agreement to allow the company to use existing cash to fund the chapter 11 cases,” the company said in a release. The company’s cash balance was $161 million as of Sept. 18. FTS International’s operating revenue was $776.6 million for 2019, and the company currently employs 600 people.

Bankruptcy Judge Alan Trust approved a roughly $133 million sale of Rubie's Costume Co. yesterday that aims to bring the retailer out of bankruptcy and save 400 jobs, Newsday reported. "There's really no dispute that this sale is in the best interest of these estates, their creditors and their employees," said Judge Trust, who is presiding over the bankruptcy of Rubie's and five affiliated companies in the U.S. Bankruptcy Court for the Eastern District of New York. "The sale is approved with the modifications." Attorneys for Rubie's and the retailer's creditors told Trust they were close to negotiating through concerns and would file paperwork finalizing modifications to the sale agreement by the end of yesterday. A new company called Rubies II, LLC, is slated to purchase the retailer, which has corporate headquarters in Westbury and sales headquarters in Melville. Rubies II is a collaboration between Joel Weinshanker, chairman of the National Entertainment Collectibles Association Inc.; the investment advisory firm Atalaya; and the primary owners of the current company, the Beige family, court papers show. Rubie's president Marc Beige noted in an affidavit — or written statement — that the sale would save about 400 jobs. He said the alternative would have involved selling Rubie's property and using the proceeds to pay its bills. Liquidation would have given creditors less compensation than the sale, which is expected to pay creditors about 55 percent to 60 percent of what they are owed, according to court filings.

Neiman Marcus Group Inc. is reducing the size of its store workforce as part of a reassessment of its business as it emerges from bankruptcy, Bloomberg News reported. The department store said that it began laying off some store workers on Wednesday after a reorganization of staff at its Neiman Marcus and Bergdorf Goodman locations. “We are evaluating every part of our business to ensure that the company is positioned for long-term success,” Neiman Marcus said in a statement. “We plan to separate from selling and non-selling associates.” The company declined to disclose how many employees would be affected by the cuts. Some new positions will be added for customer service and personal styling. Neiman Marcus is emerging from bankruptcy this month after filing for chapter 11 soon after coronavirus rocked global markets and the U.S. economy earlier this year. Neiman Marcus has been closing stores throughout the year, including the New York flagship location it opened in 2019. 

The operator of New York City’s historic Martinique hotel, one of Manhattan’s oldest, filed for chapter 11 protection, hoping for relief from rent payments and union obligations as the Covid-19 pandemic hammers the Big Apple’s lodging market, the Wall Street Journal reported. Built in 1897 in a French Renaissance style at 32nd Street and Broadway, the Martinique earned a notorious reputation as a “welfare hotel” in the 1970s and ’80s, when municipal leaders used it to house the city’s burgeoning homeless population. Developer Harold Thurman acquired the Martinique in a 99-year lease in 1989, a year after the city stopped using the hotel for emergency housing. Reborn under the Holiday Inn banner, the Martinique was designated a city landmark in 1998. He still owns the hotel. The 531-room Martinique, now carrying the Hilton brand, features a restaurant and wine bar, more than 33,000 square feet of retail space and a concierge desk, according to court papers filed by Brad Thurman, vice president of Herald Hotel Associates LP, the hotel’s operator. In addition to the pandemic’s devastating impact on hotel occupancy, he blamed the Martinique’s financial woes on a $3.5 million employee severance bill and a failure to strike deals with the hotel’s landlord, Seasons Affiliates, and mortgage lender. (Subscription required.)

Australia yesterday unveiled its biggest shakeup in bankruptcy laws in nearly three decades, allowing small businesses to trade while insolvent and take more control over debt restructuring, in a bid to help firms through the coronavirus crisis, Reuters reported. The new rules will help manage an expected avalanche of insolvencies when wage subsidies introduced to help companies survive the virus-triggered recession start to wind down early next year. Under the proposed rule changes, businesses with liabilities of less than A$1 million ($708,000) will be able to keep operating for 20 business days while they come up with a debt restructuring plan, rather than be placed in the hands of administrators. The changes, effective from Jan. 1, 2021, aim to move the system “from a rigid, one-size-fits-all creditor in possession model to a more flexible debtor in possession model,” Federal Treasurer Josh Frydenberg said in a statement. The government would adopt some rules from the U.S.-style chapter 11 process, he said, which gives struggling companies a window to restructure debt while being protected from the threat of legal action by creditors.

U.S. high-yield bond sales reached an annual record of $329.8 billion yesterday as companies reap the benefits of the Federal Reserve’s liquidity-boosting policies and investors grasp for yield, Bloomberg News reported. The crush of debt offerings accelerated in April after the U.S. central bank began purchasing some high-yield bonds as part of its efforts to support the corporate credit markets. Since then, issuance has eclipsed the prior annual sales record of $329.6 billion set in 2012, according to data compiled by Bloomberg. Companies staring at sharp, pandemic-induced revenue declines were emboldened to borrow billions of dollars to help ride out the pandemic. Some of the most virus-battered borrowers, including airlines, hotels and even cruise operators, were able to tap investors for financing, sometimes paying double-digit coupons. “A lot of the issuance was to get as much liquidity as you can, because things were looking like they were going to be stalled out for a while,” said Douglas Lopez, senior partner and portfolio manager at Aristotle Credit Partners. “This was the prudent move, but some companies may be building the liquidity bridge to nowhere.” The junk market’s record year follows the U.S. investment-grade bond market, which reached a new annual issuance high in mid-August. Europe’s high-yield bond sales surged in July, the busiest for that month since 2009. The Fed’s near zero-interest rate policy, now expected to last through 2023, has paved the way for billions of dollars to flow into funds that invest in high-yield debt as investors search for yield. The support has effectively turned high-yield into a borrower’s market, and all-in yields for U.S. junk bonds have dropped to 5.81 percent, near pre-pandemic levels, according to Bloomberg Barclays index data. Since July, some 65 percent of new high-yield bonds have come with sub-6 percent coupons, according to research by Barclays Plc strategists. 

Hertz Global Holdings Inc. is backing a new effort to raise $400 million that would allow it to keep its rental car fleet stocked with new vehicles for a return to business once the coronavirus pandemic eases, WSJ Pro Bankruptcy reported. The nation’s largest car-rental company filed for bankruptcy protection in May, its revenues hammered by restrictions imposed to suppress the spread of COVID-19, which has claimed more than 200,000 lives in the U.S. The new securitization deal between Donlen Corp., which supplies Hertz with cars, and Barclays Bank PLC is separate from Hertz’s search for chapter 11 financing in the form of a $1.5 billion loan that will preserve the company until business returns to normal levels. Multiple lenders are offering to provide the bankruptcy loan, Hertz lawyer Thomas Lauria of White & Case LLP said yesterday. Some potential financiers already have money riding on Hertz, but others don’t, and there are offers from potential backers willing to settle all the company’s debts, as part of the bankruptcy financing. The proposed $400 million asset-backed securitization deal might reduce Hertz’s need to draw down on a bankruptcy loan, but it won’t reduce the size of the chapter 11 financing, Lauria said.

Candy store chain It’Sugar filed for chapter 11 protection on Tuesday, citing its inability to make up for sales amid the COVID-19 pandemic, the Las Vegas Review-Journal reported. It’Sugar, a Florida-based company owned by BBX Capital Corp., said its four locations in Las Vegas, including its U.S. flagship location on the Strip, will remain open while the company goes through bankruptcy proceedings. The retailer shuttered its approximately 100 locations nationwide in March because of the pandemic and opened in June and July, but sales haven’t improved. It’Sugar said that 60 percent of its annual sales are related to travel and tourism. According to court documents, most of It’Sugar’s unsecured debt claims are from landlords, including $502,973.28 in rent money owed for the Grand Bazaar Shops store and $458,238.36 to the Grand Canal Shoppes. The company stopped paying rent or has only made partial payments as company executives tried to negotiate deferment or abatement deals with its landlords, according to Levan. “This has not occurred and resulted in the decision to file bankruptcy proceedings,” he said.

Americans have lost more than $145 million to fraud related to the coronavirus, according to the Federal Trade Commission, which said it had fielded more than 200,000 complaints from consumers, the New York Times reported. Schemes related to the coronavirus peaked in the spring, and they focused on federal stimulus payments and other forms of financial relief, personal protective equipment, and unemployment and other government benefits, the commission reported. The data was compiled by the commission’s Consumer Sentinel Network, which provides law enforcement agencies and the public with information about rampant forms of fraud. The network’s tracker of coronavirus-related cases includes nearly 206,000 reports of coronavirus-related fraud that were submitted to the F.T.C. from Jan. 1 through Sept. 22. The median loss was $300, according to data from the commission. The losses could be higher for older Americans, who are often the target of this kind of fraud, said Lucy Baker, a consumer defense associate at the United States Public Interest Research Group, which shared the data this week. Many of the victims were older, she said. In the months since the pandemic began, government agencies have warned consumers about fraud in which victims are asked for personal data, such as their name, date of birth, Social Security number or Medicare and health insurance information. This information can be used to commit identity theft or medical insurance fraud. The commission accelerated its action against coronavirus fraud in March, when it joined the Food and Drug Administration in issuing warnings related to the virus, telling seven companies to stop selling products that claimed to cure or prevent COVID-19, the disease caused by the virus. Many frauds also sought cash and personal information from consumers. The F.B.I. issued a warning in June when scammers were advertising fraudulent coronavirus antibody tests.