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Bankrupt crypto lender Genesis Global Holdco LLC asked the judge overseeing its reorganization to appoint a mediator in order to save the outline of a deal with its parent, Digital Currency Group, Bloomberg News reported. Genesis is seeking mediation to take place over a two-day period prior to May 9, and ahead of a mid-May due date on $630 million of debt owed to Genesis by DCG. “While these discussions were initially focused on resolving issues left open in the restructuring term sheet, more recent discussions have made it clear that a mediator is necessary to assist the mediation parties in reaching a resolution,” Genesis said in a bankruptcy filing. In particular, the unsecured creditor committee is opposed to the restructuring proposal as it stands now and are seeking better terms, according to two people familiar with the situation, who asked not to be named discussing private information. For its part, DCG in a tweeted statement said that “a subset of creditors have decided to walk away” from a settlement agreement that was submitted to the court. “DCG remains committed to reaching a fair outcome and while we look forward to a constructive mediation process, we will have to weigh any new demands against the concessions we’ve previously made.” “Given that DCG owes GGC approximately $630 million pursuant to certain fixed term loans due during the second week of May ... the Debtors believe that the mediation should be scheduled immediately,” the filing said.

Hundreds of shopping centers across the U.S. are poised to lose their anchor tenant in the coming months after Bed Bath & Beyond Inc. filed for bankruptcy and announced plans to eventually close its remaining stores, the Wall Street Journal reported. While property owners will have to absorb additional costs to lure replacement tenants, and some might still struggle to fill large vacated spaces, many landlords say they aren’t worried. Demand for big-box space in open-air shopping centers remains strong despite rising interest rates, and plenty of other retailers are waiting in the wings to fill the spaces vacated by Bed Bath & Beyond, several real-estate executives said. New tenants will in most cases pay higher rents, too, these property owners say. “There is strong interest across the board in these locations,” said John Kite, chief executive of Kite Realty Group Trust, one of Bed Bath & Beyond’s biggest landlords, with 22 locations across its portfolio. “If this was going to happen, this is probably a pretty good time for this to happen.” Retail real estate struggled for years because of oversupply and the rise of online shopping. But the sector rebounded strongly over the past two years after pandemic lockdowns eased, shoppers returned to stores and retailers fine-tuned their mix of e-commerce and bricks-and-mortar locations. Nationwide, the retail availability rate fell to 4.8% in the first quarter, the lowest level since at least 2005, when real-estate firm CBRE began tracking the market.

A bankruptcy judge on yesterday concluded a five-day court hearing to examine whether a chapter 11 filing of 3M Co.'s earplug unit Aearo Technologies LLC should be thrown out of court, MarketWatch.com reported. Following a federal appeals court's decision to dismiss Johnson & Johnson's first chapter 11 filing to freeze its talc lawsuits, 3M's earplug lawsuit claimants in February petitioned Judge Jeffrey Graham with the U.S. Bankruptcy Court in Indianapolis to dismiss Aearo's bankruptcy filing. J&J's case was dismissed because the federal appeals court deemed its bankrupt unit was not in financial distress. A significant time in the Aearo hearing was spent to argue the 3M unit's financial condition at the time of bankruptcy filing in July 2022. The judge is expected to rule in several weeks.

The San Francisco Art Institute has filed for chapter 7 bankruptcy protection, a move that will force the 152-year-old institution to liquidate its assets and abandon its legendary campus on the edge of Russian Hill, the San Francisco Chronicle reported. The Art Institute filed for bankruptcy on April 19. “It was a good run for 152 years and it is such a tragedy that it is gone,” said John Marx who served as co-chair of the institute's board. “The passion was there until the very end and up to the moment that we filed we were still trying to get a couple of billionaires on the East Coast to help us out but it just didn’t work out.” A meeting of the creditors will be held May 17. Most prominent among them is the University of San Francisco, which claims it is owed around $6 million for costs incurred in exploring a relationship between the two institutions in an attempt to save the art school. But USF ultimately decided not to go through with it in July 2022, and the Art Institute announced it would cease operations, ending a San Francisco tradition that dates back to 1871.

Cancer victims on Monday urged a U.S. judge to dismiss a Johnson & Johnson subsidiary's second bankruptcy filing, saying the company is abusing the bankruptcy system in its renewed attempt to resolve tens of thousands of lawsuits alleging that J&J's baby powder and other talc products caused cancer, Reuters reported. The J&J subsidiary, LTL Management, this month filed for bankruptcy a second time, seeking to settle all current and future talc claims for a proposed $8.9 billion. LTL's first bankruptcy was dismissed after a federal appeals court ruled the company was not in financial distress and therefore not eligible for bankruptcy. Plaintiffs have filed more than 38,000 lawsuits that have been consolidated in federal court in New Jersey alleging that J&J talc products sometimes contained asbestos and caused ovarian cancer or mesothelioma. J&J has said its talc is safe, asbestos-free and does not cause cancer. The plaintiffs allege that J&J’s actions amount to a manipulation of the bankruptcy system by a multinational conglomerate valued at more than $400 billion and in little danger of running out of money to pay cancer victims or their family members. LTL could have made a honest settlement offer after its first bankruptcy failed, but instead allowed itself to be stripped of funding so that its second bankruptcy could impose the settlement on unwilling plaintiffs and future claimants, the plaintiffs' attorneys wrote in a Monday filing in U.S. bankruptcy court in Trenton, New Jersey.

Bed Bath & Beyond Inc. won permission on Monday to tap $40 million, money the retailer said it needs to cover payroll for its roughly 14,000 employees and buy management time to try and locate a buyer in chapter 11 bankruptcy to rescue some or all of its stores, Bloomberg News reported. Bankruptcy Judge Vincent Papalia in a hearing yesterday said the urgent funding provided by Bed Bath & Beyond’s lenders averts a potential “fire sale” and immediate liquidation of the 52-year-old retail chain. The financing approved Monday includes a May 28 deadline for bids on the company’s assets. But the money comes at a cost to junior creditors: in exchange for the $40 million, Bed Bath & Beyond agreed to roll-up $200 million in existing debt, moving that debt to the front of the chapter 11 repayment line. The retailer said in its bankruptcy petition it had roughly $4.4 billion in assets compared to more than $5.2 billion in total debt as of last year. Lawyers for lenders Sixth Street Specialty Lending Inc. and JP Morgan Chase Bank N.A. defended the roll-up, saying lenders went to extraordinary lengths to provide Bed Bath & Beyond runway as it pursued last-ditch equity raises in an ultimately failed attempt to avoid bankruptcy.

A decade ago, Bed Bath & Beyond was a brick-and-mortar star with a $16 billion market cap. With interest rates at near-zero for a decade, the company went on an acquisition binge, buying up companies such as Cost Plus World Market in 2012 and Decorist in 2017. Yet the big-box retailer was slow to adapt to the e-commerce era, according to a Wall Street Journal editorial. Target, Walmart, Home Depot and Lowe’s invested in improving their online and logistics operations, which enabled them to better compete with Amazon. Bed Bath & Beyond’s failure to do so was costly during the COVID government lockdowns as it racked up billions of dollars in losses. Investors indulged such losses as long as the Fed maintained its uber-accommodative policies, which made borrowing cheap and fueled speculative stock-buying. Bed Bath & Beyond’s stock price doubled between January 2020 and 2021 to $35 a share amid a rally in so-called meme stocks such as AMC and GameStop. But credit conditions tightened last year as the Fed raised rates, spurring the retailer last August to close 150 stores and cut its workforce by 20%. The belt-tightening enabled it to secure a $375 million loan to continue operating through the holidays, but it continued to struggle and reported another sales drop in the latest quarter. By the end of March, its market valuation had slumped to $70 million and its stock price had fallen below a dollar. The company could no longer raise capital or borrow to stay afloat, making bankruptcy all but inevitable. Thousands of workers may lose their jobs, but the good news is that plenty of companies are still hiring. Nobody celebrates a corporate bankruptcy and the human and financial harm that goes with it. But some companies inevitably fail in a dynamic economy, and the demise of unprofitable businesses enables labor and capital to move to more productive uses. Propping up so-called zombie companies suppresses economic growth and innovation. Read more. (Subscription required.)

*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.

Home-goods retailer Tuesday Morning Corp. is moving toward a liquidation of additional store locations following a bankruptcy auction for the company’s remaining assets, WSJ Pro Bankruptcy reported. If a Hilco Global unit closes on its bid for Tuesday Morning, the Dallas-based retailer will be liquidated, its senior vice president of finance, Dell Young, testified in bankruptcy court on Monday. Tuesday Morning last week selected Hilco as the successful bidder for more than 200 store locations that weren’t already designated as going out of business. Lenders to Tuesday Morning filed court papers Monday saying that a sale to Hilco likely would result in a liquidation of the business, which filed for bankruptcy in February for the second time in less than three years. “We are working with the company to develop the final detailed plan on which stores will close and do not have a specific number of store closings at this time,” said Ian Fredericks, president of Hilco’s consumer-retail group.

First Republic Bank and its auditor KPMG were sued by shareholders over alleged misstatements ahead of last month’s regional-banking crisis, Bloomberg News reported. The lawsuit, filed Monday in San Francisco federal court by a Florida-based public pension fund, appears to be first targeting the bank since it was crushed in early March by unprecedented outflows. First Republic, its executives and its auditor are accused of repeatedly overstating the safety of its business model even as rising interest rates undermined the value of the bank’s loan and securities portfolios. First Republic is slashing its workforce, shrinking its balance sheet and pursuing strategic options after deposits plummeted even more than analysts expected amid the crisis. The bank has been drawn into the turmoil escalated by the collapse of SVB Financial Group’s Silicon Valley Bank, which fell into government receivership in early March after asset sales spooked depositors in the venture capital community. The city of Hollywood, Fla.’s police officers’ retirement system seeks in its proposed class action to represent investors who purchased First Republic securities from January 14, 2021, to March 14, 2023. The pension fund points to the bank’s 2020 annual report, which the complaint says downplayed and concealed the risks of potential increases to interest rates, changes in its mix of deposits, and resulting deposit outflows.

Ubo Technologies, a limited liability company connected to Waatr founder and CEO Rakesh Guduru, filed for chapter 11 bankruptcy protection, the South Florida Business Journal reported. The Doral, Fla.-based venture submitted its petition to the U.S. Bankruptcy Court in Miami on April 13. The petition was signed by Guduru. Ubo Technologies has more than $2.5 million in liabilities and $327,181 in assets, according to court documents. Its largest debts are $641,465 owed to supplier Unique Industrial Product and a $464,000 business loan from Cellular Nanomed, a California biotech startup. Guduru is also listed as an unsecured creditor, with $291,627 owed. Most of Ubo Technologies assets consists of inventory, office equipment and intellectual property. It also owns patents, copyrights, trademarks and trade secrets related to Waatr, the maker of a self-cleaning reusable water bottle with UV purifiers and filters and CrazyCap, a portable cap that sterilizes water bottles.