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Apollo Global Management Inc. is set to lose control of the former Philips lighting business it acquired in 2017. But in the easy money years leading up to Lumileds Holding BV’s bankruptcy filing this week, the buyout firm reaped a more than $500 million dividend bounty, Bloomberg News reported. The debt-laden lighting company gave out about $525 million in dividend payments to Apollo in 2017 and 2018. The payouts were largely financed by new debt that Lumileds raised in the leveraged loan market, according to previous Bloomberg reporting and came less than 18 months after Apollo sold a $1.15 billion loan to help fund its purchase of an 80% stake in the business. Previous owner Koninklijke Philips NV retained about 20%. Lumileds, which supplies energy-efficient LED lighting for automotive displays, succumbed to its $1.7 billion debt load after a sharp decline in demand during COVID-19 and filed for chapter 11 bankruptcy this week. Its proposed restructuring plan would slash that debt pile by $1.3 billion and force Apollo to relinquish control of the company to existing lenders.

LATAM Airlines yesterday turned back two challenges to its bankruptcy reorganization plan, putting the carrier a step closer to emerging from chapter 11 after seeking protection from creditors in the early months of the pandemic, Reuters reported. LATAM said in a statement it was pleased by a U.S. bankruptcy court's decision confirming its reorganization plan in which two groups of creditors lost their appeals. LATAM, which filed for bankruptcy in 2020, won court approval to exit chapter 11 in June. Its reorganization plan would inject about $8 billion into the airline through a combination of capital increase, issue of convertible bonds and new debt. The appeal against the approved plan came from the TLA Claimholder Group, which has shares in subsidary LATAM Airlines Brasil, and a group of unsecured claimants comprising Avenue Capital Management II, Corre Partners Management, CQS (US), HSBC Bank Plc, Invictus Global Management, Livello Capital Management LP and Pentwater Capital Management LP. The groups' appeals were opposed by other shareholder entities and the airline itself. The appeals had challenged LATAM's so-called backstop agreement with a creditor group that had agreed to guarantee certain financing if no one else steps up to provide it. Under the deal, the 15 backstop creditors would receive $734 million in fees to ensure that $5.4 billion in stock and debt offerings are fully financed.

A unit of Malaysia’s state-owned investment fund 1MDB — which has spurred investigations around the world into deal-making and political patronage under former Prime Minister Najib Razak — is seeking bankruptcy protection in the U.S., Bloomberg News reported. Brazen Sky Ltd., which is fully owned by 1Malaysia Development Bhd., filed for chapter 15 in Southern District of Florida court, according to a filing. The document listed voluntary liquidation pending in the British Virgin Islands, where Brazen Sky is incorporated. The development comes just days after Najib was imprisoned for 12 years, following Malaysia’s top court upholding a 2020 conviction for corruption in relation to 1MDB, from which billions were siphoned. According to a US indictment, a small coterie of Malaysians, led by businessman Low Taek Jho (known as Jho Low), diverted money from 1MDB into personal accounts disguised to look like legitimate businesses, and kicked back some of those funds to officials. Officials at 1MDB and others were alleged to have engaged in fraudulent conduct to conceal an overvaluation of Brazen Sky assets, which itself was used to conceal the diversion of more than $1 billion from a 1MDB investment, a US court filing in 2020 showed.

NewAge Inc., a direct-to-consumer seller of health and wellness products, filed for bankruptcy yesterday and said that it plans to sell itself, after disclosing material weaknesses in its financial reporting, Reuters reported. The Midvale, Utah-based company and three affiliates sought chapter 11 protection from creditors with the U.S. bankruptcy court in Delaware. Yesterday's filing came three weeks after the company received a default notice on a loan agreement. NewAge said it had $310.9 million of assets and $149.4 million of debts as of the end of 2021. In a regulatory filing, NewAge said it received a $28 million bid from an entity known as DIP Financing LLC to buy substantially all its assets, subject to court approval and higher bids. NewAge also said it lined up $16 million in financing to help it operate while it restructures. The company has not filed annual or quarterly reports this year, after finding a material weakness in its 2020 annual report related to how it reported acquisitions.

Lumileds Holding BV won bankruptcy court approval to borrow $175 million of fresh cash, overcoming skepticism from a federal judge who said a fee tied to the loan seemed too high, Bloomberg News reported. Bankruptcy Judge Lisa Beckerman in a hearing yesterday said that she would sign off on the financing package, clearing the way for lighting components company to replenish its depleted coffers. Lumileds had just $6.6 million of cash on hand as of Monday, according to court papers. Existing lenders who opt to advance fresh credit to the bankrupt company will share a fee totaling nearly 37% of its equity once Lumileds exits chapter 11 protection. Judge Beckerman initially bristled at the size of the so-called participation fee, calling it “rich” and pressing the company’s advisers on why it is necessary. The fee is large because the structure of the loan, which may grow to as much as $275 million, requires lenders to take on even more risk than in most bankruptcy financing packages, an attorney for a group of existing lenders said in the hearing. The loan will not be repaid once the company exits bankruptcy, but instead will turn into an exit facility. Lumileds, which supplies energy-efficient LED lighting for automotive displays, succumbed to its $1.7 billion debt load and filed for chapter 11 bankruptcy this week. Its proposed restructuring plan would slash that debt pile by $1.3 billion and force Apollo Global Management LLC to relinquish control of the company.

The former Mexican airline Interjet has been formally accepted into a domestic bankruptcy process by a district judge. Interjet will now be able to negotiate up to 40 billion pesos in debt (nearly US$2 billion) with its creditors, SimpleFlying.com reported. On Tuesday, a Mexican judge approved the airline Interjet formally entering a bankruptcy process. Interjet ceased operations in December 2020, after a years-long crisis fueled by the COVID-19 pandemic. Before that, Interjet was the third-largest airline in Mexico, had a fleet composed of 88 aircraft, including 22 Sukhoi Superjet units, and operated under a hybrid business model with both low-cost and legacy-like services. The management of the ill-fated airline celebrated the judge's decision, saying it was great news for the company. The airline will now be able to restructure financially, eyeing a return to the skies in the future, said Carlos del Valle, deputy director of Interjet. The airline will employ the benefits available in the Mexican bankruptcy process to strengthen its financial position, protect and preserve its assets, and organize the company's liabilities, safeguarding the creditors and employees, said Interjet in a statement. Former Interjet employees launched a strike in January 2021 and seized most of the company's assets across the country, including its airport counters at Mexico City Benito Juárez International (MEX).

The parent company of far-right website Infowars agreed yesterday to face a second U.S. defamation trial stemming from the company's false claims the deadly 2012 Sandy Hook elementary school shooting was a hoax, Reuters reported. Free Speech Systems' attorneys told U.S. Bankruptcy Judge Christopher Lopez in Houston the company would no longer oppose a trial in Connecticut next month, even though the company's bankruptcy would normally shield it from lawsuits. The Connecticut trial will determine how much FSS and its founder, conspiracy theorist Alex Jones, should pay in a defamation case brought by family members of children slain in the shooting. Families of children killed in the 2012 shooting have won judgments finding Jones and his companies liable for defamation in Texas and Connecticut. On Aug. 5 a Texas jury decided Jones must pay the parents of a 6-year-old boy killed in the massacre $45.2 million in punitive damages — on top of $4.1 million in compensatory damages — for falsely claiming the shooting was a hoax. Free Speech Systems filed for chapter 11 on July 29, when the Texas defamation trial was already under way. The company initially argued that going to trial in Connecticut would jeopardize its ability to reorganize, but it agreed to participate after a Connecticut judge ruled that the trial could go forward against Jones, who is not bankrupt.

A federal appeals court resuscitated a $200 million bankruptcy claim against PG&E Corp., ruling in favor of investment firms that argued the California utility underpaid them on accrued interest when it exited chapter 11 as a solvent company in 2020, WSJ Pro Bankruptcy reported. The Ninth U.S. Circuit Court of Appeals in San Francisco found that unsecured creditors of a solvent business like PG&E have an equitable right to interest payments after a chapter 11 filing at the original rate specified in the contract. PG&E’s chapter 11 plan didn’t pay full contractual interest of 10% or more, instead offering unsecured creditors the federal judgment rate of around 3%. Yet the bankruptcy plan also classified those creditors as unimpaired, or paid in full. Monday’s ruling sided with Citigroup Inc., Whitebox Advisors LLC and Olympus Peak Asset Management LP, but didn’t award them the $200 million interest outright. The bankruptcy court that oversaw PG&E’s restructuring must now “weigh the equities and determine what rate of interest the creditors were entitled to,” according to the decision. PG&E’s reorganization plan paid $25.5 billion in wildfire-related claims and covered its other financial debts under a complex compromise between shareholders and creditors.

Packable Holdings LLC, a Carlyle Group-backed e-commerce platform valued at more than $1 billion less than two years ago, is shutting down in bankruptcy after it failed to go public through a merger with a special-purpose acquisition company, WSJ Pro Bankruptcy reported. The Hauppauge, N.Y.-based company made the filing in the U.S. Bankruptcy Court in Wilmington, Del., on Sunday, days after it said it was laying off 138 employees. Packable, which entered bankruptcy with 372 workers, had nearly 1,300 employees at its peak. Founded in 2010, the online third-party seller of health and beauty products and its main operating business, Pharmapacks LLC, buys inventory from major brands to fulfill orders on online sites that include Amazon.com Inc., Walmart Inc. and eBay Inc. At its peak, Packable processed more than 1.8 million orders each month, chief restructuring officer Brian Teets said in a sworn declaration. The Carlyle Group invested $250 million in the company on a valuation of more than $1 billion less than two years ago. Carlyle, Packable’s largest single equity holder owning 26% of the business, declined to comment. In September, the company said it planned to raise $434 million in cash through a SPAC deal. After announcing the proposed SPAC deal, Packable increased its staffing, launched a rebranding campaign and planned to open a new warehouse and fulfillment facility in California, a plan the company later scrapped. The intensive expansion took a toll on its bottom line. While Packable recorded a 15% increase in revenue of $427.6 million last year, its net losses worsened to $175.2 million from $113.9 million in that period.

A bankruptcy judge declined on Friday to shield 3M Co. from continued litigation involving its military earplugs, a setback for the conglomerate’s attempt to shift the mass injury claims to a friendlier forum, WSJ Pro Bankruptcy reported. Judge Jeffrey Graham of the U.S. Bankruptcy Court in Indianapolis said he wouldn’t extend to 3M the same protection against the pending earplug injury lawsuits that its subsidiary Aearo Technologies LLC received by filing for chapter 11 last month. The bankruptcy filing marked the latest of several recent attempts by corporate defendants to leverage the powers of chapter 11 to resolve legal troubles. But 3M didn’t succeed as other businesses have. Judge Graham’s ruling leaves roughly 230,000 personal injury claims pending against 3M, which didn’t seek chapter 11 protection itself, but has played a central role in the bankruptcy proceedings of Aearo, the earplugs’ manufacturer. Friday’s decision backed plaintiffs’ lawyers, who have alleged the defective earplugs left U.S. military veterans with lasting hearing damage and won $265 million in jury verdicts before Aearo filed bankruptcy. 3M, which has denied the combat earplugs are unsafe, said it would appeal Friday’s ruling and that continuing to litigate the earplug cases one-by-one over the coming years “benefits no one.”