%1

With the amount of money it owes dwarfing the value of its assets, Bowlski’s alley in El Jebel, Colo., has proposed a bankruptcy exit plan that hinges on it remaining in business and receiving creditor approval, the Aspen Times reported. “The Debtor (Bowlski’s) believes that the Plan, as proposed, is feasible,” said the proposed plan. “The funding for the plan will come from the debtor’s continued operations.” A confirmation hearing for the plan is scheduled for July 28 in Denver, where certain creditors will vote on the plan, which also would need the court’s blessing. Bowlski’s declared bankruptcy Jan. 2 in Denver after a disagreement with its landlord, Crawford Properties. The chapter 11 filing “was prompted by a mix of issues,” the exit plan said. “The COVID pandemic caused the shutdown of the business, followed by operational restrictions, that caused cash flow issues for the debtor. The problem was compounded when the sprinkler system at the debtor’s leased premises failed, causing the business to be shut down for a period of time. The second shutdown further compounded the cash flow crisis. Moreover, the cash flow issues from the COVID restrictions left the debtor with limited cash to handle the shutdown caused by the issues with the leased premise’s sprinkler system.”

Drugmaker Mallinckrodt PLC has obtained support among unsecured bondholders to fund its exit from chapter 11 after a chilly reception from the leveraged credit market, WSJ Pro Bankruptcy reported. The Ireland-based company had been struggling to complete a financing deal needed to emerge from bankruptcy and has been working with Morgan Stanley to find investors. A $900 million loan deal failed to gain traction with market participants, partly due to concerns about investing in a company linked to opioid production amid growing market sensitivity about environmental, social and governance issues. Mallinckrodt has since downsized the deal offering to $650 million and shifted its structure into a bond, rather than a loan, in the hopes of finding hedge funds that might have an easier time investing. The company has secured commitments for the deal from a group of existing creditors. The deal struggles follow a broader selloff in the leveraged credit market in recent weeks that has brought junk-rated bonds and loans under pressure, and pushed at least one company, Dayco Products LLC, to pull a refinancing deal. A nearly $3.3 billion bond issued by Carvana Co., the online used-car dealer, with help from Apollo Global Management Inc. has traded down substantially since. Mallinckrodt has been working to emerge from bankruptcy under a negotiated restructuring to trim roughly $1.3 billion in debt from its balance sheet. The company filed for chapter 11 protection in 2020 to address ballooning liabilities related to its production of opioids and antitrust claims around its flagship H.P. Acthar gel product.

A bankruptcy judge installed a chapter 11 trustee to oversee the bankrupt Williamsburg Hotel, wresting control from its owner-developers after finding they had used the Brooklyn property’s funds on other unrelated investments, WSJ Pro Bankruptcy reported. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., ruled after a three-day trial that developers Toby Moskovits and Michael Lichtenstein can’t be trusted to continue running the hotel operation and that an independent trustee should be installed to protect the business and its creditors. Mortgage lender Benefit Street Partners LLC had requested the appointment of a trustee in the bankruptcy case of the 147-room hotel, following reports by a court-appointed examiner that Ms. Moskovits and Mr. Lichtenstein siphoned off cash from the business, which they deny. The judge’s ruling snarls the developers’ efforts to end the hotel’s bankruptcy by restructuring its mortgage debt and pumping in $11 million in capital to retain their ownership interests. Benefit Street has argued for a sale of the hotel based in part on allegations that Ms. Moskovits and Mr. Lichtenstein had diverted revenue from the hotel to a related management company and other affiliated entities they controlled.

The owner of Ebony magazine is nearing a deal to acquire Black News Channel LLC out of bankruptcy, a proposal that could revive the cable news network meant to provide Black Americans’ perspective on current events after it shut down abruptly earlier this year, WSJ Pro Bankruptcy reported. Lawyers for Black News Channel said in papers filed yesterday in the U.S. Bankruptcy Court in Tallahassee, Fla., that they are close to designating an affiliate of Ebony Media as the stalking-horse bidder for its assets and asked the judge overseeing the chapter 11 case for more time to finalize the agreement. Stalking-horse deals are common in chapter 11 and would set the floor price for Black News Channel’s assets ahead of a potential bankruptcy auction. The offer by Ebony Studios LLC, which is owned by former NBA player Ulysses “Junior” Bridgeman, would be subject to better offers should any materialize in the coming weeks. BNC launched two years ago and featured a lineup of high-profile contributors that included Charles Blow and Marc Lamont Hill. It shut down in March and then filed for bankruptcy, citing challenging market conditions and financial pressure. The network has largely been backed by automotive-parts billionaire and Jacksonville Jaguars NFL team owner Shad Khan.

Attorneys for the state of West Virginia and two remaining pharmaceutical manufacturers have reached a tentative $161.5 million settlement just as closing arguments were set to begin in a seven-week trial over the opioid epidemic, Attorney General Patrick Morrisey said yesterday. Morrisey announced the development in court in the state’s lawsuit against Teva Pharmaceuticals Inc., AbbVie’s Allergan and their family of companies. The judge agreed to put the trial on hold to give the parties the opportunity to reach a full settlement agreement in the upcoming weeks. “We are very optimistic that we can do so,” Morrisey said. The trial started on April 4. The lawsuit accused the defendants of downplaying the risks of addiction associated with opioid use while overstating the benefits. Under the tentative deal, West Virginia would receive more than $134.5 million in cash, while Teva would supply the state with $27 million worth of Narcan, a medication that can reverse opioid overdoses, restore breathing and bringing someone back to consciousness. West Virginia had reached a $99 million settlement with drugmaker Johnson & Johnson’s subsidiary Janssen Pharmaceuticals Inc. last month over the drugmaker’s role in perpetuating the opioid crisis in the state that has long led the nation in drug overdose deaths.

Front Sight Firearms Training Institute has filed for bankruptcy protection to stave off foreclosure after a dispute over funding through an immigration investment program, WSJ Pro Bankruptcy reported. The Pahrump, Nev., business, which has more than 260,000 members, sought chapter 11 protection from creditors Tuesday in the U.S. Bankruptcy Court in Las Vegas, listing total debt of roughly $20 million. Front Sight, founded in 1996 near Bakersfield, Calif., bought 550 acres roughly 45 minutes west of Las Vegas in 1998 and built what it said was among the world’s biggest private firearms-training facilities. The property includes 50 outdoor training ranges, live tactical simulators, an 8,000-square-foot classroom and pro shop, assorted other buildings, and land for development. The business provides classes and instruction to roughly 40,000 gun enthusiasts every year. Revenue mostly comes from selling lifetime memberships ranging from $250 to $50,000, as well as courses and products. The loan disputes that eventually landed Front Sight in bankruptcy began in 2012 when the firearms trainer said a financing company, Las Vegas Development Fund LLC, said it could raise up to $150 million to help fund the Front Sight Vacation Club & Resort. The expansion plan would include vacation residences, an RV park, retail shops and a pavilion, Front Sight said in a court filing.

The Roman Catholic Diocese of Rochester (N.Y.) has put forward a $147.75 million offer to settle claims filed by 475 sexual-abuse survivors in the diocese’s chapter 11 bankruptcy, the Rochester Beacon reported. Whether the nine-figure offer will bring a quick end to the long-stalled bankruptcy at this point seems far from certain. The offer was outlined in a filing posted with the bankruptcy court late Friday afternoon. In court papers, the diocese portrays the offer as a deal that would best serve the abuse victims “by achieving certainty with respect to a very substantial insurance contribution rather than risking the cost, extensive delay, and uncertain outcome of litigation in pursuit of the theoretical possibility of a larger recovery at some point in the distant future.” The Rochester diocese filed bankruptcy in September 2019, roughly a month after the New York Child Victims Act went into effect. Signed into law in February of that year, the CVA temporarily lifted a seven-year statute of limitations on sexual-abuse claims. That opened a roughly two-year window for adults who had been sexually abused as children decades ago and failed to press claims then to go after their alleged abusers. Under the CVA, more than 300 individuals have filed state court complaints accusing Rochester diocese priests and other church officials. Four hundred seventy-five people have filed claims seeking compensation for alleged sexual abuse in the Rochester diocese’s chapter 11. Terms proposed by the diocese’s settlement offer would see its insurance carriers contribute $107.25 million to a fund to pay abuse survivors. The diocese and its parishes would contribute $40.5 million to the fund.

A Texas-based senior living center, Christian Care Centers Inc., filed for bankruptcy on Monday with a lead bid for its assets from Boncrest Resource Group Inc., a non-profit that provides healthcare and assisted living services, Reuters reported. Christian Care Centers, a faith-based non-profit, which was established in 1947, filed its chapter 11 case in the U.S. Bankruptcy Court for the Northern District of Texas. Christian Care Centers reported about $65 million in debt and is one of several senior living or skilled nursing facilities to seek bankruptcy protection since the onslaught of the COVID-19 pandemic. Boncrest has offered $44.25 million for the assets. “We are grateful to have found a buyer who shares our long-term commitment and values,” CEO Sabrina Porter said in a statement on Monday. Christian Care Centers has three campuses in North Texas that provide a combined 412 independent living units, 152 assisted living units, 77 memory care units and 119 skilled nursing units, according to a written declaration from chief restructuring officer Mark Shapiro. The company was already facing financial strain in 2018 and 2019, according to Shapiro. The pandemic exacerbated the issue as labor costs increased and residency rates declined, leaving the company unable to make debt payments. Christian Care Centers has about $85,000 in cash on hand, according to court papers. It received a $4.5 million loan under the Paycheck Protection Program in May 2020, which was forgiven in June 2021.

The United States is objecting to a Johnson & Johnson subsidiary’s bid to add Hogan Lovells partner Neal Katyal to its legal team in a high-stakes bankruptcy case, citing his hourly rate of $2,465 — a possible new legal industry high, Reuters reported. Johnson & Johnson is using the proceedings to try to resolve claims that its baby powder and other talc-based products caused cancer. The company, which maintains the products are safe, in October assigned thousands of talc lawsuits to a new subsidiary, LTL Management LLC, and placed it in bankruptcy. The U.S. trustee in the chapter 11 case on Friday asked a federal bankruptcy judge in New Jersey to block LTL from retaining Katyal, calling his hourly rate “significantly higher” than that of partners from the seven other law firms already involved in the case. LTL asked the judge for approval to add Katyal to its legal team earlier this month, citing his and Hogan Lovells' expertise in federal appeals. Multiple talc claimants have appealed the February ruling that allowed LTL's bankruptcy to move forward.