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Another Texas power company has filed for bankruptcy protection in the wake of last year's historic winter storm that knocked out power for millions and caused energy prices to skyrocket, Reuters reported. Ector County Energy Center LLC, which filed for chapter 11 in U.S. Bankruptcy Court in Delaware on Monday, was one of many power generators in the state unable to produce power during the storm. Facing extensive litigation, including a $400 million lawsuit brought by one of its customers, Direct Energy Business Marketing LLC, the company is looking sell its assets through bankruptcy. The company, which reported revenues of about $23 million in 2021, operates a 330 megawatt natural gas-fired plant located outside of Odessa, Texas. It has lined up a lead bid of $91.25 million from an affiliate of Rockland Capital. At the time of the storm, Ector had an agreement under which Direct Energy paid a monthly premium in exchange for the right to call on Ector to provide energy and various ancillary services, according to court papers. Ector was unable to deliver power or services during the storm, prompting Direct Energy to sue in New York state court in June 2021 for $400 million in damages. It has also been hit with more than 100 other lawsuits stemming from the storm. The company, which is an indirect unit of Invenergy Clean Power LLC, also saw its cash flow decline after the storm as it shifted from pre-set pricing models to operating largely in real-time energy markets, according to court papers. In addition to its legal troubles, Ector owes $337.3 million on a first lien loan. It had about $5.4 million in cash on hand as of April 1, 2022.

ION Geophysical Corp. and certain affiliates announced today that, after evaluating a variety of strategic alternatives, it has filed for voluntary chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, according to a press release. In connection with the chapter 11 filing, ION entered into a restructuring support agreement (RSA) with the lenders under its credit agreement and holders of approximately 80% of its 2025 Notes, whereby the parties agreed to support the company’s chapter 11 plan of reorganization. The company and the consenting creditors that are parties to the RSA have agreed to the terms of a comprehensive restructuring, including the Plan premised on (i) a debt-for-equity exchange paired with the potential sale of certain assets to one or more third parties or (ii) a sale of substantially all of its assets. Under the terms of the RSA, ION will continue its ongoing solicitation of interest from third parties in potential sale transactions involving the company designed to maximize the value of the company’s assets through an open and transparent process that enables interested buyers to submit bids for assets. The company has also secured $2.5 million in debtor-in-possession financing that, along with normal operating cash flows, should support operations during the process. Therefore, ION expects to continue delivering excellent service quality with little to no expected disruption to clients.

Jeff Smith, a partner with the influential consulting firm McKinsey & Company, accepted a highly sensitive assignment in December 2017. The opioid manufacturer Purdue Pharma, beleaguered and in financial trouble, wanted to revamp its business, and an executive there sought out Dr. Smith. Over the following weeks, he traveled to Purdue’s offices in Stamford, Conn., meeting and dining with executives. His team reviewed business plans and evaluated new drugs that Purdue hoped would help move the company beyond the turmoil associated with OxyContin, its addictive painkiller that medical experts say helped to spark the opioid epidemic. But the corporate reorganization was not Dr. Smith’s only assignment at the time. He was also helping the Food and Drug Administration overhaul its office that approves new drugs — the same office that would determine the regulatory fate of Purdue’s new line of proposed products. The story of Dr. Smith’s simultaneous work for Purdue and its federal regulator is told through previously undisclosed internal McKinsey records that more broadly call into question the consulting firm’s firewall between its work for private companies and for the authorities that oversee them. A review by The New York Times of thousands of internal McKinsey documents found that the firm repeatedly allowed employees who served pharmaceutical companies, including opioid makers, to also consult for the F.D.A., the drug industry’s primary government regulator. And, the documents show, McKinsey touted that inside access in pitches to private clients. In an email in 2014 to Purdue’s chief executive, a McKinsey consultant highlighted the firm’s work for the F.D.A. and stressed “who we know and what we know.” The documents reviewed by The Times were obtained by the House Committee on Oversight and Reform, which on Wednesday released initial results from its investigation into McKinsey’s work with the federal government, and by a coalition of state attorneys general as part of a 2021 settlement resolving an investigation into the firm’s work with Purdue. The records detail the firm’s work for Purdue and other opioid manufacturers over a 15-year period, from 2004 to 2019.

Exiled Chinese businessman Guo Wengui is offering to repay the more than $100 million he owes creditors in part by offering up the yacht that drove him to bankruptcy, court papers show, Bloomberg News reported. The businessman’s debt stems from a $30 million loan he got from a fund in 2008, which according to the lender Guo failed to repay. Guo arranged for the yacht to leave U.S. waters sometime after October 2020, putting it out of the reach of debt collectors. That prompted a New York judge to hold the Chinese exile in contempt and levy a fine of $134 million, leading Guo to file for bankruptcy in February just before that payment was due.

Sungard Availability Services, an information-technology services provider, filed for chapter 11 protection for the second time in three years to grapple with falling demand for its business-recovery services and other lingering challenges exacerbated by the COVID-19 pandemic, WSJ Pro Bankruptcy reported. Privately held Sungard and its corporate affiliates filed for chapter 11 protection Monday in the U.S. Bankruptcy Court in Houston and sought similar court protection in Canada. The bankruptcy filing comes weeks after Sungard’s U.K. affiliate initiated administrative proceedings in part because of high energy costs caused by Russia’s invasion of Ukraine. Wayne, Pa.-based Sungard sped through bankruptcy in 2019, winning approval of a creditor-backed debt-cutting plan just 24 hours after filing chapter 11. Sungard said Monday that while the previous bankruptcy was effective in trimming about $800 million in debt, the process didn’t address its fundamental problems, such as expensive leases that have weighed on its business. Sungard Chief Executive Officer Michael Robinson said in a sworn declaration that demand for its workplace-recovery services dropped significantly since its business customers adopted policies to work from home during the pandemic. Companies have also delayed or reduced their IT costs, prompting some customers not to renew contracts, Mr. Robinson said.

LATAM Airlines Group SA has accused a Chilean bank representing a group of unsecured bondholders of spreading inaccurate information about the airline's proposed restructuring ahead of a key vote on the plan, Reuters reported. Attorneys for the airline will appear before U.S. Bankruptcy Judge James Garrity in Manhattan on April 15 to force Banco del Estado de Chile, known as BancoEstado, to turn over information about what LATAM described as an attempt to “obstruct and taint” its ability to reorganize in chapter 11 by seeking rulings from a Chilean court that would interfere with the New York proceeding and swaying creditor votes on the deal. Holders of nearly $500 million in unsecured bonds, for whom BancoEstado serves as trustee, have long opposed the plan, which they say gives them only 19.3% in recoveries, or up to 27.8% if they invest new money. During a hearing before Judge Garrity on Thursday, a lawyer for BancoEstado, Pedro Jimenez of Paul Hastings, called LATAM’s demand for additional information a stunt, saying the airline could have simply asked for the documents. LATAM, one of the leading airlines in South America, was one of three large Latin American carriers that filed for bankruptcy in New York in the spring of 2020 as the COVID-19 pandemic brought global travel to a halt. The other two, Grupo Aeromexico and Avianca, have since emerged from bankruptcy, while LATAM is working to do the same in the coming months.

The former and current owner of Conneaut Lake Park’s water system jointly want the Pennsylvania Public Utility Commission to approve a transfer of ownership of the system, the Meadville (Pa.) Tribune reported. Trustees of Conneaut Lake Park Inc. is the former owner of the amusement park and its water system, while Conneaut Lake Park Water Corp. Inc. is the current water system owner. Conneaut Lake Park Water Corp. Inc. is a subsidiary of Keldon Holdings LLC, the amusement park’s new owner. Keldon purchased Conneaut Lake Park, its water system, grounds and other assets from Trustees of Conneaut Lake Park for $1.2 million in March 2021 in a public U.S. Bankruptcy Court proceeding. Trustees is the nonprofit corporation that oversaw operations of Conneaut Lake Park. Trustees filed for chapter 11 bankruptcy protection in December 2014 to reorganize its debts. Trustees needed U.S. Bankruptcy Court approval for any sale of assets. In early 2021, Trustees sought U.S. Bankruptcy Court approval to sell the park after the COVID-19 pandemic had forced the park to remain closed for the 2020 season. At sale-related bankruptcy court hearings, Trustees said that the forced closure had left Trustees with no operating capital and was in default under its chapter 11 bankruptcy plan. Trustees said it had no prospects to continue without either a sale to a buyer or converting its chapter 11 plan to a chapter 7 bankruptcy.

The judge overseeing the bankruptcy case of Sears Holdings Corp. appointed mediators to help resolve a $2 billion lawsuit against former chairman Eddie Lampert and other former shareholders filed by the retailer’s creditors three years ago, WSJ Pro Bankruptcy reported. Judge Robert Drain appointed Shelley Chapman, a fellow bankruptcy judge in the U.S. Bankruptcy Court in New York, along with James Peck and Jed Melnick, as mediators in the lawsuit, which alleges that Mr. Lampert and his hedge fund stripped key assets like Lands’ End and the Sears Hometown stores out of the company before its chapter 11 filing. Mr. Lampert has denied the allegations and sought to have the lawsuit dismissed. A settlement or monetary award in the litigation is expected to be a key source of recovery for top-ranking creditors of the former Sears, many of them foreign vendors, which are still owed roughly $60 million, according to a January court filing. Judge Drain set a May 23 deadline for the mediation to conclude, though it can be extended, according to Wednesday’s court order. The appointment of mediators comes just over two months before Judge Drain’s scheduled retirement from the bench.

A federal judge on Thursday ruled that the Boy Scouts of America didn’t infringe on the Girl Scouts of the USA’s trademarks, saying the girls-only group failed to show any confusion from the Boy Scouts’ efforts to recruit girls into coed programming, WSJ Pro Bankruptcy reported. Judge Alvin Hellerstein with the U.S. District Court of New York dismissed the Girl Scouts’ lawsuit alleging the Boy Scouts had damaged the Girl Scouts trademark rights and confused the public by using gender-neutral phrases like “Scout Me In.” Judge Hellerstein said in his ruling the Girl Scouts’ complaint “is based, not on concern for trademark confusion, but on fear for their competitive position in a market with gender neutral options for scouting.” “Though Boy Scouts and Girl Scouts may now compete more than they once did, neither organization can pre-empt the other’s use of the Scout terms and their trademarks are not likely to be confused,” the judge said. The Girl Scouts said yesterday that it was disappointed by the judge’s ruling and that it planned to file an appeal. “This case is about ensuring that parents are not misled into thinking that Girl Scouts are part of or the same as the Boy Scouts,” the group said in a statement.

The probability of default across most U.S. business sectors increased in the first quarter, but the healthcare sector — including senior living — is projecting the highest probable default rate, according to a new report from S&P Global Intelligence, McKnight Senior Living reported. Staffing shortages and pandemic fears stressed the healthcare sector, which also was one of the leading industries with bankruptcies so far in 2022, S&P Global Market Intelligence data show. Looking at trends in bankruptcy filings in Florida, Tampa-based attorney Scott Underwood of Underwood Murray said his firm is definitely seeing more distress in senior living and care — including assisted living, memory care and some nursing homes — since the onset of the pandemic. “While healthcare was always a bit of a volatile industry, it seems that particular sector has really taken a hit for a while due to various reasons, including a large census drop,” Underwood told McKnight’s Senior Living. A previous Polsinelli-TrBK Distress Indices report from the Polsinelli law firm noted that senior living-focused organizations, independent and assisted living communities, and skilled nursing facilities made up a significant portion of healthcare bankruptcy filings in the fourth quarter of 2021. BDO noted in its 2022 Healthcare CFO Survey, which included long-term care organizations, that many healthcare organizations will continue struggling to meet their bond covenant obligations given the increased cost of supplies, staffing challenges and the risk of supply chain disruption. The BDO survey of 100 healthcare chief financial officers — including long-term care industry executives — revealed that 42% of organizations defaulted on bond or loan covenants in the past 12 months. And 25% said that although they had not yet defaulted, they were concerned about defaulting in the next year. Read more.

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