%1

Bidders for the bankrupt Limetree Bay oil refinery in the U.S. Virgin Islands are challenging the $33 million leading offer for the facility, saying their competing proposal to dismantle it is better for the local population, WSJ Pro Bankruptcy reported. Texas-based industrial manufacturer Bay Ltd. objected Wednesday to the refining complex’s proposed sale to St. Croix Energy LLLP, which wants to restart production there. The refinery on the island of St. Croix operated for a few months this year, after nearly a decade offline and a $4.1 billion refurbishment, until the Environmental Protection Agency suspended its permits in May due to pollution incidents. Bay and Sabin Metal Corp., the backup bidders that came in second at a bankruptcy auction, said their rival liquidation offer of $39 million would deliver more value for creditors, help fix longstanding pollution issues on St. Croix and create jobs for at least three years during the planned decommissioning. Limetree selected the St. Croix Energy offer as the leading bid. No sale can take place without approval from Judge David Jones of the U.S. Bankruptcy Court in Houston, who is overseeing the refinery’s chapter 11 case.

Avianca, one of Latin America’s largest airlines, is emerging from bankruptcy protection after winning court approval for its reorganization plan a year and a half after the COVID-19 pandemic decimated the region’s air carriers, Bloomberg News reported. Avianca, which is headquartered in Bogota, said it is exiting the restructuring process after raising fresh investments of $1.7 billion. It also comes out of bankruptcy with “significantly” reduced debt and more than $1 billion of liquidity, the company said in a regulatory filing. Over the next three years, the 102-year-old company expects to expand to almost 200 routes in Latin America and the world. By 2025, it plans to have a fleet of more than 130 aircraft “with reconfigured, lighter-weight new-generation seats, which will allow Avianca to reduce the carbon footprint of its operations,” according to the statement. Avianca filed for chapter 11 protection in May 2020, after Colombia and other Latin American governments sealed borders and restricted flights in an attempt to control the spread of the coronavirus. Within weeks, two other major carriers in the region, Latam Airlines and Grupo Aeromexico, also filed for court protection.

Music mogul Sean “Diddy” Combs is seeking to buy the Sean John lifestyle brand he founded more than two decades ago out of bankruptcy for $3.3 million, WSJ Pro Bankruptcy reported. Combs made the offer to reacquire a 90% stake in Sean John from the North American division of Global Brands Group Holding Ltd., according to papers filed Wednesday in the U.S. Bankruptcy Court in Manhattan. GBG USA Inc. filed for bankruptcy over the summer to withstand financial problems caused by the COVID-19 pandemic. Combs had sold his equity in Sean John but retains a 10% stake in the brand as part of a joint venture with GBG USA, court papers say. GBG USA put the joint venture into bankruptcy Wednesday. Combs’s offer is subject to higher bids, should any materialize in the coming weeks, and must be approved by a bankruptcy judge.

The investor who bought Philadelphia’s Hahnemann University Hospital before its collapse failed to win a bankruptcy court’s approval to take out a $17.5 million loan on the defunct healthcare center’s underlying real estate, WSJ Pro Bankruptcy reported. Joel Freedman was denied court approval to put up the former hospital’s property as collateral for a mortgage loan he said he needs to cover ongoing costs stemming from Hahnemann’s 2019 bankruptcy, which left him in control of its downtown real estate. After the bankruptcy, Hahnemann closed its doors for good despite protests from doctors, nurses and community groups. Bankruptcy administrators have been probing how Freedman split the hospital’s healthcare operations from its real estate, which wasn’t included in the chapter 11 filing. Freedman in October sought a bankruptcy-court order confirming he could encumber the properties to secure a $17.5 million loan from Gordon Brothers, a restructuring and investment firm. The proposed 15-month loan would refinance the existing mortgages on certain assets, including the premises once occupied by Hahnemann, while granting a first-priority lien to Gordon Brothers, according to court papers. Freedman said in court filings that, despite the hospital being closed, the property requires ongoing maintenance, security and upkeep to preserve its value. Professional fees and pension obligations stemming from Hahnemann’s closure are also adding up, according to his papers.

A U.S. judge yesterday questioned whether members of the Sackler family that owned Purdue Pharma abused the bankruptcy system, as she considers whether to overturn a ruling that shielded the Sacklers from liability over the opioid epidemic, Reuters reported. U.S. District Judge Colleen McMahon in Manhattan said that she wanted more information about more than $10 billion that the Sacklers, according to court documents, received from Purdue between 2008 and 2018, when they left the company’s board. “I’m looking for whether there was abuse,” she said during a hearing. One Sackler family lawyer replied that there was no evidence to suggest abuse. The Sacklers have denied wrongdoing and did not themselves file for bankruptcy. They contributed $4.5 billion to the bankruptcy settlement in exchange for protection against future litigation. Judge McMahon's remarks came during arguments over appeals of a bankruptcy court’s approval in September of Purdue’s reorganization plan, which included releases of future opioid-related civil claims against the Sacklers. The U.S. Department of Justice’s bankruptcy watchdog and a small group of states are challenging the plan's approval, claiming the Sacklers should not receive the legal protections it provides. Judge McMahon suggested that the Sacklers may have protected their wealth by taking as much money from Purdue as they could in the years before the bankruptcy. “People were aware claims were going to be asserted. Advisors told them to take steps to protect the family,” she said. 

Grupo Aeroméxico SA B de CV is roiling some of its creditors with a restructuring plan that sets aside an ownership stake for its partner and part-owner Delta Air Lines Inc. while paying a fraction of some of its debts, WSJ Pro Bankruptcy reported. Creditors including Invictus Global Management LLC, Hein Park Capital Group LLC and Livello Capital Management LP are criticizing a restructuring proposal from Aeromexico, which filed for chapter 11 last year, that would allocate less than 15 cents on the dollar to some unsecured debts while offering similar creditors and other third parties a stake in the reorganized airline. Invictus said in a letter to Delta, Aeromexico’s largest shareholder, on Tuesday that the restructuring “could be on the verge of devolving into protracted litigation because value is not currently being distributed in a lawful manner.” If approved in the U.S. Bankruptcy Court in New York, Aeromexico’s restructuring proposal would lock in commitments from financial institutions to supply money the company needs to exit chapter 11. Aeromexico filed for bankruptcy protection in the early months of Covid-19’s global spread, one of three major Latin American carriers to seek U.S. bankruptcy protection during the pandemic. The company’s current restructuring plan depends on raising $1.4 billion in exit financing that would position Delta, Aeromexico’s largest shareholder, to retain a roughly 20% stake, court records show.

Latam Airlines Group SA’s bankruptcy-exit plan has divided the airline’s creditors, some of which said a proposed $5.44 billion equity sale would drive too much value to shareholders and other capital providers, WSJ Pro Bankruptcy reported. Latam’s restructuring plan, filed last week, revolves around an equity-capital raise from certain unsecured creditors and a majority of current shareholders, including Delta Air Lines Inc., Qatar Airways Group Q.C.S.C. and the Cueto family. Unsecured creditors that aren’t signed up for the equity raise said in a court hearing Tuesday that Latam allocated too much value to the big creditors and shareholders making capital contributions, leaving too little for those on the outside. The stock-buying program would put Latam’s largest creditor group in control of the business, while retaining stakes for its existing shareholders, despite the bankruptcy. “General creditors who are not members of that group get unreasonably low recoveries,” said Allan Brilliant, a lawyer for the official committee of Latam’s unsecured creditors. The terms of the financing deal aren’t yet up for approval in the U.S. Bankruptcy Court in New York, where Latam sought chapter 11 protection in the early months of the COVID-19 pandemic. But lawyers for nonparticipating creditors took the opportunity yesterday to preview possible arguments against the proposed restructuring, which is subject to continuing negotiations and could change.

Brazilian airline Azul SA confirmed on Monday that it made an offer earlier this month to combine with Chile’s LATAM Airlines Group, which is in bankruptcy proceedings, but said it had since decided to focus on its own operations, Retuers reported. In an exchange filing published late on Sunday, Azul said that it would consider potential partnerships only in the future. The Brazilian airline said its non-binding proposal submitted on Nov. 11 had included around $5 billion in equity financing and was backed by some creditors of LATAM. Azul added however that LATAM’s valuation under its bankruptcy process had become higher than it believes to be acceptable, citing ongoing uncertainty in the aviation industry amid the COVID-19 pandemic, especially in long-haul markets. “As a result, Azul will continue to focus on its exclusive competitive advantages provided by its unique network and fleet flexibility... and to evaluate future partnerships and consolidation opportunities available in the market,” Azul said. LATAM filed a reorganization plan on Friday in which it proposed an $8.19 billion infusion of capital into the group in a bid to exit its chapter 11 bankruptcy.

A federal bankruptcy judge has set a deadline of March 15, 2022 for receipt of claim forms from people who say they were sexually assaulted by priests and employees of Roman Catholic Diocese of Norwich, Conn., the New London (Conn.) Day reported. Victims who fail to do so will likely lose their right to obtain compensation from the diocese and possibly its parishes. The diocese filed for chapter 11 bankruptcy in July as it faced more than 60 lawsuits filed by young men who charge they were sexually assaulted as boys by Christian Brothers and other staff at the diocese-run Mount Saint John Academy in Deep River from 1990 to 2002. Mount Saint John was a residential school for troubled boys whose board of directors was headed by retired Bishop of Norwich Daniel Reilly. Since then, additional people whose sexual assault allegations involved not only Mount Saint John but diocesan churches have filed claims in the bankruptcy case. The court has set a deadline of Jan. 31, 2022 for the diocese to file its plan, but that could be extended. The 51 parishes in the Roman Catholic Diocese of Norwich are now seeking to join the diocese in seeking bankruptcy protection from sexual abuse claims against priests and other employees and will have to contribute funds to the settlement. This would leave victims unable to sue the parishes in the future. The official notice of the deadline or "bar date" from the Bankruptcy Court for the District of Connecticut states in bold letters that anyone who was sexually abused, on or before July 15, 2021, the date the diocese filed bankruptcy, and believes the diocese may be responsible for the sexual abuse, must file a claim.

Chile's LATAM Airlines Group SA said on Friday that it has filed a reorganization plan, proposing an $8.19 billion infusion of capital into the group, in a bid to exit its chapter 11 protection, Reuters reported. The financing proposal will include a mix of new equity, convertible notes and debt, the group said in a statement, adding that it intends to launch an $800 million equity rights offering to shareholders, upon confirmation of the plan. "While our process is not yet over, we have reached a critical milestone in the path to a stronger financial future," said Roberto Alvo, chief executive of the largest airline in Latin America. Recently, LATAM said it received several offers to fund the exit from Chapter 11 bankruptcy, each of which are worth more than $5 billion. The group filed for chapter 11 bankruptcy protection in New York in May 2020 as world travel came to a halt amid the COVID-19 pandemic. Upon emerging from chapter 11, LATAM expects to have total debt of about $7.26 billion and liquidity of about $2.67 billion, the company said in the statement. The Santiago-based company reported losses of some $692 million in the third quarter, as the indebted company was still battling challenges from the pandemic. The restructuring plan is accompanied by a support agreement with creditor group Parent Ad Hoc Group and some LATAM shareholders.