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Offshore driller Seadrill Ltd. has requested an additional four months to retain control of its bankruptcy proceeding, saying it is still working to drum up as much support as possible for its proposed reorganization plan, Reuters reported. The company made its request in a motion filed on Tuesday, a few weeks before Seadrill is scheduled to present its proposed plan for approval to U.S. Bankruptcy Judge David Jones in Houston. The plan aims to reduce the company’s $5.6 billion debt stack by $4.9 billion and raise $350 million in new financing. Senior lenders will take over most of Seadrill’s equity. The company has holders of 58% of its senior loans on board with its proposal. The company said in Tuesday’s filing that it is still “working to obtain the acceptance of all voting classes” for its plan and that an extension of its exclusive period to file a plan is critical to ensuring its plan confirmation and emergence from bankruptcy move ahead smoothly. Seadrill has faced opposition to its reorganization efforts since the outset of the chapter 11 case, which began in February, from a group of lenders that argue that a sale is a better option for maximizing the company’s value. Seadrill said in Tuesday’s filing that it will “work constructively with opponents to the plan to resolve any remaining open issues.”

The owners of the Williamsburg Hotel in Brooklyn, N.Y., defeated attempts by a federal bankruptcy watchdog to oust hotel management, allowing its operators to move ahead with a plan to restructure its finances and emerge from chapter 11, WSJ Pro Bankruptcy reported. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., yesterday denied a request by the U.S. Trustee to convert the chapter 11 case to a chapter 7 liquidation, which would have required installing an independent overseer to take over the property. The U.S. Trustee claimed the bankrupt company behind the hotel, 96 Wythe Acquisition LLC, required independent oversight because it didn’t disclose its connection to a corporate affiliate that manages the hotel’s operations and isn’t in chapter 11. Judge Drain disputed the government’s claim, saying he was aware of the business arrangement, which he said is common in the hospitality industry. The decision means the owners of the Williamsburg Hotel can press forward with a proposed restructuring plan, which includes their offer to provide an additional $6.56 million investment into the property. Judge Drain is scheduled to consider approving the proposed restructuring plan in December. The 147-room hotel was developed by Heritage Equity Partners and opened in 2017. The Williamsburg Hotel is one of several hotel properties that have slipped into bankruptcy since the COVID-19 pandemic, which hit the New York hotel industry particularly hard. 96 Wythe Acquisition filed for bankruptcy in February amid disputes with its primary lender, an affiliate of alternative-asset-management firm Benefit Street Partners LLC, over an alleged default on a $68 million loan.

A Northern California plant for converting rice-farming waste into a wood substitute filed for bankruptcy protection after work stoppages and cost overruns triggered a roughly $344 million municipal-bond default, WSJ Pro Bankruptcy reported. CalPlant I LLC said the road to converting rice-farming waste into fiberboard from a new plant in Willows, Calif., “has not been smooth” and sought protection from creditors in the U.S. Bankruptcy Court in Wilmington, Del., on Tuesday to look for a potential buyer. If no buyer emerges, CalPlant expects to hammer out a debt restructuring with senior bondholders, some of which have agreed to supply $30.1 million to finance the chapter 11 process through the purchase of new taxable bonds, according to court papers. CalPlant Executive Chairman Jeffrey Wagner said the company began bringing its facility online in March 2020, shortly before the COVID-19 pandemic erupted in the U.S. The usual challenges associated with a startup were compounded by rolling out new technology during a global pandemic, he said. Construction problems also plagued the operation, located about 85 miles north of Sacramento, Mr. Wagner said. It is among the first to make fiberboard from rice straw, a waste product of rice farming. The Sacramento Valley produces roughly a fifth of the nation’s rice, the company said. The plant has been making the fiberboard since late 2020 but isn’t yet fully operational. Most of CalPlant’s debt was taken on to build and operate the plant and was issued by the California Pollution Control Financing Authority in the form of tax-exempt “green” bonds. CalPlant has been in default on some of its debt, and forbearance agreements will expire Oct. 13.

A real estate investment firm that financed the overhaul of a major bus station in northern Manhattan sued the Port Authority of New York and New Jersey, accusing the public agency of upending the planned bankruptcy sale of a retail leasehold and wiping out a $72 million loan from foreign investors, WSJ Pro Bankruptcy reported. New York City Regional Center LLC is seeking to recoup its losses through the lawsuit filed Monday against the Port Authority, which detailed problems with a chapter 11 sale for the retail leasehold at the George Washington Bridge Bus Station in Washington Heights. Funding to redevelop the bus station came through the EB-5 Immigrant investor program, which provides green cards to foreigners who invest $500,000 in certain qualified U.S. businesses. The development consortium, George Washington Bridge Bus Station Development Venture LLC, filed for chapter 11 in October 2019 amid cost overruns at the bus station overhaul and a dispute with contractor Tutor Perini Corp. Although the COVID-19 pandemic prolonged the bankruptcy, the developer struck a deal worth $100 million earlier this year with Monarch Alternative Capital LP, which agreed to assume the $72 million in debt funded through the EB-5 program. But Monarch backed out after the Port Authority, which owns the bus station, demanded that the buyer assume all outstanding liabilities under the ground lease and put $17 million into escrow for other problems at the property. Among the issues the Port identified were elevators that it said weren’t in compliance with fire and safety regulations, an allegation the developer said was false and not substantiated by an engineering firm it hired to check the elevators. The collapse of Monarch’s deal forced the developer to “hastily” enter into an alternative transaction with JMB Capital Partners LLC, which had been funding the bankruptcy case, Monday’s lawsuit said. JMB agreed to waive the chapter 11 loan and provide funding to cover additional administrative costs, according to the complaint.After the sale to JMB was approved, there was no money left to pay off the New York City Regional Center loan, court records show.

The U.S. Supreme Court yesterday cleared the way for New York to collect a $200 million surcharge imposed on opioid manufacturers and distributors to defray the state’s costs arising from the deadly epidemic involving the powerful painkilling drugs, Reuters reported. The justices declined to hear an appeal by two trade groups representing drug distributors and generic drug makers and a unit of British-based pharmaceutical company Mallinckrodt Plc of a lower court’s decision upholding the surcharge. The law’s challengers included the Association for Accessible Medicines, whose members include drugmakers Teva Pharmaceutical Industries Plc and Mallinckrodt, and the Healthcare Distribution Alliance, which represents wholesale distributors. The alliance’s members include the three largest opioid distributors in the United States, McKesson Corp, AmerisourceBergen Corp and Cardinal Health. They proposed in July paying $21 billion to resolve lawsuits accusing them of fueling the epidemic. Mallinckrodt filed for bankruptcy protection in 2020 and has been seeking to finalize a similar, $1.7 billion settlement. The payments to New York were owed under the Opioid Stewardship Act, which Democratic former Governor Andrew Cuomo signed into law in 2018 to address the costs the epidemic imposed on the state.

More than 13 years after Lehman Brothers filed for bankruptcy, the fight for the last scraps of its carcass is still going on, Bloomberg News reported. Deutsche Bank AG is leading a last-ditch legal bid to squeeze more from a bet it made on obscure notes issued by Lehman in the years before the U.S. bank’s collapse. The German lender is appealing a decision made by a British court last year, hoping to gain more from its holding of “enhanced capital advantaged preferred securities” or ECAPS, a series of subordinated notes Lehman issued via one of its U.K. subsidiaries. The case started on Monday at the Court of Appeal in London, and the hearing is scheduled to last until the end of the week. A ruling in Deutsche Bank’s favor could see the payout on the ECAPS rise, boosting the returns of other holders, which, according to public documents and a person familiar with the matter, include Barclays Plc, Farallon Capital Management and CarVal Investors. If all goes well for the holders it’s possible they could receive a windfall of 500 million pounds ($678 million) on notes that were deemed worthless and given away for next to nothing in the aftermath of Lehman’s bankruptcy. That said, the case isn’t without its risks, and it’s possible that holders could be cut out of the money altogether. Another Lehman entity is also appealing, potentially diverting money away from ECAPS holders, according to separate court documents. 

Mexican airline Grupo Aeromexico SAB de CV has filed a reorganization plan that includes a financing proposal largely backed by a group of senior noteholders and unsecured creditors and allow the carrier to shed $1 billion from its debt stack, Reuters reported. In court papers filed late Friday, Aeromexico says it is continuing to “actively negotiate with various stakeholders regarding an exit financing package” based on the noteholders and trade creditors’ joint proposal to bring in as much creditor support for the plan as possible. The airline, represented by Davis Polk & Wardwell, filed for chapter 11 in June 2020 with $2 billion in debt, blaming the downturn in travel demand caused by the COVID-19 pandemic. Aeromexico plans to ask U.S. Bankruptcy Judge Shelley Chapman in Manhattan to grant approval for it to begin soliciting creditor votes on the plan at a hearing on Oct. 25. The joint proposal includes $1.1875 billion in new equity and $537.5 million in new secured debt. The new financing would be used to refinance or pay off all or some of $1 billion in loans used to fund operations during the bankruptcy. It would also be used to cover costs necessary to emerge from chapter 11, to set up a cash-out option for general unsecured creditors and acquire Aimia Holdings UK Ltd’s interest in the airline's travel loyalty program, PLM Premier. The joint proposal puts Aeromexico's total enterprise value at $5.4 billion. Aeromexico says the plan would save nearly 13,000 jobs worldwide.

Frontier Communications Holdings LLC is tapping the junk bond market for the first time since emerging from bankruptcy earlier this year, marking a turnaround as the company seeks to fund an ambitious overhaul of its telephone and internet network, Bloomberg News reported. The telecommunications company launched a $1 billion second lien high-yield bond on Monday, with proceeds earmarked to fund capital investments and operating costs from building out its fiber network and customer base, and also for general corporate purposes. The telecommunications company launched a $1 billion second lien high-yield bond on Monday, with proceeds earmarked to fund capital investments and operating costs from building out its fiber network and customer base, and also for general corporate purposes, according to a person with knowledge of the matter. Frontier filed for bankruptcy in April 2020 with a plan to cut more than $10 billion of its $17 billion debt load by handing ownership to bondholders. It was the biggest telecom filing since WorldCom in 2002, reflecting years of decline in its business of providing internet, TV and phone service in 29 states. The company had earlier tapped the bond and loan markets in multiple deals to fund its exit from bankruptcy. All of Frontier’s existing bonds trade above par, according to Trace pricing data. Frontier joins other companies taking advantage of the hot debt markets. American Tire Distributors is offering a loan with a yield of 6.25 percentage points over Libor to refinance debt it used to help finance its 2018 exit from bankruptcy. Meanwhile, Gulf Finance LLC, which operates gas station and petroleum terminals, is raising a new loan that will give the company breathing room, following discussions with lenders.

Beleaguered Italian ferry operator Moby SpA dropped its request for an order blocking Morgan Stanley from trading in the company’s debt or interfering in its restructuring, Bloomberg News reported. Moby told a federal court in New York late Sunday that it was withdrawing its application for a temporary restraining order against the bank, which it accused in a Sept. 27 lawsuit of participating in a secret plan to foil its restructuring in Italy and seize control from other creditors. The company, which operates ferries between the Italian mainland and islands like Sardinia, said it would now be seeking Italian court permission to pursue its claims through a chapter 15 U.S. bankruptcy filing. Morgan Stanley on Friday filed court papers deriding the U.S. lawsuit as a meritless attempt to dictate the outcome of Moby’s Italian restructuring proceedings. The bank said Moby failed to show that Morgan Stanley interfered in Moby’s relationship with its creditors or that it had done anything wrong in purchasing the company’s bonds.

A New York federal judge put an end to a long-running legal battle waged by a bankruptcy trustee for Millennium Health LLC’s lenders against banks that arranged a nearly $1.8 billion loan for the drug-testing business before its bankruptcy, WSJ Pro Bankruptcy reported. Marc Kirschner, the bankruptcy trustee appointed in Millennium’s chapter 11 case, had sued banks including JPMorgan Chase & Co. and Citigroup Inc. in 2017. Mr. Kirschner alleged that as underwriters for Millennium, the banks had hidden information about a pending government inquiry when they marketed the loan to investors in 2014. Millennium, one of the largest drug-testing companies in the nation, filed for bankruptcy in 2015 after reaching a $256 million settlement with the Justice Department to resolve the investigation, which concerned allegations whether the company billed federal health programs for unnecessary tests. Investors that bought Millennium’s loans took control of the company in bankruptcy and received the right to sue the loan underwriters. In a ruling on Thursday, Judge Paul Gardephe of the U.S. District Court in New York, upheld a 2020 decision by a magistrate judge dismissing the trustee’s case, concluding that even if the banks knew how damaging the government probe into Millennium would be to the company, under its loan agreements they weren’t obligated to share the information with their lenders. The judge’s ruling addressed an amended version of the lawsuit that Mr. Kirschner filed after the New York court dismissed his original case in May 2020. Judge Gardephe on Tuesday issued a dismissal with prejudice, meaning the lawsuit can’t be refiled. Mr. Kirschner can appeal.