%1

Individual stock traders looking to cash in winning bets on Hertz Global Holdings Inc. are in unfamiliar territory as the company exits chapter 11, finding themselves navigating a bankruptcy process that favors the interests of bigger, wealthier investors, WSJ Pro Bankruptcy reported. All Hertz shareholders will get paid on the company’s way out of chapter 11, receiving a mix of cash, securities in the reorganized business and the right to buy stock in the future. By Friday, they must pick among several choices involving the rights to buy additional stock, with their options determined by eligibility standards tied to personal wealth. Shareholders weighing the various decisions include the day traders who bought Hertz stock when it was cheap last year, at the height of the coronavirus pandemic. Some are mom-and-pop investors who don’t meet criteria to take part directly in one of the stock-buying programs, though they could sell their rights to participate to qualified investors. Other investors have trouble understanding their options and said they can’t get straight answers from the company or from their own advisers. Some said they felt left behind in a bankruptcy-exit process that wasn’t developed with amateur investors in mind. Hertz’s situation is unusual due to the dramatic revival in its prospects in recent months. Shareholders rarely matter when a company goes bankrupt, because there is typically not enough value to repay creditors, which must be satisfied in full ahead of equity. Hertz, though, has estimated shareholders will get a payout of $7 to $8 a share, according to court papers.

The troubled owner of Jessica Simpson’s brand is nearing a deal to sell its majority stake in the fashion line back to the singer and offload other assets as part of a potential chapter 11 bankruptcy filing, Bloomberg News reported. Sequential Brands Group Inc. had been seeking to sell off its assets to avoid a cash crunch while it negotiated with creditors, but is now preparing to unload its brands under a process that will likely take place in court. The company would use proceeds from the sales to pay back creditors including its largest lender KKR & Co. Sequential owns and licenses a portfolio of consumer labels including the Gaiam yoga line, AND1 and Joe’s Jeans. It sold the Heelys brand for $11 million in April. KKR and other lenders recently extended a waiver of existing loan defaults through July 8. Sequential has been under forbearance with its lenders since late 2020 after it said it wouldn’t be able to meet certain financial metrics required under its debt agreement due to the pandemic. Retailers and brands across the country have suffered from the impact of COVID-19 and related store shutdowns. More than 20 sought bankruptcy protection last year.

LATAM Airlines Group, the region’s largest carrier, said on Wednesday that it had sought to extend until September the deadline to present its restructuring plan as part of the bankruptcy protection process initiated in 2020, Reuters reported. LATAM filed for bankruptcy protection in the U.S. in May of last year, hammered by the world travel crisis generated by the coronavirus pandemic. At the time, it was the world’s largest airline to take such action due to COVID-19. A judge had previously ordered the company deliver its restructuring plan by the end of June, and the company has said it hopes to wrap up the process in 2021. Latam also told Chilean securities regulators it has requested a second disbursement for $500 million under its DIP credit agreement. The airline said that the additional funds were necessary given “the extension of the health and mobility restrictions imposed by the authorities in the different countries in that the Company operates, as well as the analysis of the Company’s liquidity projection." The company also received a $1.15 billion debtor-in-possession loan in October last year. Earlier on Wednesday Latam said it expects to ramp up its June operations to 36% of their pre-coronavirus pandemic levels, bolstered by the quickening pace of vaccination in some countries in the region.

The company that owns The Heights Hospital filed for chapter 11 protection on June 1 — nearly five months after its doctors, nurses, support staff and even patients were locked out of the building because of alleged financial delinquency, the Heights (Texas) Leader reported. According to documents filed in U.S. Bankruptcy Court for the Southern District of Texas, 1917 Heights Hospital, LLC, estimates that it has between $100-$500 million in assets and between $10-$50 million in liabilities. Its list of creditors, according to court filings, includes utility and telecommunications companies as well as the Harris County Appraisal District (HCAD), the Texas Attorney General’s Office and the Internal Revenue Service. Another creditor is Nevada-based Arbitra Capital Partners, LLC, which in early January filed a lawsuit against The Heights Hospital managers Dharmesh Patel and James Robert Day, alleging they owe roughly $3.5 million in interest related to a $28 million promissory note they signed for the property at 1917 Ashland St. in January 2019, according to Harris County court documents. County court records also show that a group of Houston investors sued the hospital and some of its related entities and individuals in February, seeking more than $2 million in damages and alleging their investment in the hospital was fraudulently misappropriated. According to a June 4 court filing by the attorney representing the hospital in the latter case, “The hospital was forced into closure by the business downturn precipitated by the COVID-19 pandemic.”

Randolph Health, a bankrupt single-hospital system based in Asheboro, N.C., received verbal approval from the North Carolina attorney general to join Roanoke, Va.-based American Healthcare System, Becker's Hospital Review reported. Attorney General Josh Stein gave the verbal approval of the deal at a bankruptcy hearing June 4, according to the Triad Business Journal. At the bankruptcy hearing, the judge approved Michael Miller to become interim CEO of Randolph Health. Miller has more than 30 years of experience in the health care industry. Miller will serve in the role until American Healthcare System's purchase of Randolph Health is complete. Randolph Health filed for chapter 11 bankruptcy in March 2020.

Affiliates of Castex Energy, a bankrupt oil-and-gas production company that focused on exploration and development in Louisiana and the Gulf of Mexico, won court approval Monday to shut down the business after unloading its operating assets, WSJ Pro Bankruptcy reported. Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston approved Castex’s chapter 11 plan, which will create a liquidating trust to provide a modest recovery for unsecured creditors and resolve liabilities arising from decommissioning the company’s remaining oil-and-gas wells. The bankruptcy plan was the culmination of agreements between privately owned Castex and various company stakeholders, including its secured lenders owed at least $199.59 million and unsecured creditors owed about $16 million, according to court papers. Houston-based Castex and related corporate affiliates filed for bankruptcy in February, its second time doing so after emerging from an earlier chapter 11 in 2018. Castex blamed the second bankruptcy on a confluence of negative events, including the collapse in oil-and-gas prices last year during the early months of the COVID-19 pandemic, which roiled the energy sector and drove several oil-drilling-and-service companies into chapter 11. Castex sold its properties in the Gulf of Mexico last year to Talos Energy Inc. for $6.5 million in cash and $58.5 million in newly issued Talos stock. Under the liquidation plan, unsecured creditors will have rights to $1.75 million in cash and a portion of the Talos shares. The company in chapter 11 is also transferring its interest in an onshore well to W&T Offshore Inc., court papers say. Judge Isgur said Monday that the “extreme lengths” Castex and its various creditor parties went to strike deals during the chapter 11 will minimize the company’s liabilities and provide at least some recovery for creditors. He praised the lawyers for being able to find a path forward under difficult circumstances.

After pouring more than $2.1 billion into now-busted Katerra Inc., SoftBank Group Corp. is giving the construction startup one final cash infusion, Bloomberg News reported. SoftBank is offering Katerra a $35 million loan to fund its operations in bankruptcy. In exchange for the so-called debtor-in-possession loan — also called DIP financing — Katerra will try to sell its assets in the next 60 days. SoftBank is the majority owner of Katerra, which was founded in 2015. Stockholders usually see no recovery in U.S. bankruptcy because all creditors rank ahead of equity in the repayment line. Katerra filed for bankruptcy in the wake of “overly ambitious” acquisitions, cost-control issues and project completion delays, Josh Sussberg of Kirkland & Ellis said on behalf of the company. Katerra never turned a profit and had less than $5 million of unrestricted cash on hand as of Sunday.

The National Rifle Association is dropping its federal lawsuit accusing New York Attorney General Letitia James of wrongfully trying to dissolve it, saying that it would focus instead on making the same claims in state court, Bloomberg News reported. The gun rights group, which argues that James’s investigation of it is politically motivated, filed a notice of voluntary dismissal on Friday in federal court in Albany, N.Y. In a statement, it said that it would continue to make the claims in state court in Manhattan, where the attorney general last year sued the NRA over allegations of fraud. The move is important “because it will ensure that the NRA’s claims against NYAG James will be tried in the same court and by the same jury that will hear her lawsuit seeking to dissolve the NRA,” the organization said. New York’s suit in state court survived the NRA’s motion to dismiss it in January, when a judge rejected the group’s argument that its federal suit was filed first and therefore trumped the state case. The judge also denied the NRA’s request to transfer the attorney general’s case to federal court. The NRA recently saw its bankruptcy filing rejected by a Texas judge, leaving the group vulnerable to James’s efforts.

Construction startup Katerra Inc, which is backed by SoftBank Group Corp, said yesterday that it has filed for bankruptcy protection in the U.S., Reuters reported. Katerra said that it had secured commitments for $35 million in debtor-in-possession (DIP) financing from SB Investment Advisers (UK) Limited to fund operations during the chapter 11 process, adding that the company’s international operations are not affected by this filing. The company had estimated liabilities of $1 billion to $10 billion and assets of $500 million to $1 billion, according to the court filing made in the United States Bankruptcy Court for the Southern District of Texas. It was reported earlier this month that Katerra had told employees it planned to shut down, marking the collapse of the SoftBank-backed company that had raised more than $2 billion to slash the cost of building apartments. Katerra said yesterday that many of its U.S. projects will be demobilizing. The company has also entered into commitments for the sale of the Renovations and Lord Aeck Sargent architecture business lines to private buyers, it said in a statement.

The city of Long Beach, Calif., will take over daily operations of the historic Queen Mary for the first time in more than 40 years after the ship’s current operator chose to give up the lease in a sudden decision in bankruptcy court, city officials said Friday, the Long Beach Post reported. The move means Long Beach will have complete control of the ship and will be tasked with deciding how much to invest in critical repairs for the aging vessel. An inspection report in April determined the ship would need at least $23 million in critical repairs to remain viable in the next two years. The Long Beach City Council on Tuesday will consider the immediate authorization of $500,000 in Tidelands Critical Infrastructure funds to begin testing and design work for safety projects. Officials said the city will work to identify other funding options to cover a minimum of $5 million in immediate repairs. The action comes as the current leaseholder filed a motion to reject the lease in bankruptcy court on Friday. The ship’s operator Eagle Hospitality Trust filed for chapter 11 protection in January with a total of more than $500 million in debt. The ship’s lease was set to go to auction but did not receive any bidders, while the city had been locked in a legal battle with former operator Urban Commons over a litany of failed lease obligations.