%1

Facing a key bankruptcy court hearing and broad objections from attorneys representing child-sex-abuse victims and insurance companies, attorneys for the Boy Scouts of America have submitted a revised reorganization plan with details about the finances of its local councils, the Associated Press reported. The BSA submitted the latest revisions to its plan and an accompanying disclosure statement late Sunday as attorneys prepare for a Wednesday hearing that could determine whether the organization can meet its goal of emerging from bankruptcy this fall. The Boy Scouts are seeking approval of the disclosure statement formally explaining its bankruptcy plan to creditors. The judge must approve the disclosure statement before the BSA can begin soliciting votes on its plan, but it has been roundly criticized by other parties for lacking necessary details. Seeking to address some of the objections, the BSA updated its plan with balance sheet summaries for local councils and appraisals on properties they own.

California Gov. Gavin Newsom (D) has earmarked up to $454 million in his revised budget to clean up lead and arsenic spread throughout southeast Los Angeles county by the former Exide battery recycling plant, the L.A. Daily News reported. The California Department of Toxic Substances Control estimates the toxic chemicals produced during Exide’s decades of operation spread up to 1.7 miles away, contaminating schools, parks and thousands of homes in the largely working-class, Latino neighborhoods of Bell, Boyle Heights, East Los Angeles, Maywood, Huntington Park and Commerce. The Exide battery recycling plant, which produced a host of hazardous wastes as part of the process, operated for 33 years in Vernon without a permanent permit. It closed in 2015 as part of a nonprosecution agreement that allowed the company to avoid criminal charges. Last year, a federal bankruptcy court and the Department of Justice allowed Exide to abandon the property without fulfilling the terms of the agreement, which required the company to demolish and clean up the shuttered facility. A court-appointed trustee with about $30 million in funds from the bankruptcy settlement is now in charge of remediating the property. If that money runs out, Newsom’s proposal would provide $132 million in one-time funding to finish the work. California already has spent $251 million on residential cleanup and other costs, according to the Governor’s Office. Under the proposal, the state would earmark another $322 million over three years to remove contamination from additional properties. DTSC estimates that money will allow the clean up of “roughly 2,740 properties with the highest levels of contamination and the highest risk of exposure being cleaned up to 200 parts per million,” according to a spokesperson.

A celebrity vegan chef has filed a $150 million lawsuit against Pryor Cashman, claiming the law firm aided an attempt by her former business partner to steal her ownership stake in the restaurant chain that bears her name, Reuters reported. The 21-page complaint, filed Friday in New York County Supreme Court, stems from the 2017 acquisition of vegan chef Chloe Coscarelli's 50% ownership in By Chloe, a fast-casual vegan restaurant, by ESquared Hospitality, Pryor Cashman's client, for zero dollars. Coscarelli, through Chef Chloe LLC, challenged the acquisition as being legally improper. Last year, an arbitrator reinstated Coscarelli's 50% ownership stake in By Chloe and awarded her $2.3 million in attorney fees and costs. Pryor Cashman has argued that the 2020 arbitration award is not effective until it has been confirmed by a court, putting it at odds with its position in 2017, when it cited an unconfirmed arbitration award as a basis for ESquared Hospitality's no-cost buyout. Chef Chloe said that it is seeking $37.5 million in compensatory damages and $112.5 million in punitive and exemplary damages. The lawsuit asserts a single claim — that Pryor Cashman aided and abetted ESquared Hospitality's breach of fiduciary duty to Chef Chloe.

Lenders to private prison operator Geo Group Inc. are gearing up for debt talks, hiring lawyers and interviewing financial advisers to protect their interests in the discussions, Bloomberg News reported. A group of term loan holders tapped law firm Gibson Dunn & Crutcher while bondholders hired lawyers from Akin Gump Strauss Hauer & Feld. Both groups are interviewing financial advisory firms. The creditors are expecting Geo Group to negotiate a maturity extension on its 2024 term loan or an exchange of its unsecured 2026 bonds for longer-dated notes. The company is permitted under its credit agreements to borrow up to $450 million in additional secured debt, if it finds willing lenders. Scrutiny of private prisons has lately seen major banks including Bank of America Corp. and Barclays Plc pledge to stop lending to the operators. The industry is under increased political pressure after President Joe Biden issued an executive order earlier this year directing his administration to end all partnerships with private prison operators once current contracts expire. Credit graders to downgraded Geo Group’s ratings in March, citing social and governance risks that could hurt refinancing prospects. S&P Global Ratings cut the company two notches to B, or five steps below investment-grade, and Moody’s cut it to B2, also five notches into junk territory.

Hertz Global Holdings Inc. won bankruptcy-court approval to hand control of the rental-car company to Knighthead Capital Management LLC, Certares Management LLC and other investors that won a bidding war over the company, WSJ Pro Bankruptcy reported. While shareholders typically receive nothing in corporate bankruptcies, the winning bid for Hertz will provide a distribution of more than $7 and as much as $8 a share to the company’s current owners, according to Hertz’s estimates. The winning bid reflected a dramatic rise in Hertz’s prospects in recent weeks as investor groups competed to buy the company out of bankruptcy. Earlier offers from potential bidders offered nothing for Hertz’s equity, and, as recently as mid-April, the company said its shareholders would come away empty-handed in the chapter 11 proceedings. Hertz filed for bankruptcy last May, fighting for survival as its revenue plummeted during the pandemic. “Today we’re on the verge of a remarkable recovery,” company lawyer Tom Lauria said at a virtual hearing Friday in the U.S. Bankruptcy Court in Wilmington, Del. COVID-19 vaccinations and a rebound in consumers’ eagerness to vacation are expected to reinvigorate the travel business and ease Hertz’s path out of chapter 11. Hertz’s creditors will be paid in full, and shareholders will see a substantial return, Lauria said. Rachel Strickland, a lawyer for bondholders that were outbid for control of the company, said they would fight to ensure that they would have everything paid to them that was due, including accrued interest.
https://www.wsj.com/articles/hertz-gets-court-approval-for-bankruptcy-d…

After suffering a legal defeat in a Texas bankruptcy court and the possibility that one of its board members will appeal the decision, the National Rifle Association has some options moving forward, but bankruptcy experts are skeptical that many of them will turn out well for the gun rights organization, Reuters reported. In a 38-page decision issued on May 11, U.S. Bankruptcy Judge Harlin Hale made clear that he did not think the NRA’s January bankruptcy filing was made in good faith. He threw out the chapter 11 case, saying the NRA was trying to use bankruptcy to gain an unfair advantage in a lawsuit brought by New York Attorney General Letitia James that aims to dissolve the organization. Though the NRA itself has not indicated that it will appeal, a lawyer for one of its board members said during a virtual status conference before Judge Hale on Friday that he was considering an appeal. But overturning Hale’s decision seems unlikely, said Anthony Casey, a bankruptcy and business law professor at the University of Chicago Law School. An appeals court would have to consider “whether he abused his discretion in deciding to dismiss it rather than doing something else like appointing a trustee,” Casey said. “But that would be a very high standard for someone to get the judge reversed on.” The board member, Phillip Journey, who is also a Kansas state judge, had been critical of the manner in which the NRA filed for bankruptcy. The board and many top officials were unaware that CEO Wayne LaPierre was making the move until after the fact. Journey asked Judge Hale to appoint an independent examiner to investigate management, but Hale denied that motion in conjunction with his dismissal of the bankruptcy.

The bankrupt Air Force One supplier GDC Technics LLC has won court approval to borrow up to $800,000 in emergency financing and use cash pledged as collateral, despite objections by the company’s former partner Boeing Co., WSJ Pro Bankruptcy reported. Judge Craig A. Gargotta of the U.S. Bankruptcy Court in San Antonio said during a hearing on Friday that he would sign an order authorizing GDC to access up to an additional $300,000 in bankruptcy financing from MAZAV Management LLC, an indirect owner of GDC through GDC’s parent Oriole Aviation LLC. That is up from the initial $500,000 that GDC got approval to start using earlier this month. It is GDC’s “intent not to borrow any more money than absolutely needed,” the company’s bankruptcy lawyer Jason Rudd said during the hearing. Deborah Kovsky-Apap, a lawyer for the committee representing unsecured creditors, had objected during the hearing to the financing proposal because the lender’s junior liens on assets would be elevated to first priority, improving its position over the unsecured creditors. However, the judge overruled the objection. Judge Gargotta also allowed the Fort Worth, Texas-based aircraft modification and technology company to continue using cash collateral from senior lender GDC Investco LLC, one of four equity owners of GDC’s parent Oriole Aviation. GDC’s largest unsecured creditor, Boeing, had objected to the use of the cash collateral because the motion contained releases that would eliminate claims against corporate insiders before creditors could investigate potential claims. Boeing argued that it was inappropriate to grant broad releases to the equity owners and GDC’s directors and officers. Chicago-based Boeing has claims of about $6.7 million against GDC, including loans to the company, which worked on government executive fleets.

The Fairmont San Jose hotel bankruptcy case has arrived at some crucial stages while uncertainties swirl around a precise date to reopen the iconic downtown lodging and the viability of a plan to revamp its finances, the San Jose (Calif.) Mercury News reported. On March 5, the Fairmont San Jose closed its doors and filed for bankruptcy to reorganize its finances, with the hotel’s owner saying at the time that the hotel would reopen in two to three months. The original time frame of 60 to 90 days pointed to a reopening by as soon as early May or as late as early to mid-June, based on the assertions of the hotel’s owners at the time of the chapter 11 bankruptcy filing. Now, however, court papers have emerged that hint at a later time to reopen the doors of the double-tower hotel in downtown San Jose. The indication of a later time frame — which now points to mid-to-late summer — arose with the filing by the Fairmont’s owners of an amended disclosure statement regarding its business operations, assets, and liabilities. The new disclosures were filed with the U.S. Bankruptcy Court on May 11. The approval of the reorganization plan is seen as a necessary prerequisite to the hotel resuming operations. That’s because the plan must be in effect so it can provide the foundation needed to put the hotel back on a stable financial footing.

Washington Prime Group Inc.’s creditors are having difficulty advancing discussions over a planned chapter 11 filing as groups tussle over dividing the mall owner’s assets, Bloomberg News reported. The slow talks have sparked several deadline extensions -- the latest announced on Wednesday -- with sticking points, including creditors’ rights to assets that aren’t already being used as collateral for Washington Prime’s debt. The company on Monday reported a $55 million loss for the three months through March 31. At issue is the division of new equity, debt and cash each lender group would receive from the bankruptcy plan. Given the diminishing appeal of owning a mall chain, the parties are all pushing to minimize their equity exposure and maximize their take of new debt, they added. After the latest extension, Washington Prime’s forbearance agreements with lenders are set to expire May 19.

A bankruptcy judge cleared the Diocese of Rockville Centre, N.Y., to hire Arthur J. Gonzalez as a special mediator to help resolve claims by sex-abuse victims over real estate and other assets that have been sold or transferred to other parts of the institution, WSJ Pro Bankruptcy reported. At a hearing yesterday in the U.S. Bankruptcy Court in New York, Judge Shelley Chapman signed off on a compromise between the Roman Catholic diocese and a panel of abuse survivors that allows for the hiring of Mr. Gonzalez, a former bankruptcy judge, to help resolve disputes over past asset transfers. The Office of the U.S. Trustee, a government watchdog overseeing the bankruptcy system, objected to Gonzalez serving in that position, saying he can’t take an unbiased role in any fight between the diocese and abuse victims, since he was one of three advisers hired by the diocese before it filed for bankruptcy to look into the asset transfers in question. Rockville Centre filed for bankruptcy in October, becoming the largest diocese to seek chapter 11 protection in response to lawsuits by victims of sexual abuse.