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The Collected Group filed for bankruptcy protection Monday to cement a rescue plan backed by the private-equity firm that controls it, KKR & Co., WSJ Pro Bankruptcy reported. The Chino, Calif.-based company is the design, distribution and retail force behind the Joie, Current/Elliott and Equipment fashion labels. The private-equity giant is Collected’s largest owner and secured lender, and is backing a turnaround plan that would leave landlords and other unsecured creditors that are owed an estimated $35.5 million unpaid, according to bankruptcy court papers. Collected already has vacated its retail stores and is hoping to wrap up its bankruptcy reorganization in the next six weeks, court papers say. The fashion company is one of many that already was struggling when COVID-19 laid waste to the retail sector. Efforts to find a buyer for the brands stalled in the spring of 2020, when the coronavirus pandemic hit, battering Collected’s finances. At the time, the company was getting back on its feet from a crippling software issue that impaired its ability to ship orders for months in 2017. Pandemic-driven mall closures left Collected with only three Joie stores in operation, in Newport Beach, Calif.; Greenwich, Conn.; and Boston. Efforts to sell the brands restarted this year, as did talks with landlords, but Collected was out of cash and unable to reach deals with anyone but its secured lenders. KKR and Callodine Commercial Finance LLC are Collected’s secured lenders, owed an aggregate of more than $185 million, court papers said.

Wayne LaPierre, the top executive of the National Rifle Association, put the gun rights group into bankruptcy to avoid facing a financial investigation by New York’s Attorney General, a lawyer for the state said at the start of a trial that could reshape one of the most politically powerful organizations in the U.S., Bloomberg News reported. New York’s top law enforcement officer, Letitia James, is asking a federal bankruptcy judge in Dallas to either appoint a trustee to run the NRA instead of LaPierre, or to throw out its bankruptcy case, which would make it easier for her to seize the group’s assets if she prevails in a New York lawsuit. “LaPierre’s only goal is to cling to the power that his position holds,” Assistant Attorney General Monica Connell told the judge on Monday during the first day of the trial, which is being held by video. James filed a lawsuit against LaPierre and the NRA in August after investigating alleged financial misdeeds by the organization’s top executives. The suit seeks to dissolve the NRA and redistribute its $200 million worth of assets to other nonprofits. NRA attorney Greg Garman defended LaPierre, calling his fundraising prowess irreplaceable. Throwing out the bankruptcy would wrongly expose the NRA to a politically motivated attack on the group’s First Amendment rights, Garman said. And replacing LaPierre would pose an immediate danger to the organization’s future, Garman told U.S. Bankruptcy Judge Harlin D. Hale. “A trustee is in fact a death sentence,” Garman said, because LaPierre raises $100 million annually for the 150-year-old organization. Judge Hale isn’t expected to rule until after the multiday trial ends. Both sides will focus on the results of James’s investigation, which concluded the NRA executives illegally diverted tens of millions of dollars away from the group’s charitable mission.

The Justice Department’s bankruptcy watchdog is sounding the alarm over several recent “pre-packaged” chapter 11 cases that take only days, or even hours, from start to finish, Bloomberg Law reported. Some recent bankruptcies in particular have wrapped up very quickly. Retailer Belk Inc.'s 16-hour case in February set a record, while shale oil driller HighPoint Resources Corp.'s case concluded in March within four days of filing. These rapid-fire cases, which ostensibly are supposed to be reserved for extraordinary circumstances, are renewing concerns about fairness to creditors and transparency in the bankruptcy process. “Pre-packaged plans offer a means of expediting the bankruptcy process by doing most of the work in advance of the filing,” the U.S. Trustee said in a filing in HighPoint’s case, citing an appeals court decision. “That efficiency however, must not be obtained at the price of diminishing the integrity of the process.” Yet the U.S. could fall behind other countries if it doesn’t pick up the pace and lower the cost of chapter 11 proceedings. The DOJ’s U.S. Trustee’s Office says these ultra-rapid plan confirmations lack adequate notice to creditors and can block stakeholders from having any meaningful input. According to the UST, federal bankruptcy rules require at least 28 days’ notice before a court can approve a disclosure statement, the document that details a company’s chapter 11 plan. To get around this rule, the debtor must show “irreparable and immediate harm” to the bankruptcy estate if the court doesn’t confirm the plan sooner, the UST says. Belk’s “breakneck schedule precludes parties from meaningfully inquiring into the terms of the Plan, from examining the Debtors using the ordinary discovery tools available in contested matters, and from objecting to the Plan in a considered way,” the UST said in a court filing in the retailer’s chapter 11 case.

Offshore drilling rig contractor Seadrill has asked creditors to write off more than 85% of its debts in exchange for a 99% stake in the reorganized company, a court filing showed, Reuters reported. The Oslo-listed firm controlled by Norwegian-born billionaire John Fredriksen in February filed for chapter 11 bankruptcy protection in the U.S., the second time it has done so in four years. Seadrill has in the past year written off billions of dollars worth of assets due to a bleak outlook for the oil sector, and warned in March it expected offshore drilling demand to remain depressed well into 2021. According to the latest restructuring proposal, first reported by Norwegian business daily Finansavisen on Saturday and seen by Reuters, the company could emerge from bankruptcy proceedings by September with $750 million in total debt and $300 million in fresh capital. At the end of 2020, the company’s interest-bearing debt stood at $6.2 billion, including $5.7 billion in secured credit facilities and $515 million in secured notes due 2025, according to its annual report published on March 19. Seadrill also said in its proposal it expected to raise a net $26 million by selling some of its rigs for scrap. The company said last year it could scrap up to 10 rigs out of the 34 it owns.

Victims of childhood sexual abuse are challenging the Boy Scouts of America for control of the youth group’s multibillion-dollar bankruptcy case, saying they can save scouting’s future while compensating those who have suffered from its history of abuse, WSJ Pro Bankruptcy reported. An official committee representing sex-abuse victims said that because the Boy Scouts have been unable to come up with a viable settlement offer, victims themselves should be able to float a competing chapter 11 plan. “The committee filed this motion because abuse survivors are not fairly treated under the Boy Scouts proposed plan,” said James Stang, lawyer for the committee. The Boy Scouts have said they need to exit chapter 11 by the end of the summer for financial reasons, but don’t have the support of victims’ groups, which have largely rejected an opening settlement offer. “We wholeheartedly share the official tort claimants’ committee’s determination and commitment to equitably compensate survivors,” the Boy Scouts said in a statement. The committee’s challenge to extended exclusivity for the Boy Scouts amounts to a nuclear option in bankruptcy court that, if approved, could take the chapter 11 case in a radically different direction. In court papers filed on Thursday, the committee sharpened its criticism of the Boy Scouts plan as legally flawed and financially insufficient for the nearly 84,000 men who have stepped forward seeking compensation. To settle with victims, the organization last month offered to furnish cash, artwork and other assets, plus the rights to insurance policies dating back to 1935. The Boy Scouts also said they would seek $300 million for victims from hundreds of affiliated local councils spread across the country, which aren’t themselves in bankruptcy but are seeking to participate in a broad victim settlement through the chapter 11 proceeding.

Mercy Hospital and Medical Center has finalized a deal to sell its facility for $1 to a Michigan-based not-for-profit, in a deal that promises to keep the Bronzeville hospital open after months of uncertainty regarding its future, the Chicago Sun-Times reported. The agreement between Mercy and Insight Chicago requires Insight to continue operating the safety net hospital as a full-service community acute-care facility in exchange for ownership of the building, its equipment and parking facilities, the companies announced in a joint statement Saturday. Insight has promised to offer an emergency department, rehabilitation center, stroke programs, behavioral health assistance, an obstetrics unit, intensive care unit and inpatient medical surgical beds. They are also expected to maintain Mercy’s current charity care policies, company officials said. The move marks the penultimate step in a nearly yearlong saga that began when Mercy, which is owned by Trinity Health, announced plans to close their doors last July, citing millions of dollars in losses per month. The announcement sparked widespread backlash from activists who felt closing a South Side hospital in the middle of a pandemic was callous at best, especially in the middle of a pandemic that has inflicted disproportionate harm on Black and Brown people in Chicago. In February, the hospital filed for chapter 11 protection after the Illinois Health Facilities and Services Review Board rejected their application to close, and its future was up in the air until the board reluctantly approved its sale to Insight Chicago in late March.

The National Rifle Association rolled the dice by filing for chapter 11 protection earlier this year, gambling that it could use the power of U.S. bankruptcy law to consolidate litigation and combat allegations of fraud and mismanagement brought by the New York attorney general, WSJ Pro Bankruptcy reported. The gun-rights group is about to find out how well that bet is playing out. A federal bankruptcy judge in Dallas has scheduled six days of virtual hearings starting today that are likely to determine the course of the bankruptcy and, potentially, of the NRA itself. Among those whose fates are on the line is Wayne LaPierre, the chief executive who has led the not-for-profit group for three decades and become the public face of one of America’s most powerful advocacy organizations. LaPierre and other top NRA officials are poised to testify in public for the first time on allegations of spending abuses at the group. New York’s attorney general is expected to call other witnesses, possibly including LaPierre’s longtime travel consultant, who arranged NRA-funded private jet flights for him and his relatives, and sat for a deposition last week. “The legal issues here have nothing to do with the Second Amendment — the NRA could be selling shoes,” Adam Levitin, a bankruptcy-law professor at Georgetown University, noted. “This is about whether a major charitable organization has been looted by its managers.” There are four possible outcomes to the hearings, bankruptcy specialists said. U.S. Bankruptcy Judge Harlin Hale could simply allow the NRA bankruptcy to continue rolling along. He could dismiss the case altogether. Or he could leave it in place, but appoint either an independent trustee or an examiner to probe the fraud allegations.

Hertz Global Holdings Inc.​​ said it chose an “enhanced” offer from Centerbridge Partners, Warburg Pincus and Dundon Capital Partners to provide equity capital for the rental-car company’s exit from chapter 11, Bloomberg News reported. The deal, which is subject to bankruptcy court approval, has the support of holders of more than 85% of the company’s unsecured notes, Hertz said, a level of backing that gave it a “clear advantage” over a competing offer. The company earlier received a rival proposal from Knighthead Capital Management and Certares Management. “We look forward to emerging from chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market,” Paul Stone, Hertz’s chief executive officer, said in the statement Saturday. The company remains on track to exit from its bankruptcy in June. The announcement comes a day after the U.S. Centers for Disease Control and Prevention said vaccinated individuals don’t need a COVID test and don’t need to quarantine when traveling domestically. Hertz filed for bankruptcy in May when the near-total shutdown of the global travel industry sent its rental revenues plunging. It became a popular stock among day traders, who sent shares of the bankrupt company soaring against conventions. Hertz made a short-lived effort to raise funds after its bankruptcy filing by selling stock, but abandoned it after the U.S. Securities and Exchange Commission questioned the plan. The supporting noteholders have agreed to support the exchange of the unsecured funded debt claims against Hertz for about 48.2% of the equity in the reorganized company and the right to purchase an additional $1.6 billion of equity. They have also committed to purchase, or otherwise backstop, the full $1.6 billion of equity being offered to the holders of Hertz’s unsecured funded debt.

While 2020 was an exceptional year for U.S. corporate bankruptcies, a larger share of distressed companies upended by the COVID-19 pandemic is using court processes to restructure instead of close shop, according to S&P Global Market Intelligence data. Nearly 62% of U.S. corporate bankruptcy filings in 2020 sought reorganizations, the highest rate for any year going back to at least 2010, according to S&P Global. Companies were less likely to liquidate in 2020, a departure from 2019 and 2018 when corporate liquidations outpaced reorganizations in bankruptcy filings. As of March 30, the share of filings seeking restructuring is larger in 2021 than in 2020. Reorganizations have been increasingly prevalent as otherwise healthy companies use the bankruptcy process to navigate the extreme environment created by the pandemic, experts say. Creditors and debtors have struck deals prior to bankruptcy filings, and there have been many asset sales to preexisting lenders and bondholders, Joshua Friedman, global head of restructuring data at Debtwire, said in an interview. "We've seen significant chapter 11 activity with the goal of protecting the business," Friedman said. Retail sales plunged in April 2020 in the wake of lockdown measures aimed at stifling the spread of the coronavirus. Even when some states lifted restrictions, businesses faced depleted consumer confidence during the initial months of the pandemic. Stimulus money and a higher number of asset sales could be steering more companies to reorganize rather than liquidate, Connor Murphy, a director at Burford Capital, a global finance firm focused on law, said in an interview. Many companies that entered chapter 11 bankruptcy over the past year did so because they needed help navigating the "zero-revenue environment" created by the pandemic, Murphy said.

The bones of Brooks Brothers stores are scattered across 100,000 square feet here in a warehouse near the Massachusetts border, mixed in with a sea of cardboard boxes and junk, the New York Times reported. There are legions of mannequins, empty circular tables that once displayed neckties, posters of horseback-riding gentlemen from a bygone era. There is a whole section of Christmas trees and countless gold-painted ornaments of sheep suspended by ribbon — a Brooks Brothers symbol since 1850 known as the Golden Fleece. Blank order forms for tailors are strewn about. A neon sign that apparently still works. There is no apparel, but there are rows of heavy sewing machines that most likely came from one of the brand’s recently shuttered factories. And in the bathroom, a welcome carpet with Brooks Brothers written in cursive sits next to a toilet. The whole mass was abandoned here in the fallout of Brooks Brothers’ bankruptcy filing and sale last year, the scraps of a retailer that made nearly $1 billion in sales in 2019. Ever since, the couple that owns the warehouse, Chip and Rosanna LaBonte, has been scrambling to figure out how to get rid of it all. Junk removal companies have told them it will cost at least $240,000 to clear the space, which Brooks Brothers had rented through November. In order to pay the bill, the LaBontes are going to have to sell their home. The couple’s plight illustrates the far-reaching consequences of retail bankruptcies, which cascaded during the pandemic and affected everyone from factory workers to executives. Smaller vendors and landlords have often been left holding the short end of the stick during lengthy byzantine bankruptcy proceedings, particularly with limits on what they can spend on legal bills compared with larger corporations. And once bankrupt brands are sold, people like the LaBontes are typically left in the dust.