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Citigroup Inc. is punishing investment firms that kept payments the bank accidentally sent to Revlon Inc. lenders by blocking them from certain new debt offerings led by the bank, Bloomberg News reported. The bank is choosing to not invite these money managers, who hung on to over $500 million, to its new-issue debt deals. Firms targeted include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management. These firms and others tangled in a lawsuit with Citigroup can still participate if an issuer specifically requests for them to be able to join their offering. The move follows the surprise ruling by a federal judge that thwarted Citigroup’s efforts to recover funds it sent by mistake to Revlon’s lenders last year while serving as administrative agent for the cosmetics company’s loan. The New York-based bank sued 10 firms that manage assets for Revlon creditors after they refused to return the money, but Judge Jesse Furman said prior court decisions forced him to conclude that the lenders could keep it. While the bank is appealing the decision, a failure to overturn it leaves Citigroup responsible for the bulk of the almost $900 million remaining on the loan that Revlon hasn’t itself paid. Citigroup has now claimed rights as a Revlon creditor, and could seek repayment from the company if the ruling isn’t reversed.

An independent bankruptcy trustee is taking charge of an unfinished hotel in Coachella, Calif., and will be empowered to probe lender allegations that developers bungled the project envisioned as a luxury destination for attendees of the Coachella Valley Music and Arts Festival, WSJ Pro Bankruptcy reported. Judge Sheri Bluebond of the U.S. Bankruptcy Court in Los Angeles on Wednesday granted a request by the lender, an investment fund managed by Calmwater Asset Management LLC, to appoint a chapter 11 trustee over project developer Glenroy Coachella LLC, which filed for bankruptcy last month to avoid a foreclosure sale. The ruling comes after the Calmwater fund and another early investor in the project accused real-estate investor Stuart Rubin, the manager and majority owner of Glenroy Coachella, of mismanaging the project and improprieties such as using a false budget that underreported project costs to get a $24.4 million construction loan. Mr. Rubin in court papers filed last week denied the allegations of wrongdoing, including the claim that he used an alternative budget to mislead the lender. Mr. Rubin said he has spent thousands of hours on the hotel project without collecting a development fee or other remuneration. Judge Bluebond said that there are valid concerns over how the hotel project has been handled, including claims that developers have withheld information and records from investors and a court-appointed receiver, which has been overseeing the project since 2019.

Thomas H. Lee Partners is nearly doubling a fund to assist former workers at its bankrupt Art Van Furniture chain, after months of pressure from employees who said a payment of around $400 each was “grossly inadequate,” Bloomberg News reported. The private equity firm is adding $950,000 to a $1.1 million fund it established last year, according to United for Respect, the group that worked with former employees to demand health coverage or cash assistance after Art Van filed for bankruptcy last year. A representative for Boston-based T.H. Lee, which manages $11.6 billion, declined to comment on the decision. The firm had previously said that it couldn’t increase the size of the fund because it lost its own investment in Art Van. Art Van was a family-run chain founded by Art Van Elslander in Detroit in 1959. By 2015, Art Van had 100 stores and $725 million in annual sales. The family sold in 2017, with T.H. Lee paying $215 million to take over the retail operations. A separate group of funds purchased its real estate. The furniture business soon began to deteriorate, and Art Van filed for bankruptcy early last year, just as the impact of the coronavirus pandemic was starting to hit the U.S.

Energy retailer Just Energy Group Inc. filed for bankruptcy protection in the U.S. and Canada on Tuesday, hit with massive bills from the Texas energy crisis as the financial fallout spreads after last month’s dramatic spike in power prices, WSJ Pro Bankruptcy reported. Toronto-based Just Energy said it had received roughly $250 million in bills from the Electric Reliability Council of Texas, which has issued large invoices to other municipal electric companies, energy cooperatives and power retailers in the aftermath of the Texas blackouts. Just Energy filed for protection in the Ontario Superior Court of Justice and the U.S. Bankruptcy Court in Houston on Tuesday with an agreement to borrow $125 million in emergency financing from top investor Pacific Investment Management Co. The company said it wouldn’t be able to pay amounts due to Ercot, the state’s power grid operator, without that loan package, including more than $96 million coming due on Tuesday. The bankruptcy filings “enable Just Energy to continue all operations without interruption throughout the U.S. and Canada and to continue making payments required by Ercot and satisfy other regulatory obligations,” the company said. Just Energy marks the second major bankruptcy among Texas energy players stemming from last month’s electricity crisis after Brazos Electric Power Cooperative Inc., the state’s largest electric-power cooperative, filed for chapter 11 last week.

Offshore oil-rig operator Seadrill Ltd. is making a last-ditch effort to reach agreement on a balance-sheet reshaping to appease creditors that are clamoring for a sale, WSJ Pro Bankruptcy reported. Over the next 60 days, the twice-bankrupt company will try to persuade warring camps of lenders to agree on a reorganization proposal, Seadrill lawyer Ross Kwasteniet said at a hearing Tuesday in the U.S. Bankruptcy Court in Houston. At that session, Seadrill won approval of an order that represents a temporary truce between lenders that want to sell key parts of the company and other creditors that want to hold it together. Talks that began last year failed to produce an agreed restructuring of the complex business, which has a dozen different debt stacks and operations around the globe. Seadrill’s distress attracted interest among investment funds, which bought its debt, Mr. Kwasteniet said. Some of those investors have stakes in Seadrill competitors and could have ulterior motives in pressing for a sale, the company’s lawyer said. Low prices and depressed demand for oil and gas have rig operators under pressure, and Seadrill’s customers, which include major oil companies, nations and independent operators, are reining in production. When Seadrill filed for bankruptcy in February, most of its 34 rigs were idle and it owed $7.2 billion to lenders and lease counterparties, according to court papers.

The committee representing child sex abuse survivors in the Boy Scouts of America bankruptcy case has agreed to the extension of an injunction halting lawsuits against local Boy Scouts councils and sponsoring organizations, the Associated Press reported. In return for the extension, the BSA and local councils must provide the committee with information about local troop rosters that can help victims validate their claims, according to a court filing submitted on Monday. Attorneys for one of the BSA’s insurers argued in a court filing yesterday that the BSA is legally entitled to the injunction, and that the court should not grant any of the conditions it contains. The insurers argue that the arrangement regarding roster information would potentially reveal private information without the consent of local councils and sponsoring organizations. The current injunction expires March 19. A hearing on the proposed extension is scheduled for March 17.

Plastics recycler CarbonLite and its subsidiary PinnPack Packaging have filed for chapter 11 protection, Plastics in Packaging reported. Production at all three of U.S.-based CarbonLite’s facilities — in California, Texas and Pennsylvania — and its Californian thermoforming business PinnPack Packaging, will continue as usual without interruption, as will payment of all employees. Layoffs are not under consideration. There will be no stoppage of supply to CarbonLite’s customers during the reorganisation period. Pressures directly related to the coronavirus pandemic contributed to CarbonLite’s decision to reorganize. This included temporary production slow-downs caused by employee illness, the low price of virgin plastics relative to recycled PET, and a nine-month delay in the opening of the company’s new Pennsylvania facility caused by travel restrictions that held up equipment commissioning by European manufacturers. CarbonLite has also incurred heavy capital expenditures for the recent expansion of its Dallas facility and construction of its 270,000 square foot plant in Reading, Pa., which launched limited production in October 2020. This plant is outfitted with advanced robotic systems and is the largest standalone bottle-to-bottle recycling facility in the world. Its opening is planned for this spring.

The bankruptcy filing of Paper Source Inc. is squeezing small vendors the stationery chain uses to stock its shelves with greeting cards, Bloomberg News reported. Paper Source placed unusually large orders with greeting card suppliers in the months and weeks preceding the bankruptcy, according to interviews with two vendors and an outpouring of online complaints. The bankruptcy filing means that payment for those orders may be delayed and, in some cases, possibly never repaid in full. “If they were worried that we wouldn’t ship to them, they should’ve just paid up front for the product,” said Janie Velencia, owner of The Card Bureau in Washington, D.C. “$15,000 to them, that’s nothing. To a small business like me, that’s payroll, that’s rent.” Paper Source ordered more from The Card Bureau in a 60-day period than it had in all of 2020, according to Velencia. The chain ordered $5,000 worth of merchandise within 20 days of the filing and $10,000 in the weeks before that, she said. Vendors were asked for larger-than-usual orders after the holidays because Paper Source needed to stock 27 new stores it acquired from Papyrus, another stationery chain that went bankrupt last year, Chief Executive Officer Winnie Park said in an emailed statement. Most of the orders will get a higher repayment priority in bankruptcy because of their proximity to the filing, Park said.

Pennsylvania Attorney General Josh Shapiro will announce details on a settlement agreement reached between the Office of the Attorney General and Chesapeake Energy, WNEP.com reported. Chesapeake Energy filed for bankruptcy in June 2020. The Office of the Attorney General filed a lawsuit against the company a few years ago looking to recover thousands of Pennsylvania landowners' money that were wrongfully deducted from fracking royalty checks.

The 805-room San Jose Fairmont Hotel, Silicon Valley’s largest hotel, has filed for bankruptcy and plans to restructure with a new brand and new management to reopen within 60 to 90 days, the San Francisco Chronicle reported. The temporary closure of the two-tower landmark hotel — which owner FMT SJ LLC said lost at least $18 million in 2020 and is projected to lose at least an additional $20 million this year — underscores the economic damage of the coronavirus pandemic on the hotel and tourism industries. The hotel closed Friday and relocated fewer than 50 guests to other hotels in San Jose and paid for their lodging, hotel spokesman Sam Singer said. All hospitality staff were laid off on Friday, including union members and hotel management, said Singer, who didn’t have the number of layoffs. They were paid through Friday. On Saturday, the only people at the hotel were security guards and engineers, Singer said.