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A proposed bankruptcy loan of up to $125 million for the operator of the Queen Mary Hotel and other high-end lodgings has come under fire from lender Bank of America Corp., which said the financing package benefits the owners and managers but doesn’t do much for the distressed business, <em>WSJ Pro Bankruptcy</em> reported. U.S. units of Singapore-based Eagle Hospitality Real Estate Investment Trust filed for bankruptcy protection Jan. 18, with most of its properties closed. Bank of America said in court papers filed Thursday that a proposed borrowing, supplied by a hedge fund to sustain the enterprise, amounts to a blank check for investors “who, prior to chapter 11, showed an almost preternatural instinct for wasting money.” With 15 properties, only two of them in operation, Eagle Hospitality needs to look for buyers, before the market is glutted with emptied hotels, according to the bank. There are buyers ready to buy and reopen some of the properties, the bank said. The bank’s advisers think it is better to keep the hotels operating at low occupancy, instead of closing them completely. “An open hotel can keep the paint fresh and book rooms for the future. A closed one cannot,” the bank said. Bank of America’s objection was filed in the U.S. Bankruptcy Court in Wilmington, Del., where Eagle Hospitality Group filed its chapter 11 petition and which must sign off on the proposed loan. Another lender, Deutsche Bank AG New York Branch, joined in Bank of America’s objections.

Seadrill Ltd, the rig operator controlled by billionaire John Fredriksen, filed for bankruptcy protection for its Asian units after the economic downturn triggered by the coronavirus pandemic worsened a crisis in offshore oil drilling, Bloomberg News reported. The filing in U.S. Bankruptcy Court in the Southern District of Texas is the second within four years by the driller that was once the industry’s largest by market value. The filing covers Seadrill GCC Operations, Asia Offshore Drilling Ltd., Asia Offshore Rig 1 Ltd., Asia Offshore Rig 2 Ltd. and Asia Offshore Rig 3 Ltd., the company said in a statement early Monday. On Feb. 3, the company said that it obtained a new forbearance agreement from the majority of its senior secured lenders, which gave it time until mid-February to come up with a plan to shore up its finances. Nine of the group’s 12 senior secured credit facility agreements have now been terminated. Norwegian-born shipping tycoon Fredriksen founded Seadrill in 2005 and turned it into the crown jewel of his business empire. But the collapse of crude prices in 2014 forced the company to shrink its operations as oil companies slashed spending on rigs. Seadrill completed an overhaul of its finances in July 2018 but left bankruptcy protection with bank debt of almost $6 billion. The drilling market recovered at a slower pace than the company expected and Seadrill engaged in talks with creditors again last year.

State attorneys general intensified pressure on drug companies to settle claims over the opioid crisis, following consulting firm McKinsey & Co.’s agreement to pay nearly $600 million over its advice to pharmaceutical companies to rev up sales, the Wall Street Journal reported. McKinsey’s settlements, reached with every state but Nevada, are an unexpected first source of revenue to stem from yearslong investigations into drug industry players that states say helped exacerbate an opioid epidemic. It has killed at least 400,000 people in the U.S. since 1999. “We do not want to be in litigation for years on this, spending money and resources while people are dying,” Colorado Attorney General Phil Weiser said Thursday. “We want to get fair settlements now. Others need to follow suit.” States have been negotiating since 2019 with the nation’s three largest drug distributors, McKesson Corp., AmerisourceBergen Corp., Cardinal Health Inc., as well as drugmaker Johnson & Johnson. The companies have publicly disclosed that they have set aside a collective $26 billion for the deal, most of it to be paid over 18 years, but no final agreement has been reached.

McKinsey & Company has agreed to pay $573 million to settle investigations into its role in helping “turbocharge” opioid sales, a rare instance of it being held publicly accountable for its work with clients, the New York Times reported. The firm has reached the agreement with attorneys general in 47 states, the District of Columbia and five territories, according to five people familiar with the negotiations. The settlement comes after lawsuits unearthed a trove of documents showing how McKinsey worked to drive sales of Purdue Pharma’s OxyContin painkiller amid an opioid epidemic in the United States that has contributed to the deaths of more than 450,000 people over the past two decades. McKinsey’s extensive work with Purdue included advising it to focus on selling lucrative high-dose pills, the documents show, even after the drugmaker pleaded guilty in 2007 to federal criminal charges that it had misled doctors and regulators about OxyContin’s risks. The firm also told Purdue that it could “band together” with other opioid makers to head off “strict treatment” by the Food and Drug Administration. The consulting firm will not admit wrongdoing in the settlement, to be filed in state courts today, but it will agree to court-ordered restrictions on its work with some types of addictive narcotics, according to those familiar with the arrangement. McKinsey will also retain emails for five years and disclose potential conflicts of interest when bidding for state contracts. And in a move similar to the tobacco industry settlements decades ago, it will put tens of thousands of pages of documents related to its opioid work onto a publicly available database.

The National Rifle Association may have handed ammunition to its critics when it filed bankruptcy as part of an effort to defend itself from New York regulators and others and reincorporate in Texas, Bloomberg News reported. Sometime in the coming weeks, the group, known for its aggressive political and legal tactics in defense of gun rights, will be forced to release a detailed list of cash payments it has made to insiders in the last year and any unusual property transfers it has made to anyone within two years. And if the NRA had a stake in any other business of 5% or more in the last six years, that information must be made public as well. Before then, the U.S. Trustee, an arm of the U.S. Department of Justice, will set up an official committee of unsecured creditors with the power to launch new investigations into the NRA’s spending. “Each bit of information in that filing can open the door for more inquiries and discovery,” Dallas bankruptcy attorney John Penn said. The NRA filed for bankruptcy last month as part of a strategy to resolve many of the lawsuits it faces in one location and to reincorporate in gun-friendly Texas. The association claims it is the subject of a political attack by regulators in New York.

CBL & Associates Properties Inc. yesterday urged a bankruptcy judge to reject senior lenders' efforts to assert control over the mall operators' assets and operations, saying that its ability to reorganize in chapter 11 is at stake, Reuters reported. The statements from CBL attorney, Ray Schrock of Weil Gotshal & Manges, came during opening arguments in a virtual trial before Chief U.S. Bankruptcy Judge David Jones in Houston over lender claims that a series of alleged defaults on the loan documents gave them the right to take over certain subsidiaries and collect revenues directly from tenants. Wells Fargo & Co., which heads up the lender group and is represented by Jones Day, claims that CBL did not have the authority to file for bankruptcy and is looking to have the case thrown out. The case is now a showdown between the lenders and the company, which said it was forced to seek bankruptcy to protect itself and its assets from Wells Fargo. Chattanooga-based CBL filed for chapter 11 protection in November following months of COVID-19-related economic turmoil for its retail tenants and Wells Fargo's allegations of default on a $1.1 billion loan. The company, which was one of the first major mall operators to seek bankruptcy since the onslaught of the pandemic, reported $4 billion in debt and a restructuring support agreement with holders of its $1.4 billion in unsecured notes. Under the noteholder-backed restructuring agreement, CBL would reduce its debt load and preferred obligations by $1.5 billion.

U.S. shale oil and gas producer Chesapeake Energy Corp plans to cut 15% of its workforce, an email sent to employees revealed, as it closes on new financing that will allow it to emerge from bankruptcy court protection next week, Reuters reported. Once the second-largest U.S. natural gas producer, Chesapeake was felled by a long slide in gas prices. The company is “resetting our business to emerge a stronger and more competitive enterprise,” according to the email to employees by Chief Executive Doug Lawler dated on Tuesday, and reviewed by Reuters. Most of the 220 layoffs will happen at the Oklahoma City headquarters, the email said. Chesapeake on Tuesday said it planned to raise $1 billion in notes to complete its bankruptcy exit. The company’s bankruptcy plan was approved by a U.S. judge last month, giving lenders control of the firm and ending a contentious trial. Chesapeake filed for court protection in June, reeling from overspending on assets and from a sudden decline in demand and prices spurred by the coronavirus pandemic.

Vegan celebrity chef Chloe Coscarelli is fighting the bankrupt parent company of plant-based restaurant chain By Chloe over the brand’s trademark, WSJ Pro Bankruptcy reported. Coscarelli and her company, Chef Chloe LLC, agreed to a court hearing later this month so that a bankruptcy judge could determine the ownership of the trademark of By Chloe, the fast-casual chain she co-founded but left behind after a dispute. Representatives for By Chloe’s owner BC Hospitality Group Inc. argued during a virtual hearing Wednesday that Ms. Coscarelli is trying to take away the company’s rights over the trademark, one of the most valuable assets of the estate. The company has said in court papers that Coscarelli’s request could derail the chain’s sale process and wreak havoc on the ability of its bankruptcy case to move forward. BC Hospitality Group filed for chapter 11 bankruptcy protection in December to ease a sale of the restaurant business, which has about a dozen corporate-owned locations, after it faced a cash crunch brought on by the coronavirus pandemic. The company, partially owned by investment firm Bain Capital LP, has scheduled an auction for the chain on March 1, if necessary. Both sides want the issue to be resolved in advance of a hearing on March 4 for the judge to consider approving a winning bidder and to confirm BC Hospitality Group’s proposed bankruptcy plan.

Greylock Capital Management says it’s really nothing more than a small business that should be allowed to use special bankruptcy rules to quickly cancel a lease on its expensive, midtown Manhattan office space, Bloomberg News reported. At a court hearing yesterday, attorney Jeffrey Chubak argued that the company qualifies as a subchapter V debtor because only its affiliates owe hundreds of millions of dollars, not Greylock Capital Associates, the entity that filed for bankruptcy Jan. 31. Once Greylock finishes deconsolidating its balance sheet, Associates will be under the maximum debt limit of about $7 million, Chubak told U.S. Bankruptcy Judge Robert Drain. “Obviously I don’t want this case to proceed in subchapter V if you’re over the debt limit,” Judge Drain said. Assuming Greylock can show the debt is low enough, Judge Drain said that he would be open to quickly considering cancellation of the office lease since the company has already moved out. After that contract is gone, Greylock will be able to file a reorganization plan that pays all creditors in full, Chubak said. Greylock, founded in 2004, is one of the best known hedge funds in emerging markets investing; within two months its assets under management will be around $350 million, down from about $1.1 billion at the end of 2017, according to court papers.