%1

Toys “R” Us Inc. is moving closer to selling parts of its North American and international businesses, the WSJ Pro Bankruptcy reported. The retailer said in court papers that it plans to sell its Canadian operations to Fairfax Financial Holdings Ltd., were solidified after it failed to receive higher qualified bids for the assets. The auction yesterday was canceled as a result. Fairfax, the Toronto-based investment firm controlled by financier Prem Watsa, has offered to pay 300 million Canadian dollars ($233.5 million) for the business, which includes 82 stores and intellectual property. However, neither Fairfax nor any other bidder has stepped forward to buy Toys “R” Us’ 200 best performing Toys “R” Us and Babies “R” Us stores. When Toys “R” Us said it would wind down its U.S. business and liquidate its more than 700 remaining stores, it floated the idea that 200 of its best stores could be saved. The option to acquire the 200 U.S. stores was a part of the Canadian asset sale. The company has yet to receive any qualified bids for the U.S. stores.

FirstEnergy Corp. has reached a settlement with creditors of its bankrupt power-generation businesses that would simplify their restructuring while extricating the parent company from the chapter 11 case, WSJ Pro Bankruptcy reported. The proposed deal with the nonbankrupt parent company requires approval from subsidiary FirstEnergy Solutions, or FES, and its affiliates and from the Ohio chapter 11 judge overseeing their restructuring. If approved, the agreement covers potential claims surrounding FirstEnergy’s obligations toward unprofitable coal and nuclear power plants in Ohio and Pennsylvania that are under bankruptcy protection. Research firm CreditSights said the settlement provides 15 cents on the dollar for holders of unsecured FES debt, some of which rallied nearly 20 percent yesterday, according to FactSet.

Remington Outdoor Co. has only been in bankruptcy for a month, but creditors are already planning an out. The U.S. firearms and ammunition company will likely go up for sale directly following its bankruptcy, Bloomberg News reported. Certain stakeholders, some of whom haven’t been publicly identified, have already started putting out feelers for potential strategic buyers. Rather than hold the collection of 13 brands that includes a 200-year-old rifle maker, ammunition manufacturers, silencer companies and traditional firearms manufacturers, the lenders will be trying to offload at a particularly fraught time. In the two months since a mass shooting at a Florida high school, the American gun business and its allies have faced increased scrutiny, nationwide boycotts and even new new firearms regulations from Congress. Despite the turmoil, gun sales are up, particularly in the long-gun category. While private-equity firms and hedge funds may typically be expected to play vulture over the remains of a bankrupt entity, Remington is more likely to go to a competing gun company that wouldn’t face the same risks to its reputation as a financial firm would. Remington has already piqued the interest of a potential buyer in the industry. “We're watching that closely. I mean, Remington is a great company, it's been around since 1816. They [have] got some great brands and great products,” said Christopher John Killoy, president of Sturm, Ruger & Co., during the company’s last earnings call in February. “We're going to monitor and see if there may be some opportunities down the road.”

Canada’s Fairfax Financial Holdings Ltd. has offered to buy Toys “R” Us’s Canadian stores out of bankruptcy for $300 million, WSJ Pro Bankruptcy reported. The offer, revealed on Thursday in filing in U.S. Bankruptcy Court in Richmond, Va., is subject to higher bids at a court-supervised auction. The sale would also include the Canadian business’ intellectual property, including its brands. The retailer is seeking court approval to name Fairfax, the Toronto-based investment firm controlled by financier Prem Watsa, as the stalking horse, or lead bidder, at the auction. Companies selling assets in bankruptcy often seek to name a stalking horse to set a floor price to encourage bidding. In addition to the 82 Canadian stores, Toys “R” Us has put the option to buy 200 of its best performing Toys “R” Us and Babies “R” Us U.S. stores on the table. Fairfax’s offer is solely for the Canadian stores, however. An auction for the retailer’s Canadian assets is scheduled to be held Monday in New York at the offices of Toys “R” Us’s bankruptcy lawyers. A sale hearing is slated for Tuesday. Read more.

In related news, Irish toys group Smyths Toys has signed a deal to take over Toys “R” Us in Germany, Austria and Switzerland, the German arm of the insolvent retailer said on Saturday, Reuters reported. Once the largest U.S. toy retailer, Toys “R” Us abandoned a plan to emerge from bankruptcy last month and said it would try to maintain more profitable locations in Europe and Asia as an on-going business while liquidating its U.S. and UK operations. Family-owned Smyths will acquire 93 shops and four online stores via the planned deal, Toys “R” Us said in a statement on its German website. Financial details were not disclosed. The Irish company, which runs 110 stores plus websites in Britain and Ireland, plans to take on all the Toys “R” Us units, staff and management in Germany, Austria and Switzerland. Read more. 

Movie producer Harvey Weinstein asked a U.S. bankruptcy judge on Friday to order his company, which filed for chapter 11 protection in March, to turn over personal emails that he says are relevant to ongoing civil and criminal investigations against him, Reuters reported. Harvey Weinstein, who co-founded the Weinstein Company with his brother Bob, has been accused of sexual misconduct by more than 70 women. He has denied having non-consensual sex with anyone. In a filing with the U.S. Bankruptcy Court in Delaware, Harvey Weinstein’s lawyers said the bankrupt company has refused to provide him access to e-mails and personal files that they said would exonerate him. Harvey Weinstein, once one of Hollywood’s most influential film producers, was ousted as co-chairman of the Weinstein Company in October 2017 when accusations against him became public.

Fairfax Financial Holdings Ltd., the investment firm run by billionaire Prem Watsa, signed an agreement to buy the Canadian unit of Toys “R” Us Inc. for about C$300 million ($237 million), Bloomberg News reported. The stalking horse bid allows other potential buyers to enter competing proposals by Monday. Fairfax would then have the option of either increasing its offer or walking away. Under the terms of the deal, Fairfax would receive a break fee of about 4 percent if another bidder is chosen. After the takeover, Fairfax would be able to continue operating Toys “R” Us stores in Canada under the existing name, the person said. The deal would follow a Fairfax-backed consortium’s purchase of athletic equipment maker Performance Sports Inc. last year, a process that was also overseen by a bankruptcy court.

A U.S. judge said yesterday that he would approve Seadrill Ltd’s plan to exit its chapter 11 bankruptcy, in which the global offshore oil and gas drilling company would shed billions of dollars of debt and raise $1 billion in new investment, Reuters reported. Bankruptcy Judge David Jones in Houston overruled two minor objections to the reorganization plan during a 90-minute hearing. The plan extends maturities on more than $5 billion of bank loans and converts about $2.3 billion in bond debt into equity in a reorganized Seadrill. In addition, the plan will raise about $1 billion in new debt and equity through a rights offering led by Seadrill’s largest shareholder, John Fredriksen, and investment firm Centerbridge Credit Partners LP.

Bankruptcy Judge Kevin Gross yesterday granted a request by Suniva’s biggest creditor that will allow it to sell a portion of the company’s solar manufacturing equipment through a public auction, Reuters reported. The development casts fresh uncertainty on the future for Suniva, the company that fought for and won stiff tariffs on solar panel imports from the administration of President Donald Trump in January, but still has not restarted manufacturing at its U.S. factories. The creditor, SQN Capital Management, said yesterday’s order by Judge Gross will enable it to attract an investor interested in injecting capital into Suniva’s idled operations. As of February, SQN was owed more than $58 million by Suniva, court papers show.

Bon-Ton Stores Inc., a bankrupt department store chain, will begin a going-out-of-business sale at its 200 U.S. locations in the coming days after two liquidators won an auction for the company, Reuters reported. Bon-Ton, which traces its roots to 1854, had hoped in recent days that a pair of landlords and a private equity firm would actively bid at the auction and try to save the business. However, sources told Reuters on Monday that the auction started without the landlord group. Great American Group and Tiger Capital Group, which specialize in winding down retail chains, won the auction with a bid estimated to be worth $775.5 million. The pair bid against other liquidators. A portion of the winning bid came in the form of a credit bid, or when a creditor uses some of what they are owed instead of cash, sources told Reuters. Bondholders’ credit bid contributed at least $100 million to the value of the winning bid.