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Toys “R” Us Inc.’s lawyers and advisers have shot down an 11th-hour offer from a billionaire toy maker that would have kept some of its U.S. stores open, the WSJ Pro Bankruptcy reported. Isaac Larian, the founder of Bratz dolls maker MGA Entertainment Inc., came forward last week with a $675 million bid for the bankrupt retailer’s U.S. stores. The offer included an additional bid of $215 million for the retailer’s Canadian operations. Larian’s offer didn’t meet the qualified bid threshold under the court-approved auction procedures and the retailer has taken it off the table. Larian said yesterday that he hadn’t been informed yet that the bid wasn’t qualified. “If that’s the case, it’s really a shame that they’re going to let this company go into liquidation instead of at least responding and saying we need more or we need this,” he said. The company’s lawyers and advisers are still evaluating the other bids they received for the Canadian operations, and it’s unclear if any include keeping U.S. stores open. An auction is slated to take place on Wednesday, court papers show. Read more. 

A special episode of “Eye on Bankruptcy” focused on the next wave of retail cases will be taped before a live audience at the Annual Spring Meeting! Watch a preview. To register for the Annual Spring Meeting, please click here. 

The production company behind the unreleased drama “Hotel Mumbai” starring actors Dev Patel and Armie Hammer has sued Weinstein Co. in an attempt to wrest control of the project from the bankrupt film studio, WSJ Pro Bankruptcy reported. The lawsuit, brought on Monday by producer Hotel Mumbai Partners Ltd., seeks a judgment that a 2016 agreement that gave Weinstein Co. licensing and distribution rights for the film terminated because the studio’s leadership “participated in a cover-up of Harvey Weinstein’s sordid history of sexual abuse.” Despite objections, agreements for both “Project Runway” and “Hotel Mumbai” remain packaged in the proposed $310 million acquisition of the studio by Dallas-based investment firm Lantern Capital Partners, court papers say. Other films Weinstein Co. has rights to include “The Current War” starring Benedict Cumberbatch. Lantern’s offer is subject to a higher bids, should any materialize, at a bankruptcy auction scheduled for May 4. Read more. 

Don't miss the "Restructuring a Firm After Discrimination or Sexual Harassment Claims" panel Saturday at #ABISpringMeeting! Hon. Judith K. Fitzgerald (ret.) of Tucker Arensberg provides a preview. Click here to register. 

A court-appointed trustee is seeking to liquidate the bankrupt publisher of Penthouse magazine, WSJ Pro Bankruptcy reported. Trustee David K. Gottlieb said that “reorganization is not feasible” and he will therefore seek to sell Penthouse Global Media Inc. assets in a chapter 7 liquidation, according to a filing on Thursday in the U.S. Bankruptcy Court in Woodland Hills, Calif. Led by chief executive Kelly Holland, PGMI filed for chapter 11 protection in January. The filing marked the third time Penthouse has taken a trip into bankruptcy over the past 15 years. Gottlieb’s request to to convert the bankruptcy from a chapter 11 to a chapter 7 liquidation must be approved by a judge.

Bertucci’s Inc., the chain of Italian eateries rooted in the Boston area, will be auctioned off after filing for bankruptcy protection amid intense competition for diners who have less time for sit-down dining, Bloomberg News reported. The closely held restaurant company, based in Northborough, Mass., may close about half its locations and plans to hold an auction where the opening bid will be worth about $19.7 million, Chief Financial Officer Brian Connell said in court papers filed Sunday. An affiliate of Right Lane Capital has agreed to buy the chain should no higher offers come in, Eric Mara with Right said yesterday. Bertucci’s owes about $110 million to lenders, and about $9 million to suppliers, landlords and other unsecured creditors, the company said in the court papers filed in Wilmington, Del. Units of CIT Group Inc. and Wells Fargo & Co. were listed as first lien lenders. The chain is owned by an affiliate of Levine Leichtman Capital Partners, court papers show.

Creditors of failed investment firm F-Squared Investment Management are chasing money the Securities and Exchange Commission extracted in the form of disgorgement, part of a deal to settle accusations F-Squared misled investors, WSJ Pro Bankruptcy reported. If it stands up, the F-Squared lawsuit filed in federal court in Boston could have wide-ranging impact. It is framed as a class action, led by a bankruptcy trustee trying to find money for creditors. The class of people and companies that say the SEC went too far could, however, be very large. The suit springboards off of a U.S. Supreme Court decision in June of 2017, which held that when the SEC collects disgorged ill-gotten gains, it is assessing a penalty and must heed the applicable statute of limitations. The SEC says that is all the ruling says, the statute of limitations applies. F-Squared’s bankruptcy trustee says the import of the ruling is much broader.

The Supreme Court will hear oral argument today in Lamar, Archer & Cofrin, LLP v. Appling (16-1215). The issue in the case centers on whether (and, if so, when) a statement concerning a specific asset can be a “statement respecting the debtor's ... financial condition” within Section 523(a)(2) of the Bankruptcy Code. For more on the case, please click here. 

ABI's Bill Rochelle will be providing an analysis of the oral argument in his RDW column. Click here to subscribe. 

Additionally, the Supreme Court is set to hear argument today from South Dakota, which seeks to upend a 1992 ruling that bars states from collecting sales taxes on out-of-state merchants, MorningConsult.com reported. That case dealt with North Dakota’s ability to take sales taxes for mail-order catalog businesses operating beyond state lines. It preceded the rise of online retail that now plays a central role in legal questions over state sales taxes. Read more.

The bankruptcy turnaround effort of the country’s largest chain of radio stations, iHeartMedia Inc., is off to a pricey start, according to court documents that reveal the company has been spending, on average, $7.7 million per month for bankruptcy advice, WSJ Pro Bankruptcy reported. And that’s just a slice of the professional fee costs for iHeart, which filed for chapter 11 bankruptcy protection after nearly a year of negotiations about how to shake out a debt overload. iHeart told a bankruptcy judge in Houston Thrusday that it expects to file a chapter 11 plan soon, starting the process of cementing deals reached before its March 14 bankruptcy filing. In broad outline, iHeart wants to swap out about $10 billion of its $16 billion debt load, exchanging the debt for equity in a reorganized company. By the end of its chapter 11 proceeding, the radio giant will be picking up the tab for advisers to an official committee representing unsecured creditors and for advisers to creditors that have agreed to support its restructuring strategy. It is also paying for advisers to the owners that loaded it with debt, Thomas H. Lee Partners and Bain Capital, according to filings with the Securities and Exchange Commission.

A joint bid by two liquidation firms will be the starting point for bidding today in the bankruptcy auction of Bon-Ton Stores Inc., the Milwaukee Journal Sentinel reported. Bon-Ton, the parent company of Boston Store, Younkers and other department store brands, has designated an undisclosed bid by Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC as the baseline bid, according to a court filing on Friday. That means it is the top bid to date, and sets the floor for bidding in Monday’s auction of the company and its assets. Hilco and Gordon Brothers are part of a group that is running the going-out-of-business sales for Toys “R” Us and Babies “R” Us stores in the U.S. Asked on Friday whether any of the bids submitted for Bon-Ton were from firms that want to keep operating the company, Bon-Ton issued a statement: “We are making every effort to sustain Bon-Ton as a going concern. As noted in the court filing, the bid submitted by Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC is a baseline to evaluate other potential offers and maximize value for our stakeholders through the court-supervised auction. Our team remains in discussions with the investor group to reach an agreement for Bon-Ton to be acquired as a going concern.” Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the forthcoming ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Billionaire Isaac Larian, the toy marketer whose lineup includes Little Tikes and Bratz dolls, offered to save part of Toys “R” Us from liquidation with an almost $900 million bid for stores in the U.S. and Canada, Bloomberg News reported. Larian would pay $675 million and $215 million for outlets in Canada, he said Friday in a statement. The funds will come from Larian himself and bank financing, including UBS Group AG and Bank of America Corp., Larian said. The would-be rescuer is the chief executive officer of MGA Entertainment Inc., which sells toys including L.O.L. Surprise! and Baby Born. Larian previously started a GoFundMe campaign to help keep Toys “R” Us open, with the page now showing pledges of $200 million from Larian and other investors, and an additional $58,998 from various public contributions. Read more.

A special episode of “Eye on Bankruptcy” focused on the next wave of retail cases will be taped before a live audience at the Annual Spring Meeting this week! Watch a preview. To register for the Annual Spring Meeting, please click here. 

U.S. nursing home chain HCR ManorCare Inc. won court approval on Friday for a plan to exit a $7.1 billion chapter 11 protection by transferring ownership to its landlord, Quality Care Properties Inc., Reuters reported. Bankruptcy Judge Kevin Gross approved the pre-packaged reorganization that will give Quality Care, with 10 employees and $318 million in annual revenue, control over ManorCare. Toledo, Ohio-based ManorCare has more than 50,000 employees in more than 450 senior living facilities and clinics across the country, with annual revenue of $3.7 billion. ManorCare, which filed for bankruptcy in March, is one of many chains that has struggled to make rent on leases signed before declining Medicaid and Medicare reimbursements started cutting into margins in 2012.