Claire’s Stores Inc., the fashion accessories chain where legions of preteens got their ears pierced, is preparing to file for bankruptcy in the coming weeks, Bloomberg News reported. The company is closing in on a deal in which control would pass from Apollo Global Management LLC to lenders including Elliott Capital Management and Monarch Alternative Capital, according to the people, who asked not to be identified because the matter isn’t public. Venor Capital Management and Diameter Capital Partners are also involved, the people said. The move should help ease the $2 billion debt load at Claire’s.
A U.S. marine transportation company that pleaded for the Trump administration to protect its industry filed for bankruptcy on Wednesday, according to court records, the latest sign of struggles in the offshore energy services business, Reuters reported. Louisiana-based Harvey Gulf International Marine LLC, which has more than 50 vessels in its fleet and supplies offshore oil rigs among other services, filed for chapter 11 protection in Houston. The company said in court papers that it had more than $1 billion in debt and has an agreement with lenders to reduce what the company owes. In return lenders would receive the equity in the company when it exits bankruptcy. Other creditors such as suppliers will be paid in full.
Lehman Brothers Holdings Inc. caused $2.4 billion in damages to investors holding securities backed by shaky home mortgages, a New York bankruptcy judge ruled Thursday, ending one of the last remaining disputes in the defunct bank’s nearly decade-long liquidation, WSJ Pro Bankruptcy reported. Bankruptcy Judge Shelley C. Chapman’s decision marks a loss for investors, mostly hedge funds, which said their claims were worth $11.4 billion, and a win for Lehman’s bankruptcy administrators, who had proposed the $2.4 billion figure. She fixed the investors’ claim after a 22-day trial surrounding 72,500 home loans from before the 2008 financial crisis that bond trustees said were rife with misstatements about the borrowers’ income, their debts and their places of residence.
Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, Bloomberg News reported. While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, according to sources. The toy chain’s U.S. division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt. A new $3.1 billion loan was obtained to keep the stores open during the turnaround effort, but results worsened more than expected during the holidays, casting doubt on the chain’s viability. Read more.
Explore various strategies on how the tough times ahead for clients in the newspaper, brick-and-mortar retail or coal industries can be addressed in a bankruptcy, whether through a restructuring or a wind-down and liquidation of the company. Make sure to attend the "Obsolescence as a Catalyst" session at the Annual Spring Meeting.
An auction to sell West Virginia’s largest newspaper, the Charleston Gazette-Mail, is scheduled for today, the Associated Press reported. The Gazette-Mail reports bankruptcy court filings show a second company, HD Media of Huntington, W. Va., has placed a bid. A subsidiary of Wheeling, W. Va.-based Ogden Newspapers was the highest bidder Jan. 30, when Charleston Newspapers, owner of the Gazette-Mail, filed for chapter 11 bankruptcy protection and issued a 60-day layoff notice to employees. The amount of HD Media’s bid wasn’t disclosed. But to push the sale to an auction, HD Media had to bid $500,000 more than Ogden’s $10.911 million by a March 6 deadline under the bankruptcy court’s order.
The owner of Texas-based Orianna Health Systems filed for bankruptcy on Tuesday after reaching a restructuring deal with its landlord, the second large nursing home operator to seek chapter 11 protection this week due to unpaid rent, Reuters reported. 4 West Holdings Inc., which operates as Orianna, reached a deal with its landlord Omega Healthcare Investors Inc. and agreed to transfer 23 facilities to a new operator and provide for the sale of 19 others, according to court records. Orianna owes $52 million in rent to Omega, a real estate investment trust or REIT, and $67 million to vendors as well as other debts, according to court records. Orianna is Omega’s largest tenant, according to securities filings.
Bankrupt printing company Cenveo said yesterday that a bankruptcy court had approved $290 million in financing, funds the firm said would ensure suppliers and other business partners would be paid on time for goods and services, the Connecticut Post reported. With the infusion from the “debtor-in-possession” financing, Cenveo officials said that they would also be able to access up to $100 million in additional liquidity. The company expects to emerge from chapter 11 bankruptcy in the second quarter of this year. Cenveo intends to file its reorganization plan by the end of March, a road map the company said has already garnered the support of some 61 percent of the required 66.7 percent of its “first lien” debtholders. The company is aiming to reduce its debt by approximately $700 million. It was carrying about $1.4 billion in debt, compared with around $790 million in assets, at the end of 2017, according to its bankruptcy filing.
Walking Co. Holdings Inc., which has sold “comfort shoes” from around the world in the U.S. since 1991, yesterday filed for its second bankruptcy in less than a decade, Bloomberg News reported. Santa Barbara, California-based Walking Co. cited the loss of a contract from its largest vendor, UGGs maker Deckers Outdoor Corp., as among the reasons for its bust. “As a result of the difficult environment for store-based retailing in 2017, Walking Co. could not replace the lost UGG sales fast enough,” Chief Executive Officer Andrew Feshbach said in a court declaration. This resulted in its inventory getting appraised at lower levels, leading its lender Wells Fargo & Co. to reduce the amount of capital under a credit line.
Alexandria, Va. —Robert J. Keach of Bernstein, Shur, Sawyer & Nelson, P. A. (Portland, Maine) and co-chair of ABI's Commission to Study the Reform of Chapter 11 today proposed legislation to provide a viable option for small and medium-sized enterprises (SMEs) looking to reorganize under the Bankruptcy Code. “Most financially troubled SMEs simply avoid chapter 11 altogether,” Keach said in written testimony today before the Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts. The proposed legislation in Keach’s testimony is based on the Commission’s proposed reforms to reinstate reorganization under the Bankruptcy Code as a viable option for SMEs. “The bill is not just a ‘small business’ bankruptcy bill for the tiniest firms; the proposed restructuring option would apply to approximately 90 percent of all business filers by number,” according to Keach’s testimony.
Key provisions of the proposed legislation include:
Removing unrealistic and artificial deadlines and allowing SMEs to work with the courts and their stakeholders to establish sensible restructuring timelines.
Reducing the amount, and limiting the kinds, of information that an SME debtor must provide when filing a chapter 11 case.
Reducing the reporting requirements imposed on SMEs.
Not requiring the U.S. Trustee to appoint a committee of unsecured creditors in an SME case, unless requested by a creditor or needed for other reasons.
Allowing an SME debtor or other stakeholder in a case to request the appointment of a professional with skills tailored to the particular problems facing that debtor.
Encouraging parties, and allowing the court, to reduce or control the costs of a chapter 11 case by streamlining the plan of reorganization process, providing clear rules for the SME debtor’s reorganization, and structuring fees in the case to fit the size and resources of the particular SME debtor.
Providing a plan of reorganization option (as a default if a deal is not reached) that allows an SME owner to maintain some ownership interest in the company while preserving the rights of secured creditors and that seeks to repay unsecured creditors in full within a specified period.
Click here to read Keach’s full testimony and the proposed legislation.
“Because of the jobs it will save, this is a jobs bill that is already paid for,” according to Keach’s testimony. “The courts are there, the system is there, and it costs no more to make it work effectively to save companies.”
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 12,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abi.org. For additional conference information, visit http://www.abi.org/calendar-of-events.
HCR ManorCare Inc., one of the largest skilled nursing home chains in the U.S., filed for bankruptcy protection on Sunday as part of a deal in which its landlord, Quality Care Properties Inc., will take control of the company, WSJ Pro Bankruptcy reported. As part of the bankruptcy deal, the company has agreed to pay former Chief Executive Paul Ormond more than $115 million in deferred compensation and severance. The Toledo, Ohio-based nursing home operator, which is owned by private-equity firm Carlyle Group, has been behind on rent to QCP, a publicly traded real-estate investment trust, for nearly a year. After repeated missed payments and after QCP agreed to multiple temporary reductions on rent payments, QCP took legal action against its primary tenant last August, suing to replace the company’s management and appoint a receiver with the power to collect rent. The company has been in talks on a balance-sheet restructuring with the landlord since then.
