More than 18 months after Fibrant LLC announced it would shutter its large caprolactam facility in east Augusta, the company made it official on Friday through a federal bankruptcy filing announced yesterday, the Augusta (Ga.) Chronicle reported. ormerly known as DSM Chemicals North America, the plant produced the raw material used in synthetic carpet fibers and had operated since 1966. The complex employed 700 at peak employment. Fibrant said at the time of its filing in the U.S. Bankruptcy Court Southern District of Georgia it owed approximately $11 million in unsecured claims, mainly trade debt, and $20 million in long-term contract claims.
The international jewelry business that’s part of the empire controlled by Nirav Modi, a billionaire accused of masterminding India’s biggest bank fraud, has filed for bankruptcy in the U.S. just as the Indian lender at the heart of the scam revised up its fraud estimate, Bloomberg News reported. Firestar Diamond Inc. blamed liquidity and supply chain challenges and listed up to $100 million in assets and debt, according to chapter 11 documents filed Monday in a bankruptcy court in New York. Back in India, Punjab National Bank told the stock exchanges that the fraudulent transactions could be $204 million more than the previously estimated $1.8 billion. Modi has been accused along with Mehul Choksi of defrauding PNB. PNB alleges that the duo and their associates worked with some rogue PNB employees and used fake guarantees to obtain loans from abroad.
Shipping tycoon John Fredriksen has reached an agreement with a majority of creditors over a restructuring plan for oil rig firm Seadrill, according to U.S. court documents, Reuters reported. The company, once the world’s largest offshore driller by market value, filed for chapter 11 protection with debt and liabilities of over $10 billion last September after a sharp drop in oil prices in 2014 cut demand for rigs. Under an amended plan, supported by 99 percent of its bank lenders and about 70 percent of unsecured creditors, including South Korean shipyards, the company will raise $1.08 billion in new capital via the issuance of new secured notes and equity. Seadrill will issue $880 million in new secured notes, up from $860 million planned previously, and $200 million in new equity, the same level as previously planned. Unsecured bondholders which contested the original restructuring plan by Fredriksen and private equity firm Centerbridge Partners, will get a bigger stake in the company, one bondholder source told Reuters.
Creditors that are planning to seize control of the cash-strapped maker of Remington guns are already looking for an exit, Bloomberg News reported. Lenders including Franklin Resources Inc. and JPMorgan Chase & Co.’s asset management arm will become owners of a reorganized Remington Outdoor Co. as part of a plan they reached this month with the company and its private equity owner, Cerberus Capital Management. But the creditors will almost immediately be looking for a buyer for some or all of the gun manufacturer. The group has already received some expressions of interest from potential corporate buyers, although no formal sales process has begun. Remington and its creditors are planning a quick trip through bankruptcy court that would seek a judge’s approval just 45 days after the Chapter 11 filing, which is expected to happen by March 7, according to documents posted on the company’s website.
The operator of Aerosoles shoe stores won court approval to sell itself to hedge fund Alden Global Capital LLC, a month after scratching its original reorganization plan and sale process, WSJ Pro Bankruptcy reported. Bankruptcy Judge Kevin Carey signed off on the sale on Wednesday, which will see Alden buy Aerogroup International Inc.’s assets for nearly $26.2 million. Aerosoles’ sale to Alden comes after the retailer’s first deal with GBG USA Inc., which licenses brands such as Under Armour and Kenneth Cole, fell through. Judge Carey had signed off on that deal, but Aerosoles’ reorganization plan failed to win key support from the U.S. Trustee and ultimately couldn’t pass muster in court.
Virginia and Maryland were among dozens of states to reach a $650 million settlement with the U.S subsidiary of a Japanese company that manufactured faulty airbags installed in millions of automobiles worldwide, bags that sprayed deadly shrapnel that killed at least 22 people and injured hundreds more, the Washington Post reported. The agreement was reached with TK Holdings, Inc., the American subsidiary of Takata, as part of a settlement between 44 state governments and Washington, D.C., requiring a $650 million payout by the Japanese firm. Nearly 34 million of the 250 million vehicles on U.S. roads have been part of the largest recall in U.S. history.
Seton Hall University School of Law Professor Stephen Lubben says that it is time to stop pretending big banks and other systemically important financial institutions (SIFIs) can be wound down in bankruptcy court, WSJ Pro Bankruptcy reported. In an article set for publication in the Texas Law Review, Lubben says that most attempts to address big bank insolvencies try to squeeze financial institutions with special needs into a system with a different set of priorities. Since the global financial crisis and the 2008 bankruptcy of Lehman Brothers Holdings Inc., the question of what to do with big banks facing insolvency has vexed lawmakers. Without a credible threat of failure, government backstops encourage banks to take substantially greater risks, according to Lubben. Shareholders with nothing to lose have every incentive to leave taxpayers holding the bag, he writes. Read more.
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Senior lenders to iHeartMedia Inc. are preparing to pitch a new term sheet to junior bondholders in an attempt to unite all the creditor groups behind a common proposal as time runs out for the radio giant’s debt restructuring, Bloomberg News reported. The senior group, led by Franklin Resources and advised by PJT Partners and Jones Day, held a call Tuesday to finalize terms of the proposal, according to one of the people. The group plans to pitch it this week to holders of iHeart’s 14 percent notes due 2021 and legacy notes, said the people, who asked not to be identified because the talks are private. The proposal is the latest step in a series of recent conversations between the different groups. IHeart, the biggest U.S. radio broadcaster, is teetering ever closer to a default on its $20 billion debt load. The company skipped a $106 million interest payment due Feb. 1 on its 14 percent notes, kicking off a 30-day countdown to an official default. Creditors expect the company to file for bankruptcy by the end of the grace period, and are negotiating with each other and the San Antonio, Texas-based company to reach a pre-arranged plan before time runs out. The senior group is betting that a shared desire to deny current equity owners any stake in a restructured company will get junior creditors on board with their latest proposal. Cleansing documents filed by the company on Feb. 9 showed that iHeart’s insistence on retaining equity stakes for its current owners remains the main obstacle to a consensual deal.
Supermarket chain Tops Markets LLC filed for bankruptcy protection Wednesday, the latest regional grocery chain to look to restructure its balance sheet as consumers move to nontraditional food retailers, WSJ Pro Bankruptcy reported. The Williamsville, N.Y., company, which operates about 170 supermarkets in New York, Pennsylvania, Vermont under the Tops name, said it plans to stay open during bankruptcy. It employs more than 14,000 people — most of whom belong to unions — and has lined up $265 million in loans to fund its business during the chapter 11 case. Tops officials said that the chain’s financial troubles come from the competitive industry and the record run in falling food prices last year that has hurt supermarket chains across the U.S. The company lost about $80 million on about $2.5 billion in revenue last year, according to documents filed in U.S. Bankruptcy Court in White Plains, N.Y.
Toys “R” Us Inc. plans to close another 200 stores and lay off a significant portion of its corporate staff following a disappointing holiday sales season, the Wall Street Journal reported. The Wayne, N.J.-based retailer recently had announced plans to close about 180 stores, affecting approximately 4,500 workers. The latest wave of closings would cut nearly in half the number of U.S. stores it had before its bankruptcy filing. The company has also walked back from a promise to offer severance to all affected employees. Managers were recently instructed to tell hourly workers that “there are no severance benefits being provided for the store-closing process.” In January, store managers were instructed to tell employees that the company would provide severance to all affected employees, including hourly workers. Read more. (Subscription required.)
In related news, Toys “R” Us is at risk of breaching a covenant on one of its loans, intensifying concerns about its ability to emerge from bankruptcy protection, CNBC reported. The toy retailer secured a $3.1 billion loan from a group of lenders led by JPMorgan Chase prior to filing for bankruptcy protection. After a dismal holiday season, Toys “R” Us is now at risk of having too little cash to satisfy the terms of the loan. The retailer is currently in compliance with its loan terms, and has a number of options afforded to it before it does breach the covenant, the sources said. These options include getting financing elsewhere so its cash balance does not breach the loan terms, or renegotiating the debt terms with its lenders. If Toys “R” Us does breach the covenant, its DIP lenders have the option to force it to immediately pay them back, which could in turn force the retailer into liquidation. 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 for pre-order at the ABI Store.
