%1

Toshiba Corp. is selling billions of dollars of its own claims against its bankrupt Westinghouse Electric Co. nuclear subsidiary in a process expected to attract some of the largest hedge funds and money managers in the world, WSJ Pro Bankruptcy reported. Westinghouse’s deal to sell itself to Canadian investment firm Brookfield Business Partners LP for $4.6 billion will leave the company’s creditors fighting over the proceeds when the sale is completed. Westinghouse’s biggest creditors include Boston hedge fund Baupost Group LLC, which purchased billions of dollars of claims against Toshiba in the bankruptcy case from South Carolina utility SCANA Corp. Toshiba, however, has its own claims against Westinghouse, and the Japanese parent company has also acquired claims from one of the utilities to which it owed money.

A judge overseeing the Diocese of Duluth's bankruptcy has signed off on two insurance company settlements that will pump nearly $10 million into the case, the West Central Tribune (Willmar, Minn.) reported. The agreements, approved by U.S. Bankruptcy Judge Robert Kressel at a hearing yesterday in Minneapolis will provide almost $9 million to victims of child sexual abuse and allow officials to pursue additional compensation. The settlements with Catholic Mutual Relief Society of America and Fireman's Fund Insurance Co. resolve two-fifths of a federal lawsuit filed in June 2016 that has stalled the bankruptcy proceedings. The diocese, which filed for chapter 11 protection in December 2015 in the wake of a $4.9 million verdict, brought the suit against five insurers in an effort to force coverage of claims received from 125 people who said they were abused by priests.

A group of hedge funds that held junior debt in Peabody Energy Corp. have lost a bid to scoop up $54 million in preferred equity in the coal mining company months after it successfully reorganized in bankruptcy, WSJ Pro Bankruptcy reported. Judge Audrey G. Fleissig of the U.S. District Court for the Eastern District of Missouri on Friday dismissed an appeal brought by the hedge funds that challenged the terms of Peabody’s approved chapter 11 plan, which took effect in April. Judge Fleissig in rejecting the appeal cited a legal doctrine called “equitable mootness,” ruling that granting the hedge funds’ request would have unraveled complex transactions, which were fairly negotiated at the time and allowed Peabody to exit bankruptcy, months after they were consummated.

Charming Charlie has proposed a plan to ease its debt load and secure new financing as it executes a strategy to boost profits after months of inventory problems and declining sales, the Houston Chronicle reported. The plan would allow the Houston-based jewelry and accessories retailer to wipe about $69 million from its balance sheet after filing for chapter 11 protection in Delaware last month. Lenders would assume control of the company and provide additional loans to help it emerge from bankruptcy and overhaul operations. The plan swaps $132 million in debt for new equity issued to the company's lenders. It cancels all existing stock, which is also held by private equity firm Hancock Park Associates, Chanaratsopon's family members and other investors.

Toys ‘R’ Us is poised to put struggling stores on the chopping block in early 2018 as the company aims to reorganize its operations in bankruptcy following the holiday shopping season, USA Today reported. The big-box retailer revealed in court filings that it had already hired a firm that specializes in evaluating stores for liquidation. Toys ‘R’ Us did not reveal how many stores it plans to close. But the company said in a court filing that it had hired New York-based Malfitano Partners for help "soliciting and evaluating proposals to liquidate the inventory and furniture, fixtures, and equipment in certain store locations that the (company has) identified for closing." Analysts at investment-bank UBS estimated on Dec. 19 that 183 Toys ‘R’ Us stores — or roughly 21 percent of the company’s U.S. locations — could be shuttered in 2018.

Takata Corp.’s plan to shake off billions of dollars of defective product damages in bankruptcy passed preliminary court review Wednesday, but creditors are lining up to fight it, WSJ Pro Bankruptcy reported. Voting will begin soon on the chapter 11 creditor repayment plan proposed by Takata’s U.S. unit under a ruling from Judge Brendan Shannon. Once the votes are in, Takata must return to the U.S. Bankruptcy Court in Wilmington, Del., to seek final approval of its plan, an attempt to stretch scarce cash to deal with the damage from defective airbags. Takata is selling its non-airbag automotive parts business to Key Safety Systems Inc. for $1.6 billion. That is far from enough to make a dent in the airbag liabilities — car makers alone will sustain damages of more than $15 billion, according to estimates in court papers.

Fortior Solutions, the Hillsboro, Ore.-based company known as SureID during better times, has filed for chapter 11 protection, The Oregonian reported. The filing Friday capped a difficult year for the company, once among Oregon's most highly touted tech businesses. SureID collapsed last spring after losing a contract to supply identity verification services to the U.S. Navy, a deal that was responsible for 70 percent of its $57 million in revenue. The bankruptcy filing says that Fortior owed $57.9 million under a loan agreement with Goldman Sachs dating to 2015. Without the Navy business, SureID had no way to cover the debt. SureID laid off 400 people last year, most of them in Hillsboro, before selling part of its business in October to Sterling Financial Solutions for $6.6 million. The bankruptcy filing identifies Goldman Sachs as owning a "significant" chunk of New York-based Sterling, a company that specializes in background screening of prospective employees. The remaining portion of SureID changed its name to Fortior, focused on verification contracts with other branches of the military. Fortior had approximately 105 employees left after the Sterling deal.

San Antonio oil and gas entrepreneur Brian K. Alfaro will have to pay about $8 million in damages to nine disgruntled investors after a bankruptcy judge determined Alfaro defrauded them, the San Antonio Express-News reported. The award is far less than the $44 million in damages that a group of 28 investors had sought against Alfaro, 48, and his companies. The group alleged they lost all of the roughly $14.7 million they invested with Alfaro and his companies, but had sought triple that amount in damages for violations under Texas’ Deceptive Trade Practices Act.

The Securities and Exchange Commission has added its voice to a call from creditors to appoint a bankruptcy trustee for Woodbridge Group, a real-estate firm that raised more than $1 billion from investors in what regulators are calling a Ponzi scheme, WSJ Pro Bankruptcy reported. A judge could say as early as Jan. 10 who will run the embattled company: the restructuring team chosen by departed chief executive and accused Ponzi mastermind Robert Shapiro, or a court-appointed trustee. The company opposes appointing a trustee. “We believe the time-tested Chapter 11 process, paired with the business expertise of the new independent management team, best protects the interests of creditors, offers them a voice in the process and will maximize recovery,” Woodbridge said in a statement. The company filed for bankruptcy protection Dec. 4, shortly after Shapiro handed the reins to a restructuring team, and shortly before the SEC closed in.

Revolution Capital Group of Los Angeles, has filed a $5.75 million bid to buy the Boston Herald and is asking a federal bankruptcy court to un- seat GateHouse Media’s initial $5 million offer as the auction’s stalking-horse bidder, the Boston Herald reported. Revolution’s bid is the second competitive offer made since the Herald declared bankruptcy last month, citing negative trends in newspaper advertising. The new offer tops GateHouse’s initial bid in pledging $3 million in cash, $2 million in severance for employees, and $750,000 in accrued paid time off for employees who are offered jobs to work after the sale. Revolution asked the court to throw out the $200,000 break-up fee requested by GateHouse in the event that a higher bidder is accepted and to name Revolution the new stalking-horse bidder because its offer is higher.