Coal-mining company Armstrong Energy Inc. filed for bankruptcy yesterday with a plan to turn over ownership of its struggling operations to a competitor and its lender, the Wall Street Journal reported. The St. Louis company plans to use the chapter 11 process to transfer the ownership of its five mines and other operations to a new entity owned by Illinois coal company Knight Hawk Holdings LLC and some of Armstrong Energy’s noteholders. Nearly all of Armstrong Energy’s shares are now owned by energy investor Rhino Resources Partners Holdings LLC. The terms of the transaction weren’t immediately disclosed in documents filed in U.S. Bankruptcy Court in St. Louis.
The legal fallout from a bridge that has been reconstructed continued this month as the owners of the company that developed Crossings Mall in Elkview, W. Va., was sued by a lending company in federal court, the Charleston Gazette-Mail reported. The U.S. Bank National Association claims William A. Abruzzino and Rebecca A. Abruzzino, owners of Tara Retail Group, LLC, owe them more than $17.2 million for defaulting on a 2013 loan, according to the complaint in the lawsuit filed Oct. 23 in the U.S. District Court in the Southern District of New York. The loan originally was for $13.65 million, and the association claims Tara Retail breached its guaranty agreement because Tara Retail hasn’t made payments on the loan since July 2016, a month after the June 2016 flood that washed away the bridge, the only public access to Crossings Mall. The association also claims the Georgia-based Tara Retail breached the guaranty agreement by allowing a merchant’s lien against the property in November 2016 without consulting the association. In addition to the $17.2 million associated with the loan, the association is seeking attorneys’ fees, costs and expenses for this lawsuit as well as four other lawsuits in which the association has been involved as a result of Tara Retail’s loan default in U.S. District Court in the Southern District of West Virginia, according to the complaint.
True Religion Brand Jeans has exited chapter 11 bankruptcy protection in a move that reduces how much the retailer owes while giving it more time to pay it off, the Associated Press reported on Friday. The Los Angeles-based company said on Friday that its debt reorganization plan was approved by a bankruptcy court on Oct. 5. The plan reduces True Religion’s term loans from $471 million to $113.5 million and extends the time when the loans come due to 2022. True Religion filed for chapter 11 protection in July.
Cecil Bancorp said on Friday that it had raised $30.2 million from investors to recapitalize the cash-starved bank holding company, the <em>Baltimore Sun</em> reported on Saturday. The Elkton, Md.-based parent of Cecil Bank said in July it planned to send itself through a bankruptcy auction to secure the financing from a group of private investors. Cecil Bank foundered under the weight of bad real estate loans in the wake of the recession, losing so much money that its capital base eroded and federal banking regulators ordered it to raise money. In late June, the bank holding company filed for a chapter 11 reorganization in Baltimore’s federal bankruptcy court. The move gave the company a way to raise money from investors to pay off its debts and to re-emerge with a clean slate without interrupting business for customers, including deposits and loan commitments. As part of the recapitalization, Cecil will extinguish its $17.5 million debt to the federal government under the U.S. Treasury Department's Troubled Asset Relief Program, part of the broad bailout for financial institutions following the 2008 financial crisis. Through a stock exchange, the Treasury received $880,000 of what it was owed, according to the restructuring plan.
Westinghouse Electric Co. won court approval yesterday to send millions of dollars in emergency funding to subsidiaries in Europe, the Middle East and Africa, the Wall Street Journal reported today. Following a hearing at the U.S. Bankruptcy Court in New York, which is overseeing Westinghouse’s multibillion-dollar chapter 11 case, Judge Michael Wiles approved changes to the terms of an existing $800 million loan meant to help Westinghouse stabilize its global business and hang on to customers. Westinghouse says that parts of its global nuclear business that aren’t in chapter 11 are at risk of running out of cash and need money to prop up their balance sheets or to take advantage of potentially lucrative opportunities. The bankruptcy court ruling frees up as much as $38 million for a handful of affiliates most in need of fresh cash. A general bucket of money the company is allowed to use to support affiliates that aren’t part of the bankruptcy case will be increased to $25 million from $10 million. The tweaks to the lending pact weren’t opposed by junior creditors.
The U.S. trustee for Minnesota is seeking court approval to launch an independent investigation of commodities trader Tim Krieger and his businesses, according to a recent filing in U.S. Bankruptcy Court, the Minneapolis Star Tribune reported today. The investigation could be good news for Krieger’s investors, who stand to lose about $30 million unless the trustee is able to find other assets that rightfully belong to Aspirity Energy, which filed for bankruptcy earlier this year. Krieger, who owns about 70 percent of Aspirity, transferred most of the company’s assets to another business he controls before the energy company collapsed, corporate records show. Since 2011, Krieger paid himself more than $18 million, mostly in the form of distributions from the company’s dwindling cash reserves, records show. Aspirity now has less than $50,000 in the bank, according to its most recent financial statement.
PET resin maker M&G Polymers USA LLC filed for chapter 11 protection on Oct. 24 in Delaware — one week after its parent firm, Mossi Ghisolfi Group, took the same step in in its home nation of Italy, PlasticsNews.com reported yesterday. In the U.S. Bankruptcy Court filing in Wilmington, Del., Houston-based M&G Polymers listed liabilities of between $100 million and $500 million and assets of between $500 million and $1 billion. Dennis Stogsdill has been named chief restructuring officer for the firm. M&G's largest unsecured creditor is PET and feedstocks supplier Indorama Ventures of Montreal, which is owed almost $57 million. Petrochemicals supplier Shell Chemical LP of Houston ranks second on that list, being owed almost $20 million.
A judge has ruled Peabody Energy Corp. is protected by its recent bankruptcy from global-warming lawsuits brought by California coastal communities against fossil-fuel companies, the Wall Street Journal reported today. Judge Barry Schermer of the U.S. Bankruptcy Court for the Eastern District of Missouri ruled on Tuesday that discharge and injunction provisions included in Peabody’s chapter 11 plan of reorganization extinguish the lawsuits that were filed months after the coal-mining company left bankruptcy in early April. The litigation was brought by the counties of San Mateo and Marin and the city of Imperial Beach and seeks damages tied to greenhouse-gas emissions between 1965 and 2015. Peabody sought bankruptcy in 2016. The ruling doesn’t affect other companies that are named in the lawsuits, filed in July. The lawsuits say that Peabody for decades has exported substantial amounts of coal from California and claim the company has been linked to groups that have sought to undermine climate science and the connection between emissions and global warming and rising sea levels. Peabody has said the lawsuits lack merit. Judge Schermer said that the California communities were required to bring claims against Peabody during the bankruptcy but, instead, chose not to participate in the chapter 11. Initiating the lawsuits after Peabody left chapter 11 was intended to give these communities an advantage over other company creditors who went through the bankruptcy process, the judge said.
A lawyer for a global group of investors in offshore drilling company Seadrill Ltd vowed yesterday to fight for fair treatment for bondholders unhappy with the company’s proposed debt-cutting plan, Reuters reported. Norway’s Seadrill filed for chapter 11 protection in Texas on Sept. 12, with a plan backed by nearly all lenders as well as holders of 40 percent of its bonds. The plan was backed by major shareholder John Fredriksen, the Norwegian-born shipping billionaire. It will extend by around five years maturities on billions of dollars in loans, intended to give the company breathing space until an industry recovery gains steam. Under the plan, holders of the company’s $2.3 billion in unsecured bonds would receive 14.3 percent of the stock in the reorganized company. That plan was “wholly unacceptable” to a group holding around 25 percent of Seadrill’s bonds, a lawyer for the group told a bankruptcy judge at a recent hearing. The group includes 38 investors from the United States, Europe and Asia, and funds managed by Nordic asset manager DnB Asset Management, Nine Masts Capital Ltd of Hong Kong, and U.S. hedge funds such as Phoenix Investment Adviser LLC.
The recent bankruptcy of Think Finance LLC, which says it is a financial technology provider but is accused in multiple federal lawsuits of being a predatory lender, is setting up an open-court clash with a longtime backer, a Chicago hedge fund with ties to former Sen. Joseph Lieberman of Connecticut, the Wall Street Journal reported today. Think Finance said that the hedge fund, Victory Park Capital Advisors, yesterday cut off its access to cash and forced the bankruptcy filing. Both companies stand accused by Pennsylvania Attorney General Josh Shapiro of profiting from a “rent-a-tribe” scheme that runs investor funds through a web of shell companies to make it appear lawsuit-resistant Native American tribes are making short-term, high-interest loans to distressed consumers online. In fact, the attorney general’s suit said, both Think Finance and Victory Park are active participants in an arrangement set up to duck state laws that limit interest charges on loans. Both companies, the attorney general contends, rake in profits from an online lending operation that is designed to evade Pennsylvania’s limits on the amount of interest that can be charged and other consumer laws. Think Finance said it isn’t a lender but a financial technology provider. Victory Park, in a motion seeking to have the Pennsylvania case thrown out, said that it isn’t a lender, either. It simply provided money through “commercial transactions” that was used to make the online loans.
