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Walter Investment Management Corp. was supposed to prosper by snapping up mortgage cast-offs from big banks at fire-sale prices. Instead, Walter is belatedly joining the list of companies burned by the U.S. housing crisis, Bloomberg News reported today. The mortgage servicer and lender faces a deadline today to get creditors on board with its bankruptcy plan, and needs at least two-thirds of its term-loan and bond holders to agree for its restructuring to take effect. About half had signed up by the end of last week, according to a statement Friday from the Fort Washington, Pennsylvania-based company. Walter’s pre-packaged chapter 11 plan, which would be filed by late November, would cut the company’s $2.1 billion corporate debt load by about $700 million, and ideally would include some recovery for holders of Walter’s convertible notes and existing stock, according to the statement. 

Vendors to Toys ‘R’ Us have resumed shipping top products, a bankruptcy lawyer said yesterday, allowing the retailer to stock its shelves ahead of the all-important holiday season, Reuters reported. “Inventory is on the shelves,” Joshua Sussberg, an attorney with the company’s law firm, Kirkland & Ellis, said at a U.S. Bankruptcy Court hearing in Richmond, Virginia, adding that the company was well-stocked with the “latest and greatest” in toys. Toys ‘R’ Us generates roughly 40 percent of total revenues in the fourth quarter, and industry experts have expressed concern over the big-box retailer’s ability to retain vendors and customers after its chapter 11 bankruptcy filing on Sept. 19. At the time of the filing, nearly 40 percent of its trade base had stopped shipments. Now, 100 percent of merchandise vendors that supply the top 20 products are actively shipping, followed by 49 of the top 50 vendors and 91 of the top 100, Sussberg said. Read more. 

Sussberg is among the honorees for ABI’s inaugural “40 under 40” class. Click here to view the rest of the honorees who will be recognized at a special luncheon at ABI’s upcoming Winter Leadership Conference. 

Offshore rig company Seadrill has received two additional non-binding proposals from bondholders for a debt restructuring after the Norwegian firm filed for U.S. chapter 11 bankruptcy protection in September, Reuters reported today. The two indications of interest came from bondholders seeking alternatives to the firm’s own plan, Seadrill said in court documents submitted late on Friday. The company’s own plan is backed by holders of 99 percent of Seadrill’s bank loans and 40 percent of its bonds, and was submitted by its main shareholder, Norwegian-born billionaire John Fredriksen, and a group of hedge funds. It offered holders of $2.3 billion of Seadrill’s unsecured bonds a 14.3 percent stake in the restructured firm after dilution, and only a 1.9 percent stake for current shareholders. As a way to show the U.S. bankruptcy court that there was no better plan, Seadrill’s advisors have contacted 94 investors, including 15 oil rig companies, 45 financial investors and seven bondholders. The two indications of interest received so far came from bondholders, and still required substantial impairment of unsecured creditors, Seadrill said. Seadrill didn’t name the bondholders behind the alternative proposals, but it was previously reported that two groups of bondholders were preparing to challenge the official plan.

The bankruptcy of Toys‘R’Us weakened Hasbro Inc.’s forecasts for the holiday season in otherwise strong third-quarter results on Monday, boding ill for a sector worried by the collapse of a major customer, Reuters reported. The Amazon-fueled move away from brick-and-mortar retailing was behind the surprise filing last month by Toys‘R’Us, which left Hasbro exposed to the tune of $60 million in unsecured claims for payment. The U.S. toymaker, which was selling about 9 percent of its total inventory through Toys‘R’Us stores, said third-quarter profit rose 3 percent and revenue 7 percent — above analysts’ estimates — even as the bankruptcy began to hurt operations. Hasbro’s estimate for the fourth quarter of an increase of 4 to 7 percent over last year’s $1.63 billion, however, was below Wall Street expectations. “We continue to work closely with Toys‘R’Us as we head into the holiday period,” Hasbro’s Chief Executive Brian Goldner said in a statement.

A San Antonio, Texas-based insurer for public school districts and community colleges filed for chapter 9 bankruptcy on Wednesday, the San Antonio Express-News reported yesterday. The Texas Association of Public Schools Property and Liability Fund, also known as TAPS, sought protection in U.S. Bankruptcy Court in San Antonio, with more than 175 school districts from around the state listed as creditors, including Somerset, North East and Northside. TAPS is a self-insurance pool that provides property, legal liability and other types of coverage through a cost-sharing arrangement among its members, akin to a mutual insurance company. Its financial troubles have been a few years in the making. TAPS has experienced an “unprecedented number of claims across all lines of coverage, particularly in connection with large hail claims” in recent years, Chairman Ray Lanoux said in a message to members in its 2015-2016 annual report. TAPS reported assets of almost $5.6 million and liabilities of $8.5 million, giving it a negative net worth of almost $3 million.

Nashville, Tenn.-based used car chain Auto Masters has filed for bankruptcy in federal court, claiming a change in Capital One’s lending policies undercut its “buy here, pay here” model, the Nashville Post reported yesterday. A meeting with creditors is scheduled for Nov. 17 at the Customs House in Nashville. “It’s unfortunate that Auto Masters’ primary lender decided to exit this market, but fortunately Auto Masters can survive without this continued funding,” said Griffin Dunham, an attorney with Dunham Hildebrand representing the various entities that make up Auto Masters. The several Auto Masters entities are liable for $47 million from Capital One and $16 million in associated financing from First Tennessee Bank. Some are also liable to another bank for $8 million.

General Motors will pay $120 million to settle claims from dozens of states in its massive ignition switch defect scandal, the Detroit Free Press reported today. The settlement announced yesterday comes after the U.S. Supreme Court ruled earlier this year that GM could no longer avoid hundreds of lawsuits from victims of the defective ignition switches in accidents occurring before GM filed for chapter 11 protection in 2009. Altogether the scandal left at least 124 people dead and 275 injured in small cars such as the Chevrolet Cobalt and Saturn Ion that were made by the old GM. The defective ignition switches could cause vehicles to stall, and GM recalled more than 2.7 million vehicles in 2014.

VidAngel, a Provo, Utah-based streaming platform that edits content out of films and TV shows, has filed for chapter 11 bankruptcy protection, its CEO announced yesterday, according to the Salt Lake City Tribune. For more than a year, the company has been locked in a legal battle with movie studios that said VidAngel sold altered versions of original content without paying royalties. Through the platform, users watching films and TV series could filter out language, nudity, violence or other content they consider objectionable. The movie studios argued that VidAngel streamed and altered the studios’ content without permission and didn’t pay for movie and television rights. In December, a federal judge in California said that until the lawsuit is resolved, the company must stop operations regarding movies from Disney Enterprises Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation and Warner Bros. Entertainment Inc. The 9th U.S. Circuit Court of Appeals sided with the movie studios in August. In June, the company altered its service and launched a new platform. The company originally purchased and stored DVD and Blu-ray copies of films it offered. Users virtually “bought” the programs, filtered out content they found objectionable and then “sold” the program back to VidAngel for credit on the site.

Cardiac Connection Home Health Care Nursing Services Corp., a Chesterfield County, Va.-based business, filed for chapter 11 protection on Monday, but the lawyer representing the company said the business plans to continue operations, the Richmond Times Dispatch reported today. The home health company, which has 12 employees, provides care to patients after they have been released from the hospital with serious cardiac issues, according to Robert Westermann, an attorney with Hirschler Fleischer who is representing Cardiac Connection. But the company has some “obligations that just need to be restructured” through chapter 11, Westermann said, including its Medicaid and Medicare billings. They needed to be able to “address all these creditor claims in one forum, rather than putting out several different fires from different creditors,” he said. In U.S. Bankruptcy Court in Richmond on Wednesday, Westermann said, the company was granted authority to continue to meet all its payroll obligations and to continue to use receivables that are collected from the government from Medicare and Medicaid. In its filing, Cardiac Connections listed its estimated assets as between $100,001 and $500,000, with its estimated liabilities between $500,001 and $1 million. Read more. 

For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore.