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The principals of bankrupt Tinley Park, Ill.-based Oak Park Avenue Realty face possible fines and arrest if they don't comply with a federal judge's order to turn over business records of the real estate management company, the Chicago Tribune reported on Sunday. The order on Thursday by U.S. District Court Judge Carol Doyle comes after the court-appointed trustee in Oak Park Avenue's bankruptcy case reported in a court filing that business records, computers and other equipment had been removed from the company's Tinley Park offices. The trustee, Ronald Peterson, an attorney with Jenner & Block, said he went to Oak Park Avenue's offices, 6800 Centennial Drive, on July 14 and discovered "substantial" portions of records were gone, and cables to the company's computer servers had been severed. The trustee noted he saw no evidence of a break-in, and notified Tinley Park police and the Cook County state's attorney's office.

A Chicago suburb’s convention center project corporation entered chapter 11 bankruptcy on Friday, starting a court-supervised process to settle a $183 million municipal default, the Wall Street Journal reported today. Lombard Public Facilities Corp., a public financing entity in the village of Lombard, Ill., entered court protection having already hammered out a restructuring deal with its largest creditors, municipal bond giants Nuveen Asset Management LLC and OppenheimerFunds Inc. The corporation’s $183 million in debt was issued to finance an 18-story building project that opened in 2007 with a Westin-branded hotel, convention space and restaurants. The catalyst for the bankruptcy was the village’s refusal, starting in late 2011, to appropriate funds to cover shortfalls between what the project generated in revenue and the scheduled payments due to bondholders. Reserve funds covered LPFC’s debt obligations until January 2014, when the municipal debt fell into default, trashing the credit ratings of both the village and the bond issuer. Counting accrued interest and principal, the outstanding balance has ballooned to $247 million, according to court documents.

Senior Care Group Inc. has filed a voluntary Chapter 11 bankruptcy petition and is seeking to reorganize its finances, the Tampa Bay Business Journal reported on Friday. The Tampa nonprofit, a long-term care organization founded in 1983 with nursing homes and rehabilitation facilities throughout the area, has between $1 million and $10 million in assets and between $1 million and $10 million in liabilities, according to the July 27 filing in U.S. District Bankruptcy Court for the Middle District of Florida in Tampa. The company’s largest creditor is the Florida Agency for Health Care Administration, with two unsecured claims totaling $408,290. It also owed money to Blue Cross Blue Shield of Georgia, which has an unsecured claim of $242,459. Other creditors listed in the filing have unsecured claims of $71,000 or less.

FirstEnergy officials are scheduled to meet with creditors of the company’s struggling competitive generation unit, FirstEnergy Solutions, which includes two Pennsylvania power plants in Beaver County employing about 1,000 people, the Pittsburgh Post-Gazette reported on Saturday. The meeting with creditors, reported during an earnings call on Friday, is a development in the Akron, Ohio-based energy company’s plan to shed its power plants in competitive energy markets. And the move is a sign that FirstEnergy is interested in negotiating a deal to restructure FirstEnergy Solutions and is considering crafting a plan that could be either presented as part of a chapter 11 bankruptcy filing or be used to avert bankruptcy. “I think we always knew somewhere along the line this engagement with creditors was going to happen,” Chuck Jones, FirstEnergy’s president and chief executive officer, told investors and analysts. Jones said that he FirstEnergy Solutions management team recently got a call from a group representing about 80 percent of the creditors offering some proposals. Read more. 

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A wave of retail bankruptcies washing through court has revived an old debate about the role of private-equity firms in accelerating the problems of companies in distress, the Wall Street Journal reported today. Payless ShoeSource Inc., Gymboree Corp., rue21 Inc. and True Religion Apparel Inc. were all acquired by private-equity firms during the past decade. Now, lawyers for creditors have questioned whether private-equity firms share blame for the retailers’ financial collapse, in some cases by loading debt on the companies. Since 2010, more than $90 billion in leveraged loans and high-yield bonds were raised for private-equity-owned retail borrowers to make dividend payouts to their investors, according to LCD, a part of S&P Global Market Intelligence. That is in addition to the leverage often assumed in the buyout itself.

Creditors of bankrupt Katy Industries filed a lawsuit that could disrupt the sale of the Maryland Heights cleaning and storage supply manufacturer to two investment firms, the St. Louis Post Dispatch reported yesterday. Unsecured creditors of Katy Industries filed the suit in Delaware bankruptcy court a day after Chicago-based Victory Park Capital Advisors LLC and Los Angeles-based Highview Capital LLC announced a $63 million deal to purchase Katy’s assets and rename the company American Plastics. Victory Park acquired a controlling stake in the company last year and Katy filed for chapter 11 protection in May. The unsecured creditors who filed suit this week say that loans Victory Park made to Katy were more like equity investments because, among other things, Katy did not make any repayments and Victory Park took part in management afterwards. As a secured creditor, Victory Park is in line for repayment before unsecured business customer and suppliers. Secured creditors also have the option to bid on assets that were pledged as collateral for its loans. The unsecured creditors are asking a judge to disallow repayment of some loans from the bankrupt Katy to secured creditors like Victory Park and to subordinate their claims below trade creditors “to offset specific harm that non-insider trade creditors have suffered on account of the inequitable conduct of Victory Park.” Katy Industries, now American Plastics, owns brands that include Huskee plastic trash bins, Wilen cleaning supplies and Contico plastic containers and shelving.