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The Zohar investment funds at the heart of Lynn Tilton’s $2.5 billion distressed-debt empire sued their founder Monday, accusing Ms. Tilton of pillaging more than $1 billion from investors and the troubled companies she manages, the Wall Street Journal reported. Through a “toxic mix of fraud, theft and mismanagement,” Tilton stole money from the Zohar funds and from the troubled companies, siphoning hundreds of millions of dollars in fees and assets from a souring loan portfolio and failing businesses, according to the lawsuit filed in federal court in New York. Tilton denied the allegations in the suit. The Zohar funds are collateralized loan obligations created by Tilton and packed with loans to troubled companies managed by her and her New York-based Patriarch Partners investment firm. Read more. (Subscription required.) 

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

Bankruptcy Judge A. Benjamin Goldgar yesterday approved the restructuring plan for Caesars Entertainment Corp.’s operating unit, paving the way for the operator of the Caesars Palace Las Vegas and other casinos to emerge from chapter 11 protection later this year, the Wall Street Journal reported. Judge Goldgar yesterday confirmed the chapter 11 reorganization plan for Caesars Entertainment Operating Co.(CEOC) two years after the casino operator sought court protection. The plan, which will cut CEOC’s $18 billion debt load by about $10 billion, is the culmination of hard-fought negotiations among the company, its creditors, parent Caesars Entertainment and the parent’s private-equity backers — Apollo Global Management and TPG. At the heart of the plan is a settlement of CEOC and its creditors’ legal claims against parent Caesars and its private-equity backers related to a series of disputed asset transfers in the months leading up to CEOC’s Jan. 15, 2015, bankruptcy filing. In return for settling the claims, which an independent investigator said could be worth up to $5.1 billion, Caesars and its owners will contribute more than $5 billion to the CEOC financial restructuring.

After filing for bankruptcy protection in November, the Big Apple Circus is now putting its assets up for auction, the New York Daily News reported yesterday. Buyers can put in bids by a Feb. 3 deadline and the court-ordered auction is expected to be held Feb. 7. The one-ring circus said its debts amounted to $8.3 million, against assets of $3.8 million, in its chapter 11 filing. The circus' woes began after the 2008 financial crisis, legal documents show. At its height, the circus earned $18 million in the 2007-2008 season, performing over 350 shows in eight cities and towns. Read more. 

In related news, the Ringling Bros. and Barnum & Bailey circus announced that the show is closing later this year, after nearly a century-and-a-half run, a move that may signal the final act of an entertainment tradition embedded in American culture proved itself an enduring family entertainment, the Wall Street Journal reported yesterday. In recent years, the show struggled with sagging ticket sales, rising costs and opposition from animal-rights groups. Kenneth Feld, the 68-year-old chairman and chief executive of Feld Entertainment, the circus’ parent company, said that 462 employees, covering two touring Ringling shows and administrative staff, will be affected by the shutdown. Feld also said that the circus has about 85 animals, but that his company would assure they have new homes after the shows end in May. Read more. (Subscription required.) 

American Apparel LLC said it had started to lay off staff on Monday, after Canadian apparel maker Gildan Activewear Inc. withdrew its initial plan to acquire some of the bankrupt U.S. fashion retailer's manufacturing operations, Reuters reported. Gildan won the rights to American Apparel's brand with an $88 million bid in a bankruptcy auction last week. It had previously indicated it would assume some of its manufacturing operations, which had made the brand synonymous with "Made in the U.S.A." American Apparel spokeswoman Arielle Patrick said the company was laying off about 2,400 workers in Southern California. The company had 2,166 employees at its headquarters in Los Angeles, and 959 employees at the nearby South Gate manufacturing facility.

Limited Stores LLC, owner of U.S. women's apparel chain The Limited, said today that it filed for bankruptcy, Reuters reported. Limited Stores also said it agreed to sell its intellectual property and some related assets to an affiliate of private equity firm Sycamore Partners. Limited Stores, which filed for chapter 11 protection in Delaware, said on Friday that it would close all its brick-and-mortar retail locations effective Sunday.

Cameron Hughes Wine Inc. has after Vintage Wine Estates purchased the company as part of a bankruptcy court settlement this week, Wine Spectator reported on Friday. The Santa Rosa, Calif., firm emerged as the winner in a blind auction, agreeing to pay $5.5 million in a deal expected to be finalized within weeks. The proceeds will largely go to pay off Hughes Wine's debts with Union Bank. Hughes became a prominent name in the California wine industry during the global wine glut of the past decade. Recognizing that even premium wineries had excess wine, his company bought the wine in bulk, blended and repackaged it under its own label, in various limited series of "lots" and sold it at a discount. A deal with Costco put the wines in front of a loyal customer base who liked the price and quality. But when the excess juice dried up, so did Hughes' business. While the company developed a solid direct-to-consumer sales program, it wasn't enough to stay afloat. On March 24, 2015, the Superior Court of San Francisco placed the company in receivership.

Garden Fresh Restaurant Corp., which owns the Souplantation and Sweet Tomatoes restaurants, will sell its assets to a New York private investment firm as part of its bankruptcy restructuring plan, the Los Angeles Times reported on Saturday. The sale, approved in bankruptcy court last week, is expected to be completed by late January. San Diego-based Garden Fresh said that that once it emerges from chapter 11 later this month, 90 to 104 restaurants will remain. No significant changes to its day-to-day operations are anticipated, said Garden Fresh, which operates more than 100 company-owned restaurants in 11 states.

The sale of the operator of a Long Beach, Calif., container terminal has provoked stiff opposition from Hanjin Shipping Co.’s U.S. creditors, many of whom say the deal is designed to bypass them, the Wall Street Journal reported on Saturday. Hanjin has asked Bankruptcy Judge John Sherwood to sign off on a proposed $78 million sale of the business, overruling creditors that have fought the deal and aim to keep as many of the shipper’s assets in the U.S. as possible. Some U.S. creditors — including container lessors, insurance providers and the Port of Seattle — say that the terms of the sale and Hanjin’s plans to direct any proceeds to South Korea could leave them empty-handed and without recourse to fully enforce their rights. During a U.S. court hearing on the sale that began on Thursday, lawyers for Hanjin described the Long Beach terminal business as a “melting ice cube” that had to be sold quickly to preserve Hanjin’s ability to extract any value from the asset. The Seoul Central District Court, which is the primary authority overseeing Hanjin’s bankruptcy, has already approved the sale.

Caesars Entertainment Corp.’s main operating unit has cleared the way for the casino operator to exit bankruptcy protection with an agreement that ends the last objection to its reorganization plan, lawyers told a U.S. judge on Friday, Reuters reported. The U.S. Trustee had objected to the reorganization of Caesars Entertainment Operating Co Inc., the subsidiary that filed an $18 billion bankruptcy in 2015, because of legal protections for the non-bankrupt parent. The objection by the U.S. Trustee was a cloud over next week's trial to approve the Caesars unit's plan to cut $10 billion of debt and emerge from its two-year chapter 11 bankruptcy. A last-minute deal with the U.S. Trustee removes that threat. Details of the agreement would be filed later, Joe Graham, a lawyer for the bankrupt unit, said at a hearing at the U.S. Bankruptcy Court in Chicago. Judge Benjamin Goldgar said that if the issues were resolved, "you can present an order and I'll sign it."

American Apparel LLC has lined up a buyer for one of its Southern California manufacturing plants, a deal which could potentially save more than 330 jobs, a company lawyer for American Apparel said, the Wall Street Journal reported today. The bankrupt retailer has reached a preliminary deal to sell its Garden Grove, Calif., facilities to Broncs Inc., American Apparel lawyer Carl Black said at a hearing in U.S. Bankruptcy Court in Wilmington, Del. The deal, which has yet to close, could be valued at somewhere between $200,000 and $250,000, said Black, of the Jones Day law firm.