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Offshore oil exploration company Stone Energy Corp., which filed for bankruptcy last week, has agreed to increase the potential recovery for shareholders in its chapter 11 plan, Reuters reported yesterday. On Dec 14, the Lafayette, La.-based company joined a long list of oil producers that have filed for bankruptcy amid a two-year slump in prices. Stone plans to use chapter 11 to eliminate about $1.2 billion in debt by transferring control to its noteholders. Stone's two largest shareholders, Thomas Satterfield of Birmingham, Alabama, and Raymond Hyer of Tampa, Florida, have attacked the company's chapter 11 plan and requested the formation of an official equity committee. According to court papers filed yesterday, the pair have dropped that demand and are now backing the plan of reorganization, which Stone revised to increase the post-bankruptcy stake reserved for shareholders to 5 percent from 4 percent. Read more. 

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Lensar, the Orlando-based developer of surgical ultrafast laser systems for cataract treatment, has filed for chapter 11 protection, Optics.org reported. The company was acquired almost exactly a year ago by “social commerce” business Alphaeon, in a debt, cash and stock deal valued at around $59 million. Lensar says that, coupled with a restructuring, the bankruptcy filing will allow it to cut its debt levels — and notes that PDL Biopharma, its senior secured creditor, supports the decision. PDL Biopharma agreed a loan deal worth up to $60 million with Lensar back in 2013, part of a wider investment at the time that included $27 million in new venture capital. However, the terms of the PDL loan had appeared punitive, with 15.5 percent in annual interest charged on the initial $40 million tranche of the loan to Lensar. The additional $20 million tranche was never loaned, and when Alphaeon acquired Lensar last year, the terms of the credit agreement were amended to give PDL a “first lien” security interest in Lensar’s equity and assets.

Startup yoga clothing company Yoga Smoga Inc., founded by a pair of siblings who left Wall Street banks to begin the company, landed in chapter 11 bankruptcy on Monday amid a dispute with its largest investor, the Wall Street Journal reported today. The New York-based company was billed as a challenger in the premium yoga market and drew comparisons with yoga-clothing giant Lululemon Athletica Inc. It aimed to set itself apart as the authentic brand in a market saturated with flashy spandex pants. The chapter 11 filing with the U.S. Bankruptcy Court in Manhattan follows an involuntary chapter 7 bankruptcy petition submitted to the court in November. Three creditors that claimed to be owed $3.2 million submitted the involuntary petition. The creditors include Durga Capital LLC and the Ravi Singh 2015 Family Trust, both of which are associated with Ravi Singh, former chairman of Yoga Smoga’s board.

American Apparel LLC will close nine of its stores, including locations in New York and Washington, D.C., by Dec. 31 and won approval of an agreement with liquidators that would govern the closure of any stores that aren’t sold during an auction in January, Bloomberg News reported yesterday. The approval on Monday by Bankruptcy Judge Brendan Shannon means that American Apparel can begin using the notorious yellow “going out of business” signage at these nine stores, which include locations in Georgetown and Tribeca, during the next two weeks. Although the company hasn’t yet begun the aggressive liquidation promotions at these stores, it has been running sales since earlier in December, it said in court documents. Liquidation sales at these stores are likely to generate $600,000 in income for American Apparel, and their closures will save $200,000 a month in rent, it said.

At a 2007 meeting to discuss a potential buyout of Avaya Inc., some employees of private-equity firm TPG expressed concerns that the company was at risk of becoming technologically outmoded, a “buggy-whip business,” as one put it, according to a Wall Street Journal analysis. To them, Avaya’s business of installing and managing corporate phone systems appeared vulnerable to the same forces that were making landlines scarce in households across the U.S., according to people familiar with the meeting. But their concerns, not unusual in deal deliberations, didn’t prevent TPG from partnering with Silver Lake on a roughly $8 billion deal to take Avaya private. The firms were betting that Avaya’s sales of corporate telecommunications gear would chug along while they cut costs and teed up a profitable exit. Instead, the ensuing financial crisis decimated corporate spending. And when companies started buying again, Avaya faced stiff competition from rivals Cisco Systems Inc., Microsoft Corp. and, later, from Internet-based phone services. As sales fell, Avaya began to buckle under the weight of a multibillion-dollar debt load the buyout firms layered on and pension obligations largely dating back to the company’s time as a unit of AT&T. Now Silver Lake and TPG stand to lose most of the more than $2 billion they invested in the buyout and two related acquisitions. Avaya is weighing a chapter 11 bankruptcy filing to slash its $6 billion debt load.

Bankruptcy Judge Michael E. Wiles has granted Scout Media interim use of its debtor-in-possession loan, allowing the network of college basketball and football websites to keep operating as it markets itself for sale, TheStreet.com reported yesterday. Scout had failed to immediately win approval of the then-$6.2 million loan from Judge Wiles when the debtor first presented it to him on Dec. 12 in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. Judge Wiles took issue with provisions that would have given pre-petition lender Multiplier Capital a contingency fee if Scout's unsecured creditors recovered most of their claims and allowed Scout to use the loan to pay off part of its pre-petition obligations to Multiplier, replacing that debt with new, higher priority debt through what is called a gradual rollup. The loan as approved yesterday, now has a $4.35 million borrowing cap and no longer contains the contingency fee or the mechanism for gradually rolling up prepetition debt. It carries a 13 percent interest rate and matures on Feb. 6 — the deadline by which Scout must consummate a sale of its assets.

Caesars Entertainment Corp. said yesterday that lenders to its bankrupt operating unit have moved to potentially terminate a pact to support the unit's $18 billion restructuring, Dow Jones Newswires reported. The lenders, owed $5.4 billion, cited the currently "unacceptable" terms of the new debt they are slated to receive under the restructuring plan as the reason for looking to consider breaking off their support for the plan, Caesars said yesterday in a filing with the Securities and Exchange Commission. If Caesars and its Caesars Entertainment Operating Co., or CEOC, unit don't address the problem by Dec. 24, then the lenders could officially terminate their support pact, the SEC filing said.