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China Evergrande Group delayed key votes on its offshore-debt restructuring plan just hours before they were to occur Monday, adding to uncertainty in a protracted process to finalize one of the country’s biggest restructurings ever, Bloomberg News reported. The distressed developer, at the epicenter of a property crisis that’s unleashed record delinquencies in a threat to China’s financial markets, delayed the meetings for the group and some units to Sept. 25-26, it said in a filing. Evergrande cited a desire to let creditors evaluate recent developments including resumption of trading in its stock, as well as the terms of the proposals. Its shares slumped as much as 87% in Hong Kong trading following a 17-month halt, becoming a penny stock. “Not enough votes is probably the reason for the delay,” said Ting Meng, a senior credit strategist at Australia & New Zealand Banking Group, adding that it is uncertain whether the meeting will be further delayed later. While resumption of share trading helps creditors gauge value as they think about how to vote, the sharp drop in the stock price has likely given them more concerns, she said. Investor patience is running thin. Evergrande shot past previous targets in unveiling its restructuring plan, and global money managers are still seeking clarity on what they might recover some 20 months after the firm’s first public bond default. The last-minute change Monday is also the second such abrupt delay from a major distressed Chinese developer in just days, after Country Garden Holdings Co. pushed back voting Friday on its request to extend payment on an onshore bond.

Some first-lien lenders to Joann Inc. are seeking advice from law firm Gibson Dunn & Crutcher as the fabric and crafts retailer looks to build up its cash reserves, Bloomberg News reported. Joann had about $19.7 million in cash and $61.3 million of availability under its revolver as of April 29, regulatory filings show. Its term loan due 2028 was quoted at about 47.5 cents on the dollar Thursday, according to data compiled by Bloomberg. Joann is exploring a sale-leaseback of its corporate headquarters in Hudson, Ohio. The company has undertaken sale-leaseback deals in the past and is always looking for strategic opportunities. The company has also been working with Alvarez & Marsal’s consumer & retail group since February to explore process optimization and cost savings related to store labor and information technology. It’s also getting advice from Houlihan Lokey Inc., which helped the company raise a $100 million first-in last-out facility that was completed in March.

A group of Wall Street firms that lent hundreds of millions of dollars to WeWork is exploring the possibility of a bankruptcy filing that could help the company exit from expensive office leases, one of several options under discussion, WSJ Pro Bankruptcy reported. After WeWork raised doubts about its ability to stay in business a few weeks ago, fund managers including BlackRock, King Street Capital and Brigade Capital are holding preliminary talks about the company’s restructuring options and indicated that they would support a plan for WeWork to file for chapter 11 bankruptcy. The creditors haven’t presented proposals related to a bankruptcy or debt restructuring to the company’s board. Bankruptcy could allow WeWork to shed a portion of its expensive commercial real-estate leases and in the process hand over control of the company to creditors like themselves. If a bankruptcy process is pursued, WeWork would likely restructure its debts and offer creditors shares in the reorganized company. The fund managers have become some of WeWork’s most important investors after they lent $1.2 billion in new debt to the company in March, accounting for about 50% of the company’s long-term debt, according to public filings. If WeWork is able to renegotiate a sufficient number of its high-cost office leases with landlords and bring down its cost of rent, the company may not need to file for bankruptcy and the company could possibly avoid restructuring its debts.

A bankrupt California hospital will receive a $10 million loan from a new state program to aid troubled providers, Bloomberg News reported. The loan would throw a lifeline to the San Benito Health Care District, which operates Hazel Hawkins Memorial Hospital in Hollister. San Benito filed for a rare Chapter 9 bankruptcy in May as it faced waning cash and unfunded pension obligations. Hazel Hawkins is one of 17 facilities to receive a loan through the program, a state press release outlined on Thursday. The community hospitals will be award a combined total of close to $300 million of assistance. “Across the country, community hospitals are experiencing financial stress like never before. These hospitals are often the only acute health care access point in their area,” said Governor Gavin Newsom said in the statement. “In partnership with the legislature, we are working to keep the doors open so Californians can access critical care close to home.” Like hundreds of other ailing rural hospitals, Hazel Hawkins caters to poorer patients lacking private insurance, or any insurance at all. Meanwhile, US hospitals still contend with higher labor costs and staffing shortages exacerbated by the pandemic. Hazel Hawkins said it would exhaust its cash next year and needed to restructure its outstanding obligations as it sought a buyer or partner, according to court papers. Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

A group of bond investors is expected to back a new restructuring plan for Puerto Rico’s power utility but would have to contend with other creditors that want to keep fighting for a better deal, the Wall Street Journal reported. BlackRock, Nuveen and Franklin Advisers are nearing a restructuring deal to write down $8.3 billion in debt owed by the bankrupt electric monopoly to a fraction of that amount. The new deal would open a path to ending the Puerto Rico Electric Power Authority’s six-year bankruptcy case and has divided bondholders that until recently were united in negotiations. Bondholders including GoldenTree Asset Management are preparing to battle in court to try to sink the debt plan, due to be filed in court today. BlackRock and others owed nearly $2.4 billion recently broke with a longstanding Prepa bondholder committee advised by law firm Kramer Levin Naftalis & Frankel and formed their own splinter group with lawyers from Paul Weiss Rifkind Wharton & Garrison, court records show. GoldenTree also has hired its own lawyers from White & Case.

Shares of Orbital Infrastructure Group plummeted after the company and multiple subsidiaries filed voluntary chapter 11 petitions in federal bankruptcy court, extending a selloff that ravaged shares on Wednesday, MarketWatch.com reported. The stock dropped 29% to 85 cents in off-hour trading. When the market closed Wednesday, shares had fallen by a third that day and by 96% over the preceding 12 months. The infrastructure services platform said on Wednesday that it received notice from Nasdaq that it was violating listing requirements by failing to file a quarterly report, spurring the initial selloff. Orbital Infrastructure said it had until Aug. 25 to request a stay of the suspension of its shares from the exchange. Then late Wednesday night, the Houston-based company disclosed that it and four subsidiaries had filed for chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. The bankruptcy filing excludes subsidiaries Front Line Power Construction and Gibson Technical Services, which are being sold as part of the bankruptcy process. Orbital Infrastructure has entered into purchase agreements with each company's lenders, who are considered "stalking horse" bidders as the purchase agreements contain terms against which competing offers will be solicited during a chapter 11 auction process.

Mallinckrodt said it plans to file for bankruptcy in the coming days after reaching a deal with most of its lenders to restructure its debt as the company struggles to make opioid settlement payments, WSJ Pro Bankruptcy reported. The filing will mark the company’s second bankruptcy filing. Mallinckrodt, one of the largest makers of opioids, emerged from chapter 11 last year. The company said it has reached a restructuring deal that has the support of most of Mallinckrodt’s creditors. The agreement provides for a final payment of $250 million to an opioid victims compensation trust. Mallinckrodt said it has already paid $450 million to the trust, which was established to fund addiction treatment and address the U.S. opioid crisis. The creditor agreement also would reduce the company’s total funded debt by about $1.9 billion, Mallinckrodt said. The company said it expects to complete the chapter 11 process in the fourth quarter of this year, and said it is still operating normally.

Bankruptcy courts nationwide have seen more litigation-funding deals in recent years, as distressed companies and their creditors sell the rights to pursue lawsuits in exchange for upfront cash, WSJ Pro Bankruptcy reported. With the pace of corporate defaults picking up, litigation funding could fuel more disputes in bankruptcy court that can alter creditors’ recoveries. “We’re seeing a recognition of litigation assets as another source of value for companies and their unsecured creditors in a more robust way than we have in the past,” said Ken Epstein, investment manager and legal counsel at litigation funder Omni Bridgeway. Benefit Street and three other investment firms put up nearly $5.6 million to bankroll a lawsuit on behalf of unsecured bondholders of Sanchez, which exited bankruptcy in 2020 under the new name Mesquite Energy. Earlier this month, a bankruptcy judge ruled that 70% of the company belongs to unsecured creditors, rather than to its former bankruptcy lenders Fidelity Investments and Apollo Global Management. Benefit Street and the three other asset managers negotiated for 90% of the lawsuit’s proceeds in return for their financing. That means only 10% of the recent award would be spread among all the company’s unsecured creditors. One of them, Lake Whillans Capital, sued earlier this month to challenge the litigation loan, saying that a court-appointed creditor representative signed away too much of the lawsuit’s value.

WeWork Inc. is rounding up advisers for help with a restructuring as it struggles with a heavy debt load and poor financial performance, Bloomberg News reported. The co-working giant reportedly has hired real estate adviser Hilco Global, once again tapped consultant Alvarez & Marsal and re-engaged law firm Kirkland & Ellis for advice on its options. The company is seeking to avoid a chapter 11 bankruptcy filing and restructure its debts out of court, one of the people said. WeWork’s ability to stave off bankruptcy will depend in large part on whether it can terminate or renegotiate a substantial number of its leases in more expensive markets, the people said. The company earlier this month told investors there is “substantial doubt” about its ability to stay in business. “We will continue to invest in our product offerings while simultaneously taking necessary steps to reduce rent and tenancy costs. Our members remain our priority and, regardless of any near-term actions we may take, we will continue to operate and serve them for the long term,” a representative for WeWork said in a statement.

Bankrupt crypto exchange FTX has hired U.S. crypto firm Galaxy as an advisor to help hedge and sell its crypto holdings, according to court filings yesterday, Reuters reported. Hedging of bitcoin and ether will provide a means to lessen FTX's exposure to adverse price movements before their sale, the filing said. Galaxy, owned by billionaire investor Mike Novogratz, will also help "stake" FTX's crypto, a process where crypto is lent to validate blockchain transactions, earning interest in the process. "Galaxy Asset Management has extensive experience in areas relevant to digital asset management and trading, including with respect to the types of transactions and investment objectives contemplated," the filing said, referring to the investment advisory arm of Galaxy. FTX filed for bankruptcy in November 2022 in the wake of claims that the company misused and lost billions of dollars worth of customers' crypto deposits.