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A move by a pair of mall owners to rescue distressed retailer Aéropostale Inc. shows how some landlords are getting more aggressive as they seek to stem a rising tide of vacancies and store closings, the Wall Street Journal reported today. Simon Property Group and General Growth Properties Inc. were part of a consortium that last week won an auction to purchase teen-apparel retailer Aéropostale, an unusual move in which shopping-center landlords stepped in to rescue a tenant to preserve the tenant’s business. The push to take over the struggling retailer comes at a time when changing shopping habits and the growth of e-commerce are eating into traditional retailers’ revenue and in some cases forcing store closures. That, in turn, is weighing on mall operators, forcing some to reconfigure their properties and add other attractions to bring in shoppers. Simon and General Growth saw value in keeping afloat Aéropostale, which had filed for chapter 11 protection in May and later faced the threat of liquidation. Aéropostale stores potentially generate more than $1 billion in global retail sales, of which more than $800 million is from the U.S., said General Growth Chief Executive Sandeep Mathrani in a news release. Simon counts 160 Aéropostale stores and General Growth has 77 in their respective tenant portfolios. Read more. (Subscription required.) 

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Caesars Entertainment Corp. is inching closer to a deal to finance the reorganization of its bankrupt operating unit and end two years of rancorous court battles that embroiled the casino giant and its controlling shareholders, Apollo Global Management LLC and TPG Capital, Bloomberg News reported on Saturday. Caesars Entertainment Operating Co.’s bondholders and lenders are hammering out the framework of a deal. Negotiations continued on Saturday after a Friday deadline passed without a final agreement. The parties must determine how to divide a $400 million payout called for in a new plan the casino operator offered two days ago to get holdout second-priority creditors on board with a restructuring. A proposal under discussion would require the operating unit’s most senior bondholders and lenders to give up $170 million of their original recoveries, while Caesars provides $200 million. The unit’s lower-ranking, second-lien bondholders, a group that includes David Tepper’s Appaloosa Management, would forgo the remaining $30 million.

A bankruptcy judge on Friday expressed concern that Hanjin Shipping Co.’s efforts to cobble together a restructuring plan may be moving too quickly for U.S. creditors, the Wall Street Journal reported on Saturday. The South Korean shipping company hopes to file a plan of reorganization with a Korean court by Dec. 23, court papers show, about four months after it sought protection there and in the U.S. “It’s very condensed,” Bankruptcy Judge John Sherwood said on Friday at a status hearing in the company’s U.S. bankruptcy proceeding. “I’m just concerned that U.S. creditors will be asleep at the wheel, because it’s a fast process.” Once Hanjin’s restructuring plan is on file, it will then be up to the South Korean court to decide whether to accept the plan or to let the company go under. Read more. (Subscription required.) 

In related news, failed South Korean container carrier Hanjin Shipping Co. Ltd. said on Friday that cargo owners were withholding up to $80 million in payments for completed shipments, complicating the company's ability to move stranded freight, Reuters reported. Hanjin lawyers said that many cargo owners had received their goods on credit but have yet to pay the shipping company. An attorney for Ashley Furniture Industries, a Wisconsin-based furniture maker, told Friday's hearing the company anticipated that costs related to Hanjin's failure would eventually exceed what it owed for past shipments. Like many retailers and other cargo owners, Ashley has been stuck paying to get its cargo from the dockside, even though Hanjin had been paid to deliver it to an inland destination. In addition, many retailers and other cargo owners have complained they have been stuck with empty Hanjin containers that ports have been unwilling to take back. Read more.

Most oil producers would welcome higher crude prices, after a two-year downturn has pushed more than 100 U.S. energy companies into bankruptcy, but for some distressed drillers, a rebound could actually make things worse, MSNBC.com reported on Friday. Throughout the rout in oil prices, senior lenders have largely been able to dictate the terms of energy bankruptcy proceedings as drillers' assets have fallen in value. But when oil prices rise, so does the value of a company's reserves. That in turn can prompt so-called junior creditors to challenge restructuring plans in a bid to get a bigger piece of what's left of the pie. High oil prices "embolden junior classes to fight harder, meaning possibly fewer agreements, and hence more need for a court process to resolve the issues," said Patrick Hughes, a Denver-based bankruptcy lawyer at Haynes and Boone. Last year, creditors recovered just 21 percent of the capital they lent to 15 bankrupt oil and gas exploration and production companies with at least $100 million in debt, Moody's Investors Service reported this month. That compares with a historical average recovery rate of nearly 59 percent. Read more. 

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The dispute between LeClairRyan and Health Diagnostic Laboratory may be settled, but the contentions between HDL’s former executives and the Richmond-based law firm appear far from over, the Richmond Times-Dispatch reported today. A bankruptcy judge approved the settlement agreement between LeClairRyan and HDL at the end of a four-hour hearing Thursday in which various executives’ attorneys argued against the agreement. The settlement, filed earlier this month, releases LeClairRyan from all the claims HDL had against it. It is not an admission of guilt on the part of the law firm, the document stipulates. Though HDL’s claims are not public record, they center on the legal advice — or lack thereof — that LeClairRyan may have given HDL while it worked for the downtown-based blood-testing laboratory. One issue frequently mentioned in court documents is the practice of paying process and handling fees to physicians who used HDL’s services. HDL paid unusually high process and handling fees during its heyday, before filing for bankruptcy in June 2015. The practice violated state and federal anti-kickback laws, according to the U.S. Department of Justice, which investigated the practice and is as a result suing several former HDL executives.

The producer of “American Idol” won court approval to shed hundreds of millions of dollars of debt, and cleared a path toward working with Simon Fuller, the creator of the franchise, after it exits bankruptcy, Bloomberg News reported yesterday. Core Entertainment, which has continued to produce television programs including "So You Think You Can Dance" while in bankruptcy, won approval of a plan yesterday that includes a settlement with a committee of creditors and the cancellation of equity that had been owned by Apollo Global Management LLC and Twenty-First Century Fox Inc, according to court papers. Bankruptcy Judge <b>Stuart Bernstein</b> approved the plan yesterday, after hearing that most creditors had voted in favor, and all written objections had been resolved before the hearing, including one from Fuller.

Caesars Entertainment Corp. is the closest it’s been to ending two years of rancorous court battles with bondholders over who should pay to fix the casino giant’s insolvent operating unit, which can’t afford to pay almost $20 billion in debt, Bloomberg News reported today. The company is giving creditors until midnight in New York to accept a sweetened offer of more than $5 billion in cash, new debt and stock in a reorganized company. A group of bondholders that have been the biggest obstacle to the company’s plan has agreed on the framework of a deal, people familiar with the talks said Thursday. Now the question will be whether the company’s more senior lenders — who were on board with previous iterations of the plan — will be willing to give up some of the gains they won at the negotiating table in order to get the plan approved. Those creditors, who hold Caesars’ bank loans and first-lien bonds, would need to give up “hundreds of millions of dollars” in recoveries, according to the offer Caesars disclosed on Wednesday. A deal would put the unit, Caesars Entertainment Operating Co., on track to exit one of the biggest bankruptcies of the past decade. Creditors including David Tepper’s Appaloosa Management have been battling the private-equity titans that acquired the company in a 2008 leveraged buyout, Apollo Global Management LLC and TPG Capital. Read more. 

In related news, Bankruptcy Judge A. Benjamin Goldgar provided comments on Wednesday regarding the resignation of the mediator in the case. Judge Goldgar offered clarification on some of the critical comments and misunderstandings he found within the resignation letter. Click here to read the court excerpt. 

Lightstream Resources Ltd. is seeking court protection from creditors after failing to win enough support for a restructuring plan meant to cut debt at the Canadian oil driller by $904 million, Bloomberg News reported yesterday. The company plans to make a court filing under Canada’s Companies’ Creditors Arrangement Act on Sept. 26, Calgary-based Lightstream said Monday in a statement. The filing had been contemplated as an alternative to a proposal made in July to hand control of the recapitalized company to its highest-ranked bondholders. Unsecured lenders and shareholders would have received small stakes. Hedge fund Mudrick Capital Management LP, an unsecured noteholder, opposed the swap because it would have awarded equity to existing shareholders. Mudrick also said that a previous restructuring had bumped the fund down the capital structure, depriving it of a larger stake in the company under the July plan. Mudrick and FrontFour Capital Group LLC sued Lightstream after a 2015 debt swap gave a higher claim on the producer’s assets to distressed-debt investors Apollo Global Management LLC and Blackstone Group LP’s GSO Capital. The hedge funds said that they shouldn’t have been left out of that deal. Read more. 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

NJOY Inc., one of the nation’s largest electronic cigarette makers, filed for bankruptcy in Delaware on Sept. 16, owing close to $4 million in unpaid legal fees to several big firms, including DLA Piper and Goodwin Procter, the National Law Journal reported yesterday. The Scottsdale, Ariz.-based company seeks to remain in business while selling off assets is a leading manufacturer and distributor of e-cigarettes and other vaping products. Jeffrey Weiss, NJOY’s general counsel and interim president, said in a declaration of his own that the company’s bankruptcy was attributed to several issues. Among them were the market failure of NJOY’s King 2.0 disposable e-cigarette in 2013 and its unsuccessful attempt at a rebranding in 2014. Another contributing factor to NJOY’s chapter 11 filing was the substantial costs incurred by the company this year in order to comply with a series of regulations announced by the U.S. Food and Drug Administration in May controlling the registration and distribution of e-cigarettes, according to Weiss’ declaration.

BlackRock Inc. has joined a list of potential buyers for TerraForm Power Inc., a holding company founded and controlled by bankrupt wind-and-solar energy giant SunEdison Inc., Bloomberg News reported yesterday. Funds of the New York-based firm are assessing the value of TerraForm Power’s assets to prepare for a bid. TerraForm Power, along with sister company TerraForm Global Inc., own wind and solar assets, some of which are operated by SunEdison. Both said earlier this week that they seek to sell their entire businesses, or operate independently. The two yieldcos are not in bankruptcy, and SunEdison owns a controlling stake in TerraForm Power through Class B shares. SunEdison, which has been selling off assets in chapter 11, said earlier in September that it had reached an agreement with TerraForm Power and TerraForm Global over when and how they would bring claims as part of the bankruptcy.