%1

Bankruptcy Judge Kevin R. Huennekens yesterday gave final approval to Health Diagnostic Laboratory Inc.’s debtor-in-possession financing deal, the Richmond (Va.) Times-Dispatch reported today. The financing arrangement with CVF Beadsea LLC, an affiliate of the Greenwich, Conn.-based investment firm Credit Value Partners, gives Richmond-based HDL access to a revolving loan of up $12 million, which the company can use to support its business operations while it tries to sell itself under chapter 11 protection. The ruling by Judge Huennekens enables HDL, a blood-testing company with a laboratory and office in downtown Richmond, to access the full loan amount despite objections raised by the company’s primary lender, BB&T Bank. BB&T has questioned the terms of the financing deal, which the bank argues inappropriately put its claims on HDL’s assets in a subordinate position to the new lender. Late Friday, the U.S. District Court in Richmond denied an appeal by BB&T that sought to overturn Judge Huennekens’ preliminary approval of the financing arrangements on Aug. 4.

An affiliate of Paul Singer’s Elliott Management has asked a bankruptcy judge to push back a hearing on Relativity Media LLC’s proposed sale by a few days, saying that anything less would amount to a “trial by ambush,” the Wall Street Journal reported today. In bankruptcy court papers filed yesterday, the affiliate, Manchester Securities Corp., said that Relativity waited until the 11th hour to send new and conflicting information to its creditors, violating “basic notions of due process and fundamental fairness.” Manchester asked Bankruptcy Judge Michael Wiles to delay a key hearing scheduled for today until Friday, saying that the postponement would have no negative consequences for Relativity or other creditors. The new information disclosed late Friday — some of it under seal — includes essential facts and figures related to the company’s plan to hand its assets to a group of lenders, some of whom have also agreed to provide $45 million in financing to fund Relativity’s operations while in bankruptcy.

Bankruptcy Judge Robert Drain said yesterday that Great Atlantic & Pacific Tea Co. could sell pharmacy assets at 12 of its in-store pharmacies to Rite Aid Corp. for $8.1 million, the Wall Street Journal reported today. The approval by Judge Drain means the closings of the pharmacies will begin today and last through the beginning weeks of September. Rite Aid is buying inventory and customer-prescription information from pharmacies at 12 of the 25 A&P supermarkets that are closing. As part of the deal, Rite Aid will notify customers in writing that their prescription information is being moved, a recommendation made by Elise S. Frejka, a consumer privacy ombudsman appointed in the case. A&P said in court papers last week that it received seven bids for pharmacy assets at 22 of the 25 stores it is immediately closing, and the Rite Aid deal was the only one that exceeded the $5 million threshold that requires Judge Drain’s approval.

The Roman Catholic Archdiocese of Milwaukee yesterday filed its bankruptcy reorganization plan, formalizing a recent settlement deal that will divvy up $21 million among more than 300 victims of clergy sex abuse, the Associated Press reported yesterday. The archdiocese filed for chapter 11 protection in 2011 to address its sex abuse lawsuit liabilities. The bankruptcy plan is scheduled for review in November, and church officials are "hopeful this is approved by the judge," archdiocese spokesman Jerry Topczewski said. The creditors' committee, which comprises five abuse victims, is expected to endorse the deal, committee chairman Charles Linneman said. Victims' advocates have criticized several aspects of the agreement, and Peter Isely, Midwest director of Survivors Network of those Abused by Priests, said that he and others will work to address key issues, including getting more claims included in the settlement, before Bankruptcy Judge Susan Kelley reviews the case. Read more.

“Diocese and Religious Order Bankruptcies” will be a featured session at this year’s Winter Leadership Conference, happening December 3-5 at the Arizona Biltmore in Phoenix, Arizona. For more information and to register, click here.

A number of state and federal agencies are objecting to the broad releases of liability in defunct for-profit college operator Corinthian Colleges Inc.'s chapter 11 liquidation plan ahead of a bankruptcy court hearing on Wednesday to consider approval of the proposal, Dow Jones Daily Bankruptcy Review reported today. Corinthian's proposed plan says that student creditors and general unsecured creditors are receiving payment "in full and final satisfaction and settlement" of their claims. The plan provides for the establishment of two trusts, each containing a piece of what's left of Corinthian's assets, to pay the two creditor groups. The U.S. Department of Education said in court documents on Friday that the plan language amounts to a release of liability for Corinthian Colleges, which is still facing lawsuits from state and federal agencies regarding the company's allegedly deceptive marketing practices to students, among other issues. Corinthian has denied wrongdoing in these lawsuits.

Colt Holding Co. is asking a bankruptcy judge to approve golden parachutes that could be as high as a full year's salary for nine top executives, the Hartford (Conn.) Courant reported on Saturday. The bonuses would be paid if an executive were fired, resigned because of lower pay under future owners, or moved to a different location — but only if the company reaches a certain profit level between now and January. Colt's request, totaling millions of dollars, comes as the company is trying to wipe out $350 million in debt that it owes to creditors, chiefly bondholders. The company is also trying to break a provision in the union contract that guarantees the rank-and-file production workers — about 500 members of the United Auto Workers union — can keep their current compensation through the end of their contract in March 2019.

A bankruptcy judge approved the pending sale of Parkview Adventist Medical Center to its nearby rival, Mid Coast Hospital, the Portland (Maine) Press Herald reported on Saturday. Bankruptcy Judge Peter Cary signed the order on Thursday allowing the merger of the two Brunswick hospitals to proceed as part of a bankruptcy action filed in June by Parkview. The order stipulates that approval of the sale is in the best interests of the Parkview, the bankruptcy estate and its creditors. The terms of the agreement calls for Mid Coast to pay Parkview $3.8 million at the closing, to forgive $579,540 of an advance it gave to Parkview during the bankruptcy proceeding and to commit $1 million each year for three consecutive into the Parkview campus. All 190 Parkview employees are expected to be rehired by Mid Coast.

Great Atlantic & Pacific Tea Co. wants fast court approval to sell off the assets of some of its in-store pharmacies to Rite Aid Corp. for up to $8.1 million, Dow Jones Daily Bankruptcy Review reported today. A&P said in a Thursday court filing that Rite Aid has agreed to buy inventory and customer-prescription information from pharmacies at 12 stores that are closing. Bankruptcy Judge Robert Drain has approved the grocer's request for a hearing today on the matter.

Caesars Entertainment Corp. said that it reached a deal with the most-senior lenders to its bankrupt unit, allowing the casino operator to focus on getting support from the last major group holding out on its restructuring plan, Bloomberg News reported on Saturday. The agreement, announced on Friday, requires the lenders to approve Caesars’ plan to reorganize its main operating subsidiary, the bankrupt Caesars Entertainment Operating Co. The pact is effective immediately, meaning a majority of the loan holders have signed it. The casino company, owned by Apollo Global Management LLC and TPG Capital, now has support from holders of its two most-senior slices of debt for the plan to turn the unit into a real estate investment trust. The obligations total $11.7 billion.

A federal appeals court yesterday refused to undo a central component of Tribune Co.’s bankruptcy plan in a defeat for prominent hedge fund Aurelius Capital Management LP, which claimed it was short-changed by the reorganization, Reuters reported yesterday. By a 3-0 vote, the U.S. Court of Appeals for the Third Circuit said that letting Aurelius pursue an appeal related to more than $2.2 billion of bankruptcy claims would be unfair to Tribune and to creditors who overwhelmingly approved the media company's chapter 11 plan. Circuit Judge Thomas Ambro said that those parties deserve "finality" after Tribune's emergence from bankruptcy in December 2012, while Aurelius did not deserve "by judicial fiat what it could not achieve by consensus within chapter 11."