%1

Newly released court records show that Altegrity Inc., a company linked to some notable U.S. security stumbles of recent years, shelled out $25.7 million to top executives the year before it filed for bankruptcy protection, the Wall Street Journal reported on Saturday. Some of the money was channeled through Altegrity subsidiary US Investigations Services, which vetted Edward Snowden for his National Security Agency contract work. The company also conducted the background check on Aaron Alexis, an employee of a government subcontractor who killed 12 people in a shooting rampage at the Washington Navy Yard in September 2013. Altegrity, which is based in Falls Church, Va., has denied doing shoddy work. It filed for bankruptcy protection in February after losing the federal contracts that accounted for over one-third of its revenue. On Thursday, the company said that executive bonuses handed out as it headed to bankruptcy were part of agreements put in place in 2013 and 2014 as it cut costs and streamlined the organization.

Chassix Inc., the bankrupt auto-parts maker, can send its reorganization plan to creditors for a vote after it changes wording on how the proposal protects its private-equity owner, Platinum Equity LLC, from potential lawsuits, Bloomberg News reported today. Bankruptcy Judge Michael E. Wiles approved a disclosure statement that lays out terms of the debt-for-equity swap Thursday, following hours of debate and negotiation among creditors and the U.S. Trustee. Both protested the releases from potential lawsuits that the plan would give to billionaire Tom Gores’s Beverly Hills, California-based Platinum Equity. “The release is still exceptionally broad,” Judge Wiles said after a first round of changes to the plan’s wording. He approved it after a second batch of edits that allowed creditors to “opt in” to the releases in order to be bound by them.

Creditors of the bankrupt operating unit of Caesars Entertainment Corp. said that they wanted to stop the casino company from extending the period when it has exclusive control of its chapter 11 reorganization so other plans could be proposed, Reuters reported yesterday. The creditors filed objections on Wednesday to the request by the operating unit to extend to Nov. 15 from May 15 its exclusive right to propose a plan to cut its $18 billion in debt. The operating unit filed for bankruptcy in January, and creditors rarely oppose a company extending exclusive control so early in the case. Among those objecting were the company's lone allies, a group known as the first-lien noteholders who preferred an extension to September.

BlueMountain Capital Management LLC and Halcyon Asset Management LLC will suffer losses if Energy Future Holdings Corp. fails to pay them a $431 million premium on their notes, even after the hedge funds get back all the money they lent the power company, portfolio managers testified, Bloomberg News reported yesterday. John Greene of Halcyon and Ethan Auerbach of BlueMountain were in bankruptcy court yesterday to fight Energy Future’s decision to refinance the senior notes last year without also paying the $431 million premium. Such payments are sometimes made to compensate lenders for lost interest when a borrower redeems a debt early. The Energy Future unit that repaid about $4 billion in notes is profitable and solvent, unlike the rest of the company. That’s why Halcyon paid about 107 cents on the dollar for at least $100 million in Energy Future senior notes last year, Greene, the director of research at the hedge fund, told U.S. Bankruptcy Judge Christopher Sontchi.

The former owners of the Revel casino are acknowledging a long list of mistakes that helped kill the $2.4 billion resort, including an onerous energy contract that strangled it from the get-go, the Associated Press reported yesterday. A proposed disclosure statement for its bankruptcy case filed on Monday includes a history of Revel, which shut down last September without having turned a profit. The filing puts much of the responsibility on Revel's initial management, led by former CEO Kevin DeSanctis. It lists problems from construction cost overruns, taking on too much debt, the failure to attract day-tripping gamblers, pricey food and beverages and startup glitches with marketing and technology. But one of the costliest missteps — and one that continues to plague Revel now, even as a shuttered building — was its contract with its utility provider.

Patriot Coal Corp., the miner that emerged from bankruptcy two years ago, is exploring options to sell itself as prices for its commodity stagnate in the worst downturn in decades, Bloomberg News reported yesterday. The coal company hired investment bank Centerview Partners LLC and restructuring advisory firm Alvarez & Marsal Inc. to help it examine reorganization options that include selling some or all of its assets. Patriot, based in Scott Depot, West Va., emerged from bankruptcy on Dec. 18, 2013, slashing its debt to $545 million from $3.07 billion. Patriot announced the resignation of Chief Executive Officer Bennett K. Hatfield earlier this month and promoted Robert W. Bennett to the position.

A group of hedge funds is pushing to extract an extra $431 million from bankrupt Energy Future Holdings Corp., claiming they’re entitled to the money because the power company paid off its debt to them early, Bloomberg News reported yesterday. BlueMountain Capital Management LLC, Cyrus Capital Partners LP and Halcyon Asset Management LLC asked a federal judge yesterday to let them try to overturn Energy Future’s decision to refinance almost $3 billion in first-lien notes without paying them a “make-whole” premium. The hedge funds and other noteholders claim they should get the money to compensate them for lost interest. 

Women's clothing chain Simply Fashion Stores Ltd. sought bankruptcy protection on Thursday with plans to liquidate, the latest in a long line of women's retailers to fall on hard times in the past year, Dow Jones Newswires reported on Friday. Simply Fashion, which has nearly 250 stores in 25 states, filed for chapter 11 in U.S. Bankruptcy Court in Miami. The family-run company, founded in 1991, built its business by taking advantage of fire sales in retail bankruptcies. Simply Fashion got its start after buying 100 store leases through the bankruptcy of a retailer that sold clothing for $6 or less. It picked up more leases from other bankruptcy cases in 1996 and 2005. In 2014, Simply Fashion began licensing the intellectual property from Dots, another retailer that went into bankruptcy, and reopened 60 Dots stores. The company owes $9 million in secured debt to two of its owners, Swapnil Shah and Shail Shah. Its unsecured debts include $400,000 owed to IberiaBank, $3.7 million in general unsecured claims and $9.9 million in unsecured debt owed to insiders.

Education Management Corp. says that it has completed the final step of its $1.3 billion debt restructuring, which converted preferred stock into common shares, Dow Jones Daily Bankruptcy Review reported today. The for-profit education company that runs schools including the Art Institutes said it’s converted the stock to 94.9 percent outstanding stock, leaving no shareholder with more than 20 percent of the common stock. Those who held common stock prior to EDMC's restructuring now own 4 percent of the outstanding common stock.