LATAM Airlines Group SA said today that the company and its affiliates in Chile, Peru, Colombia, Ecuador and the United States have filed for chapter 11 bankruptcy protection in the U.S., Reuters reported. Latin America’s largest airline said that it secured funding from shareholders, including the Cueto and Amaro families, and Qatar Airways, to provide up to $900 million in debtor-in-possession financing. LATAM Airlines said that its affiliates in Argentina, Brazil and Paraguay were not included in the filing.
Battery maker Exide Technologies has returned to bankruptcy protection for a third and likely final time, with bondholders poised to take over its European and Asia-Pacific operations, WSJ Pro Bankruptcy reported. Loaded down with about $817 million in debt and hundreds of millions of dollars of environmental problems, Exide is on the ropes financially and was facing liquidation, according to filings yesterday in U.S. Bankruptcy Court in Wilmington, Del. Talks with backers including investment firms MacKay Shields and Axar Capital Management produced enough financing to provide a possible way out of bankruptcy for the U.S., European and Asia-Pacific businesses, if they are sold. Preparations are under way for Exide to sell or transfer control of contaminated sites in the U.S., including a Vernon, Calif., recycling plant that was shut down in 2015 to ward off a threat of criminal prosecution.
J.C. Penney Co. Inc. filed for bankruptcy protection on Friday, the latest among traditional brick-and-mortar retailers to crumble as prolonged store closures due to the COVID-19 pandemic deliver the final blow to troubled businesses, Reuters reported. The U.S. department store chain, known for selling family apparel, cosmetics and jewelry at roughly 850 locations, said it reached an agreement with creditors for about $900 million of fresh financing to aid operations, while it navigates bankruptcy proceedings. The company filed for chapter 11 protection at the U.S. Bankruptcy Court for the Southern District of Texas. The bankruptcy filing caps a long decline for the 118-year-old department store chain, which once operated more than 1,600 locations that became fixtures in U.S. malls. The company at one point employed nearly 200,000 people. Even before the coronavirus outbreak, J.C. Penney was struggling with nearly $4 billion of debt and pressure from both discount retailers and e-commerce companies. Read more.
In related news, J.C. Penney Co.’s plan to slash billions of dollars in debt and emerge from bankruptcy court includes a proposal to create two new publicly traded entities, including a real estate investment trust that would hold some of the retailer’s property, Bloomberg News reported. The company’s tentative bankruptcy plan calls for creating both a new operating company and a REIT that would collect rent from a subset of J.C. Penney stores, court papers show. J.C. Penney can, with its first-lien lenders’ permission, sell up to a 35 percent stake in the new REIT to generate cash. The retailer would seek to list shares of the new operating company and the REIT on a national securities exchange “as soon as reasonably practicable” after its proposed plan takes effect, according to court documents. J.C. Penney would also try to sell its distribution centers under the plan. The proposal is “predicated on speed — it is not an option to languish in chapter 11,” Chief Financial Officer Bill Wafford said in a court declaration, adding that the retailer needs to complete a restructuring deal before the holiday shopping season. “Failure in these efforts is not an option, with nearly 85,000 associates depending on the right outcome here.” But the REIT arrangement could be abandoned. If J.C. Penney and its first-lien lenders don’t agree on a new business plan by July 14, or if the requisite funding isn’t obtained by Aug. 15, the company would instead sell all its assets unless the lenders say otherwise. Read more.
J.C. Penney also said that it received bankruptcy court approvals for motions to support its business operations, including approval for the retailer to access and use its approximately $500 million in cash collateral, Bloomberg News reported. The U.S. Bankruptcy Court for the Southern District of Texas also authorized the company to continue paying non-furloughed employees’ wages, to provide certain benefits to all employees and to pay vendors for goods and services provided after the chapter 11 bankruptcy filing on Friday. Read more.
Gavilan Resources LLC, an oil-and-gas company formed by buyout firm Blackstone Group Inc., has filed for bankruptcy protection, a victim of the collapse in energy prices and a long-running commercial dispute with a rival Texas shale driller, the Wall Street Journal reported. The Houston-based company on Friday sought protection from creditors under chapter 11, prompted by the “precipitous decline in oil prices from the combined effect of the Covid-19 pandemic and the flooding of oil markets by warring international producers,” namely Russia and Saudi Arabia, David E. Roberts, Jr., Gavilan’s chief executive, said in papers filed with the U.S. Bankruptcy Court in Houston. Roberts also blamed Gavilan’s financial difficulties on “an increasingly unworkable relationship” with Sanchez Energy Corp., a rival Texas oil-and-gas company that filed for bankruptcy last year. Since the fall of 2018, the two companies have been sparring over the rights to oil and gas acreage in the Eagle Ford Shale in Texas they jointly acquired from Anadarko Petroleum Corp. for $2.3 billion. Gavilan is putting its assets on the bankruptcy-auction block while continuing its legal fight with Sanchez over the Eagle Ford rights, Roberts said. Sanchez and Gavilan have each accused the other of defaulting on a joint development agreement to operate the oil and gas assets they acquired. Gavilan has alleged that Sanchez deviated from an agreed-upon work plan for at least 20 wells and then refused to divide up the assets, a claim Gavilan disputes.
Ultra Petroleum Corp., one of the largest oil and natural-gas drillers in Wyoming, filed for bankruptcy on Friday, after struggling with nearly $2 billion of debt left on its books after its previous restructuring amid a historic slump in energy prices, the Wall Street Journal reported. The Englewood, Colo.-based company filed for chapter 11 in U.S. Bankruptcy Court in Houston with a plan to slash $2 billion in debt, most of which it took on when it emerged from bankruptcy in April 2017. The new deal, a pre-packaged bankruptcy, has the backing of 85 percent of Ultra’s senior lenders and 67 percent of its second-lien, or junior, lenders. Under the prepackaged bankruptcy plan, Ultra aims to exit chapter 11 within three months. Creditors who have signed on to the company’s restructuring plan are Avenue Capital Group, Bain Capital Credit LP, Goldman Sachs Group Inc.’s Special Situations Investing Group, Citadel Advisors LLC and GoldenTree Asset Management LP, court filings show.
Satellite operator Intelsat SA said yesterday that it filed for chapter 11 protection, Reuters reported. The company listed assets and liabilities in the range of $10 billion to $50 billion, according to a filing in the U.S. Bankruptcy Court for the Eastern District of Virginia. Intelsat also said that it had received $1 billion in debtor-in-possession financing. The company’s chapter 11 filing comes more than a month after it suspended its 2020 outlook and said it would delay filing its first-quarter results. Intelsat is among a number of companies that will participate in the accelerated clearing of C-band spectrum under the Federal Communications Commission (FCC) order to support a build-out of 5G wireless infrastructure in the U.S. “To meet the FCC’s accelerated clearing deadlines and ultimately be eligible to receive $4.87 billion of accelerated relocation payments, Intelsat needs to spend more than $1 billion on clearing activities,” the Luxembourg-based company said in a statement. Intelsat General, which serves the company’s U.S. commercial, government and allied military customers, is not part of the chapter 11 proceedings, the company said.
Krystal Co., the Southern burger chain founded nearly 90 years ago, is selling itself out of bankruptcy to an affiliate of its senior lender Fortress Investment Group LLC, WSJ Pro Bankruptcy reported. Bankruptcy Judge Paul W. Bonapfel said yesterday that he will approve the deal Krystal entered into last week with Fortress to sell substantially all of its assets, including about 170 corporate-owned locations in nine states. Krystal also has roughly 100 additional franchise locations. The sale is in the form of a $27 million credit bid, meaning Fortress will buy the company in exchange for canceling some of Krystal’s debt. The sale, scheduled to close next week, also includes the assumption of liabilities up to $21.5 million by Fortress. The quick-service restaurant chain was forced to close all of its dining room operations because of the coronavirus pandemic, but continued to serve customers using its drive-through and delivery services, Krystal’s bankruptcy lawyer Sarah R. Borders of King & Spalding LLP said during the hearing. As a result, Krystal’s revenue fell significantly and it took actions to preserve liquidity, including workforce and expense reductions, she said. Before the coronavirus pandemic, the Dunwoody, Ga.-based burger chain had more than 10 potential interested buyers. But that quickly changed and left Krystal facing “a very real prospect of a broken sale process and a complete liquidation,” Ms. Borders said during the hearing.
Freedom Oil and Gas became the latest victim of the oil crash as it filed for bankruptcy protection, the Houston Chronicle reported. The Houston oil exploration and production company, formerly known as Maverick Drilling Services, filed for chapter 11 protection on Monday in federal court in Houston. The company said that it was unable to pay its more than $10 million of debt as revenues have plunged during the global coronavirus pandemic. It plans to sell all of its assets to Australian environmental services company Sendero Resources, pending approval from the bankruptcy court.
Stage Stores Inc. yesterday filed for chapter 11 protection, the latest casualty of the coronavirus pandemic following the collapse of luxury store chain Neiman Marcus and apparel retailer J. Crew Group Inc., Reuters reported. The discount department store operator will seek bids for the business or any of its assets, while it also begins to wind down its operations, Stage Stores said in a statement. The company listed both assets and liabilities between $500 million and $1 billion, according to a filing with the U.S. Bankruptcy Court for the Southern District of Texas. Houston, Texas-based Stage Stores was seeking to avoid bankruptcy by asking vendors for more time to pay bills and other concessions, Reuters reported last month. The company shut all its 738 stores and three distribution centers in March, along with other “non-essential” retailers, as part of efforts to curb the spread of the novel coronavirus throughout the U.S. Stage Stores said it now expects to reopen about 557 stores on May 15, about 67 stores in the second phase by May 28 and the rest by next month.
