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Canadian carpet maker Kraus Group yesterday filed for bankruptcy protection in the U.S. and Canada after lining up a buyer for its business unit that sells carpet and vinyl tiles, WSJ Pro Bankruptcy. Kraus Carpet Inc. filed for chapter 15 protection — the part of the bankruptcy code dealing with international insolvencies — in U.S. Bankruptcy Court in Wilmington, Del., along with five affiliates. The company sought court protection from creditors in Canada and Deloitte Restructuring Inc. has been appointed as the monitor in the case. Kraus Group, based in Waterloo, Ontario, was founded in 1959. An affiliate of Hilco UK Ltd. purchased the company’s predecessor in 2012 and created the Kraus Group. Kraus continued to struggle, however, and the company has lost money for five years in a row, with sales declining significantly over the past two years, according to a filing by company director Christopher Emmott. Read more.

Cover all aspects of the UNCITRAL Model Law on Cross-Border Insolvency as well as chapter 15 of the Bankruptcy Code with ABI’s Chapter 15 for Foreign Debtors. 

Indian lenders haven’t yet been able to restructure 12 stressed loan accounts in the power sector, underscoring the risk that these may be referred to bankruptcy courts after $52 billion of debt came under scrutiny following a central bank directive, Bloomberg News reported. It was thought that a resolution was possible in seven of these assets, the people said, asking not to be identified as the information is private. Under a central bank directive in February, lenders had until Aug. 27 to recast certain delinquent loans and a further 15 days to refer the cases under the nation’s bankruptcy law. Discussions on revamping the debt are ongoing and lenders may still reach agreement on some assets. India’s banks are suffering from one of the worst bad-loan ratios among major economies, and have been scrambling to restructure soured debt since the central bank laid out a new mechanism for dealing with such accounts earlier this year. The outcomes are being closely watched as they could become test cases for the bankruptcy code that India introduced in 2016 to help speed resolutions.

A bankruptcy probe has turned up “substantial evidence” to support suspicions that Nirav Modi’s U.S. jewelry-selling operation was part of an alleged massive bank fraud that has roiled India’s financial sector, according to a new report, the Wall Street Journal reported. Now a fugitive, Modi was at one time the indirect majority owner of U.S. businesses that supplied major retailers including Costco Wholesale Corp., Macy’s Inc. and Zale Corp. Firestar Diamond Inc. and other Modi businesses filed for bankruptcy protection in the U.S. earlier this year, after India’s Punjab National Bank accused him of participating in a $2 billion financing scam. He has denied wrongdoing. Fallout from the alleged fraud, believed to be the largest in India’s history, set off changes in trade finance practices in that country, as well as an international manhunt for Modi.

An Indian court rejected a plea by the nation’s power producers to exempt generators from central bank’s rules on repaying loans, according to the Independent Power Producers Association of India, Bloomberg News reported. The court’s order allows lenders to start bankruptcy proceedings against defaulting generators. The court asked the government to discuss with the Reserve Bank of India on possibilities of relaxing the rules for the power sector, Harry Dhaul, director general of the lobby group, said by phone. In February, India’s central bank, battling the world’s worst bad-loan ratio after Italy, introduced new rules, ordering lenders to restructure stressed debt within 180 days. Creditors were asked to initiate bankruptcy proceedings after the deadline, which ends Monday. Power generators, led by IPPAI, had challenged the RBI rules, citing cash-flow woes that make timely debt-servicing difficult. The court also directed a government panel examining issues including fuel allocation, bad loan norms and regulations to come up with its report in two months, he said.

A New York bankruptcy judge agreed to recognize a Croatian insolvency proceeding initiated by Agrokor Group, a food and retail giant, but said he would reserve judgment on whether to fully enforce the company’s multibillion-dollar restructuring plan, WSJ Pro Bankruptcy reported. Following a hearing yesterday, Judge Martin Glenn approved Agrokor’s request for chapter 15 recognition. Judge Glenn decided not to enforce key parts of the company’s restructuring proposal, saying a court in London is likely a more appropriate venue to settle any disputes affecting debt governed by English law. The bulk of Agrokor’s unsecured debt is governed by English law, with the rest governed by U.S. law, court papers show. All new debt issued as part of the restructuring is to be governed by English law. The decision was a setback for Agrokor’s complex, multi-jurisdictional bankruptcy. Lawyers for the company had hoped to win full and final enforcement of the plan from Judge Glenn.

An Amsterdam judge has allowed Vantage Drilling International to restrict some assets of Brazil’s state-run oil company, Petróleo Brasileiro S.A., a win for the Houston-based offshore energy contractor in its attempt to collect a $622 million arbitration award, WSJ Pro Bankruptcy reported. The dispute concerns a drilling contract Petrobras terminated in 2015, a turn that contributed to Vantage filing for chapter 11 bankruptcy protection in December of that year. The contract was cut off amid a corruption probe in Brazil. Both companies have denied involvement in corruption. The prospect of collecting damages from Petrobras for the terminated contract was a component of Vantage’s prepackaged chapter 11 bankruptcy plan. The possibility of a win in the contract fight with Petrobras was built into the calculations for everything from management rewards to the collateral package for exit financing. The decision, issued Wednesday in Amsterdam but made public yesterday, authorizes the company to attach bank accounts and shares Petrobras holds in subsidiaries incorporated in the Netherlands, court papers say.

A deadline set by India’s central bank to restructure an estimated 3.6 trillion rupees ($52 billion) of stressed loans may push dozens more companies into bankruptcy, Bloomberg News reported. The Reserve Bank of India in February introduced new rules and a 180-day timeline for banks to recast loans once payments are missed, scrapping previous methods that could take an indefinite amount of time. Companies that were delinquent when the norms came into force will run out of time today, after which lenders must start moving court to admit the cases under India’s Insolvency and Bankruptcy Code. This marks the latest attempt by the RBI to clean up banks that are suffering from the world’s worst bad-loan ratios after Italy, and have more than $210 billion of stressed debt on their balance sheets. The central bank has already asked lenders to take about 40 large defaulters to bankruptcy court as overdue borrowings hamper fresh investment. In May, the nation’s first big success under the new insolvency law handed about $5 billion to lenders after Tata Steel Ltd. bought insolvent Bhushan Steel Ltd.

The sale of Toys “R” Us’s last and most valuable remaining asset, its Asia operations, has become caught up in a battle between two groups of hedge funds over the future use of the brand by stores in that region, Bloomberg News reported. One group of funds, including Cerberus Capital Management and Cyrus Capital Partners, owns notes issued by the Asian stores and would be the lead bidder for the shops. Another group, which includes Solus Alternative Asset Management and affiliates of Oaktree Capital Management, claims control over the rights to the Toys “R” Us name, because it was collateral on loans the funds had made to the company. The second group, known as the B-4 lenders, believes the Asian stores aren’t paying enough for the use of the brand and has reserved its right to sue whoever wins the auction for the shops, according to court documents. In court papers on Thursday, they asked a judge to rewrite the auction rules and argued that any bidders in the sale need to negotiate with them over how much the Asian business will pay to call itself Toys “R” Us. In their objection, the B-4 lenders used the technical language of bankruptcy law to issue a veiled warning to any bidders who try to top the $760 million opening offer made by the Cerberus group, which is known as the Taj lenders. “Bidders, therefore, will have to understand the contractual terms and causes of action in deciding how much to bid and whether to engage in direct discussions” with the B-4 lenders, the group said in its filing.

A U.S. judge has granted a Canadian company the right to go after prized U.S. assets belonging to Venezuela, in a bid to get paid on an $1.4 billion award tied to the 2008 nationalization of its gold mining operations by the now cash-strapped South American country, Reuters reported. U.S. District Judge Leonard Stark in Delaware on Thursday granted a so-called writ of attachment to Crystallex International Corp in shares of Citgo Holding, which owns a U.S.-based oil refiner controlled by state-owned Petroleos de Venezuela SA (PDVSA). Judge Stark also imposed a temporary stay on Crystallex enforcing the writ to give other parties a chance to weigh in. The judge ruled on Aug. 9 that Citgo Holding assets were subject to attachment. PDVSA said it would appeal. Other companies may also lay claims on the assets, and the writ does not mean Crystallex will take over Citgo and run its refineries.