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A new analysis shows that oil prices could rise to $200 per barrel, and even higher, in the next 12 to 18 months, The Washington Examiner reported. Philip Verleger, senior adviser to the Brattle Group and adviser to Congress on commodity prices, released a report from his independent firm PKVerleger LLC that included this bold claim. He predicted a 2020 economic collapse based on the oil commodity market and the lack of diesel fuel. “Catastrophically high oil prices will cause the impending recession,” he said. “The world oil market will see prices at least double.” From there, the sky is the limit, according to his analysis. From the $200 mark, the price of crude oil could surge to a price of $400, he said. Prices currently range from $65-$74 per barrel. Other analysts and oil market observers have noted that global oil reserves are thin and anticipate oil prices surging to $90-$100 per barrel after Iran sanctions kick in, while also pointing out the coming diesel crunch that Verlenger is watching. Morgan Stanley made a similar prediction as the world transitions from low-sulfur diesel, a cleaner-burning fuel, to lower emissions. Verleger says the global demand for low-sulfur diesel, which the U.S. transitioned to for trucks in 2010, will increase global demand for more expensive, less-heavy forms of crude oil to make the cleaner-burning fuel. This will place an enormous demand on the fuel, and because of the lack of refineries equipped to produce the fuel, will constrain supply and drive up prices. Since most of the world relies on diesel fuel for commerce, it's something that directly impacts the economy, according to Verlenger. “If nothing changes, the 2020 diesel and gas/oil crisis will occur because as many as half of world refineries cannot produce fuel that meets the new regulation,” the analysis read. “The owners of these units will face harsh choices," including closing down their facilities.

Ten years after newspaper publisher Tribune Media Co. defaulted on billions of dollars in debt, a federal judge is pushing for settlement talks between big shareholders that cashed out in a leveraged buyout and creditors that were burned in the bankruptcy that followed, the Wall Street Journal reported. The push came from Judge Richard Sullivan, a New York federal judge presiding over the $8 billion Tribune LBO lawsuit, a classic of the bankruptcy genre, in which creditors say the deal that enriched shareholders doomed them and the publisher. After years of wins and losses for both sides, the case is no closer to trial, and Judge Sullivan is trying to drive peace talks. On Monday, he received a 21-page letter from lawyers caught up in the litigation, who generally agree mediation or settlement talks may be in order, but maybe not right now. “I was curious about how close we are to the end. It doesn’t sound like we are very close,” Judge Kevin Carey commented at a hearing Tuesday in the U.S. Bankruptcy Court in Wilmington, Del. He has presided over Tribune’s bankruptcy case since 2008 and was warned he might have to keep the proceeding alive for years to come. The fight taking place in New York federal court grew out of the bankruptcy, which came less than a year after the buyout in 2007. The Chicago company blamed a soured economy and tough media climate. Creditors blame the LBO architect Sam Zell, Wall Street advisers and company leaders, and major shareholders that drained cash out of Tribune and left the company mired in debt.

With U.S. growth picking up and business confidence soaring, high-yield bond prices are holding steady even as the Federal Reserve has signaled it is leaning more aggressively on its path of interest-rate increases, the Wall Street Journal reported. Junk debt, which typically offers investors higher interest payments to make up for companies’ lower credit ratings, tends to suffer less than Treasurys or highly rated bonds when the Fed raises interest rates. With the Fed on track to raise short-term rates twice more in 2018, some investors are turning to high-yield bonds to cushion the blow to their portfolios. With larger interest payments buffering against Fed rate increases, and a stable stock market supporting the environment for riskier securities, “we’ve been buying into” junk bonds, said Matt Freund, co-chief investment officer and head of fixed-income strategies at Calamos Investments.

A McKinsey & Co. retirement fund held investments that gave it a financial interest in the outcome of six bankruptcy cases in which the company also was serving as an adviser, court and regulatory filings show, the Wall Street Journal. McKinsey’s restructuring unit, known as McKinsey RTS, didn’t disclose those investments publicly. Rules governing the chapter 11 bankruptcy process require advisers to disclose all relationships that might give rise to a conflict of interest, to ensure that advisers will be disinterested advocates for their clients and that other participants in the cases are aware of them. The McKinsey retirement fund’s investments with two hedge-fund companies, Whitebox Advisors LLC and Strategic Value Partners LLC, gave it a stake in the debt or other obligations of six companies that sought bankruptcy protection: United Airlines parent UAL Corp. in 2002; American Airlines parent AMR Corp. in 2011; Edison Mission Energy in 2012; NII Holdings Inc. in 2014; Alpha Natural Resources Inc. in 2015; and SunEdison Inc. in 2016. McKinsey was a bankruptcy adviser to all six companies. In each bankruptcy case McKinsey advised on, its officials signed a sworn statement that the firm was a disinterested party.

Investors are taking the fight against an assault on leveraged loan documentation to the courts as more private equity-backed companies, such as troubled retailer PetSmart, seek flexibility that could lead to raising new debt, Reuters reported. Private equity firms have been able to exploit red-hot investor demand for floating rate U.S. leveraged loans and weaken loan documentation as demand continues to outstrip supply, but this has already produced at least two court cases as investors fight back. Legal conflicts have erupted among lenders to US retailers such as Not Your Daughters Jeans and J Crew in the last 12 months, as issuers added extra debt by exploiting loopholes in their credit documents. PetSmart’s owners took steps on June 4 to potentially create additional flexibility by creating a new unrestricted subsidiary and transferring 16.5 percent of its online company Chewy into the new facility.

The Securities and Exchange Commission is trying to bridge the gap in investment advice standards for brokers and financial advisers, but the rift remains wide in one particular area: advice to 401(k) plan sponsors, Investment News reported. The SEC proposed Regulation Best Interest in mid-April as part of a broader rulemaking package. It would up the ante for brokers interacting with several retirement-account stakeholders — for example, owners of individual retirement accounts, employees rolling money out of a retirement plan and 401(k) participants deciding how to invest their money in-plan. Instead of just having to choose investments that are suitable for clients, brokers would be held to a more-stringent "best interest" standard, which isn't specifically defined in the proposal. However, 401(k) plan sponsors are left out of the equation because they don't appear to fall within the SEC rule's definition of "retail" investor, according to legal experts.

Goldman Sachs Group Inc. and Blackstone Group LP recently resolved a monthslong standoff over a controversial derivatives trade that had alarmed regulators and investors in the $11 trillion credit-default swaps market, WSJ Pro Bankruptcy reported. The Wall Street giants had taken opposite sides of a bet on bonds issued by home builder Hovnanian Enterprises Inc. The trades, engineered by Blackstone’s GSO Capital Partners LP, involved the home builder intentionally skipping a small interest payment earlier this month in exchange for an attractive financing package from the private-equity house. Blackstone had bought insurance against a default, which would allow it to make money from the skipped interest payment. It bought this insurance, through what are known as credit-default swaps, from Goldman and others. This put Goldman at risk of losing money. Goldman ​and Blackstone ​last week ​effectively ​zeroed out the trade between them, with Blackstone agreeing to assume Goldman’s position, people familiar with the matter said. ​Goldman is now off the hook for a payout that ​could have run tens of millions of dollars, ​and Blackstone​ reduces its exposure to a wager that has become increasingly fraught.

The Fifth Circuit Court of Appeals denied Tuesday another effort by attorneys general from California, New York and Oregon to defend the Labor Department's fiduciary rule, Investment News reported. Last week, the states filed a motion asking the court to reconsider its May 2 decision rejecting their motion to enter a lawsuit against the rule as defendants. As it did in its May 2 decision, the three-judge panel split, 2-1, in deciding not to take another look at the states' motion. The three judges also ruled unanimously yesterday to deny the states' alternative motion to permit a rehearing of their effort to intervene by the full 17 judges of the 5th Circuit.