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U.S. prosecutors charged a hedge-fund manager with fraud for suppressing a rival bid for a prized piece of bankrupt retailer Neiman Marcus Group Ltd., then trying to cover up the misconduct when it came to light, WSJ Pro Bankruptcy reported. Dan Kamensky, the founder of Marble Ridge Capital LP, was arrested yesterday and charged by federal prosecutors in New York with securities fraud, wire fraud, extortion and obstruction of justice in connection with his efforts to acquire shares in Neiman’s MyTheresa e-commerce business. Kamensky previously admitted to Justice Department bankruptcy watchdogs that he had used his pull with investment bank Jefferies LLC, where he was a client, to coerce it to scrap a competing offer for the MyTheresa shares so he could buy them himself for less. If convicted of all charges, Kamensky faces up to 50 years in prison. The Securities and Exchange Commission also sued Kamensky and Marble Ridge yesterday over his attempt to suppress competition for MyTheresa shares.

Members of New York Sports Clubs, the fitness chain that warned it’s close to bankruptcy, woke this week to find that an automated monthly charge for dues has been fully reinstated as the gyms partially reopen, Bloomberg News reported. The club’s owner, Town Sports International Inc., billed its members for full September dues despite the gyms’ limited operating hours and reduced capacity. The charges are drawing ire from some members and facing fresh scrutiny from the New York attorney general, who in April struck a deal forcing the company to credit thousands of members for the weeks they’d been barred from the facilities during the early stage of the pandemic. New York Governor Andrew Cuomo gave fitness centers in the state the OK to reopen, though locations must limit capacity at 33 percent, require masks and meet strict ventilation guidelines. With gym-going hardly back to normal, some members were surprised to face full dues charges on short notice. Pandemic-related closures hit the chain hard, but even before COVID-19, Town Sports was struggling to adapt to changing tastes that had consumers gravitating from mid-priced gyms to alternatives like boutique fitness studios. The company said on Tuesday that it may file for bankruptcy “in the near future” to restructure its debt if negotiations with lenders fail.

U.S. property insurers have won a flurry of judicial rulings backing up their rejections of claims for businesses’ lost income during government-ordered shutdowns, dimming policyholders’ hopes of payments to help them rebound, the Wall Street Journal reported. In recent weeks, insurers have won more rulings than policyholders as the courts begin to work through more than 1,000 COVID-19 business-interruption coverage disputes. Still, policyholders scored success in a federal court in Missouri, boosting efforts to interpret property insurance as covering claims from the coronavirus. Across the U.S., restaurants, hair salons, retailers and other businesses are seeking policy proceeds to deal with the huge economic cost of the shutdowns, in one of the biggest fights the insurance industry has ever waged with its policyholders. In the rulings, the judges sympathize with businesses’ plight, but most so far support insurers’ legal arguments. Insurers say the policies are intended to help policyholders as they recover from events, such as fires, that lead to repairs and rebuilding, and were never intended to cover virus-related claims. Read more. (Subscription required.) 

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The lenders steering J.C. Penney Co.’s bankruptcy are considering joining forces with an outside bidder to buy the retailer after efforts to line up an independent owner stalled, Bloomberg News reported. The plan envisions the hedge funds that hold J.C. Penney’s loans would become co-owners of a business they never planned to run, in partnership with a third party that could include one of the potential buyers they’ve been wooing, according to people with knowledge of the developments. The lender group was already set to take over most of J.C. Penney’s real estate at the outset of the bankruptcy case. This would have involved spinning the properties into a real estate investment trust and selling the rest of the retailer to the highest bidder. Potential bidders Simon Property Group Inc. and Brookfield Property Partners had clashed with the lender group over terms including redevelopment rights and the restrictions imposed by the master lease agreement. The mall owners’ buyout bid was considered the best hope for keeping more of the retailer’s stores open. The private equity firm Sycamore Partners has also held bid talks with lenders, as has Authentic Brands Group LLC. Sycamore owns the department store chain Belk Inc., among other retailers, and Authentic recently bought Brooks Brothers out of bankruptcy.

J.Jill Inc. has again bought more time for talks with lenders as the women’s clothing retailer faces the possibility of filing for bankruptcy after its liquidity and turnaround efforts were disrupted by the coronavirus pandemic, WSJ Pro Bankruptcy reported. The Quincy, Mass., company said yesterday that a majority of its term loan lenders and shareholders support an out-of-court financial restructuring transaction that would push back debt maturities by two years, until May 2024. A potential out-of-court deal is contingent on participation by lenders holding at least 95 percent of the company’s term loans by Sept. 11. The retailer said it is working to obtain the necessary consent. If the out-of-court transaction doesn’t garner enough support, J.Jill said that lenders holding more than 70 percent of its term loans and shareholders holding a majority of the equity of the company have agreed to a prepackaged chapter 11 reorganization. “While the company hopes to receive the required consents to execute the out-of-court transaction, the company anticipates that the in-court transaction would be a swift process,” J.Jill said. Under the out-of-court agreement, J.Jill would get as much as $15 million in additional liquidity through a junior term loan. If the retailer files for bankruptcy, it would get additional financing of up to $75 million to support the chapter 11 process.

Hertz Global Holdings Inc. has received interest from several potential buyers for its Donlen fleet business and is considering a sale if it can get at least $1 billion, Bloomberg News reported. Hertz, which filed for chapter 11 bankruptcy protection in May, sees Donlen as nonessential to its core rental business and is willing to consider selling it to satisfy some debt obligations and enable the company to more easily raise debtor-in-possession financing, one of the people said, asking not to be named because the talks are private. The rental company has been jettisoning some of the vehicles in its fleet to pay creditors and to downsize its operations for a shrunken travel business. Hertz slipped into bankruptcy after the COVID-19 pandemic decimated air travel and car rental volumes. Donlen’s suitors are chiefly private equity funds. Their ability to raise capital could help Donlen, which pays higher interest rates because its parent is bankrupt. Hertz hasn’t made a final decision on pursing a sale and its plans could still change.

The owner of the New York Sports Clubs chain said it may need to file for bankruptcy “in the near future” as many gyms across the country remain closed to stem the spread of COVID-19, Bloomberg News reported. Town Sports International is in talks with its lenders to refinance a loan coming due this fall as its cash flow and liquidity continue to tighten, the company said in a regulatory filing yesterday. The gym owner and operator said that it doesn’t have enough cash on hand to repay the debt when it comes due in November. The company missed a payment on its revolver last month, violating terms of the debt. Lenders could send the company a notice of default and demand immediate repayment of all obligations, but none has done so yet, Town Sports said in the filing.

J.C. Penney Co. is flirting with collapse, eager for lenders to agree to buy its assets out of bankruptcy after talks broke down with potential bidders including landlords Simon Property Group Inc. and Brookfield Property Partners LP, WSJ Pro Bankruptcy reported. “We’ve hit a stalemate” in negotiations with several outside bidders, J.C. Penney’s bankruptcy lawyer Joshua Sussberg said yesterday during a hearing in U.S. Bankruptcy Court in Corpus Christi, Texas. The department-store chain instead will pursue a bankruptcy sale to top lenders, including H/2 Capital Partners LLC, that would turn them into owners in exchange for debt forgiveness, Sussberg said. “Our lenders are no longer going to be held hostage in negotiations,” he said, adding that J.C. Penney intended to negotiate and document the lender deal within the next 10 days. No agreement has been reached. Putting the retail assets in lenders’ hands wasn’t the first choice for J.C. Penney or the lenders. Their lawyer, Andrew LeBlanc, said the other bidders “have been a disappointment” and that trying to hammer out a takeover so quickly is a “heavy lift.” Negotiations have dragged on past several lender-imposed deadlines. The longer J.C. Penney lingers in bankruptcy, the greater the chance of a liquidation that would dismantle the company’s retail operations and put most of its 70,000 employees out of work.

Women’s apparel retailer New York & Co. and plus-size sister brand Fashion to Figure are set to be sold for $40 million, double the amount offered after their parent company filed for bankruptcy, WSJ Pro Bankruptcy reported. RTW Retailwinds Inc. said yesterday that New York-based investor Saadia Group LLC was the winning bidder at a bankruptcy auction for the two chains’ e-commerce business and all related intellectual property. Saadia Group plans to operate the brands’ e-commerce business as RTW winds down their brick-and-mortar retail operations. Saadia outbid apparel company Sunrise Brands LLC, which had been named the lead bidder, or stalking horse, for the assets with a $20 million offer. Los Angeles-based Sunrise Brands sells branded and private-label jeans and other casual apparel under brands including American Rag and Seven7 Jeans.