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Revlon Inc., a meme-stock favorite after it filed for bankruptcy in June, said it will likely wipe out shareholders in its chapter 11 restructuring, but that didn’t stop the beauty supplier’s stock from rallying on MondayWSJ Pro Bankruptcy reported. Revlon, controlled since 1985 by billionaire financier Ronald Perelman, will be taken over mostly by lenders, and its shareholders aren’t expected to receive any distribution, according to a proposed restructuring agreement filed on Monday in the U.S. Bankruptcy Court in New York. Shareholders are generally wiped out in bankruptcy cases, except for the rare instances where there is value left over after debt claims are repaid. Revlon saw a surge of market interest after filing bankruptcy in June, closing at prices approaching $9 in August and staying above $4 through much of October despite its financial strains. Individual investors bet on Revlon hoping for a repeat of the Hertz Global Holdings Inc. bankruptcy case. The car-rental company was delisted from the New York Stock Exchange after filing for chapter 11 in 2020, yet the stock was in the money when Hertz left bankruptcy, providing shareholders with more than $1 billion in value. In October, Revlon shares lost more than half their value after the NYSE made its delisting of the company official. Now trading over the counter, the shares closed Friday at 35 cents each. They rallied to as high as $1.37 on Monday and closed at 57 cents, up 63%. Under Revlon’s restructuring deal, top lenders will pick the new board of directors for the reorganized company, which plans to emerge as a private company, court papers show.

Party City Holdco Inc., a purveyor of party favors, has engaged attorneys to help it evaluate options to address a liquidity crunch while its bondholders have tapped restructuring professionals as well, the Wall Street Journal reported. Party City has been suffering from widening net losses, and its recent Halloween sales came in at the low end of expectations in part because inflationary pressures have hampered customers’ willingness to spend, the company said last month. Party City has engaged law firm Paul Weiss Rifkind Wharton & Garrison LLP as restructuring counsel. Meanwhile, investors with interests in Party City’s bonds have engaged the law firm Davis Polk & Wardwell LLP as well as financial adviser Lazard Ltd. In addition to the macroeconomic headwinds the company has faced, Party City is also contending with constraints in the market for helium, a key gas it uses to blow up balloons. The company has said it is working to diversify its sources of helium to alleviate the supply limitations and price increases in the helium market, which have pressured both its retail and wholesale business segments.

Sears Hometown Stores Inc., an affiliate of the once-formidable retailer that sells home goods through locally owned stores, made its first bankruptcy court appearance on Wednesday as it begins shutting down, Bloomberg News reported. “What is happening here is this company is going out of business,” Mark Minuti, an attorney for Sears Hometown, said during the company’s first bankruptcy hearing. “Make no mistake about it: this is a sad day for our company.” Sears Hometown supplies hardware and appliances like dishwashers and lawnmowers to independently owned Sears-branded stores, which then get a commission for selling the merchandise. The bankruptcy will deprive those store owners of their sole supplier, Minuti said. The company’s sales have fallen and costs have risen in recent years, according to court papers. Then, in October, Sears Hometown ran afoul of a debt covenant embedded in a credit line with PNC Bank NA, and part-owner and major supplier TransformCo began restricting the shipment of new inventory. Sears Hometown filed for chapter 11 bankruptcy on Monday, listing assets of no more than $50 million and liabilities of at least $50 million in its bankruptcy court petition. The unit wasn’t part of Sears Holdings Corp.’s 2018 bankruptcy.

Serta Simmons Bedding is preparing to seek bankruptcy protection as soon as January, Bloomberg News reported. The closely held mattress manufacturer has been in confidential talks with its creditors over a restructuring plan, which may involve giving control to certain first-lien lenders. Talks are ongoing and plans could change, the people added. It isn’t yet clear if the company needs financing to fund its operations through chapter 11, they said. Serta’s entire debt load of more than $2 billion matures next year. Its approximately $843 million first-lien term loan due November 2023 is quoted at around 9 cents on the dollar, according to data compiled by Bloomberg. Given the sizable debt wall and deteriorating performance amid an inflationary environment, Serta will likely see a default, bankruptcy filing or debt restructuring in the coming months, S&P Global Ratings wrote in a note in August. Lower consumer confidence and slowdown in the housing market will likely hurt demand for bedding related products, the credit grader said.

Sears Hometown Stores Inc. filed for bankruptcy on Monday, court papers show, Bloomberg News reported. The retailer listed assets of no more than $50 million and liabilities of at least $50 million in its bankruptcy court petition, filed in Delaware. Chapter 11 bankruptcy allows companies to continue operating while working on a plan to repay creditors. Sears Hometown is a branch of the retailer that focuses on selling appliances, tools, hardware and lawn and garden equipment. Sears spun off the Hometown business in 2012 to raise cash for its struggling parent company. Hometown wasn’t part of Sears Holdings Corp.’s 2018 bankruptcy, and Transformco, a company backed by former Sears Chief Executive Officer Eddie Lampert, purchased it in 2019 as part of a strategy to focus Sears’s future business on appliances. Instead the company has continued to fade away, with Transformco shuttering stores and selling off signature brands like Craftsman and DieHard. The now-bankrupt Sears Hometown entity is at least partially owned by Lampert, according to court papers.

FedNat Holding Co., a Florida-based homeowners insurance company, filed for bankruptcy after an increase in severe weather events in the state weighed on its balance sheet, Bloomberg News reported. The company filed for chapter 11 protection in Fort Lauderdale on Sunday, court papers show. FedNat listed $33.8 million of assets and $171 million of debts in its bankruptcy petition. FedNat has racked up losses in recent years in part because more big storms hit coastal areas of the southeastern US, where the company operates. It has also suffered from the deluge of claims litigation dogging other small Florida insurers. The bankruptcy underscores Florida’s deepening home insurance crisis, where average premiums are nearly triple the national average. Ron DeSantis — the Republican governor expected to make a presidential run — is attempting to reform the system, and the state’s senate has a special session to address the crisis starting Monday. “As an industry, the Florida property insurance industry lost over $1.6 billion in 2020 and over $1.5 billion in 2021,” thanks to losses from catastrophes, higher reinsurance costs and litigation abuse, Chief Restructuring Officer Katie S. Goodman said in a sworn bankruptcy court statement. Catastrophe losses cost FedNat $800 million on a gross basis last year, though reinsurance and other recoveries reduced that loss to $86 million, according to court papers. In September, a Florida court ordered a FedNat subsidiary to liquidate after state’s insurance regulator deemed it insolvent. At least five other Florida insurers have been put into receivership by state’s regulator this year, Goodman said.

Party City Holdco Inc., a purveyor of party favors, has engaged attorneys to help it evaluate options to address a liquidity crunch while its bondholders have tapped restructuring professionals as well, WSJ Pro Bankruptcy reported. Party City has been suffering from widening net losses, and its recent Halloween sales came in at the low end of expectations in part because inflationary pressures have hampered customers’ willingness to spend, the company said last month. Party City has engaged law firm Paul Weiss Rifkind Wharton & Garrison LLP as restructuring counsel. Meanwhile, investors with interests in Party City’s bonds have engaged the law firm Davis Polk & Wardwell LLP, as well as financial adviser Lazard Ltd. In addition to the macroeconomic headwinds the company has faced, Party City is also contending with constraints in the market for helium, a key gas it uses to blow up balloons. The company has said it is working to diversify its sources of helium to alleviate the supply limitations and price increases in the helium market, which have pressured both its retail and wholesale business segments.

Used-car dealer Carvana Co. has hired a financial adviser, and the company’s creditors have banded together to protect themselves while the company’s shares plunged on fears it is headed for a restructuring, WSJ Pro Bankruptcy reported. Carvana’s stock closed down 43% to $3.85 a share Wednesday following reports that the company’s creditors had signed cooperation agreements with each other in anticipation of a potential new capital-raise. The creditor group, including Apollo Global Management Inc., Pacific Investment Management Co. and Ares Management Corp., signed a three-month cooperation agreement as a defensive move to ensure they act in unison if the company attempts to borrow new debt. Carvana also hired Moelis & Co. as a financial adviser, tapping a top investment bank for companies facing financial headwinds. The cooperation agreement covers Carvana bondholders holding around $4 billion in debt, or around 70% of the company’s total debt, and aims to block any coercive transactions that could pit creditors against each other.

For nearly two years, car dealers have been focused on getting more cars onto their lots amid a severe inventory crunch. Now, some are worried about how quickly they will be able to move them off, the Wall Street Journal reported. Slim selection at dealerships since mid-2021 has created a backlog of consumer demand. At many dealerships, that trend has meant that most vehicles arriving from the factory are presold, often at prices well above the manufacturers’ suggested retail price. But as new-vehicle stocks are slowly replenished, some dealers say there are signs that an uncertain economic outlook and higher interest rates are starting to dampen demand.“There is pent-up demand from people who’ve been in the market for six or nine months and haven’t been able to find a car,” said Peter Lanzavecchia, a Marlton, N.J., dealer who sells Hyundai, Genesis, GMC and other brands. “But it’s going to dry up. We’re very concerned about 2023.” A quarterly survey of more than 1,000 U.S. dealers, conducted Oct. 25 to Nov. 7 and released this week by Cox Automotive, shows their outlook for car sales is the gloomiest it has been since the research firm first began the poll in early 2017. The majority of dealers who responded view the current market for selling cars as weak. Overall, they cited the economy and interest rates as the top two factors holding back their business, with a lack of inventory ranking third. Since mid-2021, limited inventory had ranked as their top concern, the surveys showed.