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At the conclusion of a six-day trial over a mistaken $900 million payment by Citigroup Inc. to lenders of Revlon Inc., a federal judge and lawyers on the case focused on what the recipients knew or suspected soon after they were paid, WSJ Pro Bankruptcy reported. The lawsuit filed by Citi against several hedge-fund managers to recover money from the erroneous August payment ended yesterday with no decision from Judge Jesse Furman of the U.S. District Court in New York. Emails and witness testimony from some lenders who decided to keep their share of the $900 million show they questioned whether it might have been a mistake. “Can you point me to anything in evidence before 2:28 p.m. on Aug. 12 that anyone on the recipient’s side thought there was a mistake,” Judge Furman asked Citi’s lawyers, referring to the time and date Citi sent recall notices to lenders asking them to return the funds. Christopher Houpt, a lawyer for Citi, pointed to an email from Allstate Investment Management Co. portfolio manager Catherine McCoy to colleagues in the firm’s operations department in which she wrote: “So strange — could this be a mistake?” In court papers, however, McCoy maintained that in the email her reference to a mistake was to possible internal errors in recording the payment, rather than an error by Citi. Some lenders first learned about the erroneous payment only after their firms received a recall notice from Citi, but Judge Furman focused the questioning on those who became aware of the payment before getting the recall notice.

Lord & Taylor, Stein Mart, Pier 1 Imports and Motherhood Maternity don’t have physical stores in their future, but their new owners are betting they can unlock value from these well-known brands by recasting them as e-commerce players, WSJ Pro Bankruptcy reported. A handful of brand-acquisition and licensing companies are hoping the growth in online shopping that helped drive a record number of retailers into bankruptcy this year will also play a role in resurrecting these repackaged brands into online-only businesses. Investors such as Marquee Brands LLC, which is backed by investment manager Neuberger Berman Group LLC, and Retail Ecommerce Ventures LLC, the Miami-based brainchild of two serial entrepreneurs, have acquired control of several familiar retail names. After paying to acquire the intellectual-property rights of the brands, these investors are using a combination of social-media savvy, targeted-brand promotion and direct-to-consumer marketing to reach shoppers. For the relaunched brands, the months during the pandemic when Americans shopped mostly online offered a unique opportunity to expand the brands’ reach. Online retail sales, including curbside pickups, are projected to jump 50% this year, according to analytics provider 1010data.

Tuesday Morning Corp. has struck a settlement with investment firms that had tried to convince fellow trade creditors of the bankrupt off-price retailer to vote against a restructuring proposal, resolving the dispute as the company prepares to exit chapter 11, WSJ Pro Bankruptcy reported. The firms led by Invictus Global Management LLC agreed to drop an appeal, vote in favor of Tuesday Morning’s chapter 11 plan and encourage fellow unsecured creditors to do the same, according to the settlement outlined in papers filed yesterday in U.S. Bankruptcy Court in Dallas. The two sides reached the deal just days after the judge overseeing Tuesday Morning’s bankruptcy ruled the firms published false and misleading information to rally creditor opposition to the restructuring plan and ordered them to be sanctioned. The materials, including the website rejectTuesdayMorningPlan.com, claimed that trade debt would likely get repaid at a higher interest rate if creditors voted against the restructuring plan. Other creditors and Tuesday Morning said that was misleading because the materials didn’t include cautionary information disclosing risks associated with rejecting the plan that was described in official information distributed by the company.

Although AMC Entertainment Holdings received a $100 million lifeline last week, it still needs $750 million more to make it through next year. Some of its lenders are thinking it may not be worth it. Three of its creditors are urging the theater operator to declare bankruptcy, The Motley Fool reported. If it agrees to do so, they will provide AMC with $1 billion of debtor-in-possession (DIP) financing. Such an arrangement allows the lenders to jump to the front of the line of all creditors who now control the company. AMC said in a regulatory filing that it has held discussions with a number of its lenders and those who hold second-tier status are supporting the theater's efforts at arranging financing to continue as a going concern. Certain first-lien creditors, however, are pushing the bankruptcy option and are dangling the DIP financing as a carrot. The New York Post identified Apollo Global Management, Canyon Capital Advisors, and Davidson Kempner Capital Management as AMC's first-lien debtholders pushing the company to go the bankruptcy route.

Children’s arcade and pizza chain Chuck E. Cheese failed to persuade a bankruptcy judge to delay or cut rent obligations due to COVID-19-related restrictions on the business, WSJ Pro Bankruptcy reported. The ruling yesterday from Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston sounds a warning note for retailers and restaurants trying to survive a pandemic-driven drop in revenue, while comforting commercial landlords trying to do the same. The question of rent cuts and delays for businesses hurt by COVID-19 has come up in other bankruptcy cases, including that of Ruby Tuesday Inc. which like Chuck E. Cheese resorted to chapter 11 protection as fear of infection and government regulations kept customers away. Judge Isgur said that U.S. bankruptcy laws limit how much help he can extend to Chuck E. Cheese when it comes to the rent obligations owed on six restaurants in North Carolina, Washington and California. According to the ruling, varying degrees of health restrictions constricted the business, which is built around giving children a place to play as part of family dining. However, the Bankruptcy Code only allows the company to delay rent payments for 60 days, and nothing in state law or the terms of the leases changes that, according to the ruling. Leases are governed by their own provisions and by the laws of the states where the restaurant is located.

By Chloe, the fast-casual chain known for its vegan burgers and salads, filed for chapter 11 protection with plans to sell itself after the COVID-19 pandemic hampered liquidity, Bloomberg News reported. Since February, By Chloe has seen its revenue drop 67 percent, and the chain was forced to lay off or furlough more than half its staff. Three of its locations, including its original restaurant in the West Village, remain closed while others are operating at reduced capacity. A group of investors have agreed to provide By Chloe with a $3.25 million debtor-in-possession loan to help the company keep operating in bankruptcy, according to court filings. The chain is seeking to sell itself by mid-February. Prior to the pandemic, the chain operated 14 restaurants in the U.S. and was planning to add two more. It also licensed its names to operators who opened locations in Toronto and London, according to court papers.

About 40 days after it filed for chapter 11 protection, Lehigh Valley Mall co-owner PREIT has completed its financial restructuring and emerged from bankruptcy, the Allentown, Pa., Morning Call reported. PREIT, the largest mall owner in Philadelphia, filed for chapter 11 on Nov. 1 with a pre-packaged plan to bolster its financial flexibility and restructure its debt, after the coronavirus pandemic wreaked havoc on the brick-and-mortar retail world. Following the expedited process, PREIT said Friday it now has access to up to $130 million of new capital to support its operations. The company’s debt maturity schedule also has been extended.

Movie theater operator AMC Entertainment Holdings Inc. said today that it would issue shares to investment firm Mudrick Capital Management LP for a $100 million investment as it looks to prop up its finances to stave off a possible bankruptcy, Reuters reported. AMC said it would need at least $750 million of additional liquidity to fund its cash requirements through next year. The company estimated its cash and cash equivalents amounted to about $320 million at Nov. 30, and in the absence of additional liquidity it anticipates its existing cash resources will be depleted during January next year.

Portland, Ore.-based Blue Star Donuts, which filed for chapter 11 protection in August, emerged from those protections earlier this month with a reorganized business plan, Restaurant Business reported. Blue Star received new capital from investment group Sortis Holidings, which sponsored the chapter 11 plan, to fund new growth and resolve disputes with creditors, the chain said. Blue Star, which launched its gourmet doughnut concept in 2012, had eight units pre-pandemic. It has since permanently closed four of those locations. Blue Star has added new wholesale partnerships with area grocery stores, including New Seasons and Green Zebra Grocery. It is also expanding its shipping business, the chain said.

Women’s clothing retailer Christopher & Banks Corp. has hired Berkeley Research Group for financial advice and B. Riley Financial Inc. for investment banking services after racking up years of losses, Bloomberg News reported. The chain, which caters to women over 40, is exploring options including a potential sale or bankruptcy filing. The Plymouth, Minn.-based company is scheduled to report third-quarter earnings Thursday. The company’s first store opened in Minneapolis in 1956 as Braun’s Fashions. It now operates 450 locations in 44 states.