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A U.S. judge yesterday approved a deal to rescue J.C. Penney Co Inc. from bankruptcy proceedings precipitated by the coronavirus pandemic, averting a liquidation that would have put the beleaguered department store chain out of business and jeopardized tens of thousands of jobs, Reuters reported. The U.S. Bankruptcy Court for the Southern District of Texas approved the deal, which will allow the 118-year-old retailer to emerge from bankruptcy before the upcoming holiday season, the company said in a statement. The rescue deal is expected to save approximately 60,000 jobs. The transaction contains multiple parts. Lenders led by H/2 Capital Partners will forgive $1 billion in debt in exchange for 160 properties and six distribution centers. Mall operators Simon Property Group and Brookfield Property Partners will acquire the company’s slimmed-down retail operations for $1.75 billion in cash and debt. The sale approval comes a week after J.C. Penney’s lawyers announced a settlement with nearly all of its creditor groups that locked in support for the sale and marked a turning point in a bankruptcy case that has been marked by inter-lender fighting. However, a group of equity holders — whose investments will be wiped out — remained opposed to the deal.

Creditors who lost money on Loot Crate Inc. say venture-capital investors used hardball tactics, such as acting out scripted confrontations, to tighten their grip on the company, making moves that eventually pushed it into bankruptcy, according to court documents, WSJ Pro Bankruptcy reported. Loot Crate, which markets itself as a subscription service for “gamers and nerds,” filed for chapter 11 last year. A lawsuit filed by the Loot Crate creditors in bankruptcy court last week contains excerpts of emails involving executives at investors Upfront Ventures and Breakwater Management LP. The suit alleges the venture-capital firms used a playbook they created, as well as acting advice from a law firm, to use during boardroom negotiations with Loot Crate management. The investment firms also threatened to pressure Loot Crate co-founder Christopher Davis through his father, a Fortune 500 executive, according to an email cited in the lawsuit. Loot Crate raised $18.5 million in 2016 from investors including Upfront, Breakwater and Robert Downey Jr.’s venture-capital firm, Downey Ventures, which isn’t named in the complaint. Loot Crate owed more than $50 million to creditors when it filed for bankruptcy. A committee of unsecured creditors, including Major League Baseball, is seeking compensation of at least $10 million for the loss of value surrounding Loot Crate.

Gym chain YouFit Health Clubs LLC filed for bankruptcy yesterday, joining a growing list of fitness peers forced to seek court protection from creditors amid the pandemic, Bloomberg News reported. The chapter 11 filing in Delaware allows YouFit to continue operating while it works out a plan to repay creditors. YouFit’s petition listed assets of no more than $100 million and separate court papers show debt of about $110 million. YouFit has a tentative deal to sell itself to lenders for $75 million, court papers show. Payment would come in the form of debt forgiveness. Consumers were forced to stay away from communal gyms as the COVID-19 pandemic spread across the globe this year, leaving chains like 24 Hour Fitness Worldwide Inc. and Gold’s Gym International Inc. without customers. Many U.S. states have now allowed gyms to reopen, but with restrictions on capacity. “As it did for many industries, including other health clubs, the pandemic hit Youfit hard, and we have made the decision to restructure the company through a bankruptcy filing as a way to continue operating and providing an uplifting fitness experience to our loyal members,” YouFit spokesperson Evan Nierman said. The chain’s gyms have reopened in recent months with “stringent safety protocols,” he said. YouFit has some 85 locations in the U.S., many of which are located in Florida, according to its website. YouFit was founded in St. Petersburg, Fla. in 2008 and remains headquartered in the state. Bank of America Corp. is listed as the biggest unsecured creditor at $10 million. YouFit hired Greenberg Traurig as bankruptcy counsel, FocalPoint Securities LLC as investment banker and Hilco Real Estate LLC as real estate adviser, according to its petition.

The U.S. subsidiary of Italian luxury-goods company Furla SpA has filed for bankruptcy due to the impact of the COVID-19 pandemic on its brick-and-mortar and wholesale businesses, the Wall Street Journal reported. Furla (USA) Inc. filed for chapter 11 protection on Friday in the U.S. Bankruptcy Court in New York, planning to use the process to get rid of leases and debt, while focusing on a reorganization strategy of investing in e-commerce and wholesale. The Furla brand was created by the Furlanetto family in 1927. The Bologna, Italy-based parent company manufactures and sells products including bags, wallets, belts, scarves, jewelry, glasses, shoes and other accessories. With its financial troubles, New York-based Furla USA joins other well known brands and retailers — including some of its own wholesale customers, such as department-store operator Neiman Marcus Group Ltd. and off-price retailer Century 21 Department Stores LLC — that have gone out of business or filed for bankruptcy as a result of the coronavirus. Furla USA’s filing comes after revenue fell 67 percent in the first three quarters of this year compared with the same period in 2019. The wholesale business throughout the U.S., Central America and South America has also seen a significant reduction in revenue as customers were subject to government-mandated shutdowns.

Furniture Factory Outlet (FFO Home) joins the growing ranks of retailers seeking bankruptcy protection due to losses created by the pandemic. The home goods retailer, which is owned by private equity firm Sun Capital Partners, filed for chapter 11 in Delaware last week, and is hoping for a sale, RetailTouchPoints.com reported. Currently, furniture retailer American Freight has offered a $7 million stalking-horse bid for the company. At the start of 2020, Furniture Factory Outlet operated 68 stores in the Midwest and South Central states, before being forced to close 37 locations due to financial stress from COVID-19. The retailer now has 31 stores left in Arkansas, Missouri, Oklahoma, Kentucky and Indiana, as well as a bedding manufacturing facility and one distribution facility. In its bankruptcy filing, the retailer said raw materials have been harder to acquire, which has impacted manufacturers’ ability to produce goods. “The pandemic has also impacted manufacturing safety, which has lessened the amount of finished goods available,” the retailer stated in its filing. “Furthermore, transportation of raw materials and finished goods has been additionally pressured as a result of restrictions on the labor force. As a result, the debtors’ revenue continues to be choked by the lessened inventory supply chain.”

The Pension Benefit Guaranty Corp. officials said Friday that the PBGC is taking over J.C. Penney Co.'s defined benefit plan, Pensions&Investments reported. PBGC Director Gordon Hartogensis said in a statement that the agency "is acting to protect the retirement security of the J.C. Penney plan participants." The company and 17 related entities filed for chapter 11 protection in U.S. Bankruptcy Court in Corpus Christi, Texas, on May 15. In October, the company announced that it was seeking court approval of a proposal to sell its operating assets to a joint venture led by Brookfield Asset Management and Simon Property Group that did not agree to assume the pension plan. According to PBGC estimates, the J.C. Penney Corporation Inc. Pension Plan is 92% funded with $3.3 billion in assets and $3.6 billion in benefit liabilities. According to the company’s 10-K filing in January, the pension plan had $3.5 billion in assets and $3.2 billion in liabilities, and was 120 percent funded. The termination is effective Friday and further updates are expected.

NPC International Inc., the nation’s largest franchisee of Wendy’s and Pizza Hut restaurants, has a deal to sell itself out of bankruptcy to Flynn Restaurant Group LLC, WSJ Pro Bankruptcy reported. Flynn, the largest restaurant franchise operator in the U.S., is offering $816 million to buy the more than 1,300 restaurants operated by NPC. Weighed down by nearly $900 million in debt, NPC filed for chapter 11 protection in July and has been marketing assets. The stalking-horse offer could be subject to higher and better offers and requires bankruptcy court approval. It is likely to face competition from other interested buyers, including possibly Wendy’s Co. itself. Wendy’s said on Nov. 2 that it was considering making an offer for nearly 400 Wendy’s restaurants operated by NPC as part of a consortium with other Wendy’s franchises. Both Wendy’s and Pizza Hut LLC have expressed concerns about NPC’s quick timeline for a sale, and have pushed for greater involvement in vetting who will be the new owner of NPC’s restaurants. Wendy’s has signaled it would oppose a sale to Flynn, which operates Arby’s and Panera Bread restaurants that also sell sandwiches. Wendy’s has traditionally preferred franchisees that only own its restaurants, and Arby’s could be viewed as a direct competitor in the burger business. In addition to the Wendy’s restaurants, NPC operates roughly 900 Pizza Huts.

Pet-supply retailer Pet Valu Inc., buckling under the pressure of restrictions related to the coronavirus pandemic, plans to close its nearly 360 stores and warehouses in the U.S., WSJ Pro Bankruptcy reported. The specialty retailer of premium pet food and supplies said Wednesday it expects to wind down all of its 358 stores and warehouses in the Northeastern and Midwestern U.S., as well as its corporate office in Wayne, Pa. “After a thorough review of all available alternatives, we made the difficult but necessary decision to commence this orderly wind down,” said Jamie Gould, Pet Valu’s recently appointed chief restructuring officer. Pet Valu, owned by consumer-focused private-equity firm Roark Capital Group, said that its stores have been hurt by the pandemic, which has prompted a raft of retailers to file for bankruptcy and close stores. The U.S. company licenses its name and contracts for certain services from Pet Valu Canada Inc., a separate entity that isn’t part of the wind-down. The Ontario-based company will continue to operate its roughly 600 stores, franchise locations and e-commerce site in Canada. The U.S. chain, which has been operating for more than 25 years, said it expects to begin store-closing sales in the coming days. In the meantime, all Pet Valu stores in the U.S. remain open. The company said it has stopped taking online orders on its Pet Valu U.S. e-commerce site.

Shogo Takemoto’s family has tilled the rice fields of eastern Japan for more than 200 years. They stash their savings in an agricultural cooperative and borrow from it to help finance the farm’s day-to-day operations. But with interest rates near zero, the return on the loans is too little to keep the cooperative going. So it deposits Takemoto’s savings with Japan’s bank for farmers and fishermen, which sends the money overseas to earn a better yield. That’s how Takemoto became an indirect investor in car rental company Hertz Global Holdings Inc. before it declared bankruptcy in May, the Wall Street Journal reported. Among the owners of Hertz’s debt was Norinchukin Bank, which owned bonds backed by pieces of loans to struggling companies like Hertz. Later that month, the bank — founded nearly 100 years ago to serve the people who feed Japan — disclosed a staggering $3.7 billion unrealized loss on such bonds and said it would pause further investments. The loss, which has mostly been recouped as markets rebounded, was shocking for its size, and also because Norinchukin invested exclusively in triple-A rated bonds, which are supposed to be among the safest securities anywhere. The stumble disrupted one of Wall Street’s most lucrative trade routes — a steady flow of capital from yield-starved investors in Asia who turned to the U.S. to avoid the sting of zero interest rates at home. In doing so, they channeled their customers’ savings into a boom for loans to some of America’s riskiest corporate borrowers.