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Creditors to Puerto Rico's electricity provider were given a slight respite yesterday when the bonds' trustee made a scheduled payment, but the U.S. municipal bond market remained worried the Puerto Rico Electric Power Authority will soon use a new bankruptcy-like process to restructure its debts, Reuters reported yesterday. The law establishing the process has rattled the $3.7 trillion municipal market since it was passed last week and yesterday it prompted Moody's Investors Service to push ratings on Puerto Rico debt deeper into junk territory. Puerto Rico bonds are widely held due to their tax exemption in every state and their high yields, making them a tempting asset despite the U.S. commonwealth's struggles to cope with a shrinking economy, chronic budget deficits and a $73 billion debt load. PREPA could be the first corporation to test the law, as it faces increasing demands for its limited funds, including payments on expiring lines of credit and fuel purchases. Prices of its junk-rated bonds plummeted to the record low of 36.815 cents on the dollar.

Quiznos said yesterday that it has emerged from bankruptcy after restructuring its finances, the Associated Press reported yesterday. The toasted sandwich chain filed for chapter 11 protection in March and reduced its debt by more than $400 million. CEO Stuart Mathis said that it plans to increase sales by revitalizing the brand and reinforcing itself as a place for a "fresh, high-quality and great-tasting alternative to traditional fast food offerings." The Denver company owns and operates only seven of the nearly 2,100 Quiznos restaurants around the country. The rest are owned and operated by franchisees and weren't part of the bankruptcy proceedings. Quiznos provides franchise owners with training, store designs and marketing support.

Court hearings to determine if Energy Future Holdings Corp., Texas's biggest power company, can adopt a refinancing package that is key to its massive bankruptcy have been extended through July 11 from the original schedule to end yesterday, Reuters reported. "I'm worried about that amount of time being sufficient," Judge Christopher Sontchi said at the start of yesterday’s session. "We have a lot of witnesses," said Judge Sontchi, who scheduled time in court on Wednesday and July 10 and July 11. Judge Sontchi is being asked to approve a loan package of about $2 billion to refinance high-yielding debt at Energy Future's EFIH unit, which owns the profitable Oncor power transmission business.

James River Coal Co. is asking a bankruptcy court to give it more time to propose a chapter 11 plan, the Associated Press reported today. Richmond, Va.-based James River said in a motion that it needs an additional 100 days to propose a plan while it searches for a buyer or a sponsor for the plan. James River says numerous matters need to be resolved, including whether a reorganization plan or a liquidation plan would best serve the interests of creditors and other relevant parties. A hearing on the motion is set for July 10.

An investment group that owns a piece of a major telecom firm in the Republic of Georgia filed for bankruptcy in a U.S. court on Monday, facing a deadline to pay more than $11 million to noteholders, Dow Jones Daily Bankruptcy Review reported today. MIG LLC, which operates as Metromedia International Group Inc., filed for chapter 11 protection in Wilmington, Del., blaming a dispute that stopped the flow of profits from its only major investment: a 46 percent stake in the ownership group that owns telephone provider Magticom Ltd.

Creditors of bankrupt Energy Future Holdings, Texas's biggest power company, urged a judge to slow its chapter 11 case and warned if a key refinancing proposal was approved it might block better deals from being considered, Reuters reported yesterday. In the past week, the company's majority stake in a powerlines business known as Oncor has sparked a flurry of activity comparable to a merger-type bidding war as creditors scramble to get their hands on the unit's steady cash flow. The company wants Bankruptcy Judge Christopher Sontchi to allow its EFIH unit, which owns Oncor, to borrow around $2 billion to fund a settlement that will redeem high-yield debt, saving $11 million a month in interest payments. The loan is backed by the company's unsecured bondholders. Creditors not involved in financing the DIP, or debtor-in-possession, loan have called it "unprecedented" because it will convert into a stake of about 60 percent of Energy Future when the company exits bankruptcy. The potential to gain control over the power company has sparked competing DIP loan proposals, including one with $1.6 billion of backing by NextEra Energy Inc, a Florida company that also has a large Texas presence.

Wireless venture LightSquared has reached a deal to end its chapter 11 bankruptcy, but its largest creditor, satellite operator Charles Ergen, is not on board and "wasted the parties' time," according to a report from the court-appointed mediator, Reuters reported on Friday. The mediator, Judge Robert Drain, said that he believed the plan would be confirmable by the bankruptcy court judge overseeing the case even without Ergen's support. Judge Drain's report, made in a court filing on Friday, did not give details on the deal. LightSquared, which is owned by Phil Falcone's Harbinger Capital Partners, had accused Ergen of using underhanded methods to acquire his controlling stake of its debt. The dispute was sent to mediation after Judge Shelley Chapman rejected a restructuring proposed by LightSquared that would have pushed Ergen's repayment behind other creditors.

A powerful Texas state senator warned against a takeover by hedge funds of the power distribution unit of bankrupt Energy Future Holdings and said the state would prefer an owner with a long-term view, Reuters reported on Friday. Senator Troy Fraser told Reuters on Friday that Texas prefers that the new owner of the power distribution unit, Oncor, invest cash in the business, and would be concerned about any deal that increases debt levels. Fraser is chairman of the Texas Senate Committee on Natural Resources. He opposed the 2007 leveraged buyout that loaded Energy Future, then known as TXU Corp, with much of the $41 billion in debt it carried into bankruptcy in April. A bankruptcy judge today will consider competing proposals for refinancing the debt of the Energy Future unit that owns Oncor; those proposals could determine who controls Energy Future after its bankruptcy.

A fee examiner tasked with keeping costs down in the American Airlines bankruptcy recommended this week that a court approve nearly $400 million in fees and expenses earned by professionals who he said engineered "perhaps the most efficient airline reorganization case on record,” the Wall Street Journal reported today. Robert Keach, an attorney from Maine, made the request in a series of filings on Tuesday in U.S. Bankruptcy Court in Manhattan. Keach recommended paying $371.7 million in fees and $16.3 million in expenses to 47 professional firms, including lawyers, accountants, aircraft consultants and other advisers. A handful of firms who submitted fees after a deadline will be included in separate requests, he said. The final fee and expense tallies cover work completed from the November 2011 inception of former American Airlines parent AMR Corp.'s chapter 11 case through the approval of its bankruptcy-exit plan 23 months later. American Airlines exited bankruptcy through a historic merger with US Airways Group Inc. — initially opposed and later cleared by the Justice Department — that created the world's largest airline. American also used its bankruptcy proceeding to negotiate deep concessions from its main labor unions, ultimately cutting about $1 billion in annual labor costs. Nancy Rapoport, a bankruptcy law professor at University of Nevada at Las Vegas who has served as a fee examiner in large chapter 11 cases, said the appointment of Keach at the beginning of the case was crucial to keeping costs down. "These fees would have been way higher" if Keach hadn't created ground rules governing what could and couldn't be charged, Rapoport said.

Bankrupt Energy Future Holdings' novel plan to sell itself through a loan provision has Texas's largest power company in hot water with creditors, who accuse it of trying to skirt a public sale process and hiding its true value, Reuters reported yesterday. The company and its creditors are heading for a courtroom showdown on Monday when Energy Future will seek a judge's approval to take on a $2 billion loan that would give a group of hedge fund lenders 60 percent of the company when it emerges from its $48 billion bankruptcy. Other creditors have cried foul, saying that Energy Future hasn't considered competing offers and is selling itself without a traditional court-supervised bankruptcy auction. Creditors have estimated Energy Future has a total enterprise value, which includes debt, of $21 billion thanks to its EFIH unit, which owns Texas's biggest power lines operator, Oncor.The fight centers on EFIH's plan for a debtor-in-possession loan that would refinance high-yielding notes. Energy Future can consider alternate transactions, but creditors said once the loan is approved restrictive provisions will deter any potential bidders. John Penn, a bankruptcy attorney at Perkins Coie in Dallas, who is not involved in the case, said the judge has flexibility to decide what to with the assets if he rejects the company proposal on Monday. "Sometimes it becomes a formalized process with bid procedures and other times you just have the competing parties show up in court with their offers and each makes their pitch," said Penn.