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Highland Capital Nonprofit Probed; Saks Launches Debt Exchange
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Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Tuesday, July 22. In today's briefing, Texas Attorney General Ken Paxton is investigating a nonprofit tied to bankrupt Highland Capital Management over a $270 million charitable asset dispute tied to its former CEO James Dondero, though a judge on Monday denied the request to pause the bankruptcy proceedings. And Saks Global is restructuring its balance sheet with a $2.2 billion debt exchange, offering bondholders a mix of new securities based on their participation in a recent $600 million capital infusion deal, potentially pushing some creditors down in the repayment order.
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Texas Attorney General Ken Paxton. Photo: Bob Daemmrich/ZUMA Press
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Judge Denies Texas Attorney General’s Request to Pause Highland Bankruptcy for Charity Probe
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The Texas attorney general is looking into a nonprofit foundation linked to bankrupt investment manager Highland Capital Management following a dispute over roughly $270 million in charitable assets involving former Highland Chief Executive James Dondero.
Texas Attorney General Ken Paxton last week sought to pause proceedings in Highland’s chapter 11 case as he investigates people and organizations involved in the case, court records show. Paxton is looking into the operations of Charitable DAF Holdings Corp., a U.S. affiliate of a Cayman Islands company set up in 2011 by Dondero to support several nonprofits, according to documents reviewed by The Wall Street Journal and people familiar with the matter.
On Monday, U.S. bankruptcy Judge Stacey Jernigan in Dallas denied Paxton’s request for a pause in proceedings.
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Saks Global Launches $2.2 Billion Debt Exchange as Part of Restructuring Effort
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Saks Global has launched a $2.2 billion debt exchange offer, aiming to restructure its capital stack following ongoing financial pressures.
The luxury retailer is seeking to swap its 11% senior secured notes due 2029 for a mix of newly issued securities, as it works to stabilize its balance sheet following a recent $600 million capital deal.
Under the terms of the exchange, creditors are offered different combinations of new notes, depending on their participation in the new financing deal. Bondholders who opt not to join the transaction risk having their exchanged notes subordinated in the repayment order, a move that could reduce recovery in the event of distress.
Saks Global has been grappling with shifting consumer spending and persistent headwinds in the luxury retail sector.
—Jodi Xu Klein
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Wag! Group Files for Chapter 11 Bankruptcy
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Wag! Group said it is restructuring its balance sheet through a voluntary, prepackaged Chapter 11 bankruptcy process.
The pet-care technology company said its primary secured lender, Retriever LLC, voted to accept the prepackaged plan of reorganization. The plan offers a path to reduce debt and transitions ownership of the company to Retriever, it added.
Wag said it expects to emerge from the Chapter 11 process within a period of about 40 days. The company secured a commitment for debtor-in-possession financing from Retriever, which, when combined with cash generated from continuing operations, is expected to provide liquidity to meet business obligations throughout the court-supervised process.
The reorganization plan is subject to approval by the U.S. Bankruptcy Court for the District of Delaware.
—Denny Jacob
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Many credit providers are looking to institutional law firms in the hunt for legal talent, according to industry recruiters. Illustration: iStock
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Private Credit Legal Hiring Strong Amid Deal and Compliance Complexity
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Private-credit firms are increasingly seeking in-house legal help as both dealmaking and regulatory compliance grow in complexity, and many nonbank lenders aim to poach from established law practices in their hunt for talent.
Fundraising needs, firm growth and an increase in deal volume feed demand for internal legal talent in the private-credit sector. Some firms have created hybrid roles that blend legal and investment responsibilities.
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Evotec Shares Tumble After Revenue Outlook Cut
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Shares in Evotec slipped after the biotech company cut its full-year revenue guidance, citing first-half revenue below expectations.
In midday European trading, shares were down 13.5% at 6.45 euros. Year to date, shares have fallen 21%.
The Frankfurt-listed company now expects group revenue between €760 million and €800 million ($883.6 million to $930.1 million). This compares with a previous forecast of €840 million to €880 million.
It still anticipates research and development expenditures of €40 million to €50 million and adjusted earnings before interest, taxes, depreciation and amortization at €30 million to €50 million.
For the first half of the year, group revenue was below expectations, while adjusted Ebitda was broadly in line, the company said Monday. Revenue at its shared R&D business was lower than expected and should continue to see challenges in the rest of the year, it added.
"While some parts of our business continue to operate in a challenging market environment, the execution of our Priority Reset [restructuring program], and new strategy gives us confidence that we are well-positioned to deliver on our long-term ambitions," Chief Executive Christian Wojczewski said.
Last April, the company outlined its new strategy to support sustained growth, which included annualized recurring gross savings of 40 million euros. The group now expects the savings to exceed previous targets.
Evotec reiterated its long-term guidance, which includes an Ebitda margin above 20% by 2028.
—Najat Kantouar
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