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Amy Coney Barrett's Brief Work in Ch. 11; Shareholders Decry Garrett Motion's Top Bid; Hedge Funds Lose $250 Million PG&E Claim
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Good day. With the Senate poised to confirm Amy Coney Barrett to the Supreme Court as early as Monday, WSJ Pro Bankruptcy takes a look at the judge's brush with U.S. bankruptcy law during her brief career in private practice.
Elsewhere, Garrett Motion won permission to tap a private-equity firm's $2.6 billion offer as the stalking-horse bid, despite protests from shareholders vying to hang on to their stakes in the auto supplier. And the judge who oversaw PG&E's chapter 11 restructuring rejected a $250 million claim from Elliott Management and other bondholders that were shut out of a lucrative capital raise.
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Judge Barrett is set to become the youngest member of the court, and she could serve for decades.
SARAH SILBIGER/POOL VIA CNP/ZUMA PRESS
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Amy Coney Barrett Represented Philanthropist in Health Bankruptcy That Spawned Lawsuits
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Amy Coney Barrett has spent nearly two decades teaching law, but the likely future Supreme Court justice also had a brush with the U.S. bankruptcy system early in her career while representing a philanthropist targeted by the Pennsylvania attorney general. Read More.
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Garrett Motion Overcomes Shareholders to Tap KPS as Lead Bidder
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A bankruptcy judge authorized auto supplier Garrett Motion Inc. to designate a planned sale to private-equity firm KPS Capital Partners LP as the company’s best offer to date, giving it a leg up over others ahead of a competitive process. Read More.
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PG&E Wins $250 Million Fight With Bondholders Over Capital Raising
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PG&E Corp. scored a victory Friday as a judge ruled against hedge funds that said California’s largest utility had unfairly shut them out of a lucrative stock deal on its way out of bankruptcy. Read More.
Separately, PG&E said it was planning to pre-emptively cut power to about 361,000 customers in an effort to prevent wildfires, marking the largest such shut-off it has reported this year. Read More.
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The now-closed Neiman Marcus store in the recently Hudson Yards mall in Manhattan.
Richard B. Levine/Zuma Press
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Corporate Defaults Lag Dire Projections, Lifting Debt Market
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Fewer major U.S. companies are defaulting on their debt than investors feared just months ago, a boost to corporate bond prices and an encouraging sign for the U.S. economy. Read More.
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Canadian Retailer Le Chateau to Liquidate Assets, Wind Down
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Specialty retailer Le Chateau Inc., battered by the impacts of the coronavirus pandemic, on Friday said it filed for bankruptcy protection with plans to liquidate its assets and wind down its operations. Read More.
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Private Equity Affiliates Seek Money From Bankrupt Hospital
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More than $1 billion in unpaid bills have stacked up in the bankruptcy of Hahnemann University Hospital, an historic healthcare hub for Philadelphia's poor and homeless that was closed by private equity operators last year.
Hundreds of millions of dollars in claims arise out of the snarl of real estate entanglements involving Joel Freedman, the California investor who led a 2018 buyout before shutting down Hahnemann in spite of protests from health officials, community groups, doctors and nurses.
Mr. Freedman filed multiple claims in his own name, arguing that, if he is sued over his handling of Hahnemann, the defunct hospital should pay the damages. — Peg Brickley
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Manhattan Luggage Retailer Files For Bankruptcy Due to Pandemic
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Park Avenue Leather Goods, a luggage retailer with a single store in Manhattan, filed for bankruptcy Thursday, saying the disappearance of tourists in New York City during the pandemic has devastated the business.
The retailer, which opened its doors in Manhattan in 1946, was forced to close its sole store on Park Avenue, according to a court filing by Steven Cherniak, chief operating officer. The company, however, has lined up a $750,000 loan from Bespoke Capital Services LLC to get through bankruptcy, restart its business and bring back furloughed employees, according to the filing. — Soma Biswas
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Dine-In Theater Chain Studio Movie Grill Files For Bankruptcy
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Studio Movie Grill, the Texas-based cinema chain that also offers casual dining, filed for bankruptcy protection Friday, according to court documents.
Studio Movie Grill has more than thirty locations in ten different states. Chief Executive Brian Schultz said in a press release that the chain is still open for business as usual, and that Studio Movie Grill gift cards are still valid. — Alexander Gladstone
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Wirecard’s U.S. Operations Sold to Texas-Based Payments Company
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Wirecard’s administrator didn’t say how much Syncapay paid for the unit.
FRANK HOERMANN/SVEN SIMON/ZUMA PRESS
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Wirecard AG’s bankruptcy administrator has sold the failed German fintech’s U.S. operations to a company backed by buyout specialist Centerbridge Partners LP, as it continues to dismantle the remains of the business and earn some cash for creditors. Read More.
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The market is just wide open.”
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— Oleg Melentyev, head of high yield strategy at BofA Global Research
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Guitar Center has begun to prepare for a potential bankruptcy filing that could come as soon as next month, people with knowledge of the situation said. The retailer missed an interest payment of roughly $45 million earlier this month, setting off a 30-day grace period that could end in default, the people said. (New York Times)
A group of creditors to J.C. Penney Co. is seeking to slow the sale of the bankrupt retailer’s real estate to another group of lenders, saying that it provides the buyers an undeserved windfall and reeks “of not only greed but abhorrent bad faith.” (Bloomberg)
Debt from oil and gas bankruptcies reached a record high this year and will likely rise even higher as more companies file for chapter 11 during the worst oil bust in decades. (Houston Chronicle)
As a deadline looms for abuse survivors to come forward to make claims in the Boy Scouts of America bankruptcy, a judge’s ruling could allow the case to become the largest-ever child sexual abuse case against a single national organization. (USA Today)
Il Mulino owner Jerry Katzoff sued his lenders on Friday accusing them of a plot to squeeze him out of the business — the latest legal salvo between the restaurateur and his chain’s chief lender, Benefit Street Partners, which have been duking it out since last spring over a defaulted $35 million loan.(New York Post)
A unit of Venezuela’s state-owned oil company Petroleos de Venezuela is suing the United States in Houston federal court to seek the reimbursement of several hundred millions of dollars it says it overpaid in taxes between 2005 and 2011. (Reuters)
A bankruptcy judge ruled it would be "particularly heartless" to prevent the family of a New Jersey woman killed by an opioid overdose from pursuing payments from the insurers of Rochester Drug Cooperative. (Rochester Democrat & Chronicle)
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