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Samson LBO on Trial; Ukraine Turns to IMF; Will Alex Jones Pay Up
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Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Tuesday, August 9. Members of Oklahoma’s billionaire Schusterman family are among the defendants in a bankruptcy-court trial over Samson Resources Corp.'s LBO; Ukraine has formally requested new assistance from the IMF for more funds to help the war-torn country weather a recession and a large cash shortfall.
And listen to our reporter Jonathan Randles talk about Alex Jones's latest debacle in his defamation case where the district court ordered the conspiracy theorist to pay almost $50 million to parents of a 6-year-old killed in the Sandy Hook school shooting. But will he pay now that he filed his company for bankruptcy?
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A judge in the Samson Resources bankruptcy has allowed a claim against Stacy Schusterman, right, who oversaw the oil company when the Schusterman family sold it to KKR in 2011. Her mother, Lynn Schusterman, left, is also a defendant in the trial in her capacity as a trustee for a family trust.
PHOTO: /ASSOCIATED PRESS
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Oklahoma’s Schusterman family faces trial over oil company’s bankruptcy. Members of Oklahoma’s billionaire Schusterman family will be among the defendants in a bankruptcy-court trial over a soured buyout of Samson Resources Corp.
Judge Brendan Shannon of the U.S. Bankruptcy Court in Wilmington, Del., issued a ruling last week ahead of a trial starting next month. In the suit, a trustee is seeking to claw back more than $6 billion in payments collected by Samson’s then-shareholders when the privately held oil-and-gas company was sold to KKR & Co. in 2011 for $7.2 billion.
The remaining roughly $2.4 billion went to entities linked to the Schusterman family that got releases, or legal protections, under the chapter 11 plan. But the trustee believes that Ms. Schusterman was the beneficiary of the entire $3.5 billion
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The IMF provided Ukraine with a $1.4 billion loan in March, and a spokesperson for the IMF said in July Ukraine should receive more grants to help support the government’s finances in the short term.
PHOTO: MANDEL NGAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Ukraine asks for more IMF help. Ukraine has formally requested new assistance from the International Monetary Fund, seeking funds to help weather a severe wartime recession and a large cash shortfall.
The government submitted a proposal for an IMF program on Friday, it said. Ukraine added that it expects to receive help by November or December but didn’t say how much it is requesting.
Kyiv hopes that an IMF program will help cover its financing shortfall and bolster the credibility of its economic strategy for sustaining the war effort, thus encouraging Western governments to step up their financial support, according to Ukrainian officials. The size of a possible IMF program and the policy conditions attached to any IMF loans are still being negotiated, they added.
More on Ukraine:
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Alex Jones, outside the courthouse in Austin this week, said under oath that he now believes the shooting was ‘100% real.’
PHOTO: BRIANA SANCHEZ/AMERICAN-STATESMA/ZUMA PRESS
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Listen: Alex Jones has to pay almost $50 million to two Sandy Hook parents. But will he? A Texas jury ordered the conspiracy theorist Alex Jones to pay nearly $50 million for lying about the Sandy Hook shooting. But after Jones’ company filed for bankruptcy, there are questions about when — and how much — he’ll actually pay. Listen to our reporter Jonathan Randles gets to the bottom of this issue.
Further Reading:
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"It will be surprising if the judgement is paid quickly. This could be months and months of fighting in court for sure."
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— Jonathan Randles, WSJ Bankruptcy Reporter
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Business services group OSG files bankruptcy for quick lender takeover. OSG Group Holdings Inc., a private equity-backed provider of printing, marketing and payment services to corporate clients, has filed for bankruptcy, planning to hand ownership to lenders on a quick time frame.
The Carlstadt, N.J.-based company entered into a restructuring agreement in late May with certain first- and second-lien lenders and with its majority equity owner, Aquiline Capital Partners LLC, locking up overwhelming support for a restructuring of roughly $860 million in debt obligations, according to OSG’s court papers.
OSG provides communication services to corporate clients worldwide through a traditional print and mail business as well as digitally. It also provides such services as online payment portals, call centers and document scanning, and employs nearly 1,800 people. OSG, short for Output Services Group, said its primary legacy market of traditional print materials is shrinking because of transitions to digital, a trend that it says has accelerated during the Covid-19 pandemic.
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OSG has its first-day hearing before Judge John Dorsey in the U.S. Bankruptcy Court of Wilmington, Del. at 10 a.m. ET.
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Credito Real S.A.B de C.V., 2 p.m. ET: Credito Real has a status conference in the U.S. Bankruptcy Court in Wilmington, Del. The Mexico non-bank lender was facing a liquidation of its business less than a week after it acknowledged flawed accounting practices related to the value of its loan book. It filed for chapter 15 in U.S. bankruptcy court last month.
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Avaya’s collapsing debt deal hits clients of Goldman, JPMorgan. A $600 million debt deal that Goldman Sachs Group Inc. and JPMorgan Chase & Co. recently arranged for Avaya Holdings Corp. went bad within weeks.
The two banks sold new loans and bonds for Avaya, a cloud-communications company, in late June. Investors included Brigade Capital Management and Symphony Asset Management, people familiar with the matter said.
A few weeks later, Avaya announced that it would miss by more than 60% its previous forecasts for adjusted earnings in the third fiscal quarter, which ended June 30. It gave no explanation. The company also said then that it would miss revenue targets and announced it was removing its CEO.
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Market rout sends state and city pension funds to worst year since 2009. Public pension plans lost a median 7.9% in the year ended June 30, according to Wilshire Trust Universe Comparison Service data released Tuesday, their worst annual performance since 2009 and a fresh sign of the chronic financial stress facing governments and retirement savers.
Much of the damage occurred in April, May and June, when global markets came under intense pressure driven by concerns about inflation, high stock valuations and a broad retreat from speculative investments including cryptocurrencies. Funds that manage the retirement savings of teachers, firefighters and police officers returned a median minus 8.9% for that three-month period, their worst quarterly performance since the early months of the global pandemic.
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“It was a really really bad quarter for investing, there’s no way around it."
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— Michael Rush, Wilshire Trust Universe Comparison Service
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The Treasury Department tied Tornado Cash to the North Korean-sponsored hacking collective the Lazarus Group.
PHOTO: LUKE MACGREGOR/BLOOMBERG NEWS
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U.S. sanctions crypto platform Tornado Cash, says it laundered billions. The U.S. Treasury Department imposed sanctions on a major cryptocurrency platform, accusing it of laundering billions of dollars in virtual currency, including $455 million allegedly stolen by North Korean hackers.
Monday’s action against Tornado Cash, a so-called mixer platform that enables users to exchange cryptocurrencies with relative anonymity, is another salvo by the Biden administration against the burgeoning blockchain financial markets. Regulators, lawmakers and law-enforcement officials say that some cryptocurrency platforms afford users anonymity that enables them to launder criminal proceeds, finance terrorism, or engage in public corruption.
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A Chinese ship was scheduled to dock at Hambantota Port in Sri Lanka, which was financed with Chinese loans and built by a Chinese company.
PHOTO: TANG LU/ZUMA PRESS
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Sri Lanka defers visit from China research vessel over India concerns. China criticized Sri Lanka’s decision to delay the docking of a Chinese survey ship at one of its ports after India, citing potential security risks, objected to the vessel’s arrival.
The Chinese ship, the Yuan Wang 5, was scheduled to dock at Sri Lanka’s Hambantota port on Thursday to refuel and take on supplies, according to government officials. But Sri Lanka has submitted a request to China to defer the ship’s arrival, a Sri Lanka Foreign Ministry spokesman said Monday.
Sri Lanka is navigating a balancing act between China and India as it struggles through an economic crisis that has seen its foreign reserves drain to near zero. The country will likely need cooperation from Beijing, its most important creditor, as it seeks a bailout from the International Monetary Fund and works to restructure a mountain of debt.
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U.S. consumers are paying higher prices for every day goods, but Americans expect inflation to ease up over time.
PHOTO: OLIVIER DOULIERY/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Consumers lower their expectations of future inflation. Americans are expecting less inflation in coming years, according to a recent survey by the Federal Reserve Bank of New York.
Respondents’ median expectation in July was for an annual inflation rate of 6.2% in one year, down from the 6.8% they expected in June, the regional reserve bank said Monday. They expected inflation in three years to be at 3.2%, down from the 3.6% they expected in June, and inflation in five years to be at 2.3%, down from a previous 2.8%.
Central bank policy makers are likely to welcome a decline in inflation expectations, but have signaled they are on track to raise interest rates in September, for a fifth increase this year, to mitigate price pressures.
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Rapid wage growth keeps pressure on U.S. inflation. Workers’ wages are rising briskly, a factor contributing to four-decade high U.S. inflation.
Average hourly earnings grew 5.2% in July from a year earlier, and annual wage gains have exceeded 5% each month this year, the Labor Department said Friday. The rapid earnings growth adds to other evidence that employers are continuing to ramp up pay as they try to find and keep workers in a tight job market.
Wage gains help consumers spend money in the face of higher prices for restaurant meals, groceries and lodging. But many companies are having to pay more for labor at the same time that other business expenses are rising, including for transportation and logistics, said Omair Sharif, head of forecasting firm Inflation Insights LLC.
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Bed Bath & Beyond closes nearly 40% higher. (CNBC)
A brutal ‘crypto winter’ will hit Coinbase earnings. (Barron's)
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