Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, June 8. In today's briefing, Citadel sued lenders that participated in Serta Simmons Bedding’s controversial 2020 debt deal, seeking at least $20 million in damages and a share of the transaction’s benefits. And Saks Global won court approval for its chapter 11 reorganization plan, clearing the way for it to exit bankruptcy after cutting debt and repairing relationships with key luxury suppliers.

Citadel has filed a pair of lawsuits alleging that lenders participating in Serta Simmons Bedding’s controversial 2020 recapitalization unlawfully transformed the investment firm's $20 million stake in a $1.9 billion first-lien term loan into “effectively” an unsecured claim.

The filings with the New York State Supreme Court on Thursday follow a December 2024 decision by the Fifth Circuit Court of Appeals, which found that Serta’s 2020 debt transaction wasn’t a permissible “open market purchase” under the 2016 credit agreement.

That ruling was the result of a years-long legal battle between Serta’s participating lenders including Barings, Invesco and Eaton Vance Management, and minority lenders including Apollo Global Management, Angelo Gordon and Gamut Capital.

Citadel is demanding at least $20 million in damages, along with a court order forcing the participating lenders to ratably share the benefits of the 2020 exchange.

—Akiko Matsuda

The parent of Saks and Neiman Marcus received approval of its reorganization plan on Friday from the U.S. Bankruptcy Court for the Southern District of Texas, paving the way for it to exit Ch. 11 in the coming weeks.

When Saks Global filed for bankruptcy in January, it threw the viability of luxury department store shopping into question. It owed suppliers, including European luxury houses such as Chanel and LVMH, tens of millions of dollars.

It has since mended relationships with suppliers and will emerge from court protection on stronger financial footing, having eliminated about 75% of its debt, the company said.

For years, McClain had kept cattle here in his hometown and on the Texas Panhandle, buying calves at auction and selling them for profit three months later. His 80,000-head operation—powered by a $50 million loan from an agricultural bank and $120 million from investors—appeared to be a blowout success for the former chemicals plant worker. He lived in a 4,100-square-foot brick home surrounded by a manicured lawn, with gold-framed photos from his recent wedding in the entryway.

He also had a big secret: Most of the cattle were imaginary.

He made around $2 billion in cattle transactions to build his “ghost herd,” according to bank records filed in Texas federal bankruptcy court, which is trying to pick apart the web of alleged fraud. The mystery that forensic accountants haven’t found an answer to remains, where did the money go?

McClain’s elaborate scheme came apart in April 2023, when a local truck dealer who had invested around $650,000 insisted on repayment. After bounced checks, he brought in the county sheriff.

The U.S. labor market has climbed out of a rut. The country added more jobs than expected in May, posting strong payroll gains for the third month in a row. Despite uncertainties around the Iran war, inflation, trade and artificial intelligence, the report suggests the U.S. labor market is steadily recovering from its weak patch last fall and winter.

Share your tips, suggestions and feedback with the WSJ Pro Bankruptcy team: Alexander Gladstone; Jodi Xu Klein; Akiko Matsuda; Alicia McElhaney; Becky Yerak. 

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