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Tricolor Kicks Off Car-Loan Hunt; Citgo Bonds Upheld; Claire's Buyers Plot Comeback
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Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Friday, September 19. In today's briefing, Tricolor's liquidation kicked off, Venezuela bondholders defended their claims and the new owners of Claire's have work to do.
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Mark Felix/Bloomberg News
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Collapse of subprime lender Tricolor kicks off scramble for 100,000 car loans. Liquidators for subprime auto lender Tricolor Holdings began cleaning up the mess from its sudden collapse by designating a servicing company to search for vehicles, unfreeze its loan processing system and urge customers to resume repayments.
The Texas bankruptcy judge overseeing Tricolor’s liquidation indicated she would authorize Vervent, a financial services firm, to step in as the servicer for the company’s sprawling loan portfolio.
Dallas-based Tricolor offered auto financing to customers who lacked credit history or a social security number before it abruptly filed for a bankruptcy liquidation earlier this month amid government investigations and a bank partner’s allegations of fraud.
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Jonathan Bachman/Reuters
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Venezuela bondholders’ claim on Citgo deemed valid. A federal judge ruled that U.S. bondholders have valid claims over Venezuela’s Citgo Petroleum, declining to nullify a $1.7 billion bond issuance by the bankrupt South American country.
U.S. District Judge Katherine Polk Failla in New York on Thursday ruled that bonds issued in 2016 with 50.1% of Citgo as collateral are valid under Venezuelan law. She rejected arguments by the country’s U.S.-backed opposition leaders that the bonds were improperly issued by Venezuela’s authoritarian president, Nicolás Maduro, without legislative approval.
The New York decision will also have an impact on the forced sale of Venezuela’s stake in Citgo. A separate federal judge in Delaware heard closing arguments Thursday over the possible sale of Citgo to Elliott Investment Management, the preferred bidder.
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Jason Andrew for The Wall Street Journal
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New owners plot comeback for tween retailer Claire’s. Claire’s was a temple of girlhood, a chain of purple-carpeted stores where generations of tweens flocked for ear piercings, friendship necklaces and scrunchies.
That formula faltered and now the 64-year-old company has a new owner, private-equity firm Ames Watson, which has a plan for reviving the struggling chain. It starts with cleaning things up and steaming those purple carpets.
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Will law firms sell out to private equity? Lawyers have been buzzing about the prospect of private-equity money flooding into the legal industry, just as it reshaped other professions like medicine and accounting. Many think it’s just a matter of time.
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But institutional barriers in the U.S.—chiefly the ban on nonlawyers’ owning law practices—are slowing dealmaking. Investors have developed workarounds, and firms are scouting the market more intensely than ever, but few deals have closed so far.
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