Good day, and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, March 19. In today's briefing, Purdue Pharma has filed a new reorganization plan that aims to deliver more than $7.4 billion to creditors, with the drugmaker set to be dissolved and its assets transferred to a new company. Businesses are leveraging increasingly sophisticated and inclusive liability management exercises to restructure debt, raise capital and extend maturities, helping them avoid bankruptcy despite economic pressures. And Sunnova Energy’s creditors have unified into a single group ahead of debt talks as the company struggles with declining solar panel demand and liquidity pressures, sources told The Wall Street Journal.

Purdue Pharma has filed a new reorganization plan that aims to deliver more than $7.4 billion in cash to creditors, subject to certain reserves, to compensate victims and abate the opioid crisis.

Purdue will be dissolved and its assets transferred to a new company, it said Wednesday. Sticking to the aim articulated at the outset of the pharma company’s bankruptcy, the new public benefit company will focus on the opioid crisis.

That comes after Purdue owners from the Sackler family in January struck a settlement of mass litigation alleging that they fueled addiction in a long-running bankruptcy case stemming from the U.S. opioid crisis. The Wall Street Journal reported that month that, after a court ruling, the Sacklers agreed to increase their settlement contribution to $6.5 billion over time, up from $6 billion under a previous plan.

As recession fears amp up, struggling businesses have one thing working in their favor: They have never been more adept at reordering their debts to avoid bankruptcy.

U.S. companies have been engaging in liability management exercises, or LMEs, that raise fresh capital and extend debt maturities while avoiding the expense of chapter 11. A wave of LMEs in recent years has kicked the can down the road for dozens of struggling borrowers, pushing the rate of corporate bankruptcies down to historically low levels.

Now, a new generation of friendlier, more inclusive LMEs has sprung up that minimize the risk of investor lawsuits and help troubled businesses stay afloat longer. While a recession could further stress corporate balance sheets, the improvements in financial engineering and the amount of capital available to get LMEs done provides a hedge against the risk of widespread bankruptcy filings, market participants said.

Sunnova Energy International’s creditors have consolidated into a single group ahead of debt negotiations with the company in coming days, according to people with knowledge of the matter.

The company, one of the largest rooftop solar panel installers and financiers in the U.S., is grappling with declining demand, which has squeezed its revenue and strained its liquidity.

Two groups of creditors were formed within days after Sunnova earlier this month warned about its ability to fund its operations, The Wall Street Journal reported earlier.

The group of holders of the 2026 bonds and convertible notes represented by Evercore and Akin Gump Strauss Hauer & Feld have joined forces with a separate group of creditors advised by Ducera Partners and Paul, Weiss, Rifkind, Wharton & Garrison, the people said.

Forever 21 plans to wrap up its going-out-of-business sales within six weeks, a lawyer for the fast-fashion retailer told a bankruptcy judge on Tuesday. 

F21 OpCo, which operates the Forever 21 stores in the U.S., filed for bankruptcy Sunday with a plan to shutter all its stores even as it searches for a buyer to salvage all or a part of the chain. The sale process "remains fluid," the lawyer also told Judge Mary Walrath at a hearing in U.S. bankruptcy court in Wilmington, Del. The company is aiming to file a reorganization plan within the next 10 days, the lawyer said. — Soma Biswas

Biodegradable plastics maker Danimer Scientific has filed for bankruptcy roughly a month after defaulting on its senior secured bonds and facing a repayment demand from its term-loan provider.

The publicly traded Bainbridge, Ga.-based company sought protection from creditors Tuesday in the U.S. Bankruptcy Court in Wilmington, Del., with $622 million in assets and $449 million in debts, including a $217 million unsecured claim held by convertible noteholders.

It said it plans to wind down business and try to sell its assets in chapter 11.

The company sells eco-friendly material under the Nodax name for a variety of uses, including straws, food containers and utensils. Last year, it touted compostable Skittles packaging made with Nodax.

Revenue for the third quarter fell 21%, partly due to changing straw-purchasing practices by its customer Starbucks, according to a regulatory filing and comments in a call with analysts. Danimer also said in that filing there were significant doubts about its long-term future.

Danimer couldn’t be reached for immediate comment Tuesday. Its shares were down 69% to 35 cents a share in late-afternoon trading. 

It primarily operates out of its Winchester, Ky., facility and has operations in its headquarters city.

Hedge fund Armistice Capital is among holders of at least 5% of the voting securities, a court filing shows. The business touts Pepsi as one of its partners, according to Danimer’s website. — Becky Yerak

Rivals are coming for Southwest Airlines customers.

Frontier Airlines will temporarily offer one free checked bag for flights departing May 28 through Aug. 18, if customers book by a deadline early next week. As part of the promotion, Frontier is also offering perks like a free carry-on, free seat selection, and free flight changes.

“Think of this as the ultimate ‘divorce your old airline’ deal,” Frontier Chief Executive Officer Barry Biffle said.

Southwest shrugged off Frontier’s offer as a gimmick, and said it will serve new customers attracted to low fares above all else.

Frontier isn’t the only airline wondering whether formerly loyal fliers might be persuaded to switch, after Southwest last week said it plans to drop its generous policy allowing two free checked bags. CEOs at United and Delta said the move could prompt some Southwest customers to look at other airlines.

Ted Christie, CEO of Spirit Airlines, said last week when his airline emerged from bankruptcy that Southwest’s move could be an opportunity.

Some customers were paying high fares to get complimentary bags at Southwest, and might be open to a lower fare at Spirit with fewer bags, he said in an interview. “Those are the types of people that now have an economic incentive to look towards Spirit, whereas before they were just brand loyal,” he said.

Frontier’s promotion is temporary, but the company suggested it could become permanent if it proves popular enough.

Wall Street analysts said that while there might be some shift to other airlines in markets where Southwest has strong competitors, they don’t expect major customer defections as a result of the new bag fees. — Alison Sider

Beyond said it has agreed to sell a majority stake in e-commerce website Zulily to Lyons Trading Company for $5 million.

The owner of Bed Bath & Beyond, buybuy BABY and Overstock, said on Tuesday it will retain a 25% stake in Zulily.

In early February, Beyond acquired the rights of the buybuy Baby brand for $5 million with plans to integrate brand into its Bed Bath & Beyond stores as well as it its own standalone locations.

Beyond has been working towards bringing back physical Bed Bath & Beyond stores after the company filed for bankruptcy in April of 2023, from which it has since emerged.

"With the recent acquisition of buybuy Baby, we want our team laser-focused on our core brands as we march towards profitability," said Chief Financial Officer Adrianne Lee, who recently had her role expanded to president as well.  — Adriano Marchese

Southeast Asia’s largest budget carrier is set to cut ticket prices further and expand its fleet, a top executive says, betting the strategy can help AirAsia win over more travelers and boost revenue.

“I can’t have fares too high. It has got [to] spur demand,” Bo Lingam, group chief executive at AirAsia Aviation, said in an interview.

Lingam, who will head a new listed entity called AirAsia Group after the airline merges its short- and long-haul operations as part of a restructuring, said he wants to bring ticket prices back to levels somewhat comparable with pre-Covid-19 times.

Wall Street is racing to get private markets into the portfolios of everyday investors. Now an insurance company is getting into the game and thinks it has an edge.

Life insurer Lincoln Financial is teaming up with Bain Capital and Partners Group to launch two funds aimed at individual investors, executives said.

The funds will be marketed through the roughly 60,000 financial advisers Lincoln already works with to sell annuities, life insurance and other products. Chief Investment Officer Jayson Bronchetti said it would take many private-markets firms 10 or 15 years to replicate its distribution network.

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

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