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Caesars Wins Delay in Bondholders’ Litigation over Unit’s Debt

Caesars Entertainment Corp. won a short reprieve in its litigation with bondholders, once again hitting the pause button in its multibillion-dollar battle, the Wall Street Journal reported today. Judge Matthew Kennelly of the U.S. District Court for the Northern District of Illinois yesterday granted a motion that pushes back litigation in New York, which was slated to begin Tuesday afternoon, until Sept. 16. At issue is whether Caesars must honor more than $11 billion in guarantees for the debt of its bankrupt operating unit, Caesars Entertainment Operating Co. Last week, Bankruptcy Judge A. Benjamin Goldgar said that he wouldn’t renew the shield that protected Caesars from the lawsuits over whether it must honor the debt guarantees. Litigation was set to begin Tuesday on whether a $7.7 billion payment to bondholders would be made by Caesars. Meanwhile, another suit over $3.7 billion in debt guarantees was scheduled to be argued before a Delaware state court in September. CEOC has filed an appeal that will be heard by Judge Kennelly today.

Samson Outlines Revised Chapter 11 Exit Plan

Samson Resources Corp. has signed a revised restructuring pact with a group of creditors that calls for the oil-and-gas company to exit bankruptcy with its top-ranking loan paid off and equity in the hands of second-lien lenders, the Wall Street Journal reported today. Tulsa, Okla.-based Samson is battling junior creditors in bankruptcy court and must either defeat them or win them over in order to make the restructuring proposal a reality. The agreement signed on Friday pledges investors holding 39 percent of Samson’s second-lien loan claims to support a new chapter 11 plan that should be filed within days. When it filed for bankruptcy protection in September 2015, Samson was weighted down with about $4.9 billion worth of debt. It had a deal in hand, but falling energy prices continued to chop into the value of Samson’s assets and the pact fell apart. Read more. (Subscription required.) 

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Struggling Pharmaceutical Firm Considering Bankruptcy

Rock Creek Pharmaceuticals Inc. is considering options — including bankruptcy — after two debtholders said the company was in default, the South Florida Business Journal reported today. The drug development company, which has historic ties to a former Virginia governor accused of corruption, says it only has $35,000 in unrestricted cash and faces payment demands of more than $10 million. Rock Creek has been working to develop a compound to treat acute and chronic inflammatory conditions, and has dedicated all its resources to research and development, it said in an Aug. 10 quarterly filing with the U.S. Securities and Exchange Commission. In October 2015, it raised $20 million in a private placement of senior secured convertible notes. On Aug. 24, one of the note holders, Hudson Bay Master Fund Ltd., sent Rock Creek an event of default redemption notice, withdrawing $6.7 million from its account and claiming it is still owed nearly $7 million, Rock Creek disclosed in a SEC filing yesterday.

Congresswoman Presses Regulators on Volcker Rule Data

A senior Democrat on the House Financial Services Committee is pressing regulators to share two years of market data they have collected in connection with the Volcker Rule, a provision of the Dodd-Frank Act intended to rein in banks’ risky trading and investments, the New York Times reported today. Rep. Carolyn B. Maloney (D-N.Y.) sent a letter to regulators yesterday requesting information about certain quantitative trading metrics that the agencies had been collecting since before regulators prohibited banks from making risky bets with their own money last July. “The agencies currently have nearly two years of quantitative trading data, spanning periods both before and after the effective date of the proprietary trading ban,” Maloney said. “I believe that these quantitative trading metrics can provide important information not only about the efficacy of the Volcker Rule, but also about the general trading activities of U.S. banks, and the degree to which these trading activities have changed over the past two years.”

Commentary: Prosecution of Financial Crisis Fraud Ends with a Whimper

One source of great frustration from the financial crisis has been the dearth of cases against individuals over subprime lending practices and the related securitization of bad loans that caused so much financial havoc, according to a commentary in yesterday's New York Times DealBook blog. On Aug. 22, the Securities and Exchange Commission settled its last remaining case against a former Fannie Mae chief executive for securities fraud related to the disclosure of the company’s subprime mortgage exposure. The agency accepted a mere token payment that will not even come out of the individual’s own pocket, according to the commentary. On the same day, a federal appeals court refused to reconsider its May ruling that Bank of America’s Countrywide mortgage unit and one of its former executives did not commit fraud by failing to disclose to Fannie Mae and Freddie Mac that the subprime loans it was selling to them did not come close to the contractual requirements for such transactions.

Sycamore Partners Confirms Bid for Bankrupt Aeropostale

Sycamore Partners yesterday confirmed that it submitted a bid for Aeropostale Inc. after a judge issued an opinion rejecting the teen-focused retailer's attempt to block an offer and blame its bankruptcy on the private equity firm, Reuters reported yesterday. Aeropostale owes $151 million to two Sycamore affiliates, Aero Investors LLC and MGF Sourcing Holdings Ltd, and had sought to preempt a credit bid by them. A representative for Sycamore said the firm made an offer for Aeropostale at the retailer's auction yesterday but declined to say if the offer was a credit bid. Aeropostale in court papers last month argued for a court order denying Aero, a lender, and MGF, a supplier, an opportunity to credit bid their claims. Aeropostale charged the affiliates had caused liquidity and inventory troubles in an effort to strain the company's finances and drive it into bankruptcy.

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