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Caesars Argues Fresh Lawsuit Shield Will Help Bankruptcy Deal

The bankrupt operating unit of Caesars Entertainment Corp. asked a judge yesterday to extend a lawsuit shield for its parent company, which a financial advisor said is critical to making progress toward a settlement with holdout creditors, Reuters reported. Negotiations are advancing thanks to the prospect of more cash for creditors following the $4.4 billion sale of another Caesars affiliate last month and the possibility of financial contributions from Caesars' private equity sponsors, Brendan Hayes, managing director of Millstein & Co said at a hearing. But negotiations need to take place without the threat of judgments on bondholder litigation currently pending in New York and Delaware against the non-bankrupt Caesars parent, Hayes said. Parties in the long and litigious $18 billion bankruptcy met in U.S. Bankruptcy Court in Chicago as Caesars Entertainment Operating Co Inc. requested a third halt to $11.4 billion in lawsuits by noteholders against its parent over bond guarantees. A current injunction expires on Aug. 29.

Aéropostale Duels with Sycamore over Bankruptcy

Aéropostale Inc.’s doors remain open as back-to-school shoppers hit the stores, but there is no guarantee the company will survive for long, the Wall Street Journal reported today. A planned auction of the massive store chain has been pushed back to Aug. 29 as a bankruptcy judge weighs what could be a company-ending decision for the international seller of apparel to young adults. Bankruptcy Judge Sean Lane is set to rule later this week on a dispute between Aéropostale and the private-equity firm that was at one time one of its largest backers, Sycamore Partners. Junior creditors and the company are allied in a campaign to save Aéropostale, avoiding the “loss of over 10,000 jobs, empty lease locations and disappointment for vendors,” creditor attorney Robert Feinstein said at a hearing yesterday in New York bankruptcy court. Aéropostale is pressing for a ruling that would rein in Sycamore’s power to determine the company’s fate. Sycamore contends liquidation, not a sale of the operating business at a bargain-basement price, is the best option for creditors.

Victims Fault Settlement Plan in Twin Cities Archdiocese Case

A group of sexual abuse victims who suffered at the hands of clergy in the Archdiocese of St. Paul and Minneapolis, Minn., have filed a counter-plan for the proposed settlement, the St. Paul Pioneer Press reported today. The archdiocese’s plan, submitted to bankruptcy court in May, is “grossly underfunded and grossly deficient,” said attorney Jeff Anderson during a news conference Tuesday. Anderson is a St. Paul attorney representing hundreds of people claiming sexual abuse by priests. The plan submitted by the survivors, as the Creditors’ Committee in the Archdiocese of St. Paul and Minneapolis, would require the archdiocese to pay $80 million to victims instead of the $13 million it proposed. Read more

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Largest Oil Companies’ Debts Hit Record High

Some of the world’s largest energy companies are saddled with their highest debt levels ever as they struggle with low crude prices, raising worries about their ability to pay dividends and find new barrels, the Wall Street Journal reported today. Exxon Mobil Corp. Royal Dutch Shell PLC, BP PLC and Chevron Corp. hold a combined net debt of $184 billion — more than double their debt levels in 2014, when oil prices began a steep descent that eventually bottomed out at $27 a barrel earlier this year. Crude prices have rebounded since, but still hover near $50 a barrel. The soaring debt levels are a fresh reminder of the toll the two-year price slump has taken on the oil industry. Just a decade ago, these four companies were hauled before Congress to explain “windfall profits” but now can’t cover expenses with normal cash flow. Executives at BP, Shell, Exxon and Chevron have assured investors that they will generate enough cash in 2017 to pay for new investments and dividends, but some shareholders are skeptical. In the first half of 2015, the companies fell short of that goal by $40 billion, according to a Wall Street Journal analysis of their numbers. Read more. (Subscription required.) 

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Abengoa Sells U.S. Ethanol Plants for $357 Million

Spanish renewable energy firm Abengoa SA has sold five of its Midwestern U.S. ethanol plants for $357 million as the company looks to stave off what would be Spain’s largest-ever corporate bankruptcy, the Wall Street Journal reported today. Green Plains Inc. of Omaha, Neb., which operates 14 plants and has an ethanol-marketing unit, is paying $200 million for Abengoa plants in Mount Vernon, Ind., and Madison, Ill., according to papers filed in U.S. Bankruptcy Court in St. Louis. Green Plains also topped Houston-based BioUrja Trading LLC, an ethanol-marketing firm that doesn’t have production operations, for Abengoa’s York, Neb., plant with a $37.4 million bid at bankruptcy auction Monday. An affiliate of plant operator KAAPA Ethanol LLC of Minden, Neb., is paying $115 million for Abengoa’s Ravenna, Neb., plant. And ICM Inc. is picking up Abengoa’s shuttered plant in Colwich, Kan., for $3.15 million.

Arkansas City Sued Over Hot Check Court Fines, Arrests

A central Arkansas city is effectively operating a debtors' prison that imposes hefty fines and jail time for thousands of poor people whose checks bounce and infringes on their constitutional rights by shielding court proceedings from public scrutiny, according to a federal lawsuit filed yesterday, the Associated Press reported. The lawsuit accuses the city of Sherwood and Pulaski County, Arkansas, of violating the constitutional rights of thousands of residents through the prosecution of hot check cases. The American Civil Liberties Union of Arkansas and the Lawyers' Committee for Civil Rights Under Law filed the lawsuit on behalf of four people who were jailed because they couldn't pay fines related to bounced checks and a Sherwood resident who is challenging the practice as a misuse of taxpayer funds. The groups say that the practice is part of a nationwide problem of poor defendants being jailed for not paying fines and fees they could never afford. Sherwood District Court Judge Milas "Butch" Hale III, who presides over the court and is named as a defendant, denied the allegations. "We do not run a so-called 'debtor's prison' in Sherwood," Hale said in an email. "If a defendant pleads guilty, or is found guilty, of writing a hot check we set up a payment plan. It is only after the third or fourth time that they fail to comply with a court order that we incarcerate." Read more

Click here to read a copy of the lawsuit.