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Chaparral Energy Aims to Sell Pipeline in Push to Exit Bankruptcy

Chaparral Energy Inc. aims to have its bankruptcy exit plan confirmed next month, which may require suing a co-owner of a carbon dioxide pipeline to advance the sale of the asset, the bankrupt oil and gas producer said in court papers on Friday, Reuters reported. Chaparral has a hearing on March 9 to confirm its plan to emerge from chapter 11 bankruptcy, funded in part by asset sales. The company filed for bankruptcy in May after talks with stakeholders failed to produce a restructuring support agreement to tackle its financial troubles. Chaparral said that it no longer needed the pipeline in Oklahoma running from a Koch Fertilizer LLC fertilizer plant. It transports carbon dioxide used in "flooding" fields to help extract oil and gas from depleted wells. Chaparral and Merit Energy Co. together own more than 90 percent of the pipeline. Under an agreement, Merit bought CO2 from the Koch plant and set aside a portion for Chaparral's use. Their deal expired in December and talks to renew it failed, Chaparral said, adding that talks to acquire CO2 directly from Koch had also failed. Read more.

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Sycamore Partners Wins Bankruptcy Auction for The Limited

Buyout firm Sycamore Partners has won the auction for the e-commerce business and intellectual property of bankrupt U.S. women's apparel retailer The Limited with a bid of $26.8 million, Reuters reported yesterday. Sycamore Partners outbid clothing firm Sunrise Brands LLC in the auction, the people said, asking not to be identified because the outcome has not yet been announced. The sale to Sycamore Partners must still be approved by a U.S. bankruptcy court judge. The Limited was forced to close its roughly 250 brick-and-mortar stores earlier this year. It filed for bankruptcy last month, with Sycamore Partners as a stalking-horse bidder. Sunrise Brands, whose holdings include branded apparel for actresses Melissa McCarthy and Eva Longoria, submitted an offer for The Limited last week.

Consumer Finance Company J.G. Wentworth Hires Debt Adviser

U.S. consumer finance company J.G. Wentworth Co. has hired a financial adviser to help it address its debt burden, as fierce competition eats into its profits, Reuters reported yesterday. J.G. Wentworth, known for its catchy jingles and television commercials, has hired investment bank Evercore Partners Inc. to help it fix its capital structure, which includes an approximately $440 million term loan, the people said. J.G. Wentworth had $300 million drawn on its credit line as of Sept. 30. The Radnor, Pa.-based company buys future payments that consumers expect to receive from various sources including state lotteries, insurance companies and annuities, and in turn pays its customers a lump sum. J.G. Wentworth securitizes the future payments and sells them. Low interest rates have increased competition, J.G. Wentworth said in its 2016 annual report. The company has also been under investigation by the Consumer Finance Protection Bureau. Specialty finance firms like J.G. Wentworth and payday lenders were under scrutiny by the CFPB, but the future of that effort is unclear after ongoing court attempts to dismantle the consumer advocacy agency.

Bankrupt Avaya Stops Paying Some Pension Benefits

Troubled telecom company Avaya Inc. has begun cutting off some pension benefits for retirees, a signal that these benefits may be on the chopping block in connection with its chapter 11 case, the Wall Street Journal reported today. In a letter to retirees, the communications company cited its recent chapter 11 filing to say that as of Feb. 1, it would stop paying so-called supplemental pension benefits to certain retirees until further notice. Some retirees recently received notice that March checks also wouldn’t arrive. An Avaya spokesman said the company continues to pay federally guaranteed pension payments but doesn’t “have the court’s authority to make supplemental pension payments…at this point in time.” He declined to elaborate on Avaya’s plans for these benefits, which are among the liabilities that companies often shed in bankruptcy.

Billion-Dollar Rematch over Debit Card Fees

Banks and retailers are preparing to battle over billions of dollars in debit-card fee revenue that the government transferred to merchants from banks as part of the 2010 Dodd-Frank Act, the Wall Street Journal reported today. Now, inspired by a Republican sweep in the 2016 U.S. election, banks and other card companies are fighting to get those fees back. Before the Dodd-Frank changes, debit-card “interchange” fees were set by the card networks, including Visa Inc. and Mastercard Inc., that counted the banks as both customers and shareholders. Merchants pay the fees to card issuers whenever a consumer uses a debit card to purchase something. After the financial crisis, Dodd-Frank’s Durbin amendment capped those fees. But if House Republicans propose doing away with the Durbin amendment, named for Sen. Dick Durbin (D-Ill.), retailer groups “will be putting up a big fight,” said Laura Knapp Chadwick, director of commerce and entrepreneurship policy for the National Restaurant Association. “We’re hoping it doesn’t get ugly on the House floor, but we are preparing to go down that route.” Many expect a repeal of the Durbin amendment will be part of Rep. Jeb Hensarling’s Financial Choice Act that aims to revamp the federal government’s approach to regulating banks. The idea was included in the original version of the proposed legislation that last year passed the House Financial Services committee, which Hensarling (R-Texas) chairs.

Hedge Funds Denied in Suit over Fannie, Freddie Bailout

Hedge funds and other investors in the bailed-out mortgage giants Fannie Mae and Freddie Mac suffered a loss in federal appeals court yesterday, as a three-judge panel ruled that they could not sue the government for taking profits from them, the Washington Examiner reported. The U.S. Court of Appeals for the District of Columbia Circuit told investors, including hedge fund Perry Capital, that the 2009 stimulus law barred courts from considering their claims that Fannie and Freddie's government caretakers broke the law. The panel also sent back to the lower court the investors' claims that the government breached contracts. Fannie and Freddie investors have filed a number of suits over the Obama administration's 2012 decision to take all of the companies' profits for the Treasury. Yesterday’s decision pertained to a case consolidating the claims of a number of investors, including major hedge funds and insurance companies. Fannie and Freddie have private shareholders, although their shares stopped being traded on the stock exchanges after the government bailed them out.

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