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Toshiba Says Not Aware Westinghouse Considering Chapter 11 Filing

Toshiba Corp., responding to media reports, said today that it was not aware that its U.S. nuclear unit Westinghouse was considering filing for chapter 11 protection from creditors — an option analysts say could jeopardize the entire group, Reuters reported. The Nikkei business daily reported Toshiba was now looking at a potential chapter 11 filing as one of several options for Pittsburgh-based Westinghouse, as it grapples with cost overruns at two U.S. projects that are set to result in a $6.3 billion writedown. In theory, such a drastic step could help draw a line under problems in its nuclear business. But analysts and sources with knowledge of the matter say that even under a chapter 11 filing, Toshiba could still be on the hook for up to $7 billion in potential liabilities as it has guaranteed Westinghouse's contractual commitments — an arrangement typical for the nuclear industry.

Puerto Rico Governor Says Years Needed to Fix Island Budget

Puerto Rico Governor Ricardo Rossello said that the government may need as long as five years to close a more than $7 billion budget shortfall, saying the deep spending cuts envisioned by the island’s federal overseers would deal a devastating blow to an already sputtering economy, Bloomberg News reported yesterday. Rossello’s comments signal a potential rift with the U.S. oversight board that was given broad power over Puerto Rico’s finances after it defaulted on a growing share of its $70 billion of debt. With his administration preparing to submit fiscal plans to the board next week, he estimated it will take three to five years to erase the government’s chronic deficits, compared with the two-year time frame initially proposed by the board. “You could do it in two years, but the net effect would be a devastating blow on the economy, social unrest and a devastating blow, quite frankly, on revenues,” he said. “We’re saying, let’s get some runway so the public policy we’ve designed can get executed.” Read more

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage

HHGregg Said to Prepare for Bankruptcy as Soon as Next Month

HHGregg Inc., the 61-year-old seller of appliances and electronics, is preparing to file for bankruptcy as soon as next month as it grapples with slumping sales, Bloomberg News reported yesterday. The Indianapolis-based company announced last week that it was pursuing a range of strategic and financial options. HHGregg is still seeking an out-of-court solution that would allow it to stave off chapter 11. HHGregg’s quarterly revenue for the period ended Dec. 31 plunged 24 percent. In light of the challenges, the company said on Feb. 15 that it hired Stifel, Nicolaus & Co. and Miller Buckfire & Co. to help find ways to improve liquidity and stem the flow of red ink.

Family Christian Book Chain Closing Its 240 U.S. Stores

Family Christian, the biggest U.S. Christian bookstore chain, said yesterday that it was going out of business and planned to close its 240 stores across 36 states, Reuters reported. "Despite improvements in product assortment and the store experience, sales continued to decline," said Chuck Bengochea, the company's president. "In addition, we were not able to get the pricing and terms we needed from our vendors to successfully compete in the market." The chain filed for chapter 11 protection in February 2015 with more than $120 million in debt in the face of a sales slump amid growing competition from online stores.

Analysis: How Nasty Gal Went From an $85 Million Company to Bankruptcy

The rapid rise and fall of Nasty Gal Inc., an online retailer once popular with millennial shoppers and venture capitalists, is culminating in a bankruptcy sale to a rival, the Wall Street Journal reported today. In less than a decade, Nasty Gal founder Sophia Amoruso transformed an eBay vintage store into a company that generated $85 million in revenue for the 2014 fiscal year. But the Los Angeles company’s swift growth led to stumbles. Leadership turnover and poor communication hurt its bottom line, according to interviews with 10 former employees. Some described the company culture as becoming “toxic,” referring to turbulence in recent years including several rounds of layoffs. The turmoil culminated in a November bankruptcy filing, with Nasty Gal preparing to sell its brand name and other intellectual property for $20 million to a rival fashion site, the U.K.’s Boohoo.com.

J.C. Penney to Close More Than 100 Stores

J.C. Penney Co. will shutter two distribution centers and 130 to 140 stores as the big-box department store contends with falling foot traffic and ramps up to compete with online retailers, the Wall Street Journal reported today. The closures announced today represent 13 to 14 percent of the company’s store portfolio, less than 5 percent of total annual sales and 0 percent of net income. The announcement came as Penney reported its first annual profit since 2010. Chief Executive Marvin Ellison said that closing stores will allow Penney to adjust its business to “effectively compete against the growing threat of online retailers.”

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