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Puerto Rico Board Asks Court for More Time on Members' Appointments

Puerto Rico’s federally created financial oversight board asked a federal appeals court yesterday to extend a July 15 deadline for its members to be confirmed by the U.S. Senate, citing concerns that missing it could harm an ongoing restructuring of the bankrupt U.S. commonwealth’s debt, Reuters reported. The action followed an announcement by a U.S. Senate committee that the confirmation process will not begin for several weeks. “Without such an extension, the oversight board would be unable to carry out its responsibilities on July 15, which will throw the debt restructuring process into chaos and threaten irreparable damage to the Puerto Rican economy,” the board said in a statement. The board, which is overseeing the restructuring of about $120 billion of Puerto Rico debt and pension obligation through a form of bankruptcy, asked the Boston-based First Circuit Court of Appeals to extend the deadline pending a U.S. Supreme Court decision on whether to review the matter. The appeals court in May extended a May 16 deadline for the board’s seven members to be reappointed or replaced to July 15. In February, in a case brought by Puerto Rico creditors, the court ruled that the members’ 2016 appointments violated the U.S. Constitution’s Appointments Clause because they were not confirmed by the Senate. The White House yesterday officially sent nominations for the board’s current members to the Senate Energy and Natural Resources Committee, which said it expects to receive paperwork for the nominees “within several weeks and will announce a hearing for (the nominations) shortly thereafter.” The nominations cover only the remainder of the members’ terms, which all end on Aug. 30. A spokesman for the board said the members would continue serving until they are formally replaced. The Supreme Court could announce as soon as Monday whether it will review the First Circuit’s appointments ruling.

House Judiciary Committee Hearing Moved to Next Tuesday to Examine SBRA, HAVEN Act, Chapter 12, Student Debt and More

Originally scheduled for today at 2 p.m. EDT, the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law has postponed the hearing titled "Oversight of Bankruptcy Law and Legislative Proposals" until Tuesday, June 25, at 10 a.m. EDT.   
For further information on the hearing, please click here.
 

Forever 21 Seeks Restructuring Advice to Avoid Bankruptcy

Teen retailer Forever 21 Inc. has hired restructuring advisers to help negotiate exits from stores and raise a new loan as the once-hot chain deals with falling sales and a cash crunch, WSJ Pro Bankruptcy reported. The chain’s founder, Do Won Chang, is looking to avert a bankruptcy filing and salvage his equity in the Los Angeles-based retailer after it used up a loan from JPMorgan Chase to cover losses rather than buy merchandise. Founded in 1984, closely held Forever 21 operates more than 700 stores in dozens of countries, where it sells low-price apparel such as $5 tops and $20 dresses. The chain’s sales have slowed after a period of rapid growth and expansion that included the opening of giant stores in cities like New York and Las Vegas.

PG&E Reaches $1 Billion Wildfire Settlement With Agencies

PG&E Corp., the California utility giant that went bankrupt five months ago amid crippling wildfire liabilities, has reached a $1 billion settlement with local government agencies that were harmed by blazes its equipment ignited, Bloomberg News reported. The deal between PG&E and 14 public entities includes a settlement for the town of Paradise, which was destroyed in November’s Camp Fire — the deadliest in California history. The agreement doesn’t affect any of the suits filed by individual homeowners and businesses against the San Francisco company, owner of California’s largest utility, and it must be approved by the judge overseeing the firm’s bankruptcy case. The settlement covers the 2015 Butte Fire, the devastating 2017 Wine Country fires and last year’s Camp Fire, which killed 85 people. More than half of the total settlement amount — $582 million — would pay for Camp Fire damages, with Paradise receiving $270 million and its parks and recreation district getting $47.5 million. Butte County would receive $252 million, while Yuba County would get $12.5 million.

Senators Pressure TD Bank to Pay Victims of Stanford Ponzi Scheme

U.S. senators from Louisiana urged Toronto-Dominion Bank to compensate victims of R. Allen Stanford’s Ponzi scheme over the bank’s “knowing assistance” in his $5 billion fraud, WSJ Pro Bankruptcy reported. Sens. John Kennedy (R-La.) and Bill Cassidy (R-La.) accused TD Bank in a Friday letter of abandoning small investors who lost their nest eggs when Stanford International Bank Ltd., a TD Bank customer, was exposed as a fraud and collapsed in 2009. Despite being named in long-running lawsuits in the U.S. and Canada, TD Bank and other Stanford financial partners haven’t reached settlements with court-appointed liquidators charged with digging up money for victims. The senators alleged that TD Bank “aided and abetted” Stanford’s banking outside the U.S. and knocked the institution for expanding its U.S. footprint in the years since while holding out on settling litigation and paying restitution. Stanford’s U.S. clients were largely clustered in Texas and Louisiana, though his far-flung financial empire also stretched to Latin America, the Dutch Caribbean and Switzerland. “We demand that TD Bank stop its obstructionist conduct, engage in a meaningful effort to put an end to this decade-long debacle and provide restitution to the Stanford victims without further delay,” the senators said in their letter to TD Bank Chief Executive Greg Braca. “Regulatory intervention should not be necessary for Stanford’s victims to receive the justice they deserve.” Stanford investors since 2009 have gotten back a fraction of what they lost and far less than the recoveries for victims of Bernard Madoff’s Ponzi scheme, which collapsed months before Stanford’s.

Hermitage Club Members Allowed to Intervene in Bankruptcy

A court has given members of a now-closed private Vermont ski area approval to participate in the club’s bankruptcy proceedings, the Associated Press reported. An ad-hoc committee of Hermitage Club members favor a petition filed against the club for involuntary chapter 7 bankruptcy, which seeks asset liquidation, because it would allow members to gain influence over the club and its future. Others say chapter 7 will eliminate unsecured debt and hurt certain creditors. The two companies that own the club filed for voluntary chapter 11 bankruptcy, which seeks reorganization, in Connecticut last month and filed a motion to move the proceedings there. The state shut down its business operations last year for failure to pay sales and use taxes.

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