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Holdout Bondholders Join Puerto Rico Sales Tax Debt Restructuring

Two major holders of Puerto Rico bonds that opposed a restructuring deal for the bankrupt U.S. commonwealth’s Sales Tax Financing Corporation (COFINA) revenue bonds are now part of the agreement, the island’s federally appointed oversight board announced on Friday, Reuters reported. The board said that Aurelius Capital Master Ltd and Six PRC Investments LLC, an affiliate of Monarch Alternative Capital, have opted to support the deal. Both own significant amounts of COFINA senior and junior bonds, but mostly own Puerto Rico general obligation (GO) bonds. The move ends opposition from the island’s Ad Hoc Group of GO Bondholders to a COFINA debt restructuring plan, according to the board. The three-member group, which includes Aurelius and Monarch, objected to a COFINA settlement framework in bankruptcy court in June, calling parts of it unlawful. GO and COFINA bondholders have long debated the ownership of Puerto Rico’s future sales tax revenue. Claims by Aurelius and Monarch in a lawsuit filed in federal court in 2016 challenging COFINA’s constitutionality will also be dropped, under terms of the agreement. The deal is expected to be presented to a U.S. judge overseeing Puerto Rico’s bankruptcy case next month, the statement added.

House Judiciary Subcommittee Considers Trustee Compensation Legislation

The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a hearing on Wednesday at 10 a.m. EDT to consider H.R. 3553, the “Bankruptcy Administration Improvement Act of 2017.” The bill was introduced last year by House Judiciary Subcommittee Chair Tom Marino (R-Pa.) and aims to increase the amount of compensation paid to chapter 7 bankruptcy trustees for services rendered. Ariane Holtschlag of the Law Office of William J. Factor, Ltd. (Chicago) and a member of ABI’s Commission on Consumer Bankruptcy will testify to provide Commission recommendations on trustee compensation. While the Commission is working on a report of recommendations for improving the overall consumer bankruptcy system, to be published at ABI’s 2019 Annual Spring Meeting, it completed deliberations on the issue of chapter 7 trustee compensation. Others scheduled to testify include Bankruptcy Judge Alan C. Stout (W.D. Ky.; Louisville), Clifford J. White III, Director of the U.S. Trustee Program (Washington, D.C.) N. Neville Reid of Fox Swibel Levin & Carroll LLP and John Rao of the National Consumer Law Center (Boston).

Neiman Marcus Bondholder Criticizes Transfer of Valuable Online Business

A Neiman Marcus Group Ltd. bondholder said the luxury retailer is in default on its debt after transferring online business MyTheresa to its parent company, further from the reach of creditors, WSJ Pro Bankruptcy reported. Distressed-debt investor Marble Ridge Capital LP said on Friday that it sent a letter to Neiman Marcus “expressing concern” about the transaction. The retailer said on Tuesday that it transferred shares of MyTheresa, an online business that caters to younger customers in Europe, the Middle East and Asia, to its parent holding company, Neiman Marcus Group Inc. Marble Ridge said the transfer is an improper “dividend” to Ares Management LP and the Canada Pension Plan Investment Board, the owners of the parent company.

Putnam Stares Down Hedge Funds on Big Shopping Mall Bet

Putnam Investments has placed a large, concentrated bet that struggling U.S. shopping malls can transform themselves even as key tenants shut stores or file for bankruptcy, Reuters reported. So far, it is winning - to the chagrin of hedge funds like Alder Hill Management LP that are on the other side of the bet. Putnam, a Boston-based mutual fund firm, holds more than $1 billion worth of derivatives tied to mortgages on shopping malls, office buildings and hotels, according to interviews and filings analyzed by Reuters.

Claire’s Debt Restructuring Approved by Bankruptcy Court

Teen accessories chain Claire’s Stores Inc., piercer of ears since 1978, had its debt-restructuring plan approved Friday by a bankruptcy court, where it had filed to reorganize in March with plans to hand ownership to senior bondholders, WSJ Pro Bankruptcy reported. Bankruptcy Judge Mary Walrath signed off on that plan days after the Hoffman Estates, Ill.-based retailer reached a settlement with unhappy junior bondholder Oaktree Capital Management LP. Claire’s had entered chapter 11 with a plan under which first-lien bondholders that included Elliott Management Corp. and Monarch Alternative Capital LP, as well as current owner Apollo Management Holdings LP, would essentially swap their debt for equity in the reorganized merchant. Apollo also holds some Claire’s debt. The retailer operates its namesake chain, as well as Icing, which caters to older customers. The bankrupt entities entered chapter 11 with almost $1.9 billion in debt and have said the reorganization will help reduce debt by more than $1 billion as well as provide up to $575 million in new capital.

Ex-Hess Executive to Lead Restart of Idled Caribbean Refinery

The owners of an idled oil refinery in the U.S. Virgin Islands that once ranked among the world’s largest have hired a former Hess Corp. executive closely acquainted with the facility to oversee its return to service, Reuters reported. Brian Lever, who ran the former Hovensa refinery on St. Croix for Hess and partner Petroleos de Venezuela until it filed for bankruptcy in 2012, joined Limetree Bay Refining this month as president and chief operating officer. Private-equity firm Arclight Capital Partners and Freepoint Commodities have pledged to invest $1.4 billion and overhaul the renamed Limetree Bay refinery to process up to 200,000 barrels of crude per day. The companies have said their goal is to begin producing low-sulfur fuels by early 2020.

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