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David’s Bridal to Seek Bankruptcy Protection in Coming Days

Wedding gown retailer David’s Bridal Inc. is expected to file for bankruptcy protection in the coming days, WSJ Pro Bankruptcy reported. The private equity-backed retailer is still in negotiations with its lenders as it wraps up a prepackaged bankruptcy deal that will see it survive. The negotiations are still fluid, and the timing of the bankruptcy filing could be pushed out. The Conshohocken, Pa.-based retailer aims to lighten its nearly $900 million debt load by handing over ownership to its creditors. Existing bondholders include Solace Capital Partners and Oaktree Capital Group.

Sears Finalizing $350 million Bankruptcy Loan with Great American

Sears Holdings Corp. is finalizing a deal with financial firm Great American Capital Partners and other lenders for $350 million in critical bankruptcy financing that would keep the U.S. retailer open through the holidays, Reuters reported. The deal would increase an existing financing package from banks to give Sears a bankruptcy loan totaling $650 million. Bank lenders already promised $300 million when Sears filed for bankruptcy last month. The loan discussions come as the 125-year-old retailer has been facing calls to wind down its business from a key group of its creditors, including bondholders and landlords. The creditors believe they will collect more on what they are owed if Sears liquidates its assets, according to bankruptcy-court papers. The loan from Great American Capital Partners, an affiliate of liquidation specialist Great American Group and financial services firm B. Riley Financial Inc (RILY.O), and its partners would give Sears extra breathing room to seek buyers for its assets. Sears picked Great American’s proposal for a bankruptcy loan instead of an offer from hedge funds including Cyrus Capital Partners LP.

Hospital Operator Seeks $85 Million Loan to Expedite Sales in Bankruptcy

Promise Healthcare Group, a hospital and nursing home chain based in Boca Raton, Fla., filed for chapter 11 protection Nov. 4, Becker's Hospital Review reported. The company is now seeking final approval of an $85 million loan to support operations while it tries to sell its assets. The loan package from Wells Fargo is a "necessary bridge" to help cement the sales, Andrew Hinkelman, chief restructuring officer and interim CFO of Promise Healthcare Group, said in bankruptcy court documents filed Nov. 9. Promise and more than 40 of its affiliates entered bankruptcy after years of financial troubles. In bankruptcy court documents, Promise reported more than $565 million in combined debt. Promise and its affiliates currently operate two short-term acute care hospitals, 14 long-term acute care hospitals and two skilled-nursing facilities. Read more

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Muni-Bond Defaults Show Risk Clustered in Midwest, Southeast

To find the distress in the municipal-bond market, look to the Southeast and Midwest. That’s the conclusion from Municipal Market Analytics, a research firm that examined state and local government bond defaults by using Bloomberg data and disclosure filings from issuers. Such lapses are extremely rare, accounting for a minuscule share of the nearly $4 trillion market. But counties in the Midwest and Southeast are home to about 37 percent and 22 percent, respectively, of outstanding bonds that are in default for failing to make adequate payments or for violating elements of the debt contracts. Excluding bankrupt Puerto Rico, about $19 billion of the $31.8 billion in defaulted and impaired bonds are in those two regions. That share is notable considering the areas together have issued only about one-third of all outstanding bonds.

Virgin Islands Power Monopoly Secures $34 Million Refinancing

The U.S. Virgin Islands power monopoly clinched a refinancing deal, narrowly averting default for a borrower still struggling to recover from the aftereffects of Hurricane Maria, WSJ Pro Bankruptcy reported. The government-owned Water and Power Authority (WAPA) reached a deal with Nuveen Asset Management to refinance $34 million in debt that comes due today, extending the maturity to 2020. WAPA’s board of directors met yesterday to approve issuing new debt to pay off Nuveen’s current holdings. Under the deal, UMB Bank NA will also replace Bank of New York Mellon Trust Co. as the bond trustee, according to the WAPA board.

Commentary: Any PG&E Bankruptcy Would Pit Bonds Against Wildfire Victims*

Any PG&E Corp. bankruptcy filing could come down to a fight between bondholders who lent the company money and property owners whose homes were scorched by wildfires, according to a Bloomberg commentary. The utility company has $18 billion of bonds that are unsecured, meaning the debt would have equal priority to get repaid in a bankruptcy as the roughly $30 billion in potential liabilities that analysts have estimated from 2017 and 2018 California wildfires. PG&E recently completely drew down its credit lines. The company hasn’t said that it plans to file for bankruptcy, and is still rated investment grade. But some analysts say that it may have to eventually reorganize under court protection to clear its fire-linked liabilities. There is a trick that PG&E could use to improve investors’ status in bankruptcy, according to Andy DeVries, a CreditSights analyst. If PG&E were to take on at least $5 billion of new debt secured by PG&E’s assets, rules governing the existing bonds state that the unsecured notes would also become secured, he said. “It’s an odd situation where the bondholders might want the company to issue more secured debt if it puts them ahead potentially of wildfire claims,” DeVries said. Read more

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

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