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Puerto Rico Oversight Board Enters Agreement to Address Debt Claims

Puerto Rico’s federally created financial oversight board said on Sunday it has entered into an agreement with bondholders to provide “a framework for a plan of adjustment” to address $35 billion of claims against the bankrupt U.S. territory, Reuters reported. The agreement establishes terms for the restructuring of more than $18 billion of Puerto Rico’s General Obligation (GO) and Public Buildings Authority (PBA) debt, according to the Financial Oversight and Management Board, which filed a form of bankruptcy for the island in 2017 in an effort to restructure about $120 billion of debt and pension obligations. While the deal has the support of creditors holding about $3 billion in GO and PBA claims, it faces opposition from Puerto Rico’s government. The deal will be part of a debt-adjustment plan the oversight board said it expects to file in federal court within 30 days to address Puerto Rico’s pension and other core government debt. The board, which reached a deal with a retirees committee last week over a more than $50 billion of unfunded pension liability, said bondholders and other parties acknowledge that “Puerto Rico’s difficult financial situation requires a meaningful reduction in its debt burden to a sustainable level.”

Triangle Petroleum Wins Confirmation of Chapter 11 Plan

Triangle Petroleum Corp., which has interests in North Dakota’s energy and commercial real-estate markets, won approval of a reorganization plan that hands ownership of the company to bondholder J.P. Morgan Securities LLC, WSJ Pro Bankruptcy reported. Bankruptcy Judge Mary F. Walrath signed off on Triangle’s chapter 11 plan on Friday at a hearing in the U.S. Bankruptcy Court in Wilmington, Del. Denver-based Triangle, whose operations are focused on the Williston Basin in North Dakota and Montana, filed for bankruptcy protection last month after J.P. Morgan Securities pulled the plug on a forbearance agreement with the fracker. J.P. Morgan Securities is expected to recover up to 43 cents on the dollar of what it is owed, court filings said. The company is paying general unsecured claims — those of small vendors and professionals — in full. A $2 million secured loan from JPMorgan Chase Bank NA will be converted into exit financing. J.P. Morgan Securities will select the new board of the reorganized business. Equity investors will receive nothing under the plan.

Power Producers to Appeal Bankruptcy Court Ruling on PG&E Energy Contracts

Power producers NextEra Inc., Consolidated Edison Inc. and Calpine Corp. on Thursday said that they will appeal to try to overturn a recent decision by a judge that a federal regulator has no say in whether utility PG&E Corp. may reject its power purchase agreements if it chooses to while in bankruptcy, Reuters reported. PG&E’s power purchase agreements are valued at up to $42 billion and the matter of whether the company can walk away from them belongs exclusively in bankruptcy court, Judge Dennis Montali of the U.S. Bankruptcy Court in San Francisco said in a June 7 decision. Judge Montali, who is overseeing PG&E’s bankruptcy, rejected the Federal Energy Regulatory Commission’s argument that it has “concurrent jurisdiction” over the agreements. The dispute involving the regulator, PG&E and companies from which it buys power has been one the most contentious fights so far in the San Francisco-headquartered utility’s bankruptcy, launched in January. PG&E sought chapter 11 protection expecting billions of dollars in liabilities stemming from devastating California wildfires in recent years traced to its equipment.

Think Finance Will Cancel Loans in Nationwide Settlement

Think Finance Inc. will cancel outstanding loans as part of a nationwide settlement of accusations it preyed on consumers, and hand over $40 million to fund efforts to return money to victims of an alleged payday lending scheme, WSJ Pro Bankruptcy reported. Months in the works, the settlement with consumer advocates was hatched in a chapter 11 proceeding that began in 2017 when Think Finance filed for bankruptcy protection in Dallas. Consumer watchdogs including Pennsylvania Attorney General Josh Shapiro, had accused Think Finance of peddling online loans with illegally high interest rates. The state sued in 2014, accusing Think Finance of hiding illegal loans by claiming the lending was being done by Native American tribes. Similar lawsuits were filed in multiple states and obtained class-action status in the company’s bankruptcy. Think Finance denied the accusations, saying that it was merely a financial technology provider, not a lender. So-called “rent-a-tribe” schemes alleged in other lawsuits nationwide leverage the special sovereignty of tribes to evade state-law restrictions on interest rates on short-term loans offered to consumers. The Pennsylvania attorney general contended the tribes were fronts for otherwise illegal lending, skimming a small percentage of the profits in exchange for the use of their names.

Former For-Profit College Students Will Have $168 Million in Student Debt Cancelled

More than 18,000 students who attended a now-defunct for-profit college will have $168 million in private loan debt discharged, MarketWatch.com reported. The loan cancellation is part of a proposed deal between the Consumer Financial Protection Bureau, attorneys general of 43 states and the District of Columbia and Student CU Connect (or the CUSO), a company that held and managed private loans taken out by students at ITT Tech. The agreement comes as the court overseeing ITT’s bankruptcy approved a settlement between CUSO and ITT’s bankruptcy trustee. In its complaint, the CFPB outlined a scheme by which ITT students were lured into taking on high-interest private student debt managed and held by the CUSO that both the company and the school knew they probably wouldn’t be able to repay. As part of the deal, the CUSO neither admitted nor denied most of the agency’s claims. Richard Bernard, an attorney at Foley and Lardner, representing the CUSO, wrote in an emailed statement that the CUSO worked cooperatively with the government and “is gratified” that the settlements will benefit ITT students. In its complaint, the CFPB outlined a scheme by which ITT students were lured into taking on high-interest private student debt managed and held by the CUSO that both the company and the school knew they probably wouldn’t be able to repay. As part of the deal, the CUSO neither admitted nor denied most of the agency’s claims.

Sam Zell Settles Lawsuit over Tribune Leveraged-Buyout Deal

More than a decade after Tribune Co. went private in a leveraged buyout that saddled the Los Angeles Times’ then-owner with $13 billion in debt and led to its bankruptcy, Sam Zell and dozens of former executives have agreed to pay $200 million to settle a lawsuit brought by unsecured creditors, the Los Angeles Times reported. The settlement agreement, awaiting approval in Bankruptcy Court in Delaware, would close the book for the corporate directors and officers behind what Zell called the “deal from hell” — an ill-fated transaction that, the plaintiffs alleged, doomed the company to insolvency from the outset. But thousands of ordinary shareholders may still be forced to give back some of the proceeds from the 2007 buyout — if the litigation trust representing the unsecured creditors prevails in still-unsettled actions. During court-ordered mediation in March, more than 50 former Tribune directors and senior executives agreed to settle with the litigation trust for $200 million, according to a motion filed May 31. The deadline for objections to the agreement is Monday, with a court approval hearing scheduled for July 11.

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