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Boy Scouts Bankruptcy Roiled by Suspicions About Asset Transfers

People claiming they were sexually abused as children involved in Boy Scouts activities say they have turned up evidence that assets have been deliberately moved out of their reach as the youth organization tries to deal with its legal problems in bankruptcy, WSJ Pro Bankruptcy reported. Suspicions about potentially improper activity are feeding a growing mistrust in the chapter 11 proceeding of the Boy Scouts of America, which filed for bankruptcy protection to deal with litigation accusing it of failing to safeguard boys from predators in its ranks. Facing more than 10,000 claims of sexual abuse, the Boy Scouts say they want to negotiate rather than litigate and are seeking to set up a fund to pay victims. But with talks just getting started, victims say that the Boy Scouts aren’t watching over the assets needed to pay their claims. Days ago, the Middle Tennessee Council of the Boy Scouts transferred a property to an asset protection trust, a legal entity that shields the property from the claims of sexual-abuse victims, said James Stang, a lawyer for the official committee representing sexual-abuse victims, at a hearing yesterday in U.S. Bankruptcy Court in Wilmington, Del. Jessica Boelter, a lawyer for the Boy Scouts, said progress is being made in the bankruptcy proceeding, which has as its goal an agreed resolution of the child sexual-abuse claims that have shadowed the historic brand. Boy Scout local councils own most of the youth organization’s wealth, with more than $3 billion in land, facilities, artwork, investments and other assets, compared with the $1.4 billion that is on the books of the national group.

Report: Wave of North American Oil and Gas Bankruptcies to Continue at $40/bbl Crude

Law firm Haynes and Boone said in a report released this week that a wave of oil and gas bankruptcies in North America is likely to continue this year as oil prices remain depressed and a new surge of COVID-19 cases threaten to stall any recovery in fuel demand, Reuters reported. Bankruptcies surged in the second quarter, including from major shale independents Chesapeake Energy and Whiting Petroleum, as oil prices collapsed due to the pandemic and a brief, unexpected price war between Saudi Arabia and Russia. There were 18 producer bankruptcies in the second quarter, according to a report compiled by law firm Haynes & Boone, the highest quarterly figure since the second quarter of 2016, when there were 34 bankruptcies. In total, 23 oil producers and 18 oilfield service firms have sought protection from creditors this year. U.S. crude oil futures are currently about $40 a barrel, a level that “is not a sufficient clearing price for many heavily leveraged shale producers,” the report said. In the second quarter alone, producers filing for bankruptcy held over $29 billion in debt, with shale pioneer Chesapeake Energy accounting for $9 billion of that. In total, exploration and production firms filing for bankruptcy this year have $30.6 billion in debt. Oilfield service firms that filed in 2020 had $23.8 billion in debt, led by Diamond Offshore Drilling at $11.8 billion. Read more

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Mnuchin: Next Stimulus Bill Must Cap Jobless Benefits at 100 Percent of Previous Income

Treasury Secretary Steven Mnuchin said yesterday that the Trump administration is unwilling to extend a boost to unemployment benefits amid the coronavirus pandemic if it allows jobless workers to make more money than they did before losing their jobs, The Hill reported. Mnuchin said that any extension of enhanced unemployment insurance would cap benefits at “no more than 100 percent” of what the recipient made before becoming unemployed. The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act signed by President Trump in March added $600 to unemployment insurance in every state. The boost, which expires on July 31, was intended to help workers in industries derailed by the pandemic support themselves and continue spending money amid the lockdowns imposed to slow the pandemic. The future of the increased benefit is one of the most contentious issues facing lawmakers as they craft another stimulus package. Economists credit the enhanced unemployment benefits, among other stimulus efforts, with preventing a deeper plunge in economic activity. But many Republicans have expressed regrets about the boost because it pushed unemployment benefits above the average wage in many states.

Two Suitors Compete to Scoop Brooks Brothers Out of Bankruptcy

A battle is brewing for control of Brooks Brothers Group Inc., with at least two apparel ventures looking to take over the bankrupt clothing retailer, the Wall Street Journal reported. Sparc Group LLC, an apparel company backed by Authentic Brands Group LLC and mall owner Simon Property Group Inc., is considering bidding to buy Brooks Brothers out of bankruptcy. WHP Global Inc., which has agreed to finance Brooks Brothers during its bankruptcy, is also crafting a buyout offer. Brooks Brothers filed for bankruptcy on Wednesday after two centuries in business, unable to withstand the coronavirus pandemic and the forced shutdown of retail shopping. The company, which struggled in recent years with a shift toward more casual dress styles at work, will soon start a formal process to field offers. Both potential bidders are planning to keep most Brooks Brothers stores intact, betting that the retailer’s survival is tied to a strong brick-and-mortar presence.

AMC Nears Silver Lake Debt Deal, Setting Stage for Creditor Feud

AMC Entertainment Holdings Inc. is set to announce a deal with bondholders that would allow private equity firm Silver Lake to jump up the repayment-priority line, setting the stage for another credit-market brawl as companies dealing with the fallout of COVID-19 seek to restructure their debts, Bloomberg News reported. The transaction, which is expected to launch in the coming days, would provide $200 million of new money and see subordinated bondholders exchange their securities at a discount for new second-lien notes, according to people with knowledge of the situation. It will also extend the maturity on $600 million of convertible bonds held by Silver Lake for two years in exchange for first-lien priority on certain collateral. A group of existing first-lien lenders including Apollo Global Management Inc., Ares Management Corp. and Eaton Vance Corp. are opposing the deal, arguing it benefits certain creditors over others at the expense of the company, said the people, who asked not to be identified discussing a private matter. The cinema chain has been trying to hash out an accord for weeks as it looks to raise cash, manage its more than $5 billion debt burden and avoid a potential bankruptcy.