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Toys 'R' Us Seeks to Halt Vendor Payments Ahead of Liquidation

Toy retailer Toys ‘R’ Us Inc. yesterday asked a bankruptcy court for approval to stop paying all of its suppliers while it tries to line up buyers for its international business ahead of a planned liquidation of its U.S. operations, Reuters reported. The iconic toy store’s plan to liquidate inventory and shutter or sell its U.S. stores has put 30,000 jobs at risk and left vendors wondering where to send merchandise stuck on ships and trucks, and whether their invoices will ever get paid, lawyers said at a court hearing on yesterday. As shoppers flock to Inc and children choose smartphones and screens over toys, Toys ‘R’ Us has struggled to boost sales and service debt following a $6.6-billion leveraged buyout by private equity firms in 2005. At a hearing at U.S. Bankruptcy Court in Richmond, Virginia, Toys ‘R’ Us lawyer Joshua Sussberg said that the company was working to avoid any contagion from the U.S. liquidation on the foreign businesses it is trying to sell. Part of that effort means separating the U.S. business from foreign operations to ensure that shipments can reach stores in Canada, Europe and Asia, where the company will be reviewing bid proposals in coming weeks. Read more

One of the worst outcomes for a business owner is having a major customer file for bankruptcy and leave behind a large unpaid account receivable. ABI's Business Creditor’s Guide to Distressed Vendors, Debt Collection and Bankruptcy provides an insider’s look into the options available to help screen a business’s customers, plan for worst-case scenarios, and, if the situation does arrive, efficiently handle the fallout. 

Winn-Dixie Operator Southeastern Grocers Plans to File for U.S. Bankruptcy

Southeastern Grocers LLC, which operates supermarket chains Winn-Dixie and Bi-Lo, said on Thursday it is preparing to file for bankruptcy and would shutter 94 underperforming stores, Reuters reported. “We conducted a thorough review of our strategic options,” Chief Executive Anthony Hucker said. The company said that it plans to file with the U.S. Bankruptcy Court in Delaware by the end of this month. The restructuring would reduce overall debt levels by more than $500 million and help the Jacksonville, Florida-based company invest more in its business, Southeastern said, adding that it would continue to operate 582 stores.

Senate’s Rollback of Banking Rules Faces Headwinds in House

House Financial Services Chairman Jeb Hensarling (R-Texas) convened a press briefing with two other lawmakers yesterday to make clear that the House won’t rubber stamp the Senate bill, Bloomberg News reported. “It is a little presumptuous or naïve that the House would not expect to enter into a negotiation with the Senate,” Hensarling said. “Some seem to be under the impression that we are going to vote on their bill.” The Senate’s legislation, crafted by Banking Committee Chairman Mike Crapo (R-Idaho), mostly provides relief for smaller banks by freeing them from a number of constraints imposed on lenders deemed to-big-to-fail. In June, the House passed much more ambitious legislation sponsored by Hensarling dubbed the Financial Choice Act. 

Divided Fifth Circuit Scraps Obama-Era 'Fiduciary Rule'

The U.S. Court of Appeals for the Fifth Circuit, voting 2-1, yesterday vacated the U.S. Labor Department’s fiduciary rule, the National Law Journal reported. The challengers in the Fifth Circuit case included the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Financial Services Institute. The ruling comes one day after Labor Department won a case in the U.S. Court of Appeals for the Tenth Circuit that was brought by Market Synergy Group, an insurance distributor. The Fifth Circuit struck down the entirety of the fiduciary rule, which had expanded the definition of “fiduciary” in an attempt to confront conflicts of interest in the retirement-savings industry. Labor’s next move is to decide whether to ask the full appeals court to rehear the dispute, or take the case to the U.S. Supreme Court. The U.S. Court of Appeals for the D.C. Circuit still has an active case, one that was on hold until the Fifth Circuit ruled. The Washington, D.C., court will not be bound by how the Fifth Circuit ruled.

Brokers Will Have to Reveal More to Investors Under Coming SEC Rule

Investors wary of biased advice from stockbrokers can look forward to new disclosures that shine more light on the terms of their relationship, industry officials and regulators say, the Wall Street Journal reported. The disclosure is likely to be required under a regulation being written by the Securities and Exchange Commission, according to leaders of Wall Street trade groups. The SEC is close to proposing the regulation, its own version of the Labor Department’s “fiduciary rule” that required brokers handling retirement accounts to always put their clients’ interest ahead of their own financial gain. SEC Commissioner Hester Peirce cautioned that the disclosure would need to be brief and easy to understand, in contrast to the long, elaborate brochure that money managers are required to give clients.

Wells Fargo CEO Defends Pay; Calls Senator Warren's Criticism 'Inappropriate'

Wells Fargo & Co. Chief Executive Tim Sloan yesterday defended a 35 percent gain in his latest compensation package, while describing comments last year by Democratic U.S. Senator Elizabeth Warren (D-Mass.), who had called for his ouster, as “inappropriate,” Reuters reported. The third-largest U.S. lender has been battling a sales practices scandal that erupted in September 2016 with the revelation employees had opened potentially millions of phony accounts in customers’ names. Warren, long a consumer advocate, in October told Sloan she did not believe the bank would be able to change with him in charge, in remarks during his testimony before the Senate Banking Committee.