Help Center

Bankruptcy Headlines

EPA Deal Buys Time for Troubled Philadelphia Oil Refinery

A deal with the Environmental Protection Agency eased the path toward a bankruptcy exit for Philadelphia Energy Solutions but did little to ensure the future of the troubled oil refinery operating close to the heart of a major East Coast city, WSJ Pro Bankruptcy reported. Philadelphia Energy filed for bankruptcy protection Jan. 21, blaming the cost of compliance with renewable fuels standards for its financial distress. A settlement with the EPA earlier this month chops the refinery’s compliance obligations nearly in half, at least as to the liabilities that stack up before the oil refinery leaves chapter 11 protection. The EPA settlement aroused controversy, with renewable fuels advocates protesting that creating an exception for Philadelphia Energy sets a dangerous precedent. Other merchant refiners live with renewable fuel requirements and “in fact are doing pretty darn well,” said Bob Dinneen, chief executive of the Renewable Fuels Association, a trade group for the ethanol industry. Dinneen and other critics contend that renewable fuels standards did not drag Philadelphia Energy into bankruptcy, and relief from the standards won’t be enough to keep it from returning. Philadelphia Energy Chief Executive Gregory Gatta said that the EPA settlement puts the company on a “stable path” toward emerging from bankruptcy. However, he acknowledged, the EPA settlement is a short-term, one-time solution to a continuing compliance burden. “This is only a partial and temporary reprieve,” Gatta said. Read more.

In related news, the U.S. Justice Department said refiner Philadelphia Energy Solutions’ bankruptcy plan does not adequately protect creditors, the department said in a federal court filing that was made public yesterday, Reuters reported. The 44-page objection, filed on Tuesday by the DOJ comes just days before a pivotal Monday confirmation hearing in U.S. Bankruptcy Court in Delaware. The department said that the plan could leave a long list of unsecured creditors partially or completely unpaid even as they are prohibited from voting on the proposal. The plan also fails to detail how much unsecured creditors are owed and when they will get paid, it said. Read more

Treasury Secretary Aims to Wrap Up Loan Negotiations with Puerto Rico

Treasury Secretary Steven Mnuchin said he aims to wrap up negotiations today on a multi-billion dollar loan to Puerto Rico’s government that the territory’s leaders have complained is long overdue after Hurricane Maria ravaged the island in September, Bloomberg News reported. Mnuchin will hand-deliver documents related to the loan in his first visit to the territory as a public official, he said. “I’m meeting with them in case there are final issues that we need to negotiate — we are prepared to do that,” he said Wednesday in an interview with Bloomberg News. “I want to make sure that we fulfill the mandate from Congress to make sure that the loan facilities are in place.” Puerto Rico’s leaders have complained that Mnuchin’s department has slowed loans the territory needs to rebuild following the storm, which devastated the island. In February, Puerto Rico Governor Ricardo Rosselló said that Mnuchin was acting “recklessly” by delaying the territory’s access to a share of a $4.9 billion loan package that Congress passed in October.

IAC Group, Founded by Wilbur Ross, Scrambles to Meet June Debt Payment

An auto-parts company founded by billionaire investor and U.S. Commerce Secretary Wilbur Ross is scrambling to refinance debt after selling off its best asset last year, WSJ Pro Bankruptcy reported. Luxembourg-based International Automotive Components Group, better known as the IAC Group, is scrambling to refinance a $300 million note coming due on June 1. The company is controlled by W.L. Ross, the private-equity firm founded by Ross. Ross stepped down as chairman of the company in 2014, and is no longer a shareholder, according to a person familiar with the matter. If IAC can’t persuade debt investors to extend the company’s debt, the risk that the company will enter a debt restructuring increases, according to a February Standard & Poor’s report. S&P Global Ratings also cut the company’s credit rating in February to CCC- citing the risk that the company may not be able to refinance its debt and weak liquidity. The company is in talks with its bondholders and outside investors to refinance the debt by the end of March.

Volcker Rule Change Backed in House Panel's Dodd-Frank Remedy

U.S. House lawmakers have advanced legislation that could either expand or upend Congress’s best hope of rolling back banking-industry regulations since the financial crisis, Bloomberg News reported. The proposals approved by the Financial Services Committee yesterday include a Volcker Rule tweak that would put the Federal Reserve solely in charge of enforcing the Dodd-Frank Act ban on proprietary trading instead of the five agencies now assigned to the task. Supporters say that the change would make it easier for Goldman Sachs Group Inc., JPMorgan Chase & Co. and their peers to abide by the rule, while critics complain that it would make it easier to weaken restraints on excessive risk-taking. House Republicans, led by Financial Services Committee Chairman Jeb Hensarling (Texas), are pushing to add more changes to a broader rollback of financial-industry rules that passed the Senate in a 67-31 bipartisan vote. The potential stumbling block is that Democrats who backed the Senate bill sponsored by Banking Committee Chairman Mike Crapo may not be willing to go along with what House lawmakers are seeking. Sens. Heidi Heitkamp (North Dakota) and Jon Tester (Montana), who played key roles in getting Crapo’s bill passed, have said they won’t entertain additions by the House.

Weinstein Co.'s Bankruptcy Could Bring New Wave of Accusers

With its bankruptcy, the Weinstein Co. has tossed out the non-disclosure agreements that officials say its co-founder and former CEO Harvey Weinstein wielded as a weapon in his sexual predation, bringing with it the possibility of a whole new wave of victims coming forward, the Associated press reported. "Since October, it has been reported that Harvey Weinstein used non-disclosure agreements as a secret weapon to silence his accusers," a Weinstein Co. statement said. "Effective immediately, those 'agreements' end. No one should be afraid to speak out or coerced to stay quiet." The rare move from a major business is likely to send new witnesses and victims to media outlets and investigators, which put out fresh calls Tuesday for their stories. That's because the Weinstein Co. only has the power to end agreements made by the company and not Weinstein himself, meaning the decision’s effect will be primarily on current and former employees. Cris Armenta, a lawyer representing accusers in a proposed class-action lawsuit against the Weinstein Co., said she fears that because so many of the agreements are with Weinstein himself and still apply, the impact may not be major. Read more

Don't miss the "Restructuring a Firm After Discrimination or Sexual Harassment Claims" panel at the Annual Spring Meeting. Click here to watch a panel preview and click here to register. 

UBS in $230 Million Settlement of New York Mortgage Securities Probe

UBS AG has reached a $230 million settlement to resolve charges brought by New York state that it misled and hurt investors by selling subprime mortgage securities that contributed to the 2008 global financial crisis, Reuters reported. New York Attorney General Eric Schneiderman yesterday said that the Swiss bank will pay $41 million in cash to the state, and provide $189 million of relief to homeowners and communities. The bank is the seventh to settle similar claims by New York, resulting in roughly $3.93 billion of settlements. JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Morgan Stanley and Goldman Sachs Group Inc. have also settled, as did Royal Bank of Scotland Group Plc, which reached a $500-million accord on March 6.