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Puerto Rico Board Said to See Big Jump in Long-Term Surplus

Puerto Rico’s federal overseers are poised to raise their forecast for the island’s budget surplus over the next four decades after an influx of aid and rebuilding from last year’s storm is expected to give a jolt to the economy, Bloomberg reported. The change will increase Puerto Rico’s cumulative surplus — before any debt payments are made — to more than $20 billion through 2058. The jump is likely to please the island’s creditors, who are fighting for a piece of Puerto Rico’s revenues as it makes its way through bankruptcy. Yet such long-term fiscal projections have proven to be especially volatile, and the new estimates will follow an admission that the board made a $4 billion error the last time it certified a fiscal plan. The estimates will provide the latest signal that the island is recovering better than analysts initially expected from the blows of Hurricane Maria in 2017. Since the storm, Puerto Rico and its federal overseers have redrawn the government’s fiscal plan and the projections several times to account for the influx of federal aid that’s expected to temporarily buoy the economy. The more sanguine outlook, and the government’s progress toward cutting deals with some major creditors, has triggered a rebound in the price of its debt, with its most frequently traded general-obligation bonds more than doubling this year. The last fiscal plan estimated that Puerto Rico would have a cumulative surplus of about $4 billion over the next 40 years, assuming that the government implemented budget cuts, among other moves. The new projection, incorporating higher-than-expected disaster aid and tax receipts, raises that figure to more than $20 billion.

Bankrupt Applebee’s Franchisee to Close at Least Six More Restaurants

A major Applebee’s franchisee, which recently closed 13 locations as part of its bankruptcy reorganization, is planning another round of shutdowns, with at least six more locations expected to go out of business by month’s end, WSJ Pro Bankruptcy. RMH Franchise Holdings Inc., the second-biggest franchisee of Applebee’s restaurants, also says it “will likely need to close certain additional restaurant locations” beyond those six depending on the outcome of lease negotiations. After closing the six restaurants, RMH will own about 140 Applebee’s locations, all in the U.S. RMH revealed the latest closures in a filing yesterday in the U.S. Bankruptcy Court in Wilmington, Del., seeking permission to make severance payments to workers losing their jobs. RMH and related companies sought protection from creditors in early May through a chapter 11 petition. The Atlanta-based company later that month asked for the court’s permission to make severance payments to workers affected by the first round of closures.

Judge Rejects FirstEnergy’s Bonus Retention Plan for Nuke Plant Workers

A bankruptcy judge has rejected a FirstEnergy Nuclear Operating Co. plan that would have paid bonuses to nearly 1,000 nuclear power plant employees, the Beaver (Pa.) Times reported. That bonus plan would reward about 1,000 nonunion employees at three plants — including the Beaver Valley Nuclear Power Station in Shippingport — for staying on the job for the next three years despite looming shutdowns of the plants. The company said earlier this year it would spend about $100 million on the plan, but first needed the bankruptcy court to approve it. If approved, each worker included in the plan would have received around $100,000 to stay on the job through shutdown. The plan didn’t sit well with union members, who were excluded entirely from the bonuses. The International Brotherhood of Electrical Workers and the Utility Workers of America submitted a 90-page rebuttal that said FirstEnergy’s plan was “explicitly designed” to exclude union workers while instead only “focusing on management, supervisors and superintendents” at the three plants.

Judge Orders Examiner in Samuels Jewelers Case

An examiner will be appointed in the case of Samuels Jewelers Inc., the string of stores owned by Mehul Choksi, one of the men sought by Indian authorities in connection with an alleged $2 billion bank fraud, WSJ Pro Bankruptcy reported. Judge Kevin Carey ordered the appointment of an examiner yesterday, after a brief debate in the U.S. Bankruptcy Court in Wilmington, Del., where Samuels filed for chapter 11 on Aug. 7, its business battered by fallout from the allegations of fraud brought against it by one of India’s largest banks. Punjab National Bank, a state-owned financial institution, says it was defrauded by Choksi, who owns Samuels, and by his nephew Nirav Modi, owner of Firestar Diamonds Inc. and other jewelry concerns.

Oklahoma Hospital Turns to GoFundMe to Remain Open

Pauls Valley Regional Medical Center in Oklahoma has hit a point where operations are almost literally day-to-day, and there is no revenue in sight to help keep the doors open, Inquisitr reported. Hospital CEO Frank Avignone said that they need to come up with about $500,000 to remain open before the week closes. He added that it is possible to convince some of the staff to stay on a day or two beyond running dry, but there is no guarantee of that. Avignone said that the hospital currently has $243,000 in the bank, which should be enough to keep their doors open until Tuesday, but Wednesday will be a great unknown. The $500,000 figure is based on what it will take to pay overdue costs for health benefits, and about half of that even before then to meet payroll. With few options available to raise a significant amount of money in a relatively short period of time, Avignone decided to try GoFundMe as a bit of a last-ditch effort to keep the hospital operational. The hospital’s problems began in 2013, when it was on the cusp of declaring for bankruptcy. NewLight Healthcare, a Texas-based company specializing in takeovers of distressed hospitals, stepped in to keep the doors open. The hospital then began incurring management fees for NewLight’s guidance in running the facility; the balance on those fees is now estimated to be about $2.3 million. Unable to meet the balloon and ongoing payments on demand made by NewLight, they began tapping the hospital’s revenue. In doing so, the hospital has been bled dry and is possibly in its last week of operation. It is estimated that the hospital will need $3 million by the end of the year to stay afloat. The GoFundMe page for the hospital currently shows that less than $3,600 of their $2 million goal has been reached.

Titanic Artifacts to Be Auctioned Off in October

Thousands of Titanic artifacts are heading to a bankruptcy auction in October after more than a year of uncertainty, and a group led by Apollo Global Management LLC has a shot of getting them for $19.5 million, a fraction of their estimated value, the Wall Street Journal reported. The more than 5,000 water-damaged objects are owned by Premier Exhibitions Inc., the bankrupt company behind the “Titanic” and “Bodies” traveling exhibitions. A judge overseeing Premier’s bankruptcy case has imposed restrictions that effectively mean the collection must be sold as a whole, not piecemeal. That has contributed to keeping a lid on the price that the collection—appraised at more than $200 million — is expected to fetch at auction. Bankruptcy Judge Paul Glenn last week signed off on the sale procedures, as well as the offer that will serve as the opening bid. A consortium of hedge funds — including Apollo Global Management LLC, Alta Fundamental Advisers LLC and PacBridge Capital Partners Ltd. — received court approval to move ahead with a $19.5 million offer for Premier’s assets, including the Titanic artifacts. The group, which includes equityholders and secured lenders in Premier, increased its bid from the $17.5 million it offered in June to win the backing of Premier’s largest unsecured creditor, a landlord. (Subscription required.)
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