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Sheridan Production Fund Files for Chapter 11 Bankruptcy

Sheridan Production Partners II LLC filed for bankruptcy with plans to hand ownership to its lenders, subject to better bids, WSJ Pro Bankruptcy reported. The transaction is aimed at reducing the oil-and-gas company’s $1.1 billion debt load by about $900 million. The Houston-based company and several affiliates filed chapter 11 petitions Sunday in the U.S. Bankruptcy Court in Houston. Industry challenges have squeezed liquidity, making it difficult for the business to make interest payments on its debt, the business said. Sheridan’s slide into bankruptcy comes about a year after it began looking for ways to restructure. Sheridan borrowed heavily to buy producing oil fields — several of which are in Texas — but slumped after energy prices nosedived in 2014. By the end of 2018, it was out of compliance with one of its loan covenants. To avoid a default, Sheridan got waivers from some of its lenders that lasted until the end of May.

Massachusetts AG Signals Purdue Faces Stiff Fight in Bankruptcy

The attorney general of Massachusetts gave Purdue Pharma LP a preview of the opposition it’s facing in bankruptcy court as the embattled maker of the OxyContin painkiller seeks approval of a roughly $10 billion settlement stemming from the opioid crisis it helped start, Bloomberg News reported. Maura Healey, who sued Purdue and its board members last year, said yesterday that she’ll soon file an objection in bankruptcy court challenging the proposed settlement with 24 states, five U.S. territories and law firms representing more than 1,000 counties, cities and Native American tribes. Several other states, including New York and California, also slammed the deal. At a press conference Monday in Boston, Healey said that the proposal fails to make Purdue’s billionaire owners, the Sackler family, turn over opioid profits that she says they transferred overseas after “sucking the life out of Purdue.” She also criticized the way Purdue plans to pay for the accord. “This settlement is to be funded by continued and future sales of OxyContin here and abroad — I reject that,” she said. “Every day people in this country are dying as a result of opioids.” Healey has also argued that a proper settlement would include making public millions of pages of documents — including emails, business plans and board minutes — that she says Purdue and the Sacklers have fought for years to keep secret. The current settlement lacks that transparency, she said.

Holdout Lenders Can’t Block Empire Generating Bankruptcy Sale

A bankruptcy judge approved Empire Generating Co.’s restructuring plan, overruling holdout lenders and giving Black Diamond Capital Management LLC control of the power-plant business, WSJ Pro Bankruptcy reported. The judge’s decision marks a win for Black Diamond and MJX Asset Management LLC, which hold more than 55 percent of Empire’s $353 million in senior secured debt and had reached a deal with the company before it filed for chapter 11 to trade those claims for ownership. Black Diamond and MJX, which held the majority of the loans, and Empire structured the chapter 11 plan as a credit bid, using their debt holdings as currency to buy Rensselaer, N.Y.-based company. An auction was cancelled after no other buyers showed up to make a competing credit bid. The strategy didn’t sit right with two other secured lenders, Ares Capital Corp. and Starwood Property Trust Inc. They said they were being denied a vote on the chapter 11 plan, despite the fact their claims weren’t being paid in full. The company is worth only $250 million, they added. Bankruptcy Judge Robert Drain, however, ruled yesterday against Ares and Starwood, saying that their claims aren’t impaired.

Archdiocese of Chicago Credit Endangered by State Probe

Citing a probe into alleged sexual misconduct by priests, a major credit rating agency is warning it soon may downgrade debt issued by the Archdiocese of Chicago, Crain's Chicago Business reported. Moody’s Investors Service revised to negative its outlook on more than $137 million in unsecured notes issued by the Roman Catholic archdiocese. The firm left intact its core rating of A1 on the debt, but a change in the outlook is a sign of concern and often leads to an actual downgrade later. Moody’s said that the archdiocese, headed by Cardinal Blase Cupich, already has paid out $60 million in misconduct complaints in just the past two years. The archdiocese still has adequate liquidity with $1.05 billion in cash and investments. The Illinois attorney general's office is investigating all six Catholic dioceses in the state and how they have handled complaints of misconduct.

Frontier Communications to Make Debt Payments, Soothing Bankruptcy Fears

Frontier Communications Corp. on Monday was set to make roughly $320 million of debt payments, at least temporarily easing fears of a near-term bankruptcy filing for the wireline telecom company, the Wall Street Journal reported. Though not all investors owed interest payments had received them as of yesterday, Frontier bondholders said that they were informed by custodial banks that the cash was being transferred, ending weeks of speculation about whether the company would pay coupons on several bonds, including large issues due in 2022 and 2025. Given Frontier’s roughly $17 billion debt load and struggles to cope with cord-cutting customers, investors and analysts have long considered it possible that the company might end up in bankruptcy. Speculation, though, intensified in recent months after the company appointed restructuring experts to its board, said it wouldn’t take questions on its second-quarter earnings call and adopted a decidedly negative tone on that call compared with previous communications.

Thomas Cook Files for Chapter 15 Protection

Thomas Cook Group Plc has filed for chapter 15 protection in the U.S. as part of a broader debt restructuring for the U.K. travel agent, Bloomberg News reported. The company’s chapter 15 petition was filed in the Southern District of New York, court papers dated Sept. 16 show. Law firm Latham & Watkins is representing the company, according to the documents. The travel agent’s creditors are set to vote on Sept. 27 on a proposed scheme of arrangement, a U.K. court procedure that will allow Chinese investor Fosun Tourism Group to lead a planned rescue of the company. Thomas Cook proposed to swap 1.67 billion pounds ($2.07 billion) of bank debt and bonds for 15% of the equity and at least 81 million pounds of new subordinated notes, which will pay interest with more debt, according to the documents. After the injection of at least 900 million pounds of new money, Fosun will hold 75 percent of the shares of the tour operator arm and up to 25 percent of the airline.

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