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Bankruptcy Headlines

Sears to Lay Off Hundreds of Corporate Employees After Announcing 96 Store Closings

Sears is laying off hundreds of corporate workers less than a week after announcing a new round of store closures, Business Insider reported. The layoffs impacted workers at Sears' headquarters in Hoffman Estates, Illinois, as well as the company's offices in San Francisco. The total number of laid-off employees is fewer than 300. Sears' parent company, Transformco, which also owns Kmart stores, confirmed the layoffs. "Since purchasing substantially all the assets of Sears Holdings Corp. in February 2019, Transformco has faced a difficult retail environment," the statement said. The company last laid off corporate employees in September. That round of layoffs impacted about 250 people.

Report: Farm Income Fell Across Rural States Despite Trade Aid, Higher Prices

The Federal Reserve Bank of Kansas City reported that farm finances deteriorated across a swath of agricultural states during the summer and early fall, despite the Trump administration’s second round of trade aid payments and slightly higher prices, Bloomberg News reported. Farm income fell in the third quarter from a year ago in each of the seven rural states covered by the Kansas City Fed, according to its survey of agricultural credit conditions. The report cited the trade war, volatile crop prices and disruptions at a major beef processing facility. Bankers contacted by the Fed said the drop in farm income was sharper than they expected going into the summer. Respondents expect income to decline further and credit conditions to worsen in the coming months despite trade aid payments. The USDA started issuing payments from its 2019 trade aid program in August.

Houlihan’s Restaurant Chain Files for Bankruptcy

The private-equity backed operator of the Houlihan’s Restaurant + Bar chain has filed for bankruptcy protection with a deal in-hand to sell the casual dining chain to fellow restaurant operator Landry’s Inc. for $40 million and assumption of some liabilities, WSJ Pro Bankruptcy reported. Houlihan’s Restaurant Inc. and its affiliates blamed yesterday’s chapter 11 filing on a confluence of factors that have stressed the casual dining sector in recent years including expensive leases, a tight labor market and “the rapid growth in costly third-party delivery.” The bankruptcy comes little more than a year after the business acquired more than a dozen Houlihan’s locations from its largest franchisee. Private-equity firm York Capital Management and Mike Archer, a former president of Applebees and TGI Friday’s, acquired Houlihan’s in 2015. Houlihan’s has almost $80 million in assets and $76.9 million of liabilities, consisting mostly of debt, according to court papers filed in the U.S. Bankruptcy Court in Wilmington, Del. Landry’s owns Bubba Gump Shrimp Co., Morton’s The Steakhouse, Joe’s Crab Shack and numerous other casual dining chain. In August, Landry’s made an offer in bankruptcy to acquire the assets of Restaurants Unlimited Inc. Landry’s is owned by billionaire Tilman Fertitta, who also owns the National Basketball Association’s Houston Rockets. The bankruptcy and the sale process aren’t expected to interrupt business at Houlihan’s or its other branded restaurants.

City and Union Officials to Consult on Philadelphia Refinery Sale Process

A U.S. bankruptcy judge yesterday approved a process for the sale of the Philadelphia Energy Solutions oil refinery, the largest and oldest on East Coast, under which city officials and a trade union will consult on the matter, Reuters reported. The plan resolves earlier objections by giving the United Steelworkers union and Philadelphia city officials access to the identities of bidders and, in some cases, the ability to speak with potential buyers, according to the order signed by Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware. An auction date for the PES refinery was set for Jan. 17 in New York. PES collapsed into bankruptcy on July 21 and put its 335,000 barrel-per-day refinery up for sale after a fire tore through an alkylation unit at the Girard Point section of the plant a month earlier. Most of the 1,100 PES workers, including more than 600 members of the United Steelworkers local union, were laid off without severance or benefits.

IT Firm Riverbed Tech Cash Flow Declines in Third Quarter

Riverbed Technology Inc.’s cash burn intensified during the third quarter, reflecting the information-technology company’s eroding position in the digital-networking market, WSJ Pro Bankruptcy reported. The private equity-owned information-technology company burned through $50 million in the quarter, compared with a $33 million cash burn over the same period a year ago. While revenue declined by 9 percent year-over-year to $199 million, earnings before interest, taxes, depreciation and amortization rose 13 percent to $67 million. The company suffered a 12 percent decline in its digital networking product group, which accounted for 91 percent of revenues. Sources say that its share of the digital networking market is being overtaken by competitors who have an edge in a technology called SD-LAN, which offers a wireless network architecture, as opposed to Riverbed’s core SD-WAN solutions, which are more hardware-dependent.

McClatchy Seeks to Have U.S. Take Over Pension Fund

McClatchy Co., the third-largest newspaper publisher in the U.S. by circulation, said it has begun talks with its creditors and federal authorities about a possible government takeover of its pension fund as it tries to relieve considerable liquidity pressure due to its pension responsibilities and debt load, the Wall Street Journal reported. The 162-year-old company, which publishes 30 newspapers around the country, including the Miami Herald, Charlotte Observer, Sacramento Bee and Kansas City Star, said that it would be unable to make a required $124 million contribution next year to its pension fund. “The amount due greatly exceeds the company’s anticipated cash balances and cash flow given the size of its operations relative to the obligations due and creates a significant liquidity challenge in 2020,” the company said in its third-quarter earnings report filed on Wednesday. In late 2018, merger talks between McClatchy and Tribune Publishing Co. fell apart largely due to questions about how to finance the deal given McClatchy’s substantial debt burden. In the quarter, the company reported a net loss of $304.7 million, largely due to a noncash impairment charge related to the valuation of its assets. On an adjusted basis, McClatchy reported a loss of $1.3 million compared with a loss of $23.8 million in the same quarter last year. The company has reported a net loss in nine of its previous 12 quarters.