All items from Bankruptcy Beat

This week on The Broke and the Beautiful, Ne-Yo’s accusing his ex-manager, who invested his money in a company that went bankrupt, of conning him. Also, investor and reality-TV host Marcus Lemonis owns a bakery that supplied cupcakes to Crumbs.

Posted 12 hours 46 min ago

Bankruptcy seemed to signal the end for trendy women’s clothing retailer Dots, which emptied its 359 stores with going-out-of-business sales this spring.
But a Florida firm in the retail industry bought the Dots brand and is slowly resurrecting it, saying it can avoid the problems that the juniors’ and plus-sized clothes retailer faced. The eighth Dots store opens Friday in South Philadelphia.
The retailer’s new owner—named New Dots LLC—plans to open 120 Dots stores by the end of next year, Chief Executive Swapnil Shah told Bankruptcy Beat.
Mr. Shah said he worked out deals with some landlords whose storefronts became vacate when Dots, which employed more than 3,500 people, shut down. Some of the same suppliers who once stocked Dots’ shelves have agreed to send fresh merchandise, he added.
Liquidators had a May 31 deadline to empty Dots’ stores, according to legal documents filed to the U.S. Bankruptcy Court in Newark, N.J. For several weeks after that, there was no Dots.
Mr. Shah’s firm reopened the Cleveland store first, a nod to the chain’s founding in Ohio in 1987. Roughly 75% of employees in the eight reopened stores worked there prior to the shutdown, he said.

Posted 16 hours 35 min ago

Spencer Platt/Getty Images

In the coming week in bankruptcy court, the biggest ticket will be watching to see if Revel Casino Hotel in Atlantic City, N.J., can secure a buyer to keep the resort from shutting down and laying off thousands of employees.
The casino entered Chapter 11 for the second time in June with plans to sell itself to its secured lenders through a credit bid, which would forgive some of its debts but would leave little for unsecured creditors.
Revel owes $137 million to first-lien lenders led by J.P. Morgan Chase and another $310 million to a group of junior lenders led by Wilmington Trust. Both lender groups are slated to share in Revel’s available cash, including sale proceeds, under the Chapter 11 plan the company filed along with its bankruptcy petition.
Wells Fargo & Co. is providing Revel with $125 million in bankruptcy financing, the bulk of which will be used to pay off $83 million in existing debt.
If competing bids come in by a Monday deadline, the casino will hold an auction Aug. 7 and seek approval of the sale the following day in U.S. Bankruptcy Court in Camden, N.J.

Posted 16 hours 59 min ago

A Rhode Island lawmaker slipped a potential gift for debt-laden graduates into his proposal to tweak the consumer bankruptcy rules: a provision allowing those with crushing medical bills to eliminate their student loans, too.
The Medical Bankruptcy Fairness Act introduced by Sen. Sheldon Whitehouse (D., R.I.) would allow people to get rid of their student-loan debt if they have paid more than $10,000 in medical bills during the three years before bankruptcy. And according to one law professor’s research, more than half of the people who’ve filed for bankruptcy in recent years would qualify.
Medical debt is easy to discharge in bankruptcy, but the process to get rid of student loans is nearly impossible and costs thousands of dollars just to try. A spokesman for Sen. Whitehouse told Bankruptcy Beat that “there’s no good reason to treat these [student] loans differently from other debt in bankruptcy.”
Sen. Whitehouse’s bill would classify people who’ve spent at least $10,000 on medical bills (or have that much in medical debt) as “medically distressed debtors” and allow them to discharge student loans without having to convince a bankruptcy judge that they can’t afford to repay them, as the process now requires.

Posted 18 hours 6 min ago

Dutch coal miner New World Resources NV filed for bankruptcy protection in a U.S. court on Wednesday while officials negotiate cuts to the roughly EUR825 million ($1.1 billion) debt owed by the company, which has struggled to profit amid depressed global coal prices. Read the Daily Bankruptcy Review article here.
Zodiac Pool Solutions SAS, the Paris-based swimming pool and spa manufacturer, filed Thursday for bankruptcy protection in the U.S. as part of its debt-restructuring effort now under way in the U.K. The Wall Street Journal has the DBR article here.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
Argentina defaulted on $29 billion in debt, but investors are still hoping for a crisis resolution, WSJ reports.

Posted 18 hours 38 min ago

Reuters/Scott Audette

When a health-care company, particularly a hospital, files for Chapter 11 protection, it’s not your typical bankruptcy case. And that can be especially hard on lenders, according to a new report.
Restructuring attorneys at Schulte Roth & Zabel issued a guide for lenders navigating the bankruptcy of their health-care borrowers, which you can read here. Bankruptcy Beat talked to the report’s authors, Adam C. Harris and James T. Bentley, on Wednesday about the challenges health-care providers currently face and what lenders can expect when their health-care borrowers enter Chapter 11.
The following Q&A has been edited for brevity and clarity.
Bankruptcy Beat: Besides the Affordable Care Act, what other factors are putting pressure on health-care companies today?

Posted 1 day 17 hours ago

A judge on Wednesday said the trustee unwinding Lehman Brothers Inc. could create a $3 billion-plus fund to pay back unsecured creditors of the brokerage. The Wall Street Journal has the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
Argentina’s default is imminent, The Wall Street Journal reports.
According to WSJ, Detroit’s emergency manager has reversed course and said goodbye to a court-appointed financial watchdog.
A lawyer sued General Motors Co. on behalf 658 ignition-switch recall plaintiffs, the Associated Press reports.

Posted 1 day 18 hours ago

Marcus Lemonis (right), the CEO of an RV and camping company, during a scene from The Profit, his CNBC business-makeover show.
Heidi Gutman/CNBC

Days after putting in a bid to rescue Crumbs Bake Shop Inc. out of bankruptcy, investor Marcus Lemonis lambasted the very product he planned to save.
“The key to the baking business is the actual manufacturing process,” Mr. Lemonis said in a CNBC interview July 14, adding that he is “one of those critics” who say the cupcakes don’t taste great.
What Mr. Lemonis failed to mention on the show is that many of the cupcakes Crumbs sold in its stores came from a commercial bakery that Mr. Lemonis bought earlier this year.

Posted 2 days 15 hours ago

A group Argentina banks are working on a last-minute plan to help the country avoid default, The Wall Street Journal reports.
As Love Culture Inc. prepares for a Wednesday bankruptcy auction, the clothing retailer is asking a judge to rule that its e-commerce business be included in the assets for sale, as the company challenges an unapproved insider sale of the business that allegedly took place three months ago. Read the Daily Bankruptcy Review story.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
As Argentina hurtles toward a second default in 13 years, an 83-year-old U.S. judge is in the spotlight, WSJ reports.
Faced with the possible extinction of the material that made Hollywood famous, WSJ says a coalition of studios is close to a deal to keep Eastman Kodak Co. in the business of producing movie film.

Posted 2 days 19 hours ago

As Argentina finds itself on the verge of a second default, what blame, if any, does the distressed investing community hold?

The distressed investing community holds no blame for Argentina’s risk of default.
When issuing a bond, a country makes a promise to repay its creditors on time and with interest. If Argentina is unable to do so, that’s certainly not the bondholders’ fault. The fact that the economic crisis of 1998-2002 that precipitated the original default in December 2001 stemmed from circumstances beyond Argentina’s control does not shift blame to the country’s creditors for the present crisis, nor does it create any obligation for them to agree to a massive write-down of their bond holdings.

Posted 3 days 14 hours ago