Category Archives: Bankruptcy

At least seven companies declared bankruptcy in the last 48 hours, a reported 15-year record.

Among the firms seeking Chapter 11 protection were digital media group Vice Media and as reported here Monday (May 15) private equity-backed healthcare firm Envision.

According to a Bloomberg News report, this was the largest number of bankruptcy filings recorded for a two-day stretch since at least 2008.

Among the other weekend bankruptcies were biotech firm Athenex, oil producer Cox Operating, fire protection company Kidde-Fenwal, home security provider Monitronics International and chemical company Venator Materials.

Bloomberg notes that companies across a range of industries are coping with higher interest costs, making it harder to refinance loans and bonds, while executives are under more scrutiny from their investors and creditors.

As PYMNTS wrote last week, a new Federal Reserve report shows that banks expect to continue tightening lending standards across all loan categories for the remainder of the year.

Banks most frequently cited an expected deterioration in the credit quality of their loan portfolios and in customers collateral values, a reduction in risk tolerance and concerns about bank funding costs, bank liquidity position and deposit outflows as reasons for expecting to tighten lending standards over the rest of 2023, the Fed report said.

The report also found that lending standards for government-sponsored enterprise (GSE)-eligible and government residential mortgages stayed the same, while those for all other categories of residential real estate (RRE) loans tightened during the first quarter. Demand weakened across all REE loan categories, the Fed said.

Meanwhile, tightening demand has led banks and FinTechs to connect small businesses with other lenders.

Speaking with PYMNTS Karen Webster recently, Rohit Mathur, head of Bridge built by Citi, explained that Theres not many out there helping connect borrowers and lenders in the $250,000 to $10 million space. His company, he said, has more than 60 lenders, including community banks and CDFIs (Community Development Financial Institutions) that are focused on lending to small businesses.

PYMNTS also explored the issue in the report Digital Banking Rises To Meet SMB Needs, an NCR collaboration. That study found that 75% of small and medium-sized businesses (SMBs) in need of working capital were the most likely to work with a digital-only bank as their main financial institute in this business lending climate.

The pressure to find the right working capital solution is increasing, with one survey finding that big banks approval rate for business loans dipped to just below 15%, a 10-month low, the report said.

Alternative lending saw the biggest increase at nearly 2%, meaning small businesses are increasingly looking to FinTechs and digital-first offerings to deal with cost pressures.

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7 Companies Declare Bankruptcy Over Weekend in 15-Year Record - PYMNTS.com

(Bloomberg) -- At least seven large companies filed for Chapter 11 bankruptcy protection in less than 48 hours, a breakneck pace of restructurings that included once-hot digital-broadcaster Vice Media LLC and KKR & Co.-backed Envision Healthcare Corp.

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Thats the largest number of filings on record during a two-day period since at least 2008, according to Bloomberg-compiled data on companies with at least $50 million of liabilities. And it comes as two Federal Reserve officials signaled that they favor a pause in their aggressive monetary-tightening campaign amid the ongoing fallout in credit markets.

Firms across every sector are struggling with higher interest costs making it more challenging to refinance loans and bonds while corporate executives are drawing more scrutiny from investors and creditors.

The weekend also saw filings from home security company Monitronics International Inc., chemical producer Venator Materials Plc, oil producer Cox Operating LLC, fire protection firm Kidde-Fenwal Inc. and biotechnology company Athenex Inc.

For Vice Media, the filing marks a dramatic fall from its status as a media darling. The company secured a $450 million investment from private equity firm TPG in 2017, which valued the firm at $5.7 billion a startling figure for a newcomer. Journalism has been an easy target for advertisers cost-cutting plans in an uncertain economy.

For others, like Venator and Monitronics, the breaking point came amid looming debt maturities in the next few years.

Here are more details on the wave of recent filings:

Vice Media

Vice listed both assets and liabilities in the range of more than $500 million to as much as $1 billion in a Chapter 11 petition filed in Southern District of New York. The company struck a deal to sell itself to creditors including Fortress Investment Group, Soros Fund Management and Monroe Capital. The deal, which will see the investors purchasing its assets for $225 million and assume significant liabilities, allows for rival bidders to emerge.

Story continues

Monitronics

Monitronics, which had more than $1 billion in debt coming due in 2024, said earlier this month that it planned to start a Chapter 11 bankruptcy to help implement its restructuring. The company said it would cut its debt by $500 million under the pre-arranged and partially prepackaged plan.

The Dallas-based firm previously filed for bankruptcy back in 2019, with a plan that gave control to creditors and allowed it to slash close to $1 billion in debt. The company listed $1 billion to $10 billion in estimated assets and the same range for liabilities in its petition filed in the Southern District of Texas.

Envision Healthcare

Envision, a medical staffing company backed by KKR, had been in talks about restructuring options after it skipped a bond coupon payment due in mid-April.

The company raised more than $1 billion in fresh cash just last year, but it has still been struggling to make good on its debt obligations in the face of a higher interest burden and wage inflation. It filed in the Southern District of Texas, listing both assets and liabilities in the range of $1 billion to $10 billion.

Venator Materials

Pigment maker Venators upcoming debt maturities included a roughly $350 million first-lien term loan due in August 2024 and around $600 million of notes due in 2025. In February, the company commented on challenging macroeconomic conditions, and said it had reduced spending and planned to cut inventory. It listed both assets and liabilities in the range of more than $1 billion to $10 billion in a petition filed in Southern Texas.

Cox Operating

Cox, a closely held oil producer, had been attempting to reach an agreement with its creditors on reducing or deferring payments to avert filing for bankruptcy, people familiar with knowledge had told Bloomberg earlier this month. The company has estimated liabilities and assets of $100 million to $500 million each, it said in a filing.

Athenex

Pharmaceutical company Athenex said it had reached agreement with its lenders to move forward with an expedited sales process of its assets across its primary businesses, which is expected to conclude by July 1. The company has $100 to $500 million in estimated liabilities. In a statement, the company blamed regulatory hurdles tied to a new drug, along with challenging biotech markets and the difficult economic environment for its downfall.

Kidde-Fenwal

Industrial fire protection and suppression company Kidde-Fenwal said it will seek options including a sale of the company as a going concern. The company has $1 billion to $10 billion in estimated liabilities, and filed after mounting litigation related to forever chemicals. A unit of the company sold firefighting foam containing the chemicals from 2007 to 2013 and has been named in more than 4,000 lawsuits, according to a statement.

--With assistance from Paula Seligson.

(Updates with additional details throughout.)

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Credit Crunch Fuels 48-Hour Bankruptcy Rush With Seven Filings - Yahoo Finance

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Private equity-backed Envision Healthcare files for bankruptcy - Financial Times

We appreciate Lee Hutchinson's efforts toward situational archaeology in his initial Drobo FS review. Historians one day will know that, at a minimum, this device was released after 1999's The Matrix.

Lee Hutchinson

You don't hear nearly as much about Drobo boxes as you used to, especially on sites like Ars Technica. We now have some news, but it isn't good.

StorCentric, the holding company for the Drobo and Retrospect brands, filed for Chapter 11 bankruptcy in late June 2022. Now, AppleInsider reports that, based on an email sent by StorCentric, the bankruptcy shifted from reorganization-minded Chapter 11 to liquidation-focused Chapter 7 in late April.

The writing for Drobo was on the wall, or at least on its website. Text at the top of the homepage notes that, as of January 27, 2023, Drobo products and support for them are no longer available. "Drobo support has transitioned to a self-service model," the site reads. "We thank you for being a Drobo customer and entrusting us with your data."

Drobo began in 2005 as Data Robotics and launched into the tech consciousness with the original Drobo, a "storage robot." The marquee feature was being able to hot-swap drives of nearly any size without migrating data. In our review of the initial $500 Drobo, we liked its low management requirements, flexible data protection schemes, and "quiet, sleek, and attractive" body (please keep in mind the 2007 date).

Senior Technology Editor Lee Hutchinson's first front-page Ars feature was a two-part, in-depth look at the Drobo FS (here's part 2) in 2011. Drobo wasn't the fastest or most secure, nor did it sport elegant software. But it was "competent, powerful, extensible, and above all else just plain easy."

We'd mention the Drobo optionless nerd cred, more usabilityin occasional reviews and roundups of the network-attached storage (NAS) market. But cloud storage, streaming media, and a general trend away from "huge piles of local files" for all but the most specialized hobbies and careers seemingly ate away at Drobo over time. A NAS that wasn't quite a full NAS but wasn't as easy to use as, say, Backblaze or one of many S3 resellers made for a tough pitch to most people considering a consumer data storage device.

We've reached out to Drobo/StorCentric for comment and will update this post if we hear back.

Listing image by Lee Hutchinson

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Drobo, having stopped sales and support, reportedly files Chapter 7 bankruptcy - Ars Technica

WHEELING A federal judge on Wednesday dismissed the bankruptcy cases filed by Roxby McLure LLC and Roxby Development and lifted the stays that had temporarily protected the embattled company from legal action by a long list of creditors.

Judge David L. Bissett presided over a hearing via teleconference Wednesday afternoon in the U.S. Bankruptcy Court of the Northern District of West Virginia on a motions to dismiss Roxbys bankruptcy cases based on failure to maintain insurance specifically property insurance on the Scottish Rite building and the McLure Hotel and its adjacent parking garage. Parties noted that there is only liability insurance on the McLure Hotel properties at this time.

Several parties joined the hearing, including a number of creditors to whom Roxby owes significant amounts of money.

Attorneys representing the former owners of the McLure House and the Scottish Rite Cathedral both concurred with attorney Shari Collais, representing the Office of the U.S. Trustee in the bankruptcy cases, that property insurance on both landmark buildings in the city was necessary to protect the interests of the creditors involved.

Roxby President Jeffrey Morris and his attorney, Salene Kraemer, requested additional time to secure money through a DIP (Debtor-in-Possession financing) loan to secure property insurance for the properties within the next week or two, but the judge dismissed the bankruptcy cases and granted motions to lift the stay.

The Chapter 11 bankruptcy filings had triggered an automatic stay against further legal proceedings just before a foreclosure sale on the McLure House and the adjacent parking garage was scheduled to take place. Attorney David Delk, named substitute trustee on the deed of trust for the McLure Hotel and parking garage, had planned to move forward on a foreclosure sale of the property on behalf of the hotels previous owner FA Management Inc. and FG Management LLC.

Shortly after Wednesdays ruling in U.S. Bankruptcy Court, Delk submitted a public notice of a new date of sale at 10 a.m. June 1 in the Ohio County Courthouse for the McLure House Hotel and parking garage.

Attorney David Croft of Spillman Thomas & Battle, representing the Scottish Rite, said he is also planning to take similar action as soon as possible to foreclose on the Scottish Rite Cathedral.

According to the bankruptcy filing on behalf of Roxby Development, Roxby Labs and Roxby McLure LLC, the company is in debt to the tune of between $10 million and $50 million.

Return to theintelligencer.net later for more on this developing story.

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Roxby Bankruptcy Cases Dismissed, Foreclosure Action Expected ... - Wheeling Intelligencer

Crypto brokerage Voyagers bankruptcy plan was approved by the United States Bankruptcy Court for the Southern District of New York on May 17, according to a Reuters report. Judge Michael Wiles order approving the procedure was published by the court a day earlier.

The so-called third bankruptcy plan was proposed on May 5 after Binance.US backed out of plans to buy $1 billion worth of Voyager assets on April 25. That deal had overcome resistance from the U.S. government before Binance.US last-minute reversal. Voyager will now liquidate that is, distribute its assets to its creditors.

In September, before the Binance.US deal, FTX US had won an auction for Voyagers assets, bidding $1.4 billion, but that sale fell through when FTX collapsed. The FTX sale would reportedly have allowed creditors to receive 72% of the value of their accounts. FTX sued Voyager for $445.8 million in January, claiming loan repayments it made in 2022 are liable to clawback because they occurred immediately prior to FTXs bankruptcy.

Related: US officials appeal protections for Voyager execs in Binance.US sale

Voyager said on its website that customers could now expect to receive 35.72% of their claims initially, either in crypto through the Voyager app or in cash after 30 days. According to Voyager, it had $1.33 billion of assets for recovery as of May 8, of which $629.8 million was available for initial recovery, on claims of $1.8 billion.

The size of the creditors initial recovery could increase if FTX/Alameda Researchs claim for preferential recovery is unsuccessful. Voyager is holding back $445 million to cover that claim. In addition, Voyager may still recover funds from bankrupt Three Arrows Capital. Voyagerissued a notice of default to Three Arrows on a loan of 15,250 Bitcoin (BTC) and 350 million USD Coin (USDC) in late June. Those assets were worth $655 million then and approximately $768 million at the time of writing.

Voyager filed for bankruptcy on July 5.

Magazine: Can you trust crypto exchanges after the collapse of FTX?

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Voyager bankruptcy plan approved, customers may recover 35.7% of claims initially - Cointelegraph

Bed Bath & Beyonds bankruptcy might be a tailwind for TJXs (TJX) HomeGoods brand, according to company executives.

We never like to name the other retailers where it's happening, but we do strongly believe that creates market share opportunities and market grab for us, TJX CEO Ernie Herman said on the companys earnings call when asked about Bed Bath & Beyond.

HomeGoods, the second largest division of TJX, saw sales decline 7% in the first quarter as the segment continues to battle tough comparisons from what management has described as outsized sales during the pandemic.

For the quarter HomeGoods produced $1.97 billion in net sales, accounting for roughly 16% of TJXs overall net sales. With Bed Bath and Beyond winding down its 360 stores over the next few months, TJX, and HomeGoods specifically, will benefit, according to Bernstein retail analyst Aneesha Sherman.

In an April note titled, Why TJX and TGT (TGT) stand to gain most from BBBYs demise, Sherman wrote that more than 80% of Bed Bath and Beyond locations have a HomeGoods or TJ Maxx within five miles.

On Wednesday, TJX management revealed those locations are a key part of the companys strategy to gain market share with Bed Bath and Beyond out of the picture. For stores near where a Bed Bath & Beyond once stood, HomeGoods can re-rank inventory to match products that mightve been popular at the local Bed Bath & Beyond store.

We don't just go in and say, Oh, we should do more of this category of business because that's what Bed Bath & Beyond did, Herman said. "We do it by location and by the category of businessesas we think they stood for. And we say, yeah, there's more market share opportunity for us in those categories.

Shoppers leave a Bed Bath & Beyond store, after the company declared bankruptcy, in Danvers, Massachusetts, U.S., April 24, 2023. REUTERS/Brian Snyder

In the near-term, Bed Bath & Beyond's winddown will likely be a headwind, Sherman said, as the company heavily discounts its remaining inventory. But when those sales end sometime this year, TJX will stand to benefit in the second half of the year.

Story continues

"People who would have shopped at BBBY over holidays will now have to shop somewhere else, and given the overlap and similarity in store base, customer base, locations and assortment, HG should be a big winner," Sherman told Yahoo Finance via email on Wednesday.

Josh is a reporter for Yahoo Finance.

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Bed Bath and Beyond's bankruptcy could help TJ Maxx owner TJX - Yahoo Finance

Just_Super

Note:

I have covered IronNet (NYSE:IRNT) previously, so investors should view this as an update to my earlier articles on the company.

For a couple of quarters now, I have advised investors to consider selling existing positions in ailing cybersecurity start-up IronNet based on the company's severe execution issues and elevated liquidity needs.

IronNet has been on life support by long-term shareholder C5 Capital Ltd. ("C5 Capital") and a number of insiders and associated funds for some time now as C5 Capital and the company remain in negotiations regarding a proposed going-private transaction "at a price equal to $0.30 per share".

After several extensions, the exclusivity period for negotiating a definitive transaction expired on March 14.

Please note that among other things, consummation of the transaction would be subject to C5 Capital obtaining sufficient financing.

On Tuesday, IronNet filed its annual report on form 10-K for the fiscal year ending January 21 with the SEC and warned on a potential near-term bankruptcy filing (emphasis added by author):

Management expects that operating losses and negative cash flows from operating activities will continue in the foreseeable future as we continue to work to fund our operations. As of January 31, 2023, there is substantial doubt about our ability to continue as a going concern within one year from the issuance of our consolidated financial statements.

Based on our current planned operations, in the absence of additional sources of liquidity, management anticipates that our existing cash and cash equivalents and anticipated cash flows from operations will not be sufficient to meet our operating and liquidity needs for any meaningful period of time following the filing of this report.

There is no assurance that management will be able to obtain additional liquidity or be successful in raising additional funds or that such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on our existing stockholders. In the event we determine that additional sources of liquidity will not be available to us or will not allow us to meet our obligations as they become due, we may need to file a voluntary petition for relief under the United States Bankruptcy Code in order to implement a plan of reorganization, court-supervised sale, and/or liquidation.

Following negative free cash flow of $67.9 million in fiscal year 2023, cash and cash equivalents were down to a paltry $7.6 million at the end of January.

Company SEC-Filings

The company's financial struggles have also started to impact operations with annual recurring revenue of $26.2 million ("ARR") down 18% on a year-over-year basis amid a 25% reduction in recurring software customers. In addition, calculated billings decreased by 23% to $20.8 million.

Adding insult to injury, IronNet has received written notice from the New York Stock Exchange ("NYSE") that the company is no longer in compliance with a number of continued listing standards. With the cure period for regaining compliance with the $1 minimum bid price requirement having already expired, the company's common shares might be delisted at any time now.

In recent months, IronNet has amassed $20.3 million in short-term debt obligations solely to keep the lights on for a little bit longer with the convertible notes issued to insiders and C5 Capital scheduled to mature at the end of next month.

Quite frankly, with C5 Capital and insiders having accumulated more than $20 million in senior secured debt obligations in recent months, I just don't see the need for C5 Capital to shell out more than $30 million in cash to acquire the company's remaining outstanding shares.

I would rather expect C5 Capital, insiders and the company to agree on a restructuring support agreement to be implemented under chapter 11 of the U.S. Bankruptcy Code with senior secured lenders becoming the company's new owners in exchange for equitizing their claims and providing a sufficient amount of debtor-in-possession ("DIP") financing.

With only a limited number of creditors being involved, implementation should go smoothly and IronNet would likely be able to emerge as a private entity within weeks after the filing.

As the potential upside for equity holders seems limited to the originally proposed acquisition price "equal to $0.30" per share, risk/reward appears highly unfavorable.

IronNet remains on life support by C5 Capital and a number of insiders which have provided over $20 million in senior secured short-term debt in recent months which is scheduled to mature on June 30.

Given the dismal state of the company's business and ongoing, substantial liquidity needs, I would expect IronNet to restructure under chapter 11 of the U.S. Bankruptcy Code with senior secured creditors C5 Capital and a number of insiders becoming the restructured company's new owners following its emergence from bankruptcy protection.

Even if C5 Capital will indeed agree on a bail-out deal "at a price equal to $0.30 per share", upside for common shareholders would be very limited.

Given the highly unfavorable risk/reward, I would urge investors to consider selling existing positions and moving on.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

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IronNet: Near-Term Bankruptcy Filing Might Be In The Cards - Sell ... - Seeking Alpha

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Filing For Bankruptcy Protection Due To PFAS Litigation Costs - The National Law Review

FOUR stores have filed for bankruptcy amid a nationwide retail apocalypse, as shoppers have been shifting their buying habits.

With consumer spending being cramped by high inflation, many brick-and-mortar shops are feeling the pressure.

Even once high performing top brands like Bed Bath & Beyond and Tuesday Morning have struggled to stay afloat during the current economic conditions.

One expert said, despite inflation, consumer spending has not deflated entirely, but the trends behind it are changing.

Consumers continue to spend, but how and where they spend is evolving, Bankrates chief financial analyst Greg McBride told The U.S. Sun.

More retail spending occurs digitally and less in a physical store location, he added.

Foot traffic has dramatically declined with the rise of work-from-home situations.

This shift, alongside the increase of consumer spending toward services and away from goods, has seen brick and mortars suffer, according to McBride.

The rise in credit card balances and the number of cardholders carrying balances is a byproduct of inflation that has stretched many household budgets beyond the breaking point, the expert said.

How much consumers are spending needs to be viewed through the lens of inflation - consumers are spending more but not getting more. Millions are using credit cards just to get by.

As shoppers look for any way to make their dollar count, the once-thriving brick-and-mortar stores just cant keep up.

The U.S. Sun compiled a full list of companies that declared bankruptcy in the past few years.

Home goods store Tuesday Morning filed for bankruptcy in February and shortly after announced the closure of half of their retail locations.

At least 860 stores have reported their upcoming closures in 2023, but thats likely just the start of the burgeoning retail ice age.

Stores in states including but not limited to California, Florida, Georgia, Maryland, Nevada, and Nebraska will be shuttering this year.

The first hit of closures for the chain arrived in May 2020 after its initial bankruptcy protection filing. Back then, the retailer lost 230 locations.

While Tuesday Morning did eventually make its way out of bankruptcy in December of that year, it has still struggled since then.

In the fiscal year ending July 2, 2022, the furnishings store had lost $59million, followed by another $28.1million more in the first quarter of its current fiscal year.

The company said filing for bankruptcy will "enable the company to reduce its outstanding liabilities, obtain the significant and necessary capital, and ultimately transform into a nimbler retailer that serves heritage markets in a profitable manner."

Party supply store Party City may have flourished pre-pandemic, but the coronavirus outbreak put a hit on both in-person events and the stores financial performance.

Since filing for bankruptcy, the store has placed 12 locations up for auction so far.

Under a $150 bankruptcy loan, the chain said it will continue operating while restructuring its debt load.

In September 2022, Party City held $1.7billion in debt but was working to achieve a smaller and more successful fleet of stores.

The popular department store declared bankruptcy in May 2020 and announced it would close over 800 stores.

Unfortunately, the company had acquired $4.5billion in net losses since 2010.

Only 670 JCPenney locations exist today, and more stores are slated to close this spring, including those in Oswego, New York, and Elkhart, Indiana.

Simon Property Group and Brookfield Property Group have agreed to acquire the chain for $1.75billion.

Company leaders at Bed Bath & Beyond said the home goods giant is closing all 360 stores after filing for bankruptcy in April.

In addition, all the companys 120 buybuyBABY locations will be going under as well.

However, theres one silver lining for shoppers.

As Bed Bath & Beyond stores close, products will be marked down to reduced rates.

In Bradenton, Florida, a Bed Bath & Beyond storefront advertises 10 to 40 percent off on all merchandise.

This includes all home, baby, beauty, and wellness products, according to The Bradenton Herald.

Up to 30,000 jobs could be lost due to the store closures.

The company originally had hoped to avoid store closures, saying it would pivot away from any store closures if a buyer was found.

Bed Bath & Beyond had debts of around $5.2billion when it filed for bankruptcy.

As well-known national chains and mom and pops alike struggle in the current retail environment, another finance expert has predicted which stores are likely to be hit hardest next.

Andrew Lokenauth, a Tampa-based financial analyst who is now the founder of personal finance media platform Fluent in Finance, said there are several reasons driving the perfect storm of closures hitting retailers across the country.

It was amplified by the excess of money that we printed during the recession, Lokenauth told The U.S. Sun.

"When you're printing that much money, it has to be absorbed back into the economy.

The smaller businesses are not able to keep up with the price hikes, and its inevitable many are forced to close their doors, Lokenauth said.

However, some chains are likely to do better than others even amid the harsh environment in the months to come.

Some retailers could remain essentially unaffected by the closure trends, especially if they have created a market appeal based on their discounts.

Lokenauth said places like Dollar General and Five Below will continue to do well, as will stores selling high-luxury goods like Nordstrom.

This is because their customers will continue their spending habits no matter if theres a recession or not.

The ones most at risk are the stores that have built brands catering to the everyday middle-class American, the expert explained.

I think the stores that fall within the middle for the middle-class Americans, those might not tend to do well because people will try to cut back, Lokenauth said.

A huge chain with 1,200 locations and a major Hooters rival shut down a store after a streak of other closures.

Meanwhile, a beloved Italian restaurant and Olive Garden competitor is also closing its doors after 15 years.

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Full list of retailers that have filed for bankruptcy as shoppers go online to find deals... - The US Sun