Tag Archives: Bankruptcy

Party City filing for Bankruptcy

Party City Store

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • America’s largest party supply store files for bankruptcy
  • The largest party goods and Halloween specialty retail chain in the United States said in a regulatory filing that it reached an agreement with debtholders to cut its $1.7 billion debt load
  • Party City has for years battled competition for party goods and decorations, especially from big-box chains and online retailers that sell a wider variety of merchandise.
  • Target in particular has increased its party supplies and special events merchandise, said Neil Saunders, an analyst at GlobalData Retail.
  • Between 2017 and 2021, Party City’s sales dropped 8% to $2.2 billion. The company projected sales to remain flat in 2022. The company also lost money every year between 2019 and 2021 and said was on track to lose up to $199 million in 2022.

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Genesis Global Capital prepares for Bankruptcy

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Crypto Firm Genesis Is Preparing to File for Bankruptcy
  • Genesis Global Capital is laying the groundwork for a bankruptcy filing as soon as this week, according to people with knowledge of the situation.
  • The cryptocurrency lending unit of Digital Currency Group has been in confidential negotiations with various creditor groups amid a liquidity crunch. It has warned that it may need to file for bankruptcy if it fails to raise cash, Bloomberg previously reported.

Read the original article by clicking here.

Texas utility regulator ousted after comments to investors disclosed

By Kanishka Singh and Gary McWilliams

(Reuters) – The third and last remaining commissioner of the Texas utilities regulator resigned under pressure on Tuesday after the release of comments to investors vowing to protect utility profits and dismissing financial hits from a cold snap on municipal power companies.

The resignation came soon after the disclosure of inflammatory comments by the Public Utility Commission Chair Arthur D’Andrea in a March 9 call with Bank of America utilities’ analysts. The call took place two days before he was to consider rescinding billions of dollars in payment to utilities.

His stance against repricing helped sink a proposal this week to cut $4.1 billion from charges in the final hours of a deadly February blackout. The regulator and state grid operator raised power prices to about 400 times the normal rate over five days. But they left the pricing in place for 32 hours after the emergency passed, spurring state officials to call for a partial repricing.

On the March 9 call, D’Andrea told investors and analysts he had “tipped the scale as hard as I could” to prevent repricing and would keep “the weight of the commission” against it, according to a recording of the call published Tuesday by Texas Monthly magazine on its website.

DISMISSES HIT TO CITY-RUN POWER

Municipal power companies that could benefit from repricing proposals would get through the financial hit, he advised the investors. Several have had their credit ratings downgraded, raising future borrowing costs.

Referring to San Antonio’s city-run CPS Energy that has contested $200 million in power charges, D’Andrea dismissed the impact in remarks to Bank of America analysts: “They’ve got a lot of money. They’re fine.”

High costs from the storm have led four Texas power companies to seek protection from creditors in bankruptcy court. Electricity firms have failed to pay $3 billion in storm-related charges, amounts that eventually would be passed to all Texas utilities and their customers.

“Tonight, I asked for and accepted the resignation of PUC Commissioner Arthur D’Andrea,” Texas Governor Greg Abbott said in a statement released late Tuesday. He plans to name a replacement in the coming days.

PUC spokesman Andrew Barlow did not immediately reply to a request for comment.

JOB PROTECTION

In his call with Bank of America, D’Andrea also claimed he had job protection after two of the three PUC commissioners resigned. Lawmakers could “secure promises from me” that they could not get if there were other commissioners, he said.

“I expect it to be this way for a while, at least a year, with just me,” he said of the commission’s makeup.

Earlier in March, Shelly Botkin resigned from her post at the PUC, a week after former Chairman DeAnn Walker resigned.

The Bank of America recording threw new light on the commission’s much-criticized handling of a deadly February blackout that killed more than 56 people in the state and could saddle power companies with bills for decades.

The state’s independent market monitor testified power grid operator ERCOT, which is overseen by the PUC, made a $16 billion pricing error by keeping prices high for 32 hours after widespread outages ended Feb. 17.

Electricity retailer Brilliant Energy LLC on Tuesday became the fourth company to file for bankruptcy protection since the storm. Its bankruptcy court filing came a day after Griddy Energy filed for Chapter 11 bankruptcy with $29 million in charges for power.

(Reporting by Gary McWilliams in Houston, Kanishka Singh and Derek Francis in Bengaluru; editing by Richard Pullin and Marguerita Choy)

Texas regulator warns lawmakers against rollback in storm power prices

(Reuters) – The head of Texas’s power regulator told lawmakers on Thursday that any effort to retroactively reduce the power prices levied during a recent storm would lead to lawsuits that the state could lose.

The state’s power grid operator raised power prices sharply during a February freeze that pushed two power companies into bankruptcy. Others have warned of potential bankruptcies. Top officials this week called on the Public Utility Commission (PUC) of Texas to immediately reduce about $16 billion in power prices.

Any repricing would trigger lawsuits that the commission would lose, PUC Chairman Arthur D’Andrea bluntly told lawmakers at a hearing in Austin. Commodity contracts used to hedge power have closed and any repricing “will have consequences” for the state’s power, agriculture and other markets, he said.

“If I do it, I get sued and lose right away,” he told a state committee. The legislature could attempt to change the pricing by passing a bill, but it also would face lawsuits and could lose, he added.

The state independent market adviser has recommended a pricing of the final 32 hours of the five-day emergency and called for some service fees to be cut, citing grid rules. Emergency charges amounted to $16 billion for power and about $1.5 billion for service fees tied to the power price.

The state’s governor, lieutenant governor and 28 of 32 state senators this week also called on the PUC and grid operator to “correct” the final 32 hours of power pricing, citing the recommendation and impact on utilities.

“These corrections are squarely within your authority, whether by your own action or an order to ERCOT,” the senators told D’Andrea in a letter on Tuesday, referring to the state grid operator by its acronym.

“I disagree” with the senators’ call, D’Andrea said. He has continually ruled out a power price rollback, arguing “it is impossible to unscramble” insisting the decision to raise prices during the cold snap was known to all grid users.

D’Andrea pushed back against the market monitor’s estimate of the power overcharges, telling lawmakers the amount was much smaller, about $3.2 billion.

Intercontinental Exchange Inc. (ICE), which handles Texas power trades, last week closed contracts that covered billions of dollars in state power trades and has no authority to reopen settled contracts. ICE has deferred settling four contracts tied to the service fees that are much smaller in value, people familiar with the matter told Reuters.

(Reporting by Gary McWilliams; Editing by Marguerita Choy and Daniel Wallis)

Texas electricity regulator cuts some emergency fees tied to winter storm

By Gary McWilliams

HOUSTON (Reuters) – The Texas electricity regulator on Wednesday ordered cuts to emergency fees paid to generators amid a financial crisis in its power market, but adjourned without acting on calls to protect consumers from price spikes.

A mid-February storm temporarily knocked out up to half the state’s generating plants, triggering outages that killed dozens and pushed power prices to 10 times the normal rate. About $47 billion in one-time costs are threatening companies that sell, transmit or generate electricity in the state. Consumers will see higher prices as the costs are passed along.

In its first meeting since the blackout, Public Utility Commissioners (PUC) agreed to revoke charges for standby power services that were not provided. The size of the charges have not been disclosed.

“The PUC has acted with urgency and taken a big step in the right direction,” said Brandon Young, CEO of electricity provider Young Energy LLC. He said the changes would relieve some of the stress on providers and consumers.

The two-person PUC separately endorsed an independent market adviser’s recommendation for an about $2 billion reduction in other fees but took no immediate action.

As the state and federal governments launched investigations into the storm, commissioners backed a state audit of emergency prices that soared when demand spiked during severe cold weather. U.S. lawmakers on Wednesday demanded the state’s grid operator turn over documents and communications with officials from during the storm.

The state’s independent PUC adviser, Carrie Bivens, recommended cuts that could shave about $2 billion from business fees, though she provided no estimate of the total. Commissioners will meet Friday to consider that recommendation.

“I can’t understand why there was no action on immediate relief for consumers” at the hearing, said Tim Morstad, associate state director for consumer advocacy group AARP Texas. His group asked the PUC for protections for consumers being shifted to new utilities.

If left in place, the service fees could force out a quarter of the state’s about 100 providers and concentrate up to 80% of the market among three large utilities, industry experts said.

“There could be a number of retail service providers who aren’t able to remain in business if ERCOT does not relent on the demand for payment,” said Catherine Webking, an attorney who represents companies seeking fee cuts.

The PUC supervises grid operator Electric Reliability Council of Texas (ERCOT), which is facing a $2.46 billion shortfall from companies that have not paid their bills. ERCOT on Monday said it would begin naming businesses that have failed to pay and disclose the amounts each owed.

The crisis claimed its first victim Monday when Brazos Electric Power Cooperative Inc, whose members provide power to about 660,000 in the state, filed for bankruptcy after receiving bills for $2.1 billion from ERCOT. Brazos this week said storm charges could increase consumer bills by 2 cents per kilowatt hour.

(Reporting by Gary McWilliams; Editing by Leslie Adler and Chris Reese)

Texas electricity firm files for bankruptcy citing $1.8 billion in claims from grid operator

By Gary McWilliams

HOUSTON (Reuters) – Texas’s largest and oldest electric power cooperative on Monday filed for bankruptcy protection in federal court in Houston, citing a disputed $1.8 billion bill from the state’s grid operator.

Brazos Electric Power Cooperative Inc, which supplies electricity to more than 660,000 consumers across the state, is one of dozens of providers facing enormous charges stemming from a severe cold snap last month. The fallout threatens utilities and power marketers, which collectively face billions of dollars in blackout-related charges, executives said.

Unusually frigid temperatures knocked out nearly half of the state’s power plants in mid-February, leaving 4.3 million people without heat or light for days and bursting water pipes that damaged homes and businesses. Brazos and others that committed to provide power to the grid – and could not – were required to buy replacement power at high rates and cover other firms’ unpaid fees.

The state’s grid operator, Electric Reliability Council of Texas (ERCOT), on Friday said $2.1 billion in initial bills went unpaid, underscoring the financial stress on utilities and power marketers. More providers likely will reject the bills in coming days, executives said.

“The municipal power sector is in a real crisis,” said Maulin Patani, a founder of Volt Electricity Provider LP, an independent power marketer that is not a member of the Brazos coop. ERCOT should suspend the service charges to halt further defaults, he said in an interview on Sunday.

An ERCOT spokeswoman did not have an immediate comment. The Public Utility Commission, the state’s regulator that oversees ERCOT, was unavailable for comment.

The city of Denton, in north Texas, last week sued ERCOT in a state court to prevent it from charging it for fees unpaid by other users of the grid. Denton Electric could face tens of millions of dollars for fees that were not collected from others, the suit claimed.

Debt analyst Fitch Ratings last week also warned of potential downgrades to all Texas municipal power firms that use the state’s grid. Costs from the storm “could exceed the liquidity immediately available to these issuers,” Fitch said.

Texas’s attorney general has launched an investigation into the blackout, calling for ERCOT and others to provide documents on the outages, pricing and emergency, saying they mismanaged the crisis.

ERCOT triggered the squeeze when it pushed up spot-market rates to $9,000 per megawatt hour (mwh) over more than four days and levied huge fees for services. The service fees were 500 times the usual rate, according to industry executives.

Brazos Electric coop executive Clifton Karnei, who sat on ERCOT’s board of directors until last week, signed the Brazos coop’s bankruptcy submissions.

An attorney for Brazos did not reply to a request for comment.

(Reporting by Gary McWilliams; Editing by Christopher Cushing, Stephen Coates and Louise Heavens)

Judge rejects NRA bid to dismiss or move lawsuit by New York attorney general

By Jonathan Stempel

NEW YORK (Reuters) – A New York state judge on Thursday rejected the National Rifle Association’s bid to dismiss or move a lawsuit by New York Attorney General Letitia James seeking to dissolve the gun rights group.

Justice Joel Cohen of Manhattan Supreme Court ruled six days after the NRA filed for Chapter 11 bankruptcy to protect itself from lawsuits, and said it would reincorporate in the more gun-friendly Texas after 150 years in New York.

James had sued the NRA, Chief Executive Wayne LaPierre and others last August.

She accused the group of violating state laws governing nonprofits by diverting millions of dollars to fund luxurious trips for its officials, no-show contracts for associates, and other suspect expenses.

The NRA argued that if the case continued it belonged in the state capital of Albany, where it had its only New York office, and perhaps in federal court, where it has filed a countersuit accusing James of violating its members’ First Amendment rights.

“This is a case of historic constitutional importance,” the group’s lawyer Sarah Rogers argued.

The judge said accepting the NRA arguments would be “elevating form over substance,” and that it was a “big lift” to tell James she could not sue in state court.

“It would be inappropriate in these circumstances to find that the attorney general cannot pursue her claims in state court just because one of the defendants would prefer to proceed in federal court,” Cohen said.

The NRA has said it was “dumping” New York to escape its “toxic political environment.”

It accused James, a Democrat, of suing for political gain and because she dislikes what the group stands for.

Bankruptcy filings normally halt existing litigation, but the attorney general believes her lawsuit deserves an exemption because she is enforcing her “police and regulatory power.”

James Sheehan, a lawyer for James, told the judge a trial could occur early next year.

The case is New York v. National Rifle Association et al, New York State Supreme Court, New York County, No. 451625-2020.

(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)

Exclusive: OxyContin maker Purdue Pharma exploring bankruptcy – sources

FILE PHOTO: Bottles of prescription painkiller OxyContin pills, made by Purdue Pharma LP sit on a counter at a local pharmacy in Provo, Utah, U.S., April 25, 2017. REUTERS/George Frey

By Mike Spector and Jessica DiNapoli

(Reuters) – OxyContin maker Purdue Pharma LP is exploring filing for bankruptcy to address potentially significant liabilities from thousands of lawsuits alleging the drug manufacturer contributed to the deadly opioid crisis sweeping the United States, people familiar with the matter said on Monday.

The deliberations show how Purdue and its wealthy owners, the Sackler family, are under pressure to respond to mounting litigation accusing the pharmaceutical company of misleading doctors and patients about risks associated with prolonged use of its prescription opioids.

Purdue denies the allegations, arguing that the U.S. Food and Drug Administration-approved labels for its opioids carried warnings about the risk of abuse and misuse associated with the drugs.

Filing for Chapter 11 protection would halt the lawsuits and allow the drugmaker to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge, the sources said.

More than 1,000 lawsuits accusing Purdue and other opioid manufacturers of using deceptive practices to push addictive drugs that led to fatal overdoses are consolidated in an Ohio federal court. Purdue has held discussions to resolve the litigation with plaintiffs’ lawyers who have often compared the cases to widespread lawsuits against the tobacco industry that resulted in a $246 billion settlement in 1998.

A Purdue bankruptcy filing is not certain, the sources said. The Stamford, Connecticut, drug maker has not made any final decisions and could instead continue fighting the lawsuits, they said.

“As a privately-held company, it has been Purdue Pharma’s longstanding policy not to comment on our financial or legal strategy,” Purdue said in a statement.

“We are, however, committed to ensuring that our business remains strong and sustainable. We have ample liquidity and remain committed to meeting our obligations to the patients who benefit from our medicines, our suppliers and other business partners.”

Purdue faces a May trial in a case brought by Oklahoma’s attorney general that, like others, accuses the company of contributing to a wave of fatal overdoses by flooding the market with highly addictive opioids while falsely claiming the drugs were safe. The court proceedings will be televised.

Purdue tapped law firm Davis Polk & Wardwell LLP for restructuring advice, Reuters reported in August, fueling concerns among litigants including Oklahoma Attorney General Mike Hunter that the company might seek bankruptcy protection before the trial.

(Reporting by Mike Spector and Jessica DiNapoli in New York)

PG&E, owner of biggest U.S. power utility, files for bankruptcy

FILE PHOTO: PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

By Subrat Patnaik

(Reuters) – Power provider PG&E Corp filed for voluntary Chapter 11 bankruptcy protection on Tuesday, succumbing to liabilities stemming from wildfires in Northern California in 2017 and 2018.

The owner of the biggest U.S. power utility has filed a motion seeking court approval for a $5.5 billion debtor-in-possession financing, it said in a statement.

PG&E listed assets of $71.39 billion and liabilities of $51.69 billion, in a court document filed in the U.S. Bankruptcy Court for the Northern District of California.

“Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires,” PG&E interim Chief Executive Officer John Simon said.

The company said it intends to pay suppliers in full under normal terms for goods and services provided on or after the date of the Chapter 11 filing.

Separately, PG&E shareholder BlueMountain Capital Management LLC said it was “deeply disappointed” that the company’s board ignored calls from multiple parties to abandon its “reckless and irresponsible plan to file for bankruptcy.”

The investment firm said it would propose a slate of board directors no later than Feb. 21, and urged all PG&E stakeholders to support change at the company.

PG&E, which had a debt burden of more than $18 billion, said earlier this month it would need to pursue a court-supervised reorganization in the aftermath of the blazes, including November’s so-called Camp Fire.

The Camp Fire broke out on the morning of Nov. 8 near the mountain community of Paradise, sweeping through the town and killing at least 86 people, in the deadliest and most destructive wildfire in state history.

Reinsurance company Munich Re termed the Camp Fire as the world’s most expensive natural disaster of 2018 and earlier this month pegged the overall losses from it at $16.5 billion.

PG&E, which filed for bankruptcy once before in 2001, warned in November it could face “significant liability” in excess of its insurance coverage if its equipment was found to have caused the Camp Fire and other destructive wildfires.

Earlier this month, a state fire agency said PG&E equipment was not to blame for a 2017 wildfire in California’s wine country, but the company faces dozens of lawsuits from owners of homes and businesses that burned during that and other 2017 fires.

The San Francisco-based company provides electricity and natural gas to more than six million customers in Northern California. Last year, lawmakers gave it permission to raise rates to cover wildfire losses from 2017. But elected officials this month showed little appetite for new rate hikes or other maneuvers to prevent a bankruptcy filing.

(Reporting by Subrat Patnaik in Bengaluru and Jim Christie in San Francisco; Editing by Gopakumar Warrier and Saumyadeb Chakrabarty)

U.S. gunmaker Remington files for bankruptcy

FILE PHOTO: A man walks with his Remington 870 Express 12 gauge shotgun during a pro-gun and Second Amendment protest outside the Arizona State Capitol in Phoenix, Arizona, U.S., January 19, 2013. REUTERS/Joshua Lott/File Photo

By Tom Hals and Jessica DiNapoli

(Reuters) – Remington Outdoor Co Inc, one of the largest U.S. makers of firearms, filed for bankruptcy protection on Sunday to carry out a debt-cutting deal with creditors amid mounting public pressure for greater gun control.

The company’s chief financial officer, Stephen Jackson, said in court papers that Remington’s sales fell significantly in the year before its bankruptcy, and that the company was having difficulty meeting requirements from its lenders.

Remington, America’s oldest gunmaker, announced in February it would reduce its $950 million debtload in a deal that will transfer control of the company to creditors. The company plans to wrap up its bankruptcy as soon as May 3, according to court papers.

The filing comes after a Feb. 14 shooting at a Parkland, Florida high school that killed 17 and spurred an intense campaign for gun control by activists.

The massacre led to huge U.S. anti-gun rallies by hundreds of thousands of young Americans on Saturday.

In some of the biggest U.S. youth demonstrations for decades, protesters called on lawmakers and President Donald Trump to confront the issue. Voter registration activists fanned out in the crowds, signing up thousands of the nation’s newest voters.

Major U.S. companies and retailers have taken some steps to restrict firearm sales.

Citigroup Inc <C.N> said last week it will require new retail-sector clients to sell firearms only to customers who passed background checks and to bar sales of high-capacity magazines.

Citi also said it was restricting sales for buyers under 21, a move adopted by other large retailers, while Kroger Co’s <KR.N> superstore chain Fred Meyer said it will stop selling firearms entirely.

CERBERUS TO LOSE OWNERSHIP

Cerberus Capital Management LP, the private equity firm that controls Remington, will lose ownership in the bankruptcy.

Remington’s creditors, which sources told Reuters include Franklin Templeton Investments and JPMorgan Asset Management, will exchange their debt holdings for Remington equity.

The creditors inked the debt-cutting deal prior to the Parkland shooting, and it is unclear if any have exited. The restructuring support agreement allows creditors to sell their holdings, but the buyer is bound by the deal.

One investor told IFR, a Thomson Reuters news provider, that his firm had contemplated buying the Remington loans that will be exchanged into equity, which were offered at as low as 25 cents on the dollar.

“We bowed out because we were uncomfortable,” he said.

After a Remington Bushmaster rifle was used in the Sandy Hook elementary school shooting in Connecticut in 2012 that killed 20 children and six adults, Cerberus tried unsuccessfully to sell Remington, then known as Freedom Group.

Katie-Mesner Hage, an attorney representing Sandy Hook families in a lawsuit against Remington, said in a prepared statement that she did not expect the gunmaker’s bankruptcy would affect their case.

Remington and other gunmakers have suffered from slumping sales in the past year as fears of stricter gun laws have faded.

The chief executive of American Outdoor Brands Corp, maker of the Smith & Wesson gun used in the Parkland shooting, said on March 1 that some gun retailers reported increased sales after the Florida school shooting.

Remington filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.

(Reporting by Tom Hals in Wilmington, Delaware, Jessica DiNapoli in New York and Ismail Shakil in Bengaluru; Editing by Lisa Shumaker and Gopakumar Warrier)