Fri Jan 17, 2014 3:34pm EST
Jan 17 (Reuters) - * Freedom industries inc files for chapter 11 bankruptcy protection -- court
filing * Freedom files for protection from creditors with U.S. bankruptcy court in
southern district of West Virginia * Freedom says filing follows January 9 incident at chemical storage facility
Fri Jan 17, 2014 7:46pm EST
Jan 17 (Reuters) - Discount retailer Dots LLC is preparing for a possible bankruptcy-protection filing by Sunday, as it struggles to stay afloat amid competition from online rivals, the Wall Street Journal reported on Friday, citing people familiar with the matter.
Limited-time or "flash" sales on popular websites such as Rue La La and Gilt have eaten into Dots's revenue, which has declined in recent periods, the Journal report said, citing the people.
The retailer, which caters to women aged between 25 and 35 years old and has more than 400 stores across 28 states, has enlisted restructuring advisers at PricewaterhouseCoopers and law firm Lowenstein Sandler LLP, according to the WSJ.
Glenwillow, Ohio-based Dots is also in talks with asset management firm Salus Capital Partners for debtor-in-possession financing, sources told the business daily. According to the report, Salus provided Dots with about $50 million in financing about six months ago.
Dots's bankruptcy filing would underscore the retail industry's breakneck move from offline to online, which has significantly hurt brick-and-mortar businesses.
Bronx, New York-based Loehmann's, the 92-year-old discount clothing chain, filed for bankruptcy protection for a third time last December.
Dots, owned by Irving Place Capital, a middle-market private equity firm, was not immediately available for comment outside of regular U.S. business hours when reached by Reuters.
Fri Jan 17, 2014 7:48pm EST
Jan 17 (Reuters) - Discount retailer Dots LLC is preparing for a possible bankruptcy-protection filing by Sunday, as it struggles to stay afloat amid competition from online rivals, the Wall Street Journal reported on Friday, citing people familiar with the matter.
Limited-time or "flash" sales on popular websites such as Rue La La and Gilt have eaten into Dots's revenue, which has declined in recent periods, the Journal report said, citing the people.
The retailer, which caters to women aged between 25 and 35 years old and has more than 400 stores across 28 states, has enlisted restructuring advisers at PricewaterhouseCoopers and law firm Lowenstein Sandler LLP, according to the WSJ. ().
Glenwillow, Ohio-based Dots is also in talks with asset management firm Salus Capital Partners for debtor-in-possession financing, sources told the business daily. According to the report, Salus provided Dots with about $50 million in financing about six months ago.
Dots's bankruptcy filing would underscore the retail industry's breakneck move from offline to online, which has significantly hurt brick-and-mortar businesses.
Bronx, New York-based Loehmann's, the 92-year-old discount clothing chain, filed for bankruptcy protection for a third time last December.
Dots, owned by Irving Place Capital, a middle-market private equity firm, was not immediately available for comment outside of regular U.S. business hours when reached by Reuters.
Fri Jan 17, 2014 3:34pm EST
Jan 17 (Reuters) - * Freedom industries inc files for chapter 11 bankruptcy protection -- court
filing * Freedom files for protection from creditors with U.S. bankruptcy court in
southern district of West Virginia * Freedom says filing follows January 9 incident at chemical storage facility
Fri Jan 17, 2014 7:46pm EST
Jan 17 (Reuters) - Discount retailer Dots LLC is preparing for a possible bankruptcy-protection filing by Sunday, as it struggles to stay afloat amid competition from online rivals, the Wall Street Journal reported on Friday, citing people familiar with the matter.
Limited-time or "flash" sales on popular websites such as Rue La La and Gilt have eaten into Dots's revenue, which has declined in recent periods, the Journal report said, citing the people.
The retailer, which caters to women aged between 25 and 35 years old and has more than 400 stores across 28 states, has enlisted restructuring advisers at PricewaterhouseCoopers and law firm Lowenstein Sandler LLP, according to the WSJ.
Glenwillow, Ohio-based Dots is also in talks with asset management firm Salus Capital Partners for debtor-in-possession financing, sources told the business daily. According to the report, Salus provided Dots with about $50 million in financing about six months ago.
Dots's bankruptcy filing would underscore the retail industry's breakneck move from offline to online, which has significantly hurt brick-and-mortar businesses.
Bronx, New York-based Loehmann's, the 92-year-old discount clothing chain, filed for bankruptcy protection for a third time last December.
Dots, owned by Irving Place Capital, a middle-market private equity firm, was not immediately available for comment outside of regular U.S. business hours when reached by Reuters.
Fri Jan 17, 2014 7:48pm EST
Jan 17 (Reuters) - Discount retailer Dots LLC is preparing for a possible bankruptcy-protection filing by Sunday, as it struggles to stay afloat amid competition from online rivals, the Wall Street Journal reported on Friday, citing people familiar with the matter.
Limited-time or "flash" sales on popular websites such as Rue La La and Gilt have eaten into Dots's revenue, which has declined in recent periods, the Journal report said, citing the people.
The retailer, which caters to women aged between 25 and 35 years old and has more than 400 stores across 28 states, has enlisted restructuring advisers at PricewaterhouseCoopers and law firm Lowenstein Sandler LLP, according to the WSJ. ().
Glenwillow, Ohio-based Dots is also in talks with asset management firm Salus Capital Partners for debtor-in-possession financing, sources told the business daily. According to the report, Salus provided Dots with about $50 million in financing about six months ago.
Dots's bankruptcy filing would underscore the retail industry's breakneck move from offline to online, which has significantly hurt brick-and-mortar businesses.
Bronx, New York-based Loehmann's, the 92-year-old discount clothing chain, filed for bankruptcy protection for a third time last December.
Dots, owned by Irving Place Capital, a middle-market private equity firm, was not immediately available for comment outside of regular U.S. business hours when reached by Reuters.
Thu Jan 16, 2014 7:33pm EST
By Joseph Lichterman
DETROIT Jan 16 (Reuters) - A U.S. bankruptcy judge on Thursday rejected a deal allowing Detroit to end interest-rate swap agreements with two investment banks, a move that puts pressure on banks for more concessions while throwing a wrench into the city's plans to exit bankruptcy by September.
Ending costly swaps agreements with UBS AG and Bank of America Corp's Merrill Lynch Capital Services has been a key component of Detroit emergency manager Kevyn Orr's plan to adjust the city's finances through the bankruptcy process.
But Detroit's proposal to pay $165 million - a 43 percent discount from its original obligation - was still "too high a price to pay," federal bankruptcy judge Steve Rhodes ruled.
Rhodes, who is overseeing the city's historic bankruptcy, said Detroit likely could succeed with legal challenges to the validity of the original swaps agreements.
Since Detroit would make such a challenge in Rhodes' court, the ruling is a strong signal that banks could leave with nothing if they do not give up more in negotiations. UBS and Bank of America declined to comment as did bond insurer Syncora Guarantee, which had opposed the deal Rhodes rejected.
Rhodes said that settling the swaps was better for Detroit than lengthy, costly litigation over the claims. Rhodes said he "strongly encourages the parties to continue to negotiate" even if the city decides that filing suit is its best option.
Orr, who previously had said he was uncertain of victory in a legal dispute over the swaps, in a statement said the city would "continue to work toward a resolution" of the swaps deal.
Detroit's bankruptcy plan depended on raising cash by ending the swaps, which were used to hedge interest-rate risk for some of the $1.4 billion of pension debt the city sold in 2005 and 2006. Therefore the ruling puts on hold the process, which Detroit hoped to end by September, when Orr's term ends.
Detroit had planned to finance the swaps termination with part of a $285 million loan from Barclays Plc, but the judge denied the city's request to borrow that sum. Detroit could, however, still borrow $120 million to improve services, Rhodes ruled.
The $285 million loan from Barclays had been contingent on Detroit's pledging funds from the city's casino tax as collateral, but those funds may not be available to secure a loan because they are pledged as security on the original swaps, which remain in effect because of Rhodes' ruling.
It was not immediately clear if Barclays would be willing to provide the $120 million loan to help Detroit cover the cost of city services.
STRONG LEGAL ARGUMENTS
In rejecting the swaps deal, Rhodes said the city could argue that the use of the casino tax revenue as a lien in the original swaps transaction violated Michigan gaming law. The city could convincingly argue that the swaps themselves were illegal, he added.
An attorney following Thursday's proceeding said if he were Detroit he'd be considering litigation with an eye on a favorable settlement.
"They have to seriously consider having a complaint on his desk by Tuesday or Wednesday following his comments," the attorney said.
That could mean delay.
"I'm willing to place a wager. If the over/under is September, I'll take the over," said Kenneth Klee of legal firm Klee, Tuchin, Bogdanoff & Stern in Los Angeles. He represented Jefferson County Alabama, which recently came out of its Chapter 9 bankruptcy.
"The judge is on Detroit's side but it will take a long time," he said.
'FAR TOO RICH'
Robert Gordon, lawyer for the city's pension funds, which opposed the deal, said Detroit's planned payment to UBS and Merrill essentially treated them as secured creditors. "Paying them close to whole dollars was just far too rich," Gordon said.
Detroit's pension funds, bond insurers, banks and others opposed the termination deal. The objectors argued that the city should not have settled with the banks because it had convincing legal arguments to completely terminate the swaps.
But Orr, who has been running Detroit since March, testified in court that the city had only a 50-50 shot of winning the litigation, and he did not want to risk expensive legal proceedings or losing access to casino tax revenue, which was used as a lien in the swaps. The casino tax accounts for about 20 percent of the city budget, Orr has said.
The deal Rhodes rejected was the city's second such agreement with its swaps counterparties. Detroit originally had proposed a deal with Merrill and UBS in which the city would have ended the swaps at 75 cents on the dollar with a $230 million payment, but in a December hearing Rhodes called on the city to negotiate more favorable terms.
Detroit reached the new agreement with the banks after two days of mediation in late December.
Orr testified in court earlier this month that Detroit initially proposed a termination fee of $145 million to $150 million but that the investment banks would not agree to anything less than $165 million.
Meanwhile, mediation efforts have begun to bear fruit, with philanthropic foundations connected to Detroit pledging $330 million to help the city. In addition, Governor Rick Snyder is preparing to propose $350 million of support, over 20 years, to help protect worker pensions and prevent the Detroit Institute of Arts collection from being sold, according to reports on Thursday in the Detroit Free Press and elsewhere.
Fri Jan 17, 2014 12:41am EST
Jan 17 (Reuters) - The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.
* Most banks are not disclosing the overall size of their litigation reserves, which is crucial for assessing their ability to deal with the barrage of litigation that has been raining down on Wall Street banks. ()
* The Senate on Thursday gave final approval to a $1.1 trillion spending bill for the current fiscal year, leaving behind what might have been the Obama administration's best chance to overhaul the International Monetary Fund and meet its obligations to the world's other economic powers. Congressional Republicans did not budge from their refusal to cede some control of the fund to China, India, Brazil and other emerging economic powers. ()
* A federal judge on Thursday rejected a deal that Detroit had negotiated to help it move forward in bankruptcy, but said the city could borrow $120 million it says it urgently needs to provide services to its residents. He ruled that Detroit could not proceed with a plan to pay $165 million to two big banks to extricate itself from some long-term financial contracts that have been costing the bankrupt city tens of millions of dollars a year. ()
* The announcement on Wednesday that Yahoo CEO Marissa Mayer had tossed out her top lieutenant, Henrique de Castro, was her first public acknowledgment that turning around Yahoo would be far more difficult than has sometimes been suggested by the media attention she has received. ()
* The computer network at Neiman Marcus was penetrated by hackers as far back as July, and the breach was not fully contained until Sunday, according to people briefed on the investigation. ()
* Target, the discount retailer, which has long focused on large stores in suburban markets, completed a lease last week on its smallest store yet, a 20,000-square-foot location in Minneapolis, a test store for a new format called TargetExpress. The new format would allow the company to open more locations in dense urban markets, like New York. ()
* The European Union is tempering its ambitions and considering turning mandatory targets for renewable energy into just goals in light of a deep and lasting economic slowdown, persistently high prices for renewable energy sources and years of inconclusive international negotiations. ()
Fri Jan 17, 2014 12:47am EST
Jan 17 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy.
* Vice President Joe Biden has resumed a push to withdraw virtually all U.S. troops from Afghanistan at year end, arguing for a far-smaller presence than many military officers would like to see, said officials briefed on the discussions. ()
* Best Buy Co on Thursday became the latest retailer to chime in with weak holiday results. Like other chains, the electronics retailer blamed the race to offer the deepest discounts, a game of brinkmanship that hurt profit margins and held back revenue. ()
* President Barack Obama, in a highly anticipated speech that follows a six-month review of U.S. spying programs, is expected to extend privacy protections to non-U.S. citizens and announce measures to continuously evaluate sensitive surveillance, particularly involving foreign leaders, people familiar with the plan say. ()
* The holiday data breach at Target Corp appeared to be part of a broad and highly sophisticated international hacking campaign against multiple retailers, according to a report prepared by federal and private investigators that was sent to financial-services companies and retailers. ()
* Congress has turned to a new chapter in its long-running battle over the federal budget, as the Senate Thursday approved and sent to the White House a monumental spending bill that keeps the government running through September. ()
* Regulators took another swing at tamping down the riskiness of big U.S. banks, proposing new requirements for boards and executives and laying the groundwork for swifter enforcement for missteps. In guidelines proposed Thursday, the Office of the Comptroller of the Currency detailed risk-management standards for firms with more than $50 billion in assets, putting the onus on board members to ensure the rules are followed and requiring banks have independent audit and risk-management officers who can go straight to the board with concerns. ()
* The Justice Department hasn't charged employees at two-thirds of nearly 400 companies that have settled criminal investigations or been convicted of crimes in recent years, according to newly analyzed data. ()
* A federal bankruptcy judge on Thursday delivered a major blow to the only completed deal to cut a portion of the city of Detroit's estimated $18 billion in long-term debt. Judge Steven Rhodes rejected a proposed $165 million settlement of so-called interest-rate swap agreements that the city used to help fund its pensions, calling the pact financially imprudent. ()
* Sprint Corp has received proposals from at least two banks on how it could finance a takeover of smaller rival T-Mobile US Inc giving it confidence that a deal could be funded, people familiar with the matter said. ()
Mon Jan 13, 2014 5:04pm EST
By Joseph Lichterman
DETROIT Jan 13 (Reuters) - U.S. Bankruptcy Judge Steven Rhodes said he will rule Thursday on whether to let stand a deal struck between the city of Detroit and two investment banks to end toxic interest rate swap agreements that proved to be a strain on city finances.
Lawyers for bond insurers, banks, pension funds and others objected to the deal during a bankruptcy court hearing Monday, saying that the Dec. 24 deal with UBS AG and Merrill Lynch Capital Services, a unit of Bank of America Corp, was not in the best interest of the city. Detroit could have won larger concessions from the investment banks, the opponents argued.
Rhodes said he would announce his decision in a hearing on Thursday at 2 p.m. (1900 GMT). The hearing was postponed twice last week due to inclement weather.
If Rhodes approves the agreements, Detroit will pay the banks $165 million plus fees to end the agreements at a 43 percent discount to their original cost to the city. Detroit entered into the interest-rate swaps in a failed attempt to hedge, or limit the risk, on some of the $1.4 billion in pension debt that it sold in 2005 and 2006.
Caroline English, the attorney representing bond insurer Ambac Assurance Corp, argued the city had strong legal arguments to support a full termination of the swaps agreement and should not have settled with the banks.
"This deal should have the swap counterparties paying the city, not the city paying the swap counterparties," English said.
Detroit's emergency manager, Kevyn Orr, testified previously that the city settled with the banks because it had only a 50-50 chance of succeeding in litigation and it did not want to risk a lengthy and expensive legal process.
In response to the closing arguments, Corinne Ball, the attorney representing the city, said Detroit could lose access to casino tax revenue, which served as collateral in the swaps contract.
"That possibility and those consequences are things the emergency manager had to consider," Ball said, arguing that city residents should not have to wait for the city to be able to finance improvements to services.
The objectors argued that the use of casino revenue as a lien violated Michigan law because the funds were not used to directly provide services to Detroit residents.
Detroit gets casino tax revenue of about $180 million a year.
Detroit and the banks initially agreed to terminate the swaps for $230 million, or 75 cents on the dollar, but Rhodes encouraged the city to renegotiate the deal to secure better terms. The city reached its agreement with UBS and Merrill after two days of mediation on Dec. 23 and 24.
Detroit also has reached an agreement with Barclays Plc for a $285 million loan to end the swaps. Detroit plans to use about $120 million of the loan to fund improvements to city services.
But Vincent Marriott, who represents Detroit creditors Hypothekenbank Frankfurt AG, Hypothekenbank Frankfurt International SA and Erste Europäische Pfandbrief-und Kommunalkreditbank Aktiengesellschaft in Luxembourg SA, argued that the court should not approve the post-petition financing.
He said the city should have provided the Detroit City Council with more information about the loan and also pursued an unsecured loan.
"By beginning the solicitation process by offering collateral, the city ensured substantial collateral would be granted to the lender," Marriott said.
The lawyer representing Merrill Lynch, Marc Ellenberg, argued that the deal was in the best interest of both the city and the banks.
"There is such a thing as a win-win transaction," he said in response to a question from Rhodes about Merrill's motivation for reaching its agreement with the city.
"There is such a thing as the lesser evil and that's what we've tried to reach," Ellenberg said.
Detroit was declared legally bankrupt on Dec. 3, making it the largest U.S. city ever to go bankrupt. The city has more than $18 billion in debt and other obligations.
Orr had said he planned to file the city's plan to deal with its debt to the court in the first week of January, but that has been delayed until the issues surrounding the swaps are dealt with, spokesman Bill Nowling said in an email last week.
"If it looks like mediation efforts are bearing fruit, it could push back the release date as we look to include any mediated agreements in the plan," Nowling said.
