Judge David Jones in the Southern District of New York has rejected a request for an official committee of equity holders in Revlon’s chapter 11 proceedings, as reported by Reuters. Debtor’s counsel argued that the equity holders “cannot possibly” prove that they are entitled to a meaningful recovery at this stage of the bankruptcy proceedings, and the company’s lenders argued that recent stock price fluctuations were “untethered to market realities.” Judge Jones found that the cost of appointing a committee, with its expenses being paid from the estate, outweighed its likely value. [Reuters; Aug. 24, 2022]
The first non-bank mortgage lenders are going out of business, a trend that Bloomberg expects will continue as a result of increased interest rates, a sharp decrease in mortgage originations, and non-bank lenders’ reliance on credit lines that can be short term. Independent lenders gained market share following 2008 when banks pulled back from the mortgage industry. The situation is most dire for those lenders that make riskier loans that are not eligible for funding from Fannie Mae and Freddie Mac. [Bloomberg; Aug. 19, 2022]
The Wall Street Journal reports on the uneasy situation retailers find themselves in as they work to offload inventory ahead of the holiday season and yet, at the same time, consumer spending has shifted to essential items such as food and gas due to increasing inflation. Retailers from Walmart to Nordstrom are offering deep discounts to clear out inventory. The picture going forward is uncertain, as the industry anticipates its slowest sales growth in the period between November and January in years. [WSJ; Aug. 28, 2022]
Lumileds filed bankruptcy under Chapter 11 with a prepackaged plan in the Southern District of New York, as reported by Bloomberg. The company’s lenders will take over control of the Netherlands-based lighting manufacturer with a plan that will cut $1.3 billion in debt from the company’s balance sheet and provide the company with $275 million in DIP financing. [Bloomberg; Aug. 29, 2022]