DISTRESSED DAILY: Michaels Crafts a 75% Gain From Darkest Days

If you need proof that troubled companies can pay off big, check out Michaels Cos., whose unsecured bonds fell to deeply distressed levels as the pandemic shuttered its arts and crafts stores and threatened to make it yet another victim of the retail apocalypse. By yesterday, those notes were floating far above par and setting new intraday records, helped by a takeover bid from Apollo Global Management.

Michaels had competitive problems even before Covid-19 broke out, and S&P Global Ratings in a March 2020 report doubted the chain had enough online presence to generate meaningful cash flow. The company’s ...