Below is our initial take on recent bankruptcy-related developments:
Fed Rate Hikes Could Cause Bankruptcies to Bloom in Private Equity Portfolios | Forbes
The Federal Reserve approved the first interest rate hike in more than three years and more increases are expected to follow.
S&K Take: The macroeconomic environment seems to be more volatile in recent months. Whether a spike in bankruptcies will follow remains an open question, however. Delaware has seen more activity this week, with Footprint and MD Helicopters representing two of the bigger cases filed in 2022.
Massachusetts Natural Gas Plant Files for Ch. 11 After Arbitration Loss | Reuters
Footprint Power Salem Harbor Development LP, a natural gas-fired power plant operator, filed for Chapter 11 bankruptcy protection.
S&K Take: Mechanics liens and judgment claims always make for an interesting case. Here, an EPC contractor has both. Seems like that claimant will be squaring off against the lenders and the Debtors in this one.
Judge Allows Expedited Appeal of J&J’s Talc Bankruptcy Strategy | Reuters
U.S. Bankruptcy Judge Michael Kaplan approved an expedited appeal of his order that allowed Johnson & Johnson to leverage the bankruptcy systems to push off its liability in multibillion-dollar talc-related litigation.
S&K Take: Judge Kaplan certified his decision not to dismiss the LTL bankruptcy directly to the Third Circuit, allowing the appeal to skip the intermediate step of adjudication in the District Court. The Judge also doubled down on his decision to disband a second talc claimants committee, noting that there was no precedent for a second committee comprised of claimants based on the fact that those claimants suffered from a different disease caused by the same product.
Brazos Electric Seeks More Time to Control Bankruptcy Amid Mediation | Reuters
Brazos Electric Power Cooperative requested an additional six months to file a bankruptcy reorganization plan due to an ongoing dispute over electricity charges with the Electric Reliability Council of Texas stemming from last year’s historic winter storm in Texas.
S&K Take: Retail energy cases caused by Winter Storm Uri continue in Texas. In this instance, resolution of the ERCOT claim is one of the driving factors. ERCOT is asserting a $2.1 billion claim against Brazos. Determination of the claim in this case could provide significant guidance in other similar cases.