Below is our initial take on recent bankruptcy-related developments:
Publishers Clearing House files for bankruptcy | Law360
Publishers Clearing House filed for Chapter 11 bankruptcy and plans to reorganize its capital structure and improve its long-term growth trajectory.
S&K Take: PCH, a well-known direct mailer and the company behind the “Prize Patrol” filed in the Southern District of New York this week. The case is pretty straightforward, and mostly interesting because it allows a peek behind the curtain of a business that we are all familiar with. The company has transitioned away from the direct mailing business for obvious reasons—everything is electronic now—and is looking to emerge as a e-commerce/digital entertainment business going forward, with revenue generated from those beloved online ads. Interestingly, some of the biggest unsecured creditors (redacted of course) are sweepstakes winners. One day the Prize Patrol shows up on your doorstep and gives you a couple mil and the next you’re a GUC in the SDNY with your sights set on a ten cent recovery. C’est la vie I suppose, but that is a tough break.
US judge rejects J&J's $10 billion baby powder settlement | Reuters
U.S. Bankruptcy Judge Christopher Lopez in Houston denied healthcare company Johnson & Johnson’s $10 billion proposal to end tens of thousands of lawsuits claiming that its baby powder and other talc products caused ovarian cancer. This marks the third time the company’s bankruptcy strategy has failed in court.
S&K Take: We missed last week so we are catching up on some major news in the restructuring industry. Everyone knows that Judge Lopez shockingly (that feels fair to say, although folks smarter than I may have seen this coming) denied confirmation in the Red River Talc case, largely relying on voting irregularities to find that the Debtors did not satisfy the 75% threshold required for approval of its plan. Judge Lopez also found that the plan violated the Supreme Court’s Purdue decision by providing impermissible nonconsensual nondebtor releases. The company quickly responded saying that it would not appeal the decision, giving dissenting creditors precisely what they want, their day in the tort system. One of those decisions that makes you say “wow” when it pops up in our inbox for sure. Judge Lopez has proven to be unpredictable (at least in cases that are not your typical chapter 11 cases) rejecting the sale and settlement
