Below is our initial take on recent bankruptcy-related developments:
Endo Files for Bankruptcy as U.S. Opioid Litigation Drags | Reuters
Endo International Plc filed for bankruptcy this week, becoming the latest pharmaceutical company to file in the wake of opioid lawsuits. Endo reached a $6 billion deal with some of its creditors prior to declaring bankruptcy.
S&K Take: Another big opioid-related domino falls. Based on activity related to first day filings, this one looks like it will be contentious. A group of unsecured noteholders is already challenging Endo’s exclusivity and flagging a huge valuation issue. Buckle up.
Boy Scouts Walk Back $250 Mln Abuse Settlement with Mormon Church | Reuters
A U.S. bankruptcy judge rejected part of The Boy Scouts of America’s restructuring proposal that involved a $250 million payment from a Mormon Church to the BSA settlement fund.
S&K Take: While Judge Silverstein approved the bulk of the Boy Scouts’ plan, the releases related to the Mormon church were not narrowly tailored enough to pass muster. These have been excised from the plan to move things forward, which means that the Mormon Church may have to revisit the bargaining table with claimants. The rest of the plan should proceed, although certain insurers continue to raise objections.
Judge Rejects Veteran’s Bid to Stop 3M From Exiting Earplug Liability MDL | Reuters
A U.S. judge denied a plaintiff’s bid to prevent 3M the ability to avoid liability for claims against a bankruptcy subsidiary responsible for producing inadequate earplugs.
S&K Take: The most recent Texas Two-Step(esque) case has had some interesting maneuvering in its early stages. A Florida District Judge has deferred to the bankruptcy court to determine whether a stay of claims against non-debtor 3M is appropriate, although the Judge had some harsh words regarding the bankruptcy filing. The Judge did rule that the bankruptcy could not be used to relitigate issues already decided in the MDL. Trial with respect to the 3M stay started in bankruptcy court this week.
Crypto Lender Celsius Gets Court Sign-Off to Sell Bitcoin, But Not Stocks or Debt | Reuters
Chief U.S. Bankruptcy Judge Martin Glenn approved crypto lender Celsius to mine bitcoin as a means for profit during its bankruptcy but will not allow the company to sell equity or debt investments in other crypto companies until they can provide more information about the assets they would like to sell.
S&K Take: While Judge Glenn did indicate some concern regarding the sale of mined BTC, he ultimately deferred to the Debtors’ business judgment. He did, however, expressly limit the assets that could be sold, noting that if the Debtors were to seek to sell other assets such as debt and equity investments, they would need to come back to the court.