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ExpressJet Crash Landing; Revlon Equity Denied Committee; 3M Ruling on Deck; and Cineworld Crashing Down?

Written by Robert J. Gayda | Aug 26, 2022

Below is our initial take on recent bankruptcy-related developments:

ExpressJet Airlines, Formerly Under United, Files for Bankruptcy | CNN

Regional carrier ExpressJet, which was formerly a United subsidiary, filed for bankruptcy and ceased operations, citing difficult market conditions.

S&K Take: A name that a lot of travelers would be familiar with. ExpressJet has struggled since United terminated its contract a few years ago. It tried to go it alone but was unable to hack it. The company is seeking to sell its assets, which look like some aircraft parts and an FAA license barring some unforeseen turn of events.

Revlon Tells Bankruptcy Judge Its Shares May Be Worthless | Bloomberg

Revlon told a federal bankruptcy judge in Manhattan that the cosmetic company’s shareholders do not need a company-funded committee to represent shareholder interests because there is no evidence that the equity is worth anything.

S&K Take: Revlon successfully argued against the formation of an equity committee. Judge Jones found that the interests of equity would be adequately protected by counsel for unsecured creditors, as their interests are aligned. Whether this resolves the issue remains to be seen, as Judge Jones noted that equity holders could come back if circumstances change.

3M Awaits Bankruptcy Ruling That May Sink Litigation Tactic | Yahoo Finance

A federal judge is set to consider a temporary hiatus to more than 230,000 lawsuits against 3M and its subsidiary, so that 3M can settle the claims of veterans who are alleging that the company’s earplugs were inadequate and resulted in hearing damage.

S&K Take: A massive precedential decision is on tap. The decision in Purdue and other mass tort cases (J&J for example) felt like a fait accompli. This one feels a little different given some of the commentary from the MDL judge and the unknown of the Indianapolis bankruptcy court. Stay tuned, we sure will.

Cineworld’s Possible Bankruptcy Puts Cinema Industry Under the Spotlight | Reuters

The world’s second largest cinema operator, Cineworld, which owns the American-based Regal chain, is considering a Chapter 11 filing stemming from pandemic struggles and competition with streaming services.

S&K Take: The changing paradigm in the entertainment industry was sure to have some fall out eventually. AMC narrowly avoided a bankruptcy at least in part based on the meme stock movement. This would be a significant case, and would bring to light some unique issues to the industry, including what go-forward operations for a theater business might look like.