Below is our initial take on recent bankruptcy-related developments:
Cancer Victims Urge Court to End J&J Bankruptcy Roadblock to Lawsuits | Reuters
Victims claiming to have been affected by J&J’s use of talc products have asked an appeals court to revive their lawsuits, explaining that J&J should not be allowed to use a bankrupt subsidiary to block claims against the parent company, a strategy known as the “Texas two-step.”
S&K Take: The big-ticket item in this week’s installment of What’s News. The Third Circuit is considering the viability of the Texas Two-Step strategy. This is the decision that everyone will have their eyes on, as it will have significant persuasive (and precedential, depending on where you are) value with respect to future mass tort cases. Stay tuned.
Mullen to Bid for Bankrupt Electric Last Mile Solutions | TechCrunch
Struggling electric vehicle startup Mullen is the leading bidder for the assets of bankrupt competitor Electric Last Mile Solutions. Mullen is prepared to pay nearly $92 million for ELMS, more than half of that on the company’s assets, including inventory, intellectual property rights, and its plant in Indiana.
S&K Take: This is an unusual case—it is not often that you see a bid this high in a chapter 7 proceeding. Shareholders had objected to the case proceeding as a 7 early on, although its not quite clear whether their concerns are justified by the sale price. The bid does include the purchase of claims against the company’s founders which may have had some value according to an investigation that had been conducted. A different bid could free those up for the trustee to pursue.
Infowars Lawyer, Manager Barred from Bankruptcy Case Over Conflicts | Reuters
A U.S. bankruptcy judge blocked an attorney and executive from working for Infowars’ bankrupt parent company due to a conflict of interest, as they failed to disclose that they sought work from the parent company before the conclusion of earlier Infowars bankruptcies.
S&K Take: The strange Infowars saga continues, this time with debtors’ counsel being disqualified. The case originally looked like a Texas Two-Step style case, but that case was ultimately dismissed voluntarily. This case was then filed and seems plagued with issues. Jones, for his part, has stated that the company will retain new counsel with the assistance of the Subchapter V trustee. It remains to be seen how smoothly that goes. Our guess? Not so smoothly.
GTT’s Bankruptcy Exit Held Up by Telecom Regulatory Approvals | Bloomberg Law
Nine months after its bankruptcy plan was approved, GTT Communications Inc. is still running into delays regarding regulatory approvals, forcing the company to request more time to implement its Chapter 11 plan and complete its $2.8 billion debt reduction deal.
S&K Take: Regulatory approvals can often be a severe impediment in plan effectiveness. The EFH cases come to mind, although I am sure I am not thinking of some other obvious examples. Certainly, GTT and its creditors are champing at the bit to wrap this chapter up.
