Below is our initial take on some of the major bankruptcy-related developments from the past week:
U.S. judge tosses $4.5 bln deal shielding Sacklers from opioid lawsuits | Reuters
S&K Take: Wow. One of the most significant and thought-provoking appellate decisions in recent memory was handed down last night. Judge McMahon (a former partner of Judge Drain at Paul Weiss) reversed Judge Drain’s approval of the Purdue plan implementing a $4.5 billion settlement with the Sackler family. Judge McMahon ruled that the Bankruptcy Code does not authorize the release of direct third-party claims against non-debtors (the Sacklers in this instance). This decision will almost certainly be appealed by Purdue to the Second Circuit. If undisturbed, it will have a deep impact on future bankruptcies that involve significant litigation claims.
US Trustee Seeks Ch. 11 Examiner For J&J Talc Liability Unit | Law360
Please note that Law360 membership is required to access the full summary of this article.
S&K Take: The US Trustee is seeking the appointment of an examiner in the LTL cases. Such requests have not been as prevalent in recent years as they had been previously, so it will be interesting to see what happens. The UST wants the examiner to opine on the core case issues, including whether the Texas Two-Step is permissible under Texas law as well as whether the maneuver constitutes a fraudulent transfer or might be subject to other claims (breach of duty claims, e.g.).
Judge Chapman, Who Oversaw Lehman Bankruptcy, to Retire Next Year | Bloomberg Law
Please note that Bloomberg Law membership is required to access the full summary of this article.
New York Judge Shelley C. Chapman, who oversaw the Lehman Brothers’ bankruptcy since 2014, announced she will step down from the bench in June 2022.
Limetree Bay UCC Says Professionals Going Unpaid Despite Debtors Having Sufficient Funds; Reserves Rights to Enforce Compensation Orders | Reorg
Please note that Reorg membership is required to access the full summary of this article.
S&K Take: For those that aren’t Reorg subscribers, the UCC in Limetree filed a reservation of rights asserting that they might be considering filing a motion to enforce the interim compensation order since they haven’t been paid. The DIP lender subsequently responded by saying that the UCC’s fees are excessive, and that they will be paid if certain asset sales proceed (essentially pointing out that the estates are administratively insolvent at this juncture). This case continues to be interesting, as this comes on the heels of the reopening of the sale process in the case.
USA Gymnastics Announces $380M Bankruptcy Settlement | Law360
Please note that Law360 membership is required to access the full summary of this article.
USA Gymnastics reached a $380 million settlement with all its major stakeholders, including its insurance carriers, sexual abuse claimants, and the U.S. Olympic & Paralympic Committee on its Chapter 11 plan.
S&K Take: Seemingly good news in this case (you never know as there is usually at least one disaffected creditor somewhere in these complex situations) as the large case constituents have struck a deal.
All Year Files for Bankruptcy to Stave Off Insolvency Lawsuits | Commercial Observer
Brooklyn property developer All Year Holdings filed for bankruptcy protection on Tuesday to avoid potential litigation with bondholders over its $1.6 billion debt.
S&K Take: Another bankruptcy involving commercial real estate. We imagine that there are more in the horizon.
Insurer Agrees to $800M Settlement in Boy Scouts Bankruptcy | Associated Press
The Boy Scouts of America reached a tentative settlement with its insurer, calling for Century Indemnity Co., to contribute $800 million to a fund for abuse victims.
S&K Take: Again, good news in another abuse case. Hopefully this will pace the way towards confirmation of a plan in these difficult cases.
