Below is our initial take on recent bankruptcy-related developments:
On Wednesday, a three-judge panel of the Third Circuit Court of Appeals in Philadelphia considered whether to overturn the Boy Scouts of America’s $2.46 billion settlement of sexual abuse claims. The issue mainly revolves around whether it is possible to overturn the deal after implementation of the plan has commenced.
S&K Take: The headline seems at least a touch misleading. The Third Circuit appellate panel took the issue under advisement, so I’m not entirely sure they telegraphed what they would do. The debtors and other plan proponents have argued both statutory (section 363(m)) and equitable mootness based on substantial consummation of the plan. The debtors have also argued that the Purdue decision does not apply (i) to cases decided pre-Purdue and (ii) to full-pay cases (citing the decision in Bird Global). As for statutory mootness, opponents argued that the sale (of certain of the debtors’ insurance policies) was consummated through a plan, and thus section 363(m) does not apply. With respect to equitable mootness, the same opponents argue that the plan hasn’t been substantially consummated—only 10% of money has been pushed out the door. Will be an interesting decision and a data point on Purdue. My hunch is that the Court finds the appeal to be moot.
PureGym, the U.K.-based fitness company, will acquire the majority of bankrupt U.S. gym operator Blink Fitness’s assets for $121 million, including corporate operations and 67 gyms in New York and New Jersey.
The largest gym chain in America, Planet Fitness, made a last-minute bid to acquire bankrupt gym chain Blink. The proposal will be considered in Delaware bankruptcy court on Wednesday.
S&K Take: This is one of the more interesting recent sale processes with competing bidders making interesting allegations around the auction process. PureGym has a $125 million bid that has been accepted by the debtors as highest and best, primarily based on the lack of execution risk. Planet Fitness (through an entity named Supreme Orange, which I am informed has no affiliation with the President-elect) has made a $145 million bid. The concern with the PF bid is that it will face antitrust scrutiny, and the debtors don’t have the time and the cash to wait around for that. The UCC is backing the PF bid. Judge Stickles heard argument on the issue on Wednesday, and has promised a decision by Tuesday, Nov. 12. You would usually bet on the “winning bidder” in matters like these, since disgruntled purchasers rarely win. The UCC backing throws a wrench in this one, however, so we will report back next week.
Purdue Pharma is nearing a new settlement with the Sackler family and government entities to resolve opioid-related lawsuits. This comes after a previous bankruptcy settlement was overturned by the Supreme Court.
S&K Take: Stop me if you have heard this one—settlement talks in the Purdue case are closing in on a deal, and the Judge has extended the freeze on third party litigation against non-debtors until Dec. 2 while the parties negotiate. Apologies for the sarcasm, but this saga continues in the manner it has for years already. Hopefully there is a deal around the corner that gets everyone across the finish line and gets victims some compensation for their losses. Sounds like we are unlikely to see much in the next few weeks (just given the duration of the stay). With the holidays a few weeks away, one has to wonder if this creeps into the new year.