A corporate restructuring and bankruptcy BLOG

    Not that Kind of Party, Red Flags for Yellow, Purdue Plan Proceeds, Instant Karma?

    What's News
    July 28, 2023

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

    Party City Rehashes Restructuring Deal After Missing Financial Projections | Yahoo Finance

    Party City has reworked a key deal with their key lenders to restructure their bankruptcy exit plan. Now, lenders will have the option to be repaid in second-lien notes instead of a cash payout.

    S&K Take: Party City has pivoted to amend its plan in light of poor post-petition performance.  Generally speaking, retailers have been in pretty dire straits.  This is yet another data point on that front.  Regardless, most cases have been sale cases without a stalking horse, so pulling off a restructuring of any kind seems like an accomplishment in this market, so there is that.   

    Trucker Yellow Prepares to File for Bankruptcy as Customers Flee | Wall Street Journal

    Yellow, one of the largest U.S. trucking companies, is planning to file for bankruptcy. The trucker has been losing many customers who fear losing their cargo if the company falls into liquidation while also navigating a cash crunch and worker negotiations.

    S&K Take: We have been reporting on this one for the past few weeks. What seemed like an inevitable 2024 bankruptcy now seems like an inevitable 2023 bankruptcy. Yellow managed to elude a walkout by its union thanks to the support of an investor which agreed to continue union health benefits for 30 days while the parties continue to negotiate. Despite the support, Yellow’s customers have been seeking out other options, reducing business by a reported 80%. That doesn’t seem likely to return, so a filing may be a fait accompli.

    Purdue Pharma bankruptcy can proceed despite potential US Supreme Court appeal | Reuters

    Purdue Pharma has been granted the ability to continue with a bankruptcy settlement that would shield its owners from lawsuits.

    S&K Take: The twists and turns have no end in the Purdue cases. The UST had sought a stay of the Second Circuit’s decision which overturned the District Court’s decision on third-party releases. That request was denied, meaning that Purdue can move forward with implementing its plan. The UST can still seek reconsideration of the decision from the Supreme Court, which seems highly likely given the UST’s quixotic quest against third-party releases. That petition is due by Aug. 28. The UST now faces the specter of equitable mootness, however, in any subsequent consideration of the issue.

    Lordstown Motors stalls on the road to a quick bankruptcy sale | Reuters

    Lordstown Motors' hopes for an expedited sale of assets has been struck down by a recent ruling that prevents them from doing so while they await trial against stolen technology claims. Karma Automotive initially sued Lordstown in 2020 for allegedly stealing their technology and employee raiding.

    S&K Take: Not often you see facts like those in the Lordstown case, so you almost knew there would be interesting decisions in this one from the jump. The company filed with $136 million in cash and no secured debt, with two pretty big litigation claims at the center of the case, Foxconn and Karma. Karma clearly won the first skirmish on their front, with Judge Walrath granting stay relief to allow the existing litigation to continue. Lordstown had requested that the Judge instead estimate Karma’s claim. The Judge decided against that based on the advanced state of the litigation and the amount if time it would take to wade through the issues (12 million pages of discovery!). We’ll see how Lordstown pivots, as this puts a pretty big crimp in its sale plans.

    The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

    November 18, 2022

    This Week In Crypto Contagion



    Fill out the following form to receive our corporate restructuring and bankruptcy news and analysis.

    Group 25-1