Below is our initial take on recent bankruptcy-related developments:
Purdue bankruptcy judge extends temporary litigation shield for Sacklers | Yahoo News
A bankruptcy judge has extended temporary protections against opioid-related litigation for the Sackler family members who own Purdue Pharma until Feb. 1 after another judge overturned the OxyContin maker’s bankruptcy settlement this month.
S&K Take: As expected, the stay of litigation against the Sacklers was extended so that the parties could consider a revised deal (everyone will recall that the Debtors had confirmed a plan providing for releases of claims against the Sacklers, which was recently upended on appeal). Connecticut and Washington had objected to the extension, arguing that negotiations might be more fruitful if litigation was allowed to progress. Judge Drain urged the parties to negotiate in good faith – if they failed to do so, he noted there would be “consequences.”
As legal fees grow beyond $7 million, Buffalo Diocese bankruptcy case heads to mediation | The Buffalo News
The Buffalo Diocese, which has racked up more than $7 million in legal and professional fees in nearly two years in bankruptcy court, will head into a new phase of its Chapter 11 reorganization.
S&K Take: The Buffalo Diocese cases are heading to mediation to the chagrin of some abuse survivors, who are frustrated with the time and cost that the process has already involved. That frustration is understandable, but it seems as though mediation is likely the best path forward given the complexity of the cases and the divergent interests of the debtors, survivors and insurers that might be on the hook.
Purdue, NRA and Boy Scouts: Bankruptcies that defined 2021 | Reuters
The second year of the COVID-19 pandemic didn’t bring as many corporate Chapter 11 bankruptcies as the first year, but that didn’t mean things were quiet in bankruptcy courts. Here are five cases that made big waves in 2021 with their unusual legal strategies, high-profile players, and overall unpredictability.
S&K Take: At long last, it is “year-in-review” season (have no fear, S&K’s year-in-review is in the works)! While 2021 was a slow year in the restructuring industry, the cases that filed certainly packed a significant punch. We have talked a lot about Purdue on this blog, the NRA case was an extraordinarily interesting ruling on case dismissal, and the Boy Scouts cases have had no shortage of drama.
N.Y. Beach Town Approves Tentative Deal to Stave Off Bankruptcy | Bloomberg
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The Long Beach, New York city council approved a tentative settlement on Tuesday evening with a real estate developer who was awarded a judgment this year now estimated to be worth nearly $150 million, that threatened the city with insolvency.
S&K Take: Long Beach, home to some of the finest restructuring professionals in the industry, needed to solve for a significant judgment which threatened the town’s solvency and appears to have succeeded through a settlement (which still requires approval of the city zoning board). The recent judgment of over $140 million came on the heels of some other financial issues, and post-judgment interest was accruing at an alarming rate ($1.1 million/month). The settlement cuts the obligation in half, and the payment will purportedly be funded by issuing general obligation bonds, carrying $5 million to $6 million in debt service a year. It appears immediate disaster has been averted, but future issues could still arise.
J&J Talc Claimants Say Company Is Hindering Case Investigation | Bloomberg
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A lawyer for claimants suing Johnson & Johnson over its baby powder wants a bankruptcy judge to force the pharma giant to produce requested information, saying it’s hindering efforts to investigate the case.
S&K Take: S&K Take: The LTL bankruptcy cases continue to be acrimonious. The latest dispute is related to discovery requested by the claimants committee (seemingly tied to information about future claims), which request was denied by the debtors. The claimants’ committee has indicated that they will seek a motion to compel production. Additionally, the committee has indicated it is taking the position that a hearing on the motion to appoint a future claims representative should be postponed until after the motion to dismiss the case as a bad faith filing is resolved.
