Below is our quick take on recent bankruptcy-related developments:
Following the Purdue Pharma bankruptcy case, under a new rule going into effect Dec. 1, the SDNY will randomly assign judges to Chapter 11 cases worth at least $100 million, regardless of the courthouse a case is initially filed.
S&K Take: The Bankruptcy Court for the Southern District of New York will implement a new rule that will see judges in the district randomly assigned to cases. This appears to be a direct response to recent outcries about forum shopping, with many pointing fingers at White Plains, NY. If a debtor filed in that jurisdiction, they would, for a time, be certain of drawing Judge Drain, who oversaw the Purdue cases. Venue reform proponents called this blatant forum shopping.
Elizabeth Warren, Bernie Sanders: Equity Firms ‘Made Off Like Bandits’ While Striking Alabama Coal Miners Struggle | AL.com
Three U.S. senators sent a letter to Apollo Global Management and Blackstone, the previous owners of Warrior Met Coal, alleging the firms made decisions that led to pay and benefit challenges for the minors.
S&K Take: Sens. Warren, Sanders and Baldwin are apparently seeking information from Apollo and Blackstone in connection with their investments in Warrior Met Coal. Warrior has had significant labor issues over the last several months, while the company’s private equity sponsors have taken dividends from the company in recent years. It appears the Senators are looking to make this case a poster child for the Stop Wall Street Looting Act, which they all support and which would put significant limitations on the rights of private equity sponsors. Stay tuned.
The talc claimants committee, the group suing Johnson & Johnson for asbestos-tainted talcum powder, plan to file a motion to dismiss the bankruptcy of J&J’s spinoff developed to hold the companies liabilities.
S&K Take: The first page in the New Jersey chapter of the J&J cases is being written, with the tort claimants committee stating that they intend to seek to dismiss the case. The Debtors have stated that they intend to seek to mediate disputes, with Judge Kaplan stating that he is an advocate of mediation. Seems likely that a motion to dismiss would be decided before or concurrently with a request to send the parties to mediation.
Closing arguments in Puerto Rico’s bankruptcy case closed this week, however, the judge overseeing the case will give the U.S. Department of Justice a chance to weigh in on the proceedings, which will likely push the judge’s decision in 2022, extending the already-lengthy restructuring.
S&K Take: It appears as though the PR cases will spill into 2022, although they could be resolved early in the year. We will keep an eye on the DOJ issues.