Bloomberg reported that USA Gymnastics asked the Southern District of Indiana Bankruptcy Court to enforce the automatic stay and enjoin litigation filed by four plaintiffs seeking to hold the US Olympic & Paralympic Committee (USOPC) liable for sexual abuse committed by convicted child sexual predator Larry Nassar. USA Gymnastics said allowing the litigation to proceed
The Wall Street Journal reported that the wave of cash raised by special-purpose acquisition companies (SPACs) is fueling activity in the junk debt market at levels not seen since the dot.com-boom from two decades ago. So far this year, SPACs have issued roughly $100 billion of stock to purchase private companies and take them public,
On Friday, March 19, 2021, Congressional lawmakers introduced a bill that would amend the U.S. Bankruptcy Code to prohibit bankruptcy judges from permanently enjoining or releasing legal claims of states, tribes, municipalities or the U.S. government against non-debtors.
According to media reports, the bill, which is named the “SACKLER Act,” (i.e., the “Stop Shielding Assets from Corporate Known Liability by Eliminating Non-Debtor Releases Act”) is specifically designed to prevent members of the Sackler family, who own OxyContin-maker Purdue Pharma LP, from using the bankruptcy process to obtain legal releases from government lawsuits. Purdue Pharma LP filed for bankruptcy in September 2019, but none of the members of the Sackler family have filed for bankruptcy as individuals. Nevertheless, the Sacklers have offered to contribute roughly $4.28 billion as part of a proposed bankruptcy plan to fund payouts to victims who suffered injuries linked to Purdue Pharma’s opioids over the next decade in exchange for legal releases that would enjoin claims against the Sackler family. If approved, those legal releases would shield the Sackler family from further liability related to the opioid crisis, something that many state attorneys general have ardently opposed.
Continue Reading Wither Non-Debtor Releases? Purdue Pharma and the Proposed SACKLER Act
On March 10, 2021, the parent company of sports club and gym-operator Town Sports International, LLC, filed a motion seeking to set aside a purported $250,000 settlement agreement between Town Sports and the New York Attorney General arguing that the agreement (1) was barred by the terms of Town Sports’ confirmed chapter 11 plan and (2) in any case, not authorized by Town Sports but instead only by one of its prior attorneys.
As noted in our prior post on the case, Town Sports has been embroiled in litigation with the New York Attorney General since September 2020, when the attorney general’s office filed a lawsuit against Town Sports arguing that it improperly failed to honor certain of its members’ cancellation requests, and instead continued to assess monthly membership fees, during the disruptions caused by the COVID-19 pandemic and related government shutdown orders. The parties appeared to have settled their lawsuit on March 4, 2021, when a New York state court
Continue Reading Settled or Not? Town Sports Challenges Settlement it Purportedly Entered into with New York Attorney General
Perhaps not unexpectedly, on February 25, 2021, a New York bankruptcy court dismissed the involuntary bankruptcy petition brought earlier in the month by three student loan borrowers against Navient Solutions (see our prior post on the borrowers’ petition here). Navient is the student loan servicing arm of Navient Corporation, one of the world’s largest student loan-originators.
Continue Reading Navient Case Dismissed Confirming High Bar to Involuntary Bankruptcy Petitions
On February 8, 2021, three student loan borrowers filed an involuntary petition against Navient Solutions LLC in New York bankruptcy court seeking to force Navient into bankruptcy.[1] Navient Solutions is the loan servicing arm of Navient Corporation, a student loan originator which manages approximately $300 billion in student loan debt for more than 12 million borrowers. Involuntary petitions like the one instituted by the borrowers here are somewhat rare, at least in the case of larger companies like Navient, and the Bankruptcy Code provides special procedural rules, discussed below, which are designed in part to protect against potential abuses.
Continue Reading Navient Solutions & The High Bar to Involuntary Bankruptcy Petitions
In a post for Appellate.net, Restructuring partner Aaron Gavant and associate Samuel Rabuck and Supreme Court & Appellate partner Nicole A. Saharsky summarize the Supreme Court’s recent decision in Chicago v. Fulton.
Reporting from S&P Global shows that from January 1, 2020 through December 13, 2020, there were 610 commercial bankruptcy filings by public and private entities with at least $2 million in reported assets or liabilities at the time of the bankruptcy filing. Entities in the consumer discretionary, industrial, energy, and healthcare industries made up over
The Wall Street Journal reports on the growth of dividend recapitalization transactions during the COVID-19 pandemic by private equity controlled companies. That growth stands in contrast to prior economic downturns. [WSJ; Dec 17, 2020]
Reporting from Yahoo Finance addresses the growing control that investment firms and hedge funds exert over commercial restructuring efforts as a
In a new opinion issued in the Chuck E. Cheese bankruptcy cases, In re CEC Entertainment, Inc., Case No. 20-33163 (Bankr. S.D. Tex.),1 Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas ruled2 that CEC Entertainment, Inc. (“CEC”), the parent company of the Chuck E. Cheese pizza chain, could not defer its rent obligations due to ongoing COVID-19 disruptions beyond the initial 60-day period authorized by section 365(d)(3) of the Bankruptcy Code. While CEC had initially sought rent relief with respect to dozens of its store locations, it was able to settle with the landlords for all but six locations in North Carolina, Washington, and California; the non-settling landlords continued to insist that CEC was required to pay rent despite the global pandemic and CEC’s bankruptcy filing. In its December 14, 2020 opinion, the court agreed with these landlords and rejected each of CEC’s arguments for its proposed relief, including that: (1) sections 105 and 365 of the Bankruptcy Code authorized the Bankruptcy Court to suspend CEC’s rent obligations beyond the 60-day period included in Section 365(d)(3); (2) the COVID-19 pandemic—and related restrictions put in place by state and local governments—constituted a force majeure event under each of the six leases at issue; and (3) CEC’s inability to fully utilize the leased premises as a result of state and local restrictions on indoor dining and entertainment entitled CED to a “frustration of purpose” defense with respect to each lease.
Continue Reading Opinion of Interest – In re CEC Entertainment Inc.: COVID Disruptions Do Not Justify Additional Rent Deferrals Beyond Initial 60-Day Period Expressly Permitted by Bankruptcy Code