Per Law360, a Delaware bankruptcy judge ruled that Art Van Furniture did not violate the Worker Adjustment and Retraining Notification (“WARN”) Act, which requires large employers to provide least 60 days’ notice to workers before mass layoffs, when Art Van laid off 700 workers when COVID-19 shutdown orders were in effect. The

Bloomberg reports that Puerto Rico ended its five-year bankruptcy this week by restructuring $22 billion of debt. This was accomplished through a bond transaction in which certain investors exchanged their prepetition debt securities for new general obligations. The exchange reduced Puerto Rico’s funded debt to approximately $7 billion and dedicated $1.4 billion for public employees’

Reuters reports that Mahwah Bergen Retail Group – the former owner of the Ann Taylor retail clothing brand – obtained bankruptcy court approval of its revised reorganization plan, from which certain non-debtor releases were removed.  The revised plan comes after the U.S. District Court for the Eastern District of Virginia held that the non-debtor releases

As reported by Bloomberg, hearings began on Monday to decide whether to dismiss Johnson & Johnson’s District of New Jersey bankruptcy case. Employing the so-called “Texas Two-Step” strategy, J&J used Texas law to create the subsidiary LTL Management to hold its talc-related liabilities. LTL then filed for bankruptcy, with a pledge from J&J to

Mayer Brown partners Adam C. Paul, Sean T. Scott, Louis S. Chiappetta, Aaron Gavant, and Tyler R. Ferguson recently published an article for Mayer Brown’s Perspectives & Events portal on the December 16, 2021, decision in which Judge Colleen McMahon of the US District Court for the Southern District of New York reversed the bankruptcy

Reuters reports that a district court judge has deferred to the bankruptcy court on whether Johnson & Johnson is entitled to the continuing protection of the Bankruptcy Code’s automatic stay from mass tort lawsuits that it would otherwise face relating to its talc products while its subsidiary, LTL Management, proceeds through bankruptcy.  A committee of

The Bankruptcy Court for the Southern District of New York (the “SDNY”) has been a longstanding epicenter of Chapter 11 filings. Historically seen as one of the more pro-debtor forums in the country, large companies often filed in the SDNY to take advantage of that stance. Some debtors appear to have attempted to direct their cases to specific judges within the district who were seen as particularly pro-debtor. One recent example was the bankruptcy filing by OxyContin producer, Purdue Pharma. Facing a historic indictment by the Department of Justice, along with mounting tort claims relating to the marketing of its drugs, Purdue—a company headquartered in Connecticut—changed the mailing address of one of its units from Albany to White Plains six months before filing for bankruptcy.[1] As a result, Purdue was able to file its petition in the bankruptcy court in Westchester (within the Southern District) so that it could be heard by Judge Robert Drain, a longtime judge with extensive experience over cases for large-chapter 11 debtors and the only commercial bankruptcy judge in Westchester.[2] Purdue rationalized its decision by stating that “White Plains is about 15 miles from our corporate headquarters and is the closest federal Bankruptcy courthouse,” yet many took issue with this supposed rationale.[3] Purdue was also not an isolated case. Nationwide, a subset of three judges (including Judge Drain)—out of the total three hundred and seventy-five bankruptcy court judges—heard 57% of all large public company Chapter 11 filings in 2020.[4]

Continue Reading Attempting to Close the Shops: New York and Virginia Adopt Random Case Assignment to Discourage Forum Shopping

Recapping 2021, Bloomberg reported that last year saw the fewest annual bankruptcy filings in nearly four decades, falling 24% from 2020. A total of 3,596 chapter 11 cases were filed in 2021, about 3,000 fewer than the year before. The stimulus funds and easy access to liquidity combined with debt forbearance were pointed as the

Fox Business reports that Boy Scouts of America’s insurer Chubb Ltd. has pledged to contribute $800 million to the Boy Scouts of America’s bankruptcy settlement deal. Boy Scouts of America, which filed for bankruptcy in February 2020, is currently on track to settle with approximately 82,500 tort claimants who claim they were sexually abused as children by troop leaders. The latest contribution by Chubb raises the total amount of available funds to resolve the claims to more than $2.7 billion. The fund is also backed by Boy Scouts of America’s primary insurer, the Hartford Financial Group, as well as the Church of Jesus Christ of Latter-day Saints. Ultimately, Boy Scouts of America’s emergence from Chapter 11 hinges on a settlement with tort claimants, and, while several victims have voiced support for the settlement deal, a separate committee of claimants voiced concerns that the deal compromises too much in exchange for a quick exit. The abuse claimants have until December 28th to vote on the reorganization. [Fox Business; Dec. 13, 2021]

Continue Reading What We’re Reading This Week [December 16, 2021]

The Economist discusses how the Omicron variant has exacerbated potential threats to the world economy, including that tightening of domestic and global travel restrictions in response to Omicron will harm growth, that the variant will cause further supply chain bottlenecks that may result in inflation heading even higher, and that the variant may cause a