Category Archives: Bankruptcy

The CDC said Thursday that those who have been fully vaccinated against COVID-19 largely no longer need to wear masks or practice social distancing indoors. "If you are fully vaccinated, you can start doing the things that you had stopped doing because of the pandemic," CDC Director Rochelle Walensky said. The exceptions are where masks are "required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance," the CDC said. Masks are also still required during travel, and the CDC is advising they still be worn when going to doctors, hospitals, or long-term care facilities, as well as in prisons, jails, or homeless shelters. Unvaccinated people remain at risk and should still mask. But "we have all longed for this moment when we can get back to some sense of normalcy," Walensky said, and for vaccinated people, "that moment has come."

The rest is here:

5 things you need to know now - Federal judge dismisses NRA's bankruptcy case - The Week Magazine

Hertz, whose car-rental bands also include Dollar and Thrifty, lost almost all their revenue when travel shut down due to the coronavirus this year. Wochit

Hertz saw its business strengthen in the first quarter, as it put the gas pedal on efforts to exit bankruptcy.

On Friday, Estero-based Hertz Global Holdings parent of The HertzCorp. reported quarterly profits of $190 million, or $1.21 a diluted share.

That compared to losses of $356 million, or $2.50 a share, a year ago.

Adjusting for one-time expenses and gains, Hertz said it lost $52 million, or 33 cents a share.

Revenues totaled nearly $1.3 billion in the quarter ending March 31. That was down from but much closer to the $1.9 billion Hertz reported forthe same monthslast year whenthe financial blow from thepandemic hadonly justbegun to show up on its bottom line.

For comparison, the company had revenue of $2.1 billion in the first quarter of 2019.

Latest: Hertz deems competing bid for its reorganization plan 'superior'

In case you missed it: Judge makes milestone decisions in Hertz's bankruptcy case

Previously: Hertz switches gears, chooses new sponsors to emerge from bankruptcy in June

An aerial view of Hertz's global headquarters in Estero.(Photo: USA TODAY NETWORK - FLORIDA FILE PHOTO/Dorothy Edwards)

Hertz hasimproved upon its financial results from last year by cutting costs, so that they're better aligned with demand.

Over the past few months, Hertz's business has also improved markedly, as more Americans get vaccinated, making them more comfortable with travel, at least within the United States.

"This quarter we realized the first effects of the leisure travel rebound and capitalized on strong demand-driven pricing in destination markets that exceeded 2019 levels," saidPaul Stone,HertzGlobal's president and CEO, in a statement. "We're continuing to see improved demand and are optimistic about a sustained recovery."

Autoplay

Show Thumbnails

Show Captions

With that optimism, Hertz is working aggressively to replenish its fleet, "despite the constraints of the global semiconductor shortage and its impact on the automotive supply chain," Stone said.

"Most importantly, I'm exceptionally proud of our employees who are working tirelessly to serve our customers as they're ready to be on the road again," he said.

Hertzunloaded almost 200,000 carslast year as part of its bankruptcy deal with creditors.

In late March, the company completed the sale of its Donlen vehicle leasing and fleet management business to Athene Holding Ltd. for$891 millionin cash, putting it on a stronger financial footing to emerge from bankruptcy next month.

The company, Stone said, is "making great progress towards concluding the bankruptcy process" by June 31.

"We remain on track to emerge in June and are poised to do so with more efficient operations and a stronger balance sheet for the future," he said.

Need a rental car?You're not alone. Shortage starts to hit home, and everywhere else

Paul Stone, CEO of Hertz(Photo: Courtesy Hertz Global Holdings)

On Monday, Hertz held a closed-door auction to choose the best financial sponsors for its reorganization plan after a bidding war broke out for ownership of the new company a few weeks ago.

Two groups have been aggressively competing to fund the exit plan since mid-April.

Hertz had not yet announced the results from the auction by the newspaper's deadline Monday.

Last week, Stone said in a news release that he anticipates the exit plan will "deliver a robust recovery for creditors and shareholders" alike,no matter who backs it.

More than a month ago, Hertz's directors determineda trio of companies Centerbridge Partners L.P., Warburg Pincus LLC and Dundon Capital Partners LLC hadthe "highest and best" financial proposal, selecting it as the equity sponsorfor its reorganization plan.

Then came a competing offer at the 11th hour, just as Hertzsought court approval to move ahead with its chosen sponsors.

A customer looks to rent a car at Hertz.(Photo: The News-Press / file)

Hertz conducted another round of bidding to givethe alternativegroup what it described as a "full and fair opportunity to present their best proposal."

As a result, theunderdog a group made up of Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital ManagementLP emerged with a "superior" proposal.

Hertz confirmed itreceived the revised offer last Tuesday, then announced Wednesday that it "constitutes a superior proposal" to the one put forward by its chosen plan sponsors.

The current plan sponsorsnotified Hertz that they wanted to make a counteroffer, triggering the court-approved auction.

Hertz held the auction ina"virtual room," under the supervision of its attorneys.

The companyoriginally announced the competinggroupKnighthead Capital Management and Certares Opportunities LLC as itspotential equity sponsors. The group lost its strongholdafter its successors stepped forward with a more favorable plan in the eyes of Hertz and its creditors.

Hertz hasn't publicly shared any of the details of the competing plans, but some information has leaked out to the national news media.

Bloomberg reported that the competing plan Hertz deemed as superior last week "aims to fund the exit through a direct common stock investment of $2.9 billion, preferred stock worth $1.5 billion and a $1.36 billion rights offering."

Hertz is in a hurry to get out of bankruptcy, with a court hearing scheduled for May 14 for the judge toapprove its plan sponsors.

By the third quarter, Hertz anticipatesthe demand for its cars to be much stronger, as itusually surgeswith travelers seeking summergetaways, so it wants to be ready for that business.

The sooner Hertz can speed its way out ofbankruptcy the better because it's so costly and the company desperately needs cashto rebuild its fleet and remain competitive.

The lobby of the Hertz global headquarters in Estero.(Photo: The News-Press file photo)

Hertz fell into bankruptcy last May, a little more than two months after COVID-19 became a global pandemic, bringing the tourism and travel industry to a virtual halt.

Catch up: Hertz bankruptcy could leave potholes in Southwest Florida economy

At the time of its Chapter 11 filings, the company had racked upnearly $20 billion in debt.

In addition to its namesake brand, Hertz operates the DollarandThriftycar rental services.

In May 2013,Hertzannounced the relocation of its global headquarters from New Jersey to Estero,following the acquisition of the Dollar Thrifty Automotive Group.

The new multimillion-dollar headquarters opened in 2015.

Read or Share this story: https://www.news-press.com/story/money/companies/2021/05/10/hertz-nears-june-exit-chapter-11-bankruptcy-business-improves/4989600001/

Follow this link:

Hertz sees signs of turnaround as it approaches exit from bankruptcy - News-Press

National Rifle Association CEO Wayne LaPierre at the group's annual meeting in Dallas in May 2018. A secretive figure, LaPierre makes few public appearances outside of carefully scripted speeches. Daniel Acker/Bloomberg via Getty Images hide caption

National Rifle Association CEO Wayne LaPierre at the group's annual meeting in Dallas in May 2018. A secretive figure, LaPierre makes few public appearances outside of carefully scripted speeches.

Updated at 6:43 pm ET

A federal bankruptcy judge dismissed an effort by the National Rifle Association to declare bankruptcy on Tuesday, ruling that the gun rights group had not filed the case in good faith.

The ruling slams the door on the NRA's attempt to use bankruptcy laws to evade New York officials seeking to dissolve the organization. In his decision, the federal judge said that "using this bankruptcy case to address a regulatory enforcement problem" was not a permitted use of bankruptcy.

The bankruptcy trial had paused other legal challenges the NRA had been facing, but this decision returns the group to its confrontation with the New York attorney general, who is seeking to shut it down over alleged "fraud and abuse."

"The @NRA does not get to dictate if and where it will answer for its actions, and our case will continue in New York court," New York Attorney General Letitia James said in a tweet after the ruling. "We sued the NRA to put an end to its fraud and abuse, and now we will continue our work to hold the organization accountable."

During the trial, the NRA said it had enough money to pay its creditors. Instead, it declared bankruptcy for a tactical reason: to avoid the reach of the New York attorney general. Last year, the attorney general sought a court's approval to dissolve the NRA, alleging a wide variety of financial misconduct, chiefly by the NRA's top executive: CEO Wayne LaPierre.

In response to the judge's dismissal, the NRA said that it had taken steps to improve internal financial controls and would continue to pursue its gun rights mission.

"Although we are disappointed in some aspects of the decision, there is no change in the overall direction of our Association, its programs, or its Second Amendment advocacy," LaPierre said in a statement. "We remain an independent organization that can chart its own course... The NRA will keep fighting, as we've done for 150 years."

The NRA had argued during the case it was being persecuted for its political views. The group asked a federal bankruptcy judge to halt its other legal cases and allow it to reorganize in Texas, where it might be out of the reach of New York's attorney general.

"In the parlance of bankruptcy, we have a predatory lender who is seeking to foreclose on our assets," argued Greg Garman, an attorney representing the NRA.

But the monthlong trial had the side effect of putting into the public record details of personal spending by senior NRA officials. It also painted the picture of an organization in crisis, with some of the sharpest criticism coming from current or former organization insiders.

Testimony included examples of the nonprofit organization's tax-exempt funds being used for wedding expenses, private jet travel and exotic getaways. For example, LaPierre's private travel consultant, who was paid $26,000 a month to cater to him personally, testified about how LaPierre instructed her to alter travel invoices for private jets so as to hide their true destinations.

The trial also gave a rare look into the behavior of LaPierre, who has led the controversial organization for almost 30 years. A secretive figure, LaPierre makes few public appearances outside of carefully scripted speeches.

During questioning, he admitted to annual trips to the Bahamas, where he would stay on a luxury yacht belonging to an NRA vendor a conflict of interest he did not disclose at the time, which testimony and court proceedings showed was in contravention of NRA policy. Instead, he justified the Caribbean trips to the court as a "security retreat" that was necessary for his safety and that of his family members.

LaPierre appeared to irritate the judge overseeing the case repeatedly by rambling on, talking about his privileged conversations with his attorneys and not directly answering questions.

"I'm about to say something I've said for a day and a half now. Can you answer the questions that are asked?" the judge asked LaPierre at one point. "Do you understand that I've said that to you more than a dozen times over the last day?"

"Yes, sir, your honor. I'm sorry, I'm I'm doing my best," LaPierre responded.

The NRA claims it is financially sound, but investigations and litigation have hampered the group. Information provided during the trial indicated that in a span of less than three years, the organization had spent $72 million on its primary law firm alone. For context, the group took in $291 million in revenue in 2019, the most recent year for which there are public records available.

Since 2019, when infighting among NRA officials burst into public view with the dramatic resignation of its then-President Oliver North, the NRA has careened from crisis to crisis. A number of NRA board members have resigned in protest as tales of alleged executive misconduct have surfaced. The NRA severed its relationship with its key advertising firm, Ackerman McQueen, leading to costly lawsuits and the airing of yet more dirty laundry.

With the bankruptcy case dismissed, the NRA now returns to its prior state of vulnerability: fighting for its survival against a New York attorney general who seeks to shut the whole organization down.

Read more here:

NRA Bankruptcy Case Denied, Allowing New York Dissolution Case To Move Forward - NPR

Litigation funding has becoming increasingly common for general litigation matters, although its validity will still depend upon applicable state law. See generally Robert Miller, J.D., Annotation, Enforcement and Funding of Litigation Funding Agreements,72 ALR 6th 385 (2012). According to a recent posting by CNBC, there are roughly 40 entities involved in U.S. commercial litigation financing, with assets under management of $9.5 billion. Its increasing presence, however, has not yet carried into the bankruptcy arena, but two recent U.S. District Court decisions, on appeal from the rulings of two different bankruptcy courts, may change the legal landscape for this type of arrangement in bankruptcy cases.

Litigation funding refers to an arrangement whereby a lender provides funds to a plaintiff in planned or pending litigation, or to the plaintiff's attorney, in exchange for the right to receive an amount out of the proceeds of any realized settlement, judgment, award, or verdict that may be received in the civil lawsuit. In bankruptcy cases, common plaintiffs include the trustee, a debtor in possession or a creditors committee.

In Dean v. Seidel, Civil Action No. 3:20-CV-01834-X, 2021 WL 1541550 (N.D. Tex. Apr. 20, 2021), the United States District Court for the Northern District of Texas affirmed the bankruptcy courts approval of a litigation funding agreement under which a creditor of the bankruptcy estate agreed to advance up to $200,000 to the chapter 7 trustee for litigation fees to prosecute claims against third parties. Id. at *1. The agreement further provided that all recoveries from these claims would be used first to pay the trustees statutory commission and allowed expenses, second, to reimburse the advancing creditor, third, to pay it a 30% investment return, and finally, to distribute the balance to creditors.

The agreement in Seidel was challenged by the debtor as violating the priority scheme of section 507 of the Bankruptcy Code because it would allow one creditor to receive a disproportionate share of the litigation recoveries as compared to other similarly situated creditors and also as violating section 550 of the Bankruptcy Code on the theory that litigation recoveries must be for the benefit of the estate. Id. at *1. The district court did not consider those challenges persuasive, and in upholding the agreement, found it important that the trustee attempted but was unable to negotiate a contingency fee arrangement with attorneys who were approached about taking the case. Id. at *2.

Interestingly, the bankruptcy court had approved the arrangement as a term of retention of special counsel under sections 327 and 328 of the Bankruptcy Code, but remarked that it was a bit like a section 363 or 364 transaction. Id. The grounds for approval were not disturbed on appeal. Although the district court had some reservations about the litigation funding agreement, due to what it termed legitimate ethical concerns, and the lack of any supporting caselaw, it affirmed because it was not left with the definite and firm conviction that a mistake had been made, id., which is the clearly erroneous standard of review on appeal.

The approval of a litigation funding agreement in another bankruptcy case recently withstood challenge on appeal to a district court, but on standing grounds. In Valley National Bank v. Warren, Case No. 8:20-cv-1777-KKM, 2021 WL 1597960 (M.D. Fla. Apr. 23, 2021), the liquidating trustee in a chapter 11 case sought approval of a litigation funding agreement with a third-party whereby it would finance the fees and expense of litigating an adversary proceeding against Valley National Bank for aiding and abetting breach of fiduciary duty and for the avoidance and recovery of $3 million in fraudulent transfers. Based on a review of the proceedings, the funding agreement provided that the funder would pay the monthly fees and expenses of the liquidating trustees professionals and that from any litigation recovery, would first be reimbursed for those payments and then receive 85% of the recovery. The funder was also granted a first priority lien and security interest in the cause of action and other collateral.

The bankruptcy court approved the agreement as a financing under section 364 of the Bankruptcy Code, over the banks objection that the funders financial interests would impair the good faith efforts of the liquidating trustee in negotiating a settlement with the bank. Id. at *2. On appeal, the United States District Court for the Middle District of Florida held that the bank lacked Article III standing to appeal, as well appellate standing under the person aggrieved standard for bankruptcy appeals. Id. at *3-6. Essentially, the district court held that the bank could not establish a concrete injury that was not speculative or remote for Article III standing, and that the bank was not aggrieved because it was not directly and pecuniarily affected by the approval.

There have been other bankruptcy decisions that have approved of litigation funding arrangements on their merits, but not as a form of financing under 364 of the Bankruptcy Code. In Realan Investment Partners, LLLP v. Meininger (In re Land Resource, LLC), 505 B.R. 571 (M.D. Fla. 2014), the chapter 7 trustee entered into a litigation funding agreement with a surety that had issued bonds for the debtors benefit prior to the bankruptcy filings. Under the agreement, the surety agreed to fund up to $750,000 for the fees and costs of certain fraudulent transfer litigation brought by the chapter 7 trustee and, in exchange, was to receive a sliding scale percentage of the recovery proceeds after reimbursement of the amount funded. Id. at 576. The percentages started at 80% of the net recovery up $1 million and gradually declined to 35% of any net recovery in excess of $3 million. Id. The agreement was approved by the bankruptcy court as a settlement under Fed. R. Bankr. P. 9019, over the objection of the defendants in the fraudulent transfer action, and its approval was affirmed on appeal on that basis. Id. at 587.

In affirming the bankruptcy court, the district court found most important the testimony of the chapter 7 trustees counsel that the litigation could not continue without the funding, while adding its recognition that the real reason for the objection and appeal by the defendants was for them to be free of the litigation. Id. at 587. The district court also rejected arguments that the agreement should have been reviewed under the standard for a sale of assets under 363 of the Bankruptcy Code or as a financing under 364 of the Bankruptcy Code.

In In re Ashford Hotels, Ltd., 226 B.R. 797, appeal dismissed 235 B.R. 734 (S.D.N.Y. 1999), the bankruptcy court approved a litigation funding agreement between a chapter 7 trustee and Allied Irish Bank (AIB), a major creditor of the estate, whereby AIB would pay $25,000 toward administrative expenses of the estate and fund the fees necessary for the trustee to defend an action against the debtor which sought to nullify an indemnity agreement in its favor. Id. at 800-01. The indemnity agreement, if enforceable, would require the indemnitors to pay AIBs outstanding loan to the debtor, and would allow for a successful recovery on the indemnity in a related action before Englands High Court. Id. In the event of a recovery, AIB would remit to the trustee the lesser of $500,000 or five percent of the net recovery. Id. at 801.

The agreement was presented, analyzed and approved as a settlement under Fed. R. Bankr. P. 9019, which, at bottom, requires approval if the settlement does not fall below the lowest point in the range of reasonableness. Id. at 804. The bankruptcy court had no trouble finding that the agreement met that standard, even though the parties who sought recission of the indemnity agreement offered $50,000 to the estate to drop the litigations defense. The court reasoned that it was the trustees decision that was being reviewed and that it met the standard for approval of a settlement under Rule 9019 particularly since it allowed for a potential future recovery of additional monies for the estate, whereas the indemnitors offer close[d] the door to future recoveries. Id. at 804.

The decision in In re 8 West 58th Street Hospitality, LLC Case No. 14-11524, 2017 WL 3575856 (Bankr. S.D.N.Y. Aug. 4, 2017) involved an unusual arrangement whereby the landlord of the chapter 11 debtors place of business agreed to fund litigation against a party that had defaulted on its obligations to take an assignment of the debtors under-market lease of the premises, which had been approved by the court on the debtors motion for assumption and assignment of the lease. Under the agreement, if the action against the assignee for surrender of the lease was successful, the landlord would buy the lease from the debtor for $1,250,000, and if the action was unsuccessful, the debtor and its principals would assign their claims against the assignee of the lease, which included a contempt proceeding, to the landlord for $1 million. Id. at *2.

The court approved the agreement as a transaction outside the ordinary course of business under section 363(b) of the Bankruptcy Code, which employs a business judgment standard, id. at *3, after it was clarified that the landlord would not have veto power over any settlement or other disposition of the litigation. Id. at *5. The court also rejected the argument that the agreement should be analyzed as a financing transaction under section 364 of the Bankruptcy Code, citing Ashford, as well as the argument that receiving fees from a third party would present a conflict for debtors counsel. Id. at *6-7.

As can be seen, litigation funding agreements for bankruptcy litigation have not received uniform analysis in bankruptcy cases, but they have been approved on various grounds. Given the more limited resources that are commonly found in bankruptcy cases, and as bankruptcy decisions approving these types of agreements become more widely known, it can be reasonably expected that they will be used more frequently as the litigation funding business continues to expand.

[View source.]

Read more from the original source:

Litigation Funding for Bankruptcy Litigation Gets a Boost from Recent Appellate Decisions - JD Supra

(Image via iStock)

Former Simpson Thacher attorney turned founder of the $1 billion Marble Ridge Capital LP fund, Daniel Kamensky, was sentenced to time in prison after pleading guilty to bankruptcy fraud. U.S. District Judge Denise L. Cote gave him a six-month sentence after Kamensky admitted to pressuring Jefferies Financial Group to not place bids for assets being sold by Neiman Marcus in insolvency proceedings.

As reported by Law360, Judge Cote said Kamensky was a good man but his behavior was deeply disturbing. In sentencing, she also pointed to Kamenskys attempt at covering up his actions:

The judge also credited Kamenskys explanation that his conduct in pressuring Jefferies not to bid for the retailers MyTheresa e-commerce assets and later asking for his contacts there to lie was a panic move.

He came undone. He tried to control what he could not control and in doing so he betrayed his profession, the judge said. He tried to get another person to lie for him. He tried to obstruct justice.

Kamensky apologized to the court and his family for his behavior:

There is no excuse for my behavior and I am deeply regretful and embarrassed for my conduct, he said. I was aware other bidders were going to come in. Whatever triggered my reaction, I will never know. It doesnt excuse my conduct what I did was wrong.

Kamensky will surrender to custody by June 18th.

Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email herwith any tips, questions, or comments and follow her on Twitter (@Kathryn1).

The rest is here:

Former Biglaw Attorney Headed To Prison For Bankruptcy Fraud - Above the Law

The Chief Economist of the Bank of England, Andy Haldane, listens from the audience at an event at the Bank of England in the City of London, London, Britain April 27, 2018. REUTERS/Toby Melville

The Bank of England does not expect to see a wave of bankruptcies among British firms when the government ends its coronavirus emergency support for the economy, BoE Chief Economist Andy Haldane said on Friday.

Many debts racked up recently by companies are spread over long durations "which increases the chances of them being able to be paid back and therefore bankruptcy is not picking up very much from current relatively subdued levels," Haldane said.

"But ultimately there are risks around that and we'll need to track them through," he said in a presentation to businesses, a day after the BoE sharply raised its forecasts for British economic growth in 2021.

Data published last week showed company insolvencies in England and Wales fell to their lowest level in more than 30 years in early 2021 as the government's support helped businesses to ward off bankruptcy.

Haldane also said there were "significant risks" that inflation could come in either above or below the BoE's latest forecasts. These predict inflation will be close to its 2% target in two to three years' time, after an initial overshoot as the economy recovers from the pandemic.

"Currently we see those (risks) as being broadly symmetric, but they're big on both sides and there's no escaping that given where we are economically right now," Haldane said.

BoE Deputy Governor Ben Broadbent, speaking alongside Haldane, said policymakers were less likely to loosen policy than they thought three months ago.

"The bias toward easing that we might have had is less pronounced," he said.

Broadbent highlighted a change in the BoE Monetary Policy Committee minutes, which on Thursday stated: "The MPC would continue to monitor the situation closely and would take whatever action was necessary to achieve its remit."

In March that passage had read: "If the outlook for inflation weakened, the Committee stood ready to take whatever additional action was necessary to achieve its remit."

That gives you an idea of how some of the downside risks - although they are still there - have diminished, Broadbent said.

Our Standards: The Thomson Reuters Trust Principles.

View post:

Bank of England does not see COVID bankruptcy wave - Haldane - Reuters UK

That cant be allowed to happen. Bankruptcy judges should heed the formal objections filed by Massachusetts Attorney General Maura Healey and dozens of other state officials seeking to stop the family, which is not party to the companys bankruptcy proceedings, from shielding the majority of their fortunes from it in exchange for a $4 billion payment and forfeiture of company control.

The move, using an obscure legal device called a nonconsensual third-party release, would essentially strip state and local officials from the policing power they ought to possess to hold those responsible for the crisis responsible and fail to adequately compensate all those who have been harmed, according to a brief filed last week by Healey and other officials.

And beyond that, Congress must act to close this virtual escape hatch for wrongdoers to use company bankruptcy proceedings to escape individual personal liability.

A bevy of lawsuits accuse the Sacklers, the family that founded and controlled Purdue, and in particular Dr. Richard Sackler, of aggressively promoting and marketing OxyContin for years to increase the drugs use and maximize profit while misleading doctors and patients about the drugs addictiveness. They did this while seeking to shield their own family name well known in the world of philanthropy from the taint of scandal. Since their actions came to light, in part due to the efforts of the Globes sister publication STAT, museums from the Louvre in Paris to the Smithsonian Institutions in Washington have dropped the Sackler name. Tufts University has also dropped the name from its programs and buildings, including the medical school.

The company has also been in the crosshairs of federal and state officials, who accuse it of accelerated payments to members of the Sackler family after it was fined for its role in the opioid crisis. Between 2007 and 2017, based on the companys own court filings, the family was paid nearly $11 billion, compared to just $1.3 billion from 1995 to 2007. Healey called that disclosure the very definition of ill-gotten gains.

Yet, despite their own admitted guilt, state officials claim in their brief, filed in a New York bankruptcy court Friday, the company and other debtors seek to cram down an unconfirmable plan that, among other things, would absolve [the Sacklers] in exchange for the stretched-out payment of only a tiny fraction of their independent liability, unlawful gains, and current wealth, over the objection of Attorneys General from 24 States and the District of Columbia, representing 53% of the U.S. population.

Bankruptcy judges have wide discretion in approving proposed settlements, but in this case, the interest of justice requires that there be the possibility of holding family members responsible if they misled those seeking relief from chronic pain, sending millions of them down a painful and dangerous path of addiction. Doing otherwise runs contrary to the principles of fairness and equity by which all judges are bound.

And Congress should act to ensure that state attorneys general never again have to rely on the individual judges to guard against this misuse of bankruptcy courts. Legislation introduced by Representative Carolyn Maloney, Democrat of New York, and whose cosponsors include Massachusetts Representatives Katherine Clark, Ayanna Pressley, Stephen Lynch, and Jim McGovern, called the Stop Shielding Assets from Corporate Known Liability by Eliminating Non-Debtor Releases (SACKLER) Act, would close the loophole the Sacklers seek to exploit.

If the Sacklers deal is finalized something that could happen as soon as this month if the states objection is dismissed it would set a dangerous precedent that protects the wealth of wrongdoers so long as their companies go bankrupt. Thats a legacy that the courts and Congress must avoid.

Correction: A previous version of this article misstated that Richard Sackler was the founder of Purdue Pharma, instead of a member of the family that founded and controlled the company. It also misidentified whom the state officials claimed admitted guilt; it was the company and its debtors, not the Sackler family.

Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.

Here is the original post:

Bankruptcy judges and Congress must close the Sackler loophole - The Boston Globe

Steven Church:

That's precisely what the argument was on the side of the New York attorney general and their allies who were arguing with them.

The NRA is making the claim that, even though they have plenty of money, this lawsuit is an existential threat to their existence, because one of the things that could happen is that the judge a judge in New York, if they side with the New York attorney general, could dissolve the NRA, and all of the NRA assets, which amounts to tens of millions of dollars, could be given away to other similar type nonprofits.

So they argued, because that's a threat, because that's a possibility, they should be allowed to file bankruptcy, even though they have plenty of cash, they're solvent, they're paying their bills on time, and it doesn't look like they face any immediate threats.

Visit link:

Is the NRA's bankruptcy filing a way to escape regulation? - PBS NewsHour

When Covid-19 first plunged Europe into lockdown last spring, there were plausible predictions of a tidal wave of corporate insolvencies. Thathasnt happened, at least not yet.

The number of companies declaring bankruptcy declined by about a fifth in the euro area last year, even as economic output contracted more than 6%. Firms were saved by overwhelming government support,including hundreds of billions of euros of public loan guarantees, wage subsidies and loan forbearance by banks. Rules were relaxed on when businesses must file for insolvency.

European bankruptcies are being artificially suppressed

Source: Eurostat

The big question is whether Europe has merely delayed the inevitable by propping up financially distressed enterprises (unkindlydubbed zombies by economists), or whether resurgent demand and accelerating vaccination rates can keep the bankruptcy wave at bay. Theres been more groundfor optimism recently but many company failures stilllookunavoidable.

Leaving aside high-profile implosions, like the ones at budget airline Norwegian Air Shuttle ASA, Topshop owner Arcadia Group and fraudulent fintech Wirecard AG, the recent insolvency trend has been the opposite of what usually happens in a recession.

Bankruptcies soared during the last crisis. This time they fell

Source: Coface

Compared with the U.S., where large companies such as car-rental giant Hertz Global Holdings Inc. and telecoms provider Frontier Communications Corp.had to file for Chapter 11 bankruptcy, some European countries have beenespecially forgiving. Germany recorded the smallest number of corporate insolvencies since at least 1999;English and French bankruptciesare the lowest in more than 30 years.

More from

With big parts of the economy left relatively unscathed by the pandemic, interest rates still at rock bottom, consumers ready to spend their pandemic savings and Europes 750 billion-euro ($900 billion) Covid recovery fund poised to start disbursements, its tempting to think the worst is over.

Policy makers, though, shouldnt consider the low number of insolvency filings in Europe as a sign of corporate health,the European Systemic Risk Board which oversees the continents financial system has warned.It noted that in a worst-case scenario the current calm might be the sea retreating before a tsunami.

Because of government loan guarantees, business failureswould also further damage public finances. Thats one reason Frances President Emmanuel Macron and other leaders are in a hurry to relax lockdown restrictions. Every day of lost revenues deepens the hole from which companies must climb.

Genuine zombie businesses those that were financially distressed before the pandemic but were able to avoid filing for creditor protection last year will, however, remain in that hole. Many insolvencies have been postponed rather than prevented, notes French credit insurer Coface SA. Euler Hermes, another credit insurer, expects global insolvencies to be 13% higher in 2021 than in 2019. In 2022 it expects insolvencies will be 27% higher than in 2019.

Given the circumstances, that would be a decent outcome. Even once-healthy companies are burdened with huge borrowings and reopening for business brings new risks.After a long hibernation firms have to rebuild inventory and rehire staff, potentially sinking them further into debt.The travel and hospitality industries face the biggest difficulties, which bodes ill for southern Europe where they account for a bigger share of output and governments have less fiscal firepower. Spain and Italy may see more insolvencies than Germany.

A tricky dance is now underway in which governments and lenders try to wean companies off financial support while separating businesses with sound long-term prospectsfrom the no hopers. Telling one from other isnt easy.

After a long hiatus Germany says over-indebted businesses should file promptly for insolvency. A German government backstop for the credit insurance that underpins vital trade expires next month.

And yet, with national elections looming in Germany and France and governments everywhere under pressure over their handling of the pandemic, theres a strong temptation to keep the cash spigot open. Look at how Paris has showered money on Air France-KLM. Britains small businesses have been given up to 10 years to repay so-called Bounce Backloans. Much of the 47billion pounds ($65billion) theyve borrowed will probably never be recouped.

Its no wonder European banks are sounding more sanguine about commercial lending. Lloyds Banking Group Plc and HSBC Holdings Plc have unwound some bad-loan provisions, while Austrias Erste Group Bank AG says the vast majority of customers resumed loan payments without delay.Even if this confidence turns out to be misplaced, the financesector is better capitalized now than before the last recession. Shareholders are more upbeat, too: The Euro Stoxx banks index has gained 23% this year.

Free-market acolytes will say Europes decision to prop up zombies has already done lasting damage by preventing labor and capital from shifting to more dynamic businesses. Creative destruction is essential to capitalism, they say. Productivity will suffer.

Thats too crude. While massive government intervention is often targeted poorly, it has preventedthe collapse of healthy businesses. Employees kept their jobs and banks were able to keep extending credit. Europes recession was brutal but it could have been much worse.

A year ago no lender or government could judge reasonably which companies prospects had been permanently impaired. By the summer they should have a much better idea. Some hard decisions await.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:Chris Bryant at cbryant32@bloomberg.net

To contact the editor responsible for this story:James Boxell at jboxell@bloomberg.net

Before it's here, it's on the Bloomberg Terminal.

Continue reading here:

We Can't Hold Off the Bankruptcy Wave Forever - Bloomberg

The Henry Ford Village: Senior Living Community on Thursday, Jan. 14, 2021, in Dearborn. (Photo: Antranik Tavitian, Detroit Free Press)

A New York firm has won an auction to buy the1,038-unitHenry Ford Village retirement community in Dearborn out of bankruptcy and intends to paya portion of current residents' refundable entrance fee deposits that bankruptcy had put at risk.

The village announced Thursday thatSage Healthcare Partners won the auction with a$76.3 million bid, beating a $69 million offer fromMED Healthcare Partners, the only other bidder.

The deal is still subject to U.S. Bankruptcy Court approvaland is scheduled for a May 24 hearing. Sage plans to continue operating the village, but will convert it to a "rental only" residential model and stop theentrance fee deposits.

Henry Ford Village,15101 Ford Road nearthe birthplace of Henry Ford,declared Chapter 11 bankruptcy Oct. 28, citing asits biggest financial challenge the liability associated with the entrance fee deposits, which range from $27,500 to $356,000andcan be refundable when a residentmoves out or dies.

The deposits were supposed to be 100% refundable and totaled more than $112 million for current residents, as well as some former residents and their heirs who are still waiting to get deposits back.

But the village struggled inrecent years to make good onthe refunds because its occupancy ratehasslumped especially during the COVID-19 pandemic and it dependedonnew deposits from incoming residents to pay out those of former residents.

More: Henry Ford Village bankruptcy puts seniors' deposits at risk. Here's why they are worried

The proposedSage deal doesnot give formerresidents or former residents' heirsany deposit refunds.

Instead, theywould betreated as unsecured creditors in the village's ongoing bankruptcy case, and may eventuallyreceive some compensation for their unrefundeddeposits.

The Henry Ford Village: Senior Living Community on Thursday, Jan. 14, 2021, in Dearborn. (Photo: Antranik Tavitian, Detroit Free Press)

The deal would allow current residents to become eligible to get a percentage of their entrance feedeposits back after specific anniversariesof the Sage sale's future closing date. These refunds would be triggered oncethey exit the village:

Sage Healthcare Partners was started in 2014 and says it owns 13 properties such as Henry Ford Villagethat are known as continuing care retirement communities. Henry Ford Village isthe largest such community in the country and employed a staff of more than 500.

Chad Shandler, Henry Ford Villages chief restructuring officer, was not available for an interview Thursday, but issued a statement announcingthe auction results.

"Were confident thatSage, as the winning bidder, considers the long-term best interests of our residents, employeesand allthe wonderful people that make Henry Ford Village a true community, Shandler, also a New York-basedexecutive with FTI Consulting,said in the statement.

He continued, Throughout the sale process, our guiding focus was to identify a path forward that upheld Henry Ford Village's values and stabilized its financial position while allowing us to maintain the care and lifestyle our residents have come to know, love andrely on. Under Sages ownership, we believe HFV will achieve just that while providing a distribution to unsecured creditors.

Sage's PresidentAvi Satt said in a statement that his company looksforward to strengthening HFV

financially while enhancing the lifestyle residents have come to love."

Contact JC Reindlat 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter@jcreindl. Read more on business and sign up for our business newsletter.

Read or Share this story: https://www.freep.com/story/money/business/michigan/2021/05/06/sage-healthcare-partners-buys-henry-ford-village/4979370001/

View post:

New York firm wins auction to buy Henry Ford Village out of bankruptcy - Detroit Free Press