Below is our initial take on recent bankruptcy-related developments:
Juul Labs Inc. has begun discussions with lenders for financing that could assist the company through a potential Chapter 11 bankruptcy. Since June, Juul has been working with legal advisers to understand their options as disputes with the FDA intensified over whether Juul’s vaping products can remain on the market in the U.S.
S&K Take: Juul faces an FDA ban as well as mounting litigation regarding its marketing practices. Depending on the outcome of the FDA appeal, it could be an open question about whether this is a restructuring or a litigation. Altria (think Marlboro cigarettes) has already thrown up its hands and walked away from this one. This is a situation we will be watching closely to see how things evolve.
According to new court records, three of Celsius’ top executives, including its former CEO and CSO, withdrew upwards of $42 million in cryptocurrency from custody accounts right before the crypto lender suspended withdrawals and filed for bankruptcy.
S&K Take: The Celsius situation seems to be moving forward at a much more rapid clip in the past weeks. Mashinsky resigned, and now a $10 million withdrawal on the eve of the trading freeze is revealed. An examiner is also now in place, and the examiner’s report will be eagerly anticipated. On top of that, a sale process looms. A lot of moving pieces for sure. Hopefully the ultimate outcome is a material recovery for Celsius customers that are short a significant amount of crypto.
A U.S. bankruptcy judge said the talc litigation against J&J must pause in New Mexico and Mississippi until an appellate court reviews whether J&J can use their bankrupt subsidiary to resolve claims against them.
S&K Take: Judge Kaplan paused lawsuits filed by New Mexico and Mississippi against J&J while we all wait on a decision from the Third Circuit regarding the viability of the “Texas Two-Step” bankruptcy that J&J is implementing. That decision will be massive, and could moot the stay of the state lawsuits. Unclear when the Third Circuit will rule, but the entire restructuring industry certainly waits with bated breath.
Pipeline Health System, which operates hospitals and clinics for individuals on government insurance programs, filed for bankruptcy with plans to auction itself in pieces or hand control to lenders.
S&K Take: The wave of healthcare related restructurings continues. Pipeline serves communities in need of healthcare, so a speedy bankruptcy is paramount. The debtors have proffered a toggle plan that would see the first lien lenders equitize their debt or a sale of the debtors’ assets.
