Bankruptcy System Faces Gov't Backlash

Seward & Kissel LLP

Key bankruptcy issues, including the propriety of third-party releases and the so-called "Texas Two-Step," as well as determination of proper case venue, have recently drawn the attention of mainstream media, the public at large and, consequently, Congress. These issues have largely been thrust into the public eye by two high-profile and emotionally charged cases, namely Purdue Pharma and Johnson & Johnson affiliate, LTL Management LLC. There has been a bevy of related activity, which has not been easy to keep track of - a number of highly influential bankruptcy court decisions have been rendered and bankruptcy court policies changed. The related public scrutiny has also driven the desire of Congress to act to curtail what they view as abuse of the bankruptcy system. To that end, certain members of Congress have proposed legislation aimed at resolving these perceived problems, which legislation remains outstanding.

Originally Published in Turnarounds & Workouts - May 2022.

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