Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Thursday, May 15. In today's briefing, tariff-driven market turmoil is reigniting opportunities for distressed debt investors, but only the largest funds are positioned to benefit in the changed landscape. And a Texas bankruptcy judge's ruling said a federal district court must decide whether Barretts Minerals’ talc contained asbestos, overruling claimants' objections that the move delays justice.

The market turmoil brought on by tariffs is creating one of the most significant opportunities in recent years for distressed debt investors—but only the largest funds are best positioned to capitalize on it.

Distressed debt investing surged after the global financial crisis as hedge funds profited from overleveraged companies restructuring their balance sheets. But that playbook was disrupted by prolonged low interest rates and the rise of out-of-court restructurings, or liability management exercises, which allowed companies to delay or avoid chapter 11 filings. Some funds shut down, while others shifted away from distress-focused strategies.

The uncertainty stemming from the Trump administration’s tariffs may present a silver lining for investors who remain active in distressed investing and those looking for a comeback. Moody’s Ratings said tariffs could cause default rates to spike to 8%, up from 5.8% for the 12-month period ended in March.

A federal court in Texas could play a pivotal role in determining whether talc sold by Barretts Minerals contained asbestos—a question central to personal-injury lawsuits alleging that the company's talc products caused mesothelioma and other asbestos-related diseases.

Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston said in his written decision on Wednesday that he believes the presence of disease-causing asbestos “must be determined by the U.S. District Court” because it is “fundamental” in the bankruptcy case.

Personal-injury claimants had argued such a process would further delay their day in state courts. The judge said 800 claimants are “ably represented” by counsel and will not be deprived of their day in court.

Claimant lawyer Clay Thompson said the order “improperly removes hundreds of mesothelioma cases” pending in more than 20 different states to the district court that lacks the authority to decide whether Barretts Minerals' talc was contaminated and caused cancer.

“My clients have Constitutional rights to individually pursue their cases before state court juries,” he said.

Barretts Minerals owned two mines in Dillon, Mont., when it filed for chapter 11 in October 2023 to resolve talc-related liabilities in bankruptcy. Several months later, it sold the talc business to private-equity firm Riverspan Partners for $32 million.

Isgur last month declined to toss the talc miner’s bankruptcy case despite the injury claimants’ arguments that Barretts Minerals has no business to restructure, and that its sole purpose in bankruptcy has been to protect its parent company, Minerals Technologies, from mass injury litigation. Lawyers for injury claimants plan to appeal this ruling.

—Akiko Matsuda

Wolfspeed, the semiconductor firm that is trying to restructure its debt, looked set to rise for a third consecutive day Wednesday after a report that negotiations among creditors are happening.

Apollo Global Management, one of the biggest holders of Wolfspeed’s $6.5 billion of debt, is in talks with investment bank Moelis about a restructuring, The Wall Street Journal reported Tuesday. The stock plunged 26% Friday after the company said that it faces the risk of not being able to continue as a “going concern” on its latest earnings call.

Wolfspeed rose 0.5% to $3.89 in Wednesday morning trading after gaining 16% on Tuesday and 1.8% Monday. Coming into the session, it was down almost 6% over the past five days and 42% lower in 2025.

Wolfspeed makes silicon-carbide technology for use in the automotive industry and would stand to benefit from renewed interest in chips and artificial intelligence. Its problem is that it was due for funding under President Joe Biden’s CHIPS Act that now looks doubtful under President Donald Trump. It has been one of the most shorted stocks on the market this year—short selling is when traders bet that the price of shares will fall.

Other chip stocks were mixed on Wednesday. Big names Nvidia, AMD and Arm were all rising, while others such as Broadcom and Intel were lower. Smaller chip maker Alpha & Omega was falling while peer Indie Semiconductor was rising. The Nasdaq was up 0.4%.

Wolfspeed didn’t immediately respond to a request for comment early Wednesday.

—Brian Swint

The most prolific lender to Manhattan property developers isn’t Wells Fargo & Co. or Citigroup Inc. or any of the other big global banks. It is Bank OZK, which not that long ago was an obscure lender from Little Rock, Ark.

The bank has become one of the country’s most aggressive financiers of skyscraper construction. OZK’s chief executive, George Gleason, said on a recent earnings call that the lender could issue its biggest ever construction mortgages in 2022.

OZK is nearing a deal to issue a $410 million loan to Rabina, the developer of a roughly 1,000-foot-tall Manhattan office and luxury residential tower on Fifth Avenue, which would be one of its largest loans, the bank said.

The lender is one of a group of regional banks and debt funds that are propelling the recent surge in commercial real-estate development. Proposed New York City construction in the fourth quarter, for instance, totaled nearly 32 million square feet, according to the Real Estate Board of New York, the city’s most for a single quarter since 2014, the trade association said.

Share your tips, suggestions and feedback with the WSJ Pro Bankruptcy team: Soma Biswas; Alexander Gladstone; Jodi Xu Klein; Akiko Matsuda; Andrew Scurria; Becky Yerak. 

Follow us on Twitter: @SomaBisWSJ; @gladstonea; @jodixu; @AskAkiko; @AndrewScurria; @beckyyerak.