Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, September 18. In today's briefing, SVB Financial Group, the former parent of Silicon Valley Bank, is closing in on a deal to sell its venture-capital and credit-investment arm out of bankruptcy. San Francisco’s beleaguered office market, the hardest hit of any in the U.S. since 2020, is beginning to display flickers of life. And a Johnson & Johnson executive will appear before a U.S. Senate committee on Tuesday to face questions about the healthcare products company’s legal strategy to resolve mass tort claims over allegedly harmful talc products.

Scaramucci emerges as lead bidder for SVB's VC arm. SVB Financial Group, the former parent of Silicon Valley Bank, is closing in on a deal to sell its venture-capital and credit-investment arm out of bankruptcy.

Two front-runners are vying in the bidding process for SVB Capital, as it is known, according to people familiar with the matter: a duo of Anthony Scaramucci’s SkyBridge Capital and Atlas Merchant Capital, and San Francisco private-equity firm Vector Capital. A court decision on a winner is expected in the next few weeks.

The business could fetch anywhere between $250 million and $500 million, the people said, cautioning that a transaction still isn’t guaranteed and would need to be reviewed by the creditors’ committee too. Bankers at Centerview Partners have been advising the parent company on the process.

San Francisco office market shows signs of life. San Francisco’s beleaguered office market, the hardest hit of any in the U.S. since 2020, is beginning to display flickers of life.

Technology companies’ rapid adaptation of remote work, along with an increase in crime and other quality-of-life concerns, hollowed out San Francisco’s business district. Vacancy rates soared to new highs, while building values plummeted.

Johnson & Johnson executive to testify at Senate bankruptcy hearing. The worldwide vice president of litigation for Johnson & Johnson will appear before a U.S. Senate committee to face questions about the healthcare products company’s legal strategy to resolve mass tort claims over allegedly harmful talc products.

Erik Haas is scheduled to appear Tuesday before the Senate Judiciary Committee. Others expected to testify are University of North Carolina law professor Melissa Jacoby; Lewis & Clark law school professor Samir Parikh; Sidley lawyer Stephen Hessler and Bestwall claimant Lori Knapp.

The hearing will be held in Washington, D.C., and will also stream live on the committee’s website, on Facebook and on X, formerly known as Twitter.

The committee, chaired by Illinois Democrat Dick Durbin, has dubbed the hearing “Evading Accountability:  Corporate Manipulation of Chapter 11 Bankruptcy.”

“This hearing will examine chapter 11 bankruptcy law and the threat posed to consumers and others by legal maneuvers like the Texas Two-Step,” said the hearing notice sent Friday by the committee.

The Texas Two-Step refers to a Texas law that has inspired financially sound businesses to use legal loopholes to shift personal-injury cases to bankruptcy court through newly-created subsidiaries with limited business operations. J&J and Georgia Pacific, owner of the bankrupt Bestwall unit, are among the companies criticized for bypassing the mass tort system by channeling hundreds of thousands of legal claims into bankruptcy. Through that tactic, critics say, they can enjoy certain legal protections while not themselves going through bankruptcy.

In July, a bankruptcy judge threw out the second chapter 11 case that J&J filed to resolve mass talc liabilities. The judge said J&J affiliate LTL Management wasn’t in sufficient distress to warrant granting it the legal protections of chapter 11.

–Becky Yerak

Rondeau, who had been CEO since 2013 and served as chief operating officer for the 10 years before that, will continue to serve on the company’s board and will be nominated for re-election at the 2024 annual meeting as part of his separation agreement.

Planet Fitness, based in Hampton, N.H., benefited coming out of the pandemic as consumers returned to gyms and sought to get in shape. More recently, the company has struggled to keep growing its locations as higher interest rates and construction costs weigh on development.

Big banks are worried that more lending might migrate away from them in the coming years. Investors big and small are taking notice.

The boom in alternative assets has been a big winner for managers of those funds in recent years, as things such as bespoke corporate lending take share from what has traditionally been the business of banks. However, one recent wrinkle has been a worry that the people supplying money to those funds might not keep pouring in cash as interest rates rise—especially when it comes to wealthy individuals, one of the major sources of growth.

Why the Twinkie is now worth billions.Ten years ago, the unthinkable happened: Twinkies disappeared.

Hostess Brands, maker of the golden, cream-filled sponge cake, declared bankruptcy for the second time in a decade. The company closed its factories and began liquidation proceedings, sparking a run on supermarkets as shoppers filled their carts with Twinkies, Ho Hos and other edible specimens of Americana they thought they might never be able to buy again.

What happened next was a dramatic comeback that few could have anticipated. Two investment firms rescued the snack cakes, paying $410 million for Hostess’s brands and kicking off a decadelong fix-up job. Then came a dogged quest for efficiency and a determined search for the next Twinkie, all of which culminated this week in a deal to sell Hostess to J.M. Smucker for $4.6 billion.

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

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