Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Friday, May 29. In today's briefing, First Brands’ proposed chapter 11 plan is drawing scrutiny from the Justice Department’s bankruptcy watchdog, which warned that the auto-parts supplier’s unusual strategy of prioritizing loan repayments over administrative claims could undermine federal bankruptcy protections and erode creditor confidence in restructuring. And California Attorney General Rob Bonta has sued 23andMe, alleging the company violated the state's data-security and privacy laws in connection with a 2023 breach that exposed the information of nearly 7 million users.

First Brands Group’s restructuring plan presents a challenge for the U.S. bankruptcy system, testing how the court balances a quick corporate rescue against creditor repayment rules governed by bankruptcy law.

The auto-parts supplier has proposed an unusual chapter 11 plan that gives priority to repaying loans that fund its operations in bankruptcy but bypassing most administrative claims from businesses supplying the company goods and services during the case.

According to the Justice Department’s bankruptcy watchdog, First Brands’ proposed bankruptcy plan is a new tactic to subvert chapter 11 rules and could “destroy” creditors’ trust in the restructuring process.

Genetic testing company formerly known as 23andMe is facing a lawsuit filed by California Attorney General Rob Bonta for allegedly failing to protect customers’ personal information. The lawsuit is tied to a 2023 data breach that affected nearly 7 million users and ultimately pushed 23andMe toward bankruptcy.

When 23andMe, now operating under the name Chrome Holding Co., filed for chapter 11 last year, Bonta urged users to delete their data from the company’s site over concerns that it could be sold to a third party. 23andMe’s founder, Anne Wojcicki, won a bidding war against biotech giant Regeneron to regain control of the company.

Bonta’s lawsuit alleges that 23andMe failed to implement and maintain security procedures that protected customer data, and that the company made untrue statements that misled customers. He said this violates California’s genetic information privacy and data security laws. The lawsuit is separate from his pending challenge in the U.S. Bankruptcy Court over the sale of Californians’ genetic data in the bankruptcy.

–Alicia McElhaney

Judge Wendy Kinsella of the U.S. Bankruptcy Court in Syracuse, N.Y., on Thursday denied the request from talc injury claimants to stay the closing of Vanderbilt Minerals’ asset sale while their appeal is pending.

Siding with the bankrupt former talc miner, the judge said in her bench ruling that a stay could jeopardize Vanderbilt’s $64 million asset sales to Riverspan. The collapse of the sale could “ultimately harm talc claimants in the long run,” she said.

A committee representing injury claimants has argued that the stay is necessary because once the sale is consummated, its pending appeal would become moot.

—Akiko Matsuda

FAA Administrator Bryan Bedford said Wednesday that he would like to see another budget airline to fill the void at LaGuardia left by Spirit’s collapse. Other airlines have been eyeing Spirit’s takeoff and landing rights at the busy New York airport, which could be worth nearly $87 million, according to an April bankruptcy filing.

But regulators don't want to see an entrenched carrier take those slots and increase its market power at LaGuardia, Bedford said. If a discounter isn’t able to pick them up, the other option would be to retire the slots to help ease congestion.

Billionaire Tilman Fertitta is making what could be his biggest wager yet: that Caesars Entertainment can overcome doubts about the gambling industry’s future.

On Thursday, the Houston businessman’s Fertitta Entertainment said it had agreed to buy Caesars for about $5.7 billion, combining more than 50 Caesars resorts with a portfolio that includes Golden Nugget casinos, restaurants and hospitality properties.

Caesars’ stock price has plummeted 70% in the past five years. The company—once synonymous with Las Vegas Strip decadence—has been pummeled by a downturn in the city’s fortunes and disruption from online gambling.

Private-equity investors are trying to combine America’s mom-and-pop condominium managers into larger and more profitable businesses. But they face challenges cracking an industry long considered too local, fragmented and diverse to accommodate big-money investors, people who work on these deals say.

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

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