Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Friday, May 16. In today's briefing, Bayer is seeking to resolve Roundup mass tort lawsuits through Missouri state court while exploring a potential bankruptcy filing for its Monsanto business as a backup plan, people familiar with the matter told The Wall Street Journal.

Bayer is making another push to resolve lawsuits linking the popular weedkiller Roundup to cancer, while exploring a bankruptcy filing for its Monsanto agriculture business in case the settlement plan fails, according to people familiar with the matter.

Bayer is drawing up plans to try to resolve some of its mass lawsuits over Roundup through proceedings in Missouri state court, where a majority of them are pending, the people said. But given its past difficulties in ending the Roundup litigation in civil courts, the German drug and agriculture conglomerate is preparing as another option a bankruptcy filing covering the weedkiller’s U.S. manufacturer, Monsanto, they said.

Bayer has engaged restructuring advisers from law firm Latham & Watkins and consultant AlixPartners to examine its options, people familiar with the matter said. A chapter 11 filing by Monsanto would pause lawsuits against the division and open a path to settling its share of Roundup-related liability in bankruptcy court.

Rite Aid has reached agreements to sell prescription files and other pharmacy assets from more than 1,000 stores nationwide to operators including CVS Pharmacy, Walgreens, Albertsons, Kroger and Giant Eagle, the company said Thursday.

The transactions follow a bankruptcy auction held Wednesday, after the Philadelphia-based drugstore chain last week filed for Chapter 11 protection for the second time in two years.

As part of the deal, CVS also agreed to acquire a number of Rite Aid and Bartell Drugs store locations in Washington, Oregon and Idaho, the company said. 

Rite Aid said its stores will remain open during the transition, and customers can continue to access their pharmacy services, including prescription refills and immunizations.

“These agreements ensure our pharmacy customers will experience a smooth transition while preserving jobs for some of our valued team members,” said Matt Schroeder, chief executive officer of Rite Aid.

The sale transactions are subject to approval by the U.S. Bankruptcy Court in Trenton, N.J. A hearing is scheduled for May 21 before Judge Michael Kaplan.

—Akiko Matsuda

Lithium battery recycler Li-Cycle has filed for bankruptcy after years of financial struggles. Toronto-based Li-Cycle said Wednesday that it has begun insolvency proceedings in Canada and has filed for chapter 15 in the U.S. Bankruptcy Court in the Southern District of New York.

Its large creditor Glencore, a producer and recycler of nickel and cobalt for lithium-ion batteries, has offered to provide up to $10.5 million in financing during the proceedings and to offer a credit bid of at least $40 million in a sale process.

Li-Cycle had defaulted on its secured and unsecured notes, and waivers negotiated with Glencore and Koch expired on Tuesday, a court filing shows.

The cost for Li-Cycle to build its Rochester, N.Y., facility surged, prompting a construction pause in October 2023. Litigation including securities lawsuits and the filing of mechanics’ liens ensued. Existing operations also remained unprofitable.

Li-Cycle said that in early 2023, it had received a conditional commitment from the U.S. Department of Energy for a $375 million secured loan. It signed a definitive agreement in November, increasing the facility to $475 million, but no funds have been disbursed because the loan depends on Li-Cycle securing other financing, according to a court filing. 

—Becky Yerak

Hudson’s Bay has agreed to sell its intellectual property portfolio, including the iconic stripes design and other brand assets, to Canadian Tire in a $30 million deal.

The deal, which requires court approval, is expected to close this summer. It excludes the company’s art and artifacts, which will be handled separately through a court-supervised process.

The sale follows a court-sanctioned bidding process involving multiple qualified bidders. Hudson’s Bay continues to pursue other asset sales and lease monetization as part of its broader restructuring efforts. The oldest department store chain in Canada filed for bankruptcy in March.   -Jodi Xu Klein

Investors are again underestimating the risk of disruptions to the global economy, and a fresh bout of sharp price falls is possible, the European Central Bank's vice president warned Thursday.

Asset prices fell sharply in the wake of President Trump's April 2 announcement of higher tariffs on imports from around the world, but have since reclaimed much of that lost ground.

But in an Amsterdam speech, Luis de Guindos warned that rebound may be setting investors up for fresh falls.

"Like with equity market risk premia, credit spreads remain compressed and appear to be out of sync with the very high levels of geopolitical and policy uncertainty," he said. "As such, there is a risk that investors may be underestimating and underpricing the likelihood and impact of adverse scenarios."

De Guindos said the high levels of volatility in prices over recent months hasn't impeded the functioning of financial markets. But he warned that may not last.

"Sharp adjustments could still become disorderly," he said. "Non-banks may face higher valuation losses and more frequent margin calls as trade tensions increase market volatility and weigh on asset quality."

Central bankers view market moves as disorderly when they reflect distress in financial institutions, rather than a recalibration of prospects for economies and companies.

De Guindos said rising government debt may also pose a threat to the stability of the eurozone's financial system.

"While increased defense spending has the potential to boost growth if it is well targeted and sourced from within the EU, it may exacerbate fiscal vulnerabilities in some countries," he said.

—Paul Hannon

Tom and Laurie Hegna bought annuities as part of their retirement planning.

Robert Plowright took out a loan for a home-renovation project.

They didn’t know it, but they were on opposite ends of a multitrillion-dollar financial machine that has become the hottest thing on Wall Street, transforming who lends money in the global economy and where the capital comes from.

At the center of this system, known as “private credit,” are titans of private equity such as Blackstone, Apollo Global Management and KKR, firms best known for buying and selling companies. They have emerged as major lenders to businesses and are competing head-on with traditional banks, while operating mostly outside the reach of regulators.

Tie-ups with insurance companies are helping private-credit firms bring in the huge pools of money needed to make this business work. A portion of the annuity premiums the Hegnas paid wound up managed by Blackstone. Private-credit firms are constantly scouring for lending deals, often with borrowers that want something banks won’t offer. It was an Apollo-owned lender that gave Plowright his loan.

Credit-focused TPG Twin Brook Capital Partners is letting investors cash out of several older funds in what would be the largest continuation-fund deal to take place in the private-debt market.

Twin Brook, which lends to small to midsize businesses backed by private equity, is giving fund investors the option to sell their holdings or remain invested by rolling their stakes into a continuation vehicle, according to several people familiar with the matter.

The continuation fund is expected to reach around $3 billion, handily topping the largest such vehicle raised so far to buy private-credit loans, according to the people. Boston-based Abry Partners closed that fund with $1.6 billion last year, they said.

• WeightWatchers Got One Thing Very Right. As happy as people are with their new pharmaceutical alternatives, though, the company’s in-person, community-based, mutual-support model of (mostly) female dieters supporting one another on their journeys offered something that no shot or pill ever could. (New York Times)

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