Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, July 23. In today's briefing, the soaring land value of the Carnegie House co-op is poised to significantly raise residents' monthly costs and could force many into financial hardship if the court upholds the decision. Charitable DAF Holdco, a Cayman Islands firm tied to Highland Capital co-founder James Dondero, has filed for chapter 15 bankruptcy in Delaware. And a judge has ruled that WilmerHale can continue representing consumer privacy interests in 23andMe’s bankruptcy despite also advising a losing bidder Regeneron, finding no conflict of interest.

Richard Hirsch and his wife, Jill Strauss, paid about $400,000 for a two-bedroom co-op unit at Carnegie House in the 1990s. They have watched in awe over the past decade as developers built skyscrapers around them, homes for the global superrich. The development boom caused property values in their neighborhood to explode, and is now threatening to drive them out of their longtime home.

On July 18, an independent arbitration panel announced a ruling that would increase the annual rent at Carnegie House 450%, from $4.36 million to roughly $24 million, following an arbitration process triggered by failed negotiations between the landowner and the co-op. For Hirsch and Strauss, the ruling means their monthly costs could spike from around $5,000 to roughly $13,000, Hirsch said.

The ruling is based on the value of the land and still has to be confirmed by a court. If enacted, the increase could push many residents to the brink and force the building into default, causing the owners to lose all their equity in their homes, according to the co-op board.

The Trump administration is proposing a $27 billion reduction in federal programs that provide rental assistance to low-income individuals.

Landlords and developers say these budget cuts would shrink a crucial piece of revenue for affordable apartments, making it harder to maintain and pay debt on their properties.

The company overseeing four bankrupt Highland Capital-linked nonprofits has filed for chapter 15 in the United States.

Charitable DAF Holdco, a Caymans-based company set up in 2011 by Highland co-founder James Dondero to support several nonprofits, is seeking the Delaware bankruptcy court’s recognition as it winds up its operations in the Cayman Islands.

Court-appointed administrators in the Caymans alleged recently that Charitable DAF Holdco’s CEO Mark Patrick improperly transferred $270 million out of reach of its nonprofit beneficiaries, which include the Dallas Foundation, the Greater Kansas City Foundation, the Santa Barbara Foundation and the Community Foundation of North Texas.

Patrick has denied wrongdoing in filings with the Texas business court, where he has been sued by some of the nonprofit beneficiaries. Patrick said he restructured Charitable DAF Holdco to prevent Dondero from using its assets to fund ongoing litigation.

Texas Attorney General Ken Paxton is investigating the operations of Charitable DAF Holdings Corp., a U.S. affiliate of Charitable DAF Holdco. Paxton previously asked U.S. bankruptcy judge Stacey Jernigan in Dallas to pause proceedings in Highland Capital’s case while he investigates. She denied that request on Monday.

“The court saw through their efforts to pause the Highland bankruptcy proceedings, determining that the claims raised were not sufficiently connected to the estate to justify a stay,” Patrick said of Judge Jernigan’s decision in a statement Tuesday.

–Alicia McElhaney

The legal team appointed in 23andMe’s bankruptcy case to protect consumer privacy doesn’t have a conflict of interest despite also representing a losing bidder for the genetics and biotech company, a judge has ruled.

WilmerHale was hired to make sure that 23andMe is following its privacy policy as it sells assets through chapter 11. The firm has also represented Regeneron, which made an offer to buy 23andMe before being beat out by a nonprofit organization owned by its co-founder and former CEO, Anne Wojcicki.

Bankruptcy judge Brian C. Walsh in Missouri said in an oral ruling Tuesday that there is no overlap between the WilmerHale attorneys working on behalf of Regeneron and in the role to safeguard consumer privacy. He added that WilmerHale put up “ethical walls” to ensure that it wasn’t conflicted.

Judge Walsh said that to disqualify WilmerHale from working as the privacy safeguard would be “disproportionate and harsh.” He added that in other cases like this, a judge has decided to decrease a conflicted firm’s compensation. While Judge Walsh said he’s not threatening to decrease WilmerHale’s fees, he isn’t ruling it out.

–Alicia McElhaney

New buyers of private-fund stakes helped drive a market long considered undercapitalized to new heights in the first half of 2025, according to data from two of the largest intermediaries in the market. 

Jefferies Financial Group tracked around $103 billion of secondary market transactions in the first six months of 2025, a 51% increase compared with the previous first-half record of $68 billion registered during the same period a year ago, the bank said in its half-year secondary market review.

The U.S. economy is set to slow, leading economic indicators say, with the impact of tariffs becoming more pronounced in the second half of the year through higher prices.

The Leading Economic Index, or LEI, published Monday by research group The Conference Board, declined 0.3% to 98.8 in June, a stronger fall than the 0.2% expected by a consensus of economists polled by The Wall Street Journal. It followed an unchanged reading in May that was revised upward from the 0.1% downtick originally reported.

• The U.S. Securities and Exchange Commission is prepared to work with the Labor Department to establish guardrails for investors if they gain greater access to private markets in retirement plans, the agency's chief said in a CNBC interview on Monday. (Reuters)

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