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Thrasio Plans for Chapter 11; Student Debt Holders Seek Bankruptcy Relief
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Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Friday, November 17. In today's briefing, Amazon aggregator Thrasio is preparing to file for bankruptcy as it contends with a postpandemic slump in online spending, sources told The Wall Street Journal. And more Americans are filing for bankruptcy to get rid of their student debt after the Biden administration made it easier for student borrowers to do so by overhauling its guidelines last November.
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Online sellers like Thrasio have been pressured as shoppers have cut back on their online purchases since the early days of the pandemic. PHOTO: DOMINIC LIPINSKI/ZUMA PRESS
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Amazon aggregator Thrasio pepares for bankruptcy. Thrasio, a startup that raised billions of dollars to buy up consumer brands sold on Amazon, is preparing to file for bankruptcy, according to people familiar with the matter.
Consulting firm AlixPartners has advised Thrasio in recent years, and Holly Etlin, a veteran retail turnaround professional at the firm, is currently working with the company, the people said. Etlin has often served as a chief restructuring officer at bankrupt retailers, including most recently at Bed Bath & Beyond.
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Elon Musk acquired Twitter, now renamed X, in a deal valued at about $44 billion last year. PHOTO: AVALON.RED/ZUMA PRESS
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X loses bid to scrap FTC privacy order. A federal judge denied X Corp.’s request to modify or terminate a consent order between the social-media company acquired by Elon Musk last year and the Federal Trade Commission over how the platform handled users’ information.
In a decision Thursday, U.S. Magistrate Judge Thomas Hixson in the Northern District of California said his court lacked the power to grant X relief from another tribunal’s orders. The judge also denied X’s request to stop a deposition of Musk by the FTC. The company didn’t respond to a request for comment.
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Squeezed property owners put their faith in the Fed. The Fed might be done raising rates. But can the cost of debt drop fast enough to save struggling landlords?
Commercial real estate has been a big casualty of higher interest rates. Property values have fallen by a fifth since the Fed began hiking in March 2022 and almost 8% of securitized property loans are in distress, according to CRED iQ data.
Interest rate cuts can’t come fast enough for landlords who grew addicted to cheap money in recent years. Between now and the end of 2025, $390 billion of securitized commercial real-estate debt matures and needs to be refinanced at higher rates. Another wave of bank debt also comes due.
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UpHealth to sell Cloudbreak Health to GTCR for $180 million. Digital health company UpHealth Inc. agreed to sell Cloudbreak Health to GTCR for $180 million in cash.
In September, UpHealth Inc. unit UpHealth Holdings filed for Chapter 11 bankruptcy after a court ruled in favor of Needham & Co. in a lawsuit related to UpHealth Services Inc.'s engagement of Needham. In October, UpHealth Holdings unit Thrasys filed for bankruptcy.
UpHealth Inc. said Thursday that the Cloudbreak sale, expected to close in the first half of 2024, will allow it to "pursue a more simplified strategy" focused on TTC Healthcare Inc., a "growing, cash flow positive" behavioral health business. Proceeds will be used to pay down all unsecured debt and about 45% of secured debt.
Cloudbreak's Martti platform provides medical interpreters in over 250 languages.
-- Josh Beckerman
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This is the caption and credit for the image above.
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Editor’s Note: Each week, we will share selections from WSJ Pro that provide insight and analysis we hope are useful to you. The stories are unlocked for The Wall Street Journal’s subscribers.
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🎧 Listen to Laura Deming of Longevity Fund discuss futuristic solutions to aging.
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Around 40 million borrowers hold $1.6 trillion in federal student debt. PHOTO: CARLOS OSORIO/ASSOCIATED PRESS
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Student borrowers tap a new path to loan forgiveness: bankruptcy. More Americans are filing for bankruptcy to get rid of their student debt.
The increase came after the Biden administration made it easier for student borrowers to apply for bankruptcy by overhauling its guidelines last November. The government now supports borrowers’ use of bankruptcy to eliminate student debt when they meet certain economic hardship conditions. That is a sharp change from the old, far more adversarial procedure that borrowers found confusing and intimidating.
The application numbers remain extremely small, with just 632 borrowers using the new process from last November through September, according to Justice Department data released Thursday. Still, that is an increase from recent levels.
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