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Serta Lenders Dodge Asset Freeze; Boy Scouts Abuse Claims Swell
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Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, September 17. In today's briefing, the next chapter in the yearslong struggle between Serta's lenders, and a new estimate of Boy Scouts sex-abuse claims casts further doubt on survivors' prospects for payment.
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Richard B. Levine/Zuma Press
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Judge won't issue asset freeze against Serta lenders. Serta Simmons Bedding's 2020 liability-management deal is back in bankruptcy court again, where a judge declined to freeze $340 million in assets controlled by lenders that participated.
A minority group of Serta lenders that were excluded from the 2020 transaction had sought a court order restraining a majority lender group from dissolving investment funds and distributing assets. Excluded lenders including Apollo Global Management, Angelo Gordon and Gamut Capital Management argued that without an asset freeze, members of the rival majority group might not have sufficient assets to satisfy an eventual damages award.
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Tim Sharp/Reuters
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Boy Scouts abuse survivors face increasingly dim prospects of payment. Tens of thousands of individuals who were sexually abused in the Boy Scouts of America are facing increasingly dim prospects for receiving the compensation they were told they would get during the youth group’s bankruptcy.
The cost of fully compensating abuse survivors has ballooned, with insurers receiving bills for at least $12 billion so far—several times the $3.6 billion forecast under the Boy Scouts’ bankruptcy plan.
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"No one expected the amount of horror that was going to be discovered from the claims questionnaires and how widespread the abuse was."
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— Doug Kennedy, an abuse survivor who co-chaired the tort claimants’ committee during the Boy Scouts bankruptcy case.
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New Fortress Energy rallies on $4 billion Puerto Rico deal. New Fortress Energy has negotiated a $4 billion deal with Puerto Rico’s government to supply liquified natural gas, sending the struggling company's stock higher.
The deal announced Tuesday by Puerto Rico’s governor Jenniffer González Colón remains subject to approval by the oversight board supervising Puerto Rico's finances. New Fortress Energy’s share price bounced Tuesday to $2 per share, a gain of 44%.
The $4 billion deal carries a shorter term and lower cost than a previous iteraction, according to the governor's announcement. An earlier 15-year contract proposed by New Fortress Energy in June had exclusivity provisions dna price tag over $20 billion.
Earlier this month, New Fortress disclosed in a quarterly report that deteriorating financial conditions created substantial doubt in its ability to continue operating. The company is working with financial adviser Houlihan Lokey and law firm Skadden Arps Slate Meagher & Flom as it evaluates strategic alternatives to improve its capital structure. –Alicia McElhaney
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End of de minimis tariff exemption pushed Ssense into bankruptcy. Canadian fashion retailer Ssense was already on the brink of financial distress. Then, the U.S. rolled back a tariff exemption that allowed shoppers to buy up to $800 in goods duty-free.
The end of the de minimis exemption pushed Ssense, which sells luxury brands like Fendi and Loewe, over the edge and into bankruptcy in Canada. On Friday, the company, which was once valued at C$5 billion, received approval from a Canadian court to move forward with the application.
Ssense is one of the first companies to cite the de minimis rule as a reason for restructuring its business. Other companies with healthier balance sheets, from Canadian athleisure brand Lululemon to online marketplace Etsy, have warned recently that the closure of the exemption could have a negative impact on their business.
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