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The Texas Two-Step's Second Act
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Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, April 5. Johnson & Johnson's unveiled the sequel to its original Texas Two-Step, filing a second bankruptcy case aimed at settling its mass talc liabilities. McKinsey is winding down its bankruptcy practice. And AMC Entertainment's stock fell as the company quelled a shareholder challenge to its equity-selling plans.
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Johnson & Johnson filed a repeat bankruptcy case for talc subsidiary LTL Management LLC, saying it had corrected the missteps that doomed its last bankruptcy. Photo: Getty Images
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Johnson & Johnson revives bankruptcy case for $8.9 billion talc offer. The health-products company unveiled what would be among the biggest-ever product-liability settlements, offering to resolve mass claims that J&J’s talc-containing powders caused cancer.
The proposed deal requires approval in bankruptcy court, where J&J unit LTL Management LLC filed a repeat chapter 11 petition on Tuesday, shortly after its initial bankruptcy case was dismissed as an improper use of the nation's insolvency laws.
Plaintiffs' firms representing 60,000 talc claimants have signed on, according to the company, which said that LTL's new bankruptcy filing avoids the missteps that felled its previous trip to chapter 11.
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Commentary: J&J refines the Texas Two-Step. The new-and-improved bankruptcy filing for LTL could mark the next step in the evolution of the Texas Two-Step, the controversial legal maneuver that J&J and several other companies have used to move tort liabilities to chapter 11. But J&J's move still carries risks, considering the company fell flat in its last attempt to use bankruptcy as a litigation management tool.
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While it used to compete against other firms for bankruptcy work, McKinsey doesn’t currently have any chapter 11 engagements.
Photo: Charles Platiau/REUTERS
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McKinsey winding down firm's bankruptcy practice. Consulting firm McKinsey & Co. is winding down its bankruptcy practice after numerous lawsuits and government investigations concerning the division’s work advising troubled borrowers, people familiar with the matter said.
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Some McKinsey partners who had previously focused on bankruptcy advisory work in the firm’s recovery and transformation services, or RTS, division have either been leaving the firm or pivoting to other kinds of work, the people said.
McKinsey has faced years of private lawsuits and government probes into the firm’s work in the bankruptcy space, including whether it failed to disclose potential conflicts of interest and guard against insider trading involving the firm's clients.
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A view of Orlando, Fla., where Kalera is based. Photo: Alamy Stock Photo
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Kalera PLC unit files for chapter 11 bankruptcy. Kalera PLC said Tuesday its wholly owned and main operating subsidiary, Kalera Inc., has filed a voluntary petition for chapter 11 bankruptcy in the Southern District of Texas.
The vertical farming company said it would continue to operate its business as debtor-in-possession under the jurisdiction of the bankruptcy court and in accordance with the applicable provisions of the bankruptcy code and orders of the bankruptcy court.
Kalera will be filing various first-day motions with the bankruptcy court requesting customary relief that will enable the company to transition into chapter 11 without disruption to its ordinary operations. Kalera PLC, Kalera SA and other subsidiaries aren’t included in the chapter 11 filing.
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Invictus returns as Tuesday Morning DIP lender. Invictus Global Management LLC has been at odds with Tuesday Morning for weeks, since the home-goods retailer took out a bankruptcy loan from a different lender. Now Invictus has "tentatively agreed to step into the shoes" of the other lender, an affiliate of Gordon Brothers Group.
Tuesday Morning lawyer Robin Phelan said in a court hearing that the company has repaid $12.5 million it borrowed from Gordon Brothers, using proceeds from store-closing sales. Under a final agreement approved in court on Tuesday, the company plans to borrow an additional $10 million from Invictus to continue its operations, Mr. Phelan said. Invictus lawyer Doug Mintz said Tuesday it has submitted a bid to acquire the business.
—Akiko Matsuda
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AMC, under Chief Executive Adam Aron, is preparing to convert its preferred stock into regular shares. Photo: Whitney Curtis for The Wall Street Journal
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AMC stock drops as theater chain settles shareholder lawsuit. AMC Entertainment Holdings Inc. tumbled as the company moves closer to converting its preferred shares, or Ape units, into regular stock.
The Ape units have traded at a substantial discount to the regular shares, despite carrying the same economic rights. Last month investors approved a 10-for-1 reverse stock split, opening the door to converting the Apes, and also greenlit the sale of new common stock.
But the company's plans were on hold pending the outcome of a shareholder lawsuit alleging that AMC had robbed its common shareholders of their voice by forcing them to vote alongside holders of the Ape units.
The company is settling that litigation by agreeing to pay common stockholders one share for every 7.5 shares they own after the reverse stock split. AMC shares fell 23.5% on Tuesday.
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Axel Lehmann, Credit Suisse’s chairman, apologized at the bank’s annual general meeting on Tuesday.
Photo: Michael Buholzer/Shutterstock
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Credit Suisse chairman says 'I am truly sorry.' The Swiss bank's annual shareholder meeting Tuesday was supposed to be the launchpad for its recovery. Instead, it became the final chapter of its nearly 167-year-old history as shareholders poured out their anger on the bank’s management and board for failing to save the storied institution.
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