Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Tuesday, March 15. The Federal Reserve is struggling to communicate its rate-hiking intentions without rattling markets. The Boy Scouts of America defended the grants of legal immunity for its troop sponsors and insurers as a trial opened on its bankruptcy plan. And the lenders to Japanese aircraft lessors challenged their proposed $210 million sale out of chapter 11.

The Fed’s challenge: How fast to raise interest rates without tanking economy. The Federal Reserve needs to figure out how to signal the likely path of rate increases in the months following this week’s policy meeting while avoiding a sharp correction in financial markets. But worsening inflation, already at a 40-year high, could force the Fed to accelerate the process.

Meanwhile inflationary pressures keep building, driven by escalating sanctions by the West to punish Russia for its war against Ukraine. Now, the global economy faces the prospect of higher energy and commodity prices, which will raise the costs to transport and manufacture a range of goods, while the conflict further disrupts global shipping networks. The New York Fed said households’ expectations of the near-term future path of inflation surged back to record levels in February amid worries it will only get harder to borrow over coming months.

Boy Scouts bankruptcy trial opens with questions about liability releases. The Boy Scouts of America began a trial on a chapter 11 plan that would end its bankruptcy, resolve roughly 82,200 individual claims of childhood sexual abuse and set aside roughly $2.7 billion for victims, but insurers started mounting their fight. Devang Desai, a member of the Boy Scouts’ national executive board and bankruptcy task force, said the grants of legal immunity being offered to insurers and others that are contributing to victims’ compensation are important to encouraging settlements.

• Boy Scouts of America, 10 a.m. Trial continues on the youth group's chapter 11 plan.
• Latam Airlines Group SA, 2 p.m. The airline seeks court approval for an amended debtor-in-possession loan

Judge reserves ruling on Japanese Airbus lessors' bankruptcy sale after new information emerges. A bankruptcy judge reserved his ruling Monday on Japanese aircraft lessors’ sale of two Airbus jets to a winning auction bidder, after facing further resistance initiated by the top secured lender FitzWalter Capital Partners (Financial Trading) Ltd.

In December, the lessors, JPA No. 111 Co. Ltd. and JPA No. 48 Co. Ltd, jointly filed chapter 11 to stop the lender’s foreclosure auction of the two airplanes leased to Vietnam Airlines through intermediate lessors backed by the same parent company, Japan Investment Adviser Co. Ltd. Vietnam Airlines’ rent payments had stalled in the pandemic, causing default of the loans that FitzWalter came to own.

The lessors have already fended off FitzWalter’s attempt to dismiss the bankruptcy filing. On Monday, they were hoping for Judge David Jones of the U.S. Bankruptcy Court in Manhattan to approve the sale of the airplanes to Strategic Value Partners, which emerged as the winning bidder with a roughly $210 million offer.

But FitzWalter, which has been opposing the lessors’ sale of the property, recently took control of the intermediate lessors from JIA, and the intermediate lessors joined FitzWalter’s argument that the lessors can’t sell what they don’t own. Judge Jones said he would consider new information that he learned Monday and would rule on the sale in coming days.  — Akiko Matsuda

Appeals court authorizes rejection of pipeline contract in bankruptcy. Ultra Petroleum Corp. won an appellate court's authorization to reject a natural gas pipeline contract in chapter 11, the latest such ruling to find that bankruptcy can override federally-regulated pipeline rates.

The Fifth Circuit Court of Appeals affirmed that Ultra could reject its contract with Rockies Express Pipeline LLC, even though federal energy regulators hadn't found that rejection was in the public interest.

The appellate ruling went against the Federal Energy Regulatory Commission, which argued the judge overseeing Ultra's bankruptcy couldn't make a unilateral decision to reject the contract without the agency finding that rejection was also in the public interest.

The Fifth Circuit said Ultra wasn't attacking the rates in the pipeline contract or attempting to change them, but instead wanted out of it altogether, which is allowed in chapter 11 under the circumstances. — Andrew Scurria

The U.S. backtracked on its talks with Venezuela's ruling regime after political backlash to opening the door with President Nicolás Maduro. (Financial Times)

What a Russia debt default would mean for financial markets as Ukraine invasion continues. (MarketWatch)

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