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First Brands Is Pushed to Liquidate; Bestwall Reboot Rumors Under Probe
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Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Friday, May 15. In today's briefing, the U.S. government asked the bankruptcy court in Houston to convert First Brands’ Chapter 11 case to a liquidation or dismiss it entirely on the ground of insolvency, arguing the case is “administratively insolvent” because the auto-parts supplier’s plan improperly favors certain professionals and lenders. Meanwhile, a bankruptcy judge has authorized asbestos claimants to investigate whether Georgia-Pacific is planning to scrap its restructuring of subsidiary Bestwall in favor of a new bankruptcy filing, a move that lawyers argue could further delay compensation for tens of thousands of victims.
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Auto-parts supplier First Brands filed for Chapter 11 last September. Photo: Nick Oxford/Bloomberg News
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First Brands Faces U.S. Push for Trustee-Led Liquidation
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The U.S. Trustee’s office, a division of the Justice Department that acts as a bankruptcy watchdog, said auto-parts supplier First Brands has “no realistic prospect for reorganization,” and should be wound down through a federal-government-led liquidation to save costs, according to a court filing.
The government said under the current restructuring plan, First Brands plans to set up a litigation trust to pursue legal claims, using proceeds to repay certain creditors. The company also plans to pay professional fees of more than $245 million in full, while as much as $223 million in administrative expenses would remain unpaid as of the bankruptcy plan’s effective date.
The plan improperly favors a limited group of professionals and lenders who received the benefits of unpaid administrative creditors’ work, the U.S. Trustee said. This demonstrates that the case is “administratively insolvent” and shouldn’t be confirmed, according to the U.S. Trustee.
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Bestwall Claimants Allowed to Probe Alleged Fresh Georgia-Pacific Bankruptcy Plan
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A bankruptcy judge on Thursday allowed Bestwall claimants to investigate whether parent company Georgia-Pacific is preparing to abandon its years-long restructuring effort in favor of a new bankruptcy filing to resolve tens of thousands of asbestos lawsuits.
Since last month, two personal injury lawyers representing separate groups of asbestos claimants said in court declarations that Mark Goodman, a Georgia-Pacific lawyer, approached them seeking support for a new settlement by parent company Georgia-Pacific in a possible new bankruptcy.
Greg Gordon, a Bestwall lawyer, said these lawyers have no evidence to support their statement. “That's all just made up. It's just simply not true,” Gordon said during the Thursday hearing.
Starting a new bankruptcy could undermine claimants by delaying payouts further and potentially forcing them to restart years of litigation and negotiations.
Judge Laura Beyer of the U.S. Bankruptcy Court in Charlotte, N.C., is allowing the claimant lawyers to take sworn testimony from Goodman and Joel Mercer, Bestwall’s chief legal officer and secretary. Bestwall and Georgia-Pacific are also required to make documents related to their communications on the proposed settlement available to the claimant lawyers.
“I don't know what the truth is,” Judge Beyer said during the hearing. “And it is up to this court to determine what the truth is.”
—Akiko Matsuda
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Following Oregon and California, other states have begun to consider toughening restrictions on corporate medicine. Photo: Etienne Laurent/Shutterstock
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New State Laws to Bar Private Equity From Medicine Start to Show Their Teeth
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State laws restricting private-equity involvement in the medical sector have taken their first scalps, as authorities signal an aggressive approach to enforcement.
Last year, lawmakers in California and Oregon passed measures to prevent corporate healthcare investors from encroaching on medical care, part of a broad backlash against private equity’s role in the sector.
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Large Fund Managers Put Institutional Investors Back in the Limelight
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Big publicly traded asset managers, who face rising hurdles to expand credit strategies tailored to wealthy individuals, have turned to their longtime institutional investors to show their lending businesses remain strong.
During first quarter earnings calls, executives of Blue Owl Capital and KKR & Co. were among those who highlighted a resurgent interest in their strategies from institutional investors, particularly for private credit. The trend marks a reversal from previous quarters, when the growth of retail-oriented funds took center stage in those periodic public discussions of results and the outlook for future performance.
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