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WSJ Pro Bankruptcy: Private Equity’s Grand Ambitions for U.S. Healthcare Hit Bumpy Stretch

Buyout firms spent decades making inroads into the U.S. healthcare industry. But in the pandemic’s aftermath, the industry has entered a period of retrenchment as a rise in defaults and bankruptcies hits some of private equity’s largest investments in medicine, according to a WSJ Pro Bankruptcy analysis. A string of private-equity investments in physician practices have soured in recent years, with portfolio companies like KKR’s Envision Healthcare filing for bankruptcy and others turning to their owners for rescue capital. And the recent bankruptcies of privately owned hospital chains Steward Health Care and Prospect Medical Holdings have fueled doubts among lawmakers and regulators about the buyout industry’s role in U.S. healthcare. READ MORE
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Private Credit and BSL: Peaceful Coexistence

As private credit continues to expand, it maintains a relatively peaceful coexistence with broadly syndicated loans. SRS Acquiom offers insights into the current state of the lending landscape, as anchored by two viable sources of financing. GET THE INSIGHTS
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U.S. Trustee Says Silence Is Not 'Consent' in Container Store Bankruptcy

The DOJ's Office of the U.S. Trustee challenged a popular Texas bankruptcy court's practice of approving broad legal protections for a bankrupt company’s directors, officers and other non-debtors, saying that creditors who do not "opt out" cannot be assumed to consent to a deal, Reuters reported. The DOJ's Office of the U.S. Trustee filed its objection in The Container Store's bankruptcy case, arguing that Texas state law does not support the retailer’s argument that creditors consented to release potential legal claims against the company's officers and other non-debtors because they had not returned an "opt out" form in the bankruptcy. READ MORE
Global Airlines Reportedly in Talks with Brazil's Gol as Part of Bankruptcy Exit

Global airlines are in talks with Gol to invest in the Brazilian airline, which is undergoing chapter 11 bankruptcy proceedings in the U.S., local newspaper Valor Economico reported yesterday, according to Reuters. The report mentions U.S.-based companies United Airlines and American Airlines, as well as European firms Air France-KLM, International Airlines Group and Lufthansa Group among the groups in talks with Gol. The Brazilian airline, which last week announced a memorandum of understanding to explore a merger with local rival Azul, has been in chapter 11 bankruptcy proceedings since early 2024. READ MORE
Cybersecurity Breaches Are Increasing Business Insolvency Risks

Data breaches and ransomware attacks in the U.S. are increasing companies’ risk of financial losses, in many cases dragging them into bankruptcy or putting them out of business altogether, Bloomberg Law reported. Data breaches cost companies across the world on average about $4.9 million, and nearly double that amount in the U.S., according to a 2024 study by IBM. Costs can differ based on a number of factors, including regulatory compliance requirements, sensitivity or complexity of the data involved, and subsequent litigation. READ MORE

 
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  Daily Roundup
 
174-Year-Old Bay Area Bookstore Company Files for Bankruptcy, Will Close Berkeley Store

The oldest independent bookstore company in the Bay Area said Tuesday it has filed for chapter 11 bankruptcy, SFGate.com reported. Books Inc. said the reorganization is necessary because of "steadily rising operating costs and dramatically changing consumer buying habits" exacerbated by the COVID-19 pandemic. READ MORE
B. Riley Suspends Preferred Payouts Ahead of Note Redemption

B. Riley Financial Inc. suspended dividends on a pair of its preferred shares, holding off on cash payments to some investors while it prepares to pay off another set of notes coming due next month, Bloomberg News reported. Chairman Bryant Riley has put a priority on paying down debt as his firm seeks to recover from a string of losses and writedowns on soured investments. The biggest was the November bankruptcy of Franchise Group, a collection of retail brands that was among B. Riley’s biggest holdings. A bankruptcy judge has said that Franchise Group’s equity appears to be worthless. READ MORE
Citigroup Must Face New York Lawsuit over Handling of Fraud Scams

A federal judge yesterday rejected Citigroup's bid to dismiss a lawsuit by New York Attorney General Letitia James claiming that it failed to protect customers from online scammers and refused to reimburse customers who were victimized, Reuters reported. U.S. District Judge Paul Oetken in Manhattan said the bank's Citibank unit must face James' claim it violated a 1978 federal law concerning electronic wire transfers, and parts of three other claims. READ MORE
TD Eyes Selling $9 Billion of Mortgages as It Faces Asset Cap

Toronto-Dominion Bank is looking to sell about $9 billion of residential mortgage loans as the Canadian lender adjusts its balance sheet to comply with a new cap imposed by U.S. regulators, part of a plea agreement reached last year for its role in failing to prevent money laundering, Bloomberg News reported. The portfolio for sale consists of so-called jumbo mortgages taken out by U.S. homeowners with relatively high credit scores, according to people familiar with the matter. Bids on the pool are due next week, the people added, asking not to be named because the details are confidential. READ MORE
SEC Unveils New Task Force to Start Work on Crypto Regulations

The U.S. Securities and Exchange Commission's new leadership said on Tuesday it had created a task force to develop a regulatory framework for crypto assets, in the first major move by President Donald Trump's new administration to overhaul crypto policy, Reuters reported. "The Task Force's focus will be to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously," said Republican Commissioner Mark Uyeda, whom Trump named acting SEC Chair on Monday. READ MORE
Banks Could Be Hurt By a Leverage Ban in SRTs, Hedge Fund Says

Banning the use of leverage in significant risk transfers (SRTs) could have a knock-on impact on the cost of credit for consumers and businesses, according to Seer Capital Management LP, a hedge fund that has invested in the deals since 2010, Bloomberg News reported. SRTs provide an efficient way for banks to improve their capital buffers allowing them to lend money at a lower cost, the New York-based alternative asset manager said in a note seen by Bloomberg News. In return, investors in the transactions typically receive yields that frequently top 10% for taking on the junior losses on pools of everything from car loans to corporate debt. READ MORE
Troubled Chain of SeaQuest Aquariums Up for Sale with $80,000 Asking Price

SeaQuest Holdings is asking a bankruptcy judge to expedite a sale of the company, which operates interactive aquariums and hands-on adventures with mammals and birds in shopping malls. The company filed for bankruptcy protection last month, the Minnesota Star Tribune reported. The Idaho-based SeaQuest has asked the court to approve a sale of its assets to Z&A Management LLC for $80,000, with a hearing set for Jan. 31, according to documents filed in bankruptcy court in Boise. READ MORE
Trump Says He Intends to Impose 10% Tariffs on Chinese Imports on Feb. 1

President Trump said on Tuesday that he intended to impose a 10 percent tariff on Chinese imports into the United States on Feb. 1, the New York Times reported. Speaking at the White House, Mr. Trump said that the tariffs were in response to China’s role in America’s fentanyl crisis. Trump said that China was sending fentanyl to Canada and Mexico, from where it would be transported into the United States. READ MORE
Preliminary-Round Judges Needed for the Duberstein National Bankruptcy Moot Court Competition!

The Duberstein National Bankruptcy Moot Court Competition, now in its 33rd year and widely recognized as one of the nation’s preeminent moot court competitions, will be held in New York March 1-3, 2025. Fifty-three teams from law schools across the country will compete through written briefings and oral argument. Please find the fact pattern by clicking here. Volunteers are needed to judge the preliminary rounds (sign up here) of the competition. Click here for more information and to volunteer.
 
 
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