Fitch: U.S. Distressed-Debt Exchanges Result in Higher Recoveries than Bankruptcy​​​

Out-of-court restructurings continue to lead to better recovery outcomes for creditors as compared to bankruptcies, according to a new report published by Fitch Ratings. Companies conducting distressed-debt exchanges (DDEs) typically have more enterprise value than those that proceed to bankruptcy, where additional restructuring time, leverage and costs further erode creditor recoveries. Average recoveries for DDEs from the beginning of 2024 through 1Q25 ranged from 77.8% to 92.8%, depending on the proxy. This is greater than the historical average weighted first-lien bankruptcy recoveries of approximately 63.2%, and substantially higher than the 50.7% weighted average first-lien recoveries observed in 2024 and the 39% so far this year. Notably, DDEs that take the form of liability-management transactions (LMTs) were below those that were not LMTs. Furthermore, the blended weighted average recoveries for LMTs in 1Q25 dropped to 56% from 74.9%, with participating lenders achieving notably higher recoveries than non-participants. Read more.​​​​​​

Federal Judge Reverses Rule that Would Have Removed Medical Debt from Credit Reports​​​

A federal judge in Texas removed a Biden-era finalized rule by the Consumer Financial Protection Bureau that would have removed medical debt from credit reports, the Associated Press reported. U.S. District Court Judge Sean Jordan of Texas’s Eastern District, who was appointed by President Donald Trump, found on Friday that the rule exceeded the CFPB’s authority. Jordan said that the CFPB is not permitted to remove medical debt from credit reports, according to the Fair Credit Reporting Act, which protects information collected by consumer-reporting agencies. Removing medical debt from consumer credit reports was expected to increase the credit scores of millions of families by an average of 20 points, the bureau said. The CFPB states that its research has shown outstanding health care claims to be a poor predictor of an individual’s ability to repay a loan, yet they are often used to deny mortgage applications. Read more.​​​​​​

Subchapter V Experiences to Share? ABI Wants to Hear from You!

ABI is continuing its study of Subchapter V, and it needs your help! We are particularly interested in learning more about the real-world impact of Subchapter V. So our question is, do you have a story about a distressed business or creditor who has used or benefited from the subchapter? If so, could that case still happen under the lower debt cap for Subchapter V debtors? Any and all responses are welcome. Submit your story at https://abi.org/subvstories.
 

Moody's: Tariff Uncertainty Increases Default Risks Among Companies​​​

According to a Moody's report, the number of companies at high risk of default has reached an 11-month high due to deteriorating credit conditions amid trade tensions and U.S. tariff policy, ForexMart.com reported. In the second quarter of 2025, 16 more companies were included in the list of the most vulnerable to default, increasing the total number to 241. These are mostly non-financial firms in the U.S. with a Caa1 rating or lower, or with a B3 rating but with a negative outlook. Moody's notes that U.S. tariffs and global trade instability have increased pressures on business revenues and liquidity. In particular, Conair Holdings (cosmetics) and Power Stop (braking systems) received a junk rating due to the effects of high import duties. There has also been an increase in the number of actual defaults — companies that left the high-risk list not because of an improved rating, but because of non-fulfillment of debt obligations. According to Moody's, there were four times as many such cases as there were improvements. The agency emphasizes that the largest numbers of defaults are currently observed in the technology sector, but in the coming months, the greatest risks will pass to companies from the consumer sector. Read more.​​​​​​

U.S. Weekly Jobless Claims Fall; Job Growth Appears Steady in July​​​

The number of Americans filing new applications for jobless benefits fell last week, pointing to steady job growth in July, although some laid-off workers are experiencing long spells of unemployment because of a moderation in hiring, Reuters reported. Initial claims for state unemployment benefits dropped 7,000 to a seasonally adjusted 221,000 for the week ended July 12, the Labor Department said today. The Fed said that while reports of layoffs were limited in all industries, they were "somewhat more common among manufacturers." It noted that "many contacts expected to postpone major hiring and layoff decisions until uncertainty diminished." The claims report covered the period during which the government surveyed employers for the nonfarm payrolls component of July's employment report. Nonfarm payrolls increased by 147,000 jobs in June, though nearly half of the positions were in the government sector, mostly state education. Read more.​​​​​​

Retail Sales Rose More than Expected in June​​​

Retail sales rose 0.6% in June from May, the Commerce Department said Thursday, the Wall Street Journal reported. The pickup comes after retail sales fell 0.9% in May. The increase was driven in part by strong demand for motor vehicles, whose sales rose 1.2%. Not counting autos, retail sales rose 0.5% in June. Sales of clothing, which tends to be tariff-sensitive, rose 0.9% after rising by 0.3% the prior month. Sales of building materials also rose 0.9%. Conversely, sales at furniture stores and at electronics and appliances stores both fell slightly. (Subscription required.) Read more.​​​​​​

‘Crypto Week’ Is Back on Track After House GOP Quells Conservative Revolt​​​

Republicans today moved toward passing a series of bills backed by the cryptocurrency industry, reviving plans for a widely publicized “crypto week” on Capitol Hill that had collapsed amid GOP infighting, the New York Times reported. Late Wednesday night, Republican leaders managed to quell a conservative revolt over the measures and finally win a nearly 10-hour vote to take them up. The breakthrough put the House on track on Thursday to pass the Genius Act, which would outline rules for stablecoins, a type of digital currency. That would then clear the legislation for President Trump, who has promised to sign it. The House is also slated to vote on a separate bill called the Clarity Act, which would establish a new regulatory framework for cryptocurrencies, weakening the power of the Securities and Exchange Commission, which has aggressively pursued crypto enforcement, to police the industry. A third bill that would ban the federal government from offering its own digital currency was also on track for a vote today.  Read more.​​​​​​

Webinar Series on Mergers and Acquisitions, Sponsored by SC&H Capital, Kicks Off Next Thursday to Examine Key Considerations in the Current Market​​​

Join us on July 24 at 1:00 p.m. EDT for the first session of a three-part webinar series, hosted by ABI Capital Partner SC&H Capital. This first webinar in the series will discuss the sales of private credit lender collateral, as well as capture key considerations in mergers and acquisitions in the current and near-term markets. Enjoy free registration by clicking here!  Read more.​​​​​​

Unlock Bankruptcy Law Essentials from Top Industry Professionals with Restructuring Masterclass Program​​​

Restructuring Masterclass is an online, on-demand series of classes specifically designed to cover all the bankruptcy essentials. This program provides a foundation in bankruptcy law for both lawyers and business professionals alike, and sessions are taught by an outstanding faculty of experts who present practice tips and the basic concepts that every professional dealing with insolvency needs to know. Learning the fundamentals of bankruptcy law is an essential practice component for a variety of professions. Subscribe today at restructuringmasterclass.com to explore more than 40 expertly crafted courses, with new sessions being added monthly.​​​​​​

Access All Current ABI Titles Through ABI’s New Digital Book Subscription!​​​

One of the best collections of bankruptcy books is now available as an annual digital subscription! ABI’s bankruptcy library opens the door to a constantly evolving area of the law, and our books are continually being updated by top industry professionals. Auto-renewing annual subscriptions guarantee immediate access to this invaluable resource, which is comprised of fully searchable content that’s always available on any digital device. Convenient pricing plans for individual and institutional subscribers offer immediate and unlimited access to our entire digital library of books — nearly 100 treatises! Plus, you get advanced access to new and revised books as soon as they are published — all included in your annual subscription. Learn more!

Nomination Deadline Is Aug. 22 for ABI's International Matter of the Year Award​​​

ABI’s International Committee is accepting nominations for its Fourth Annual ABI International Matter of the Year Award. For criteria, eligibility and other information on the award, please click here.​​​​​​

Have an Idea for a Topic for an ABI Conference Session? Submit Your Proposal via ABI’s “Call for Abstracts” Page!​​​

ABI has launched an online portal for professionals to submit proposals for educational sessions at future ABI conferences. Submitters can describe their proposed topic, outline the session’s focus and learning goals, suggest speakers, and provide contact information via the portal’s detailed form. The portal can be accessed here.

All submissions will be reviewed by an internal Education Committee, which will contact the submitter to ask questions as needed and to discuss the status of the proposal. Submissions will be reviewed on a rolling basis.

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