Purdue Pharma Nears New Bankruptcy Deal with Sacklers, Mediator Says​​​

Purdue Pharma is close to a new bankruptcy settlement with its owners, members of the wealthy Sackler family, and state and local governments that have filed lawsuits alleging that its painkiller OxyContin spurred a deadly opioid addiction crisis in the U.S., a court-appointed mediator said today, Reuters reported. Hon. Shelley Chapman (ret.), the mediator, said at a court hearing in White Plains, N.Y., that Purdue has made real progress in recent days on a comprehensive deal that would resolve the lawsuits, adding that she would soon file a written report on the results of mediation. "The parties are getting closer and closer by the day and the remaining issues, in our view, are resolvable," Judge Chapman said. She urged U.S. Bankruptcy Judge Sean Lane to extend a freeze on opioid lawsuits against the Sacklers until Dec. 2, saying that allowing lawsuits to resume would undermine settlement talks and deplete resources that should be reserved for paying opioid creditors. “You can't make war and peace at the same time," Chapman said. “In order for the mediation to succeed, we need the full, undistracted attention of all the parties.” Purdue was sent back to the drawing board after a landmark U.S. Supreme Court ruling upended its previous bankruptcy plan, which would have granted sweeping legal protections to the Sacklers in exchange for up to $6 billion that would have been spent addressing the harms caused by the opioid epidemic in the U.S. Judge Chapman did not discuss any terms of the deal. Attorneys representing state and local governments also declined to address the terms under discussion while saying they were optimistic that a new deal could be reached before Dec. 2, the date when the current litigation stay is scheduled to expire. Read more.

Third-party releases will be one of the many topics being discussed at ABI's Winter Leadership Conference on Dec. 12-14. Rates go up after 11/8, so be sure to register today!

Low U.S. Weekly Jobless Claims, Solid Consumer Spending Showcase Economy's Strength​​​

The number of Americans filing new applications for unemployment benefits fell to a five-month low last week and consumer spending increased more than expected in September, showcasing the economy's strength heading into the final stretch of 2024 and just days before next Tuesday's presidential election, Reuters reported. Though prices pushed higher last month, inflation is firmly on a downward trend, with other data on Thursday showing labor costs posting their smallest gain in more than three years in the third quarter. The data likely keeps the Federal Reserve on track to cut interest rates next week and possibly in December. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 216,000 for the week ended Oct. 26, the lowest level since May, the Labor Department said. The third straight weekly decline likely reflected the fading distortions from Hurricanes Helene and Milton, which boosted claims in early October and kept them elevated through the middle of the month. Applications were also lifted by a strike at Boeing, which has forced the planemaker to implement rolling furloughs, and hurt its suppliers. 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.
 

Cars, Planes and Restaurants Boost Asset-Backed Debt Sales to Highest Level Since Financial Crisis​​​

Sales of debt backed by everything from auto loans to airplane leases to Subway franchise fees have hit their highest level since the financial crisis, as banks try to meet new capital rules and insurance companies clamor for higher-yielding debt, Bloomberg News reported. Asset-backed securities sales have topped $316 billion, surpassing 2021’s $312.6 billion, data compiled by Bloomberg shows. According to Bank of America Corp., which uses a different methodology for counting asset-backed issuance, this year’s sales are the highest in the decade-and-a-half following the Great Financial Crisis. The heavy issuance partly stems from banks offloading loans from their books ahead of new capital rules, bundling the debt into bonds they can sell to investors. The firms could be required to start implementing Basel III endgame rules next year, which in many cases require them to pare back risk and fund loans with more capital, cutting into potential returns. Read more.

Their Car Is Totaled, but They Still Owe Years of Payments​​​

The rapid decline in used-car prices is a financial risk for millions of drivers — even if they bought a new car, the Wall Street Journal reported. Roughly a third of people who financed their vehicles have negative equity on their auto loans, according to a survey by car marketplace CarEdge, which means their loan is larger than the value of their car. That share would amount to some 31 million of the more than 100 million auto-loan accounts tallied by the Consumer Financial Protection Bureau. Being “underwater” is common because a car loses value as soon as it is driven off the lot. But that 19% drop in used car prices since their peak in 2022 means that more cars are now worth less than the remaining balances on their car loans — and by larger amounts. Drivers feel the consequences if they total their cars or trade them in. If a car is among the growing number that got totaled in an accident or natural disaster, the owner is still on the hook for any remaining loan payments. If an owner goes to trade it in, the balance might be rolled over into a new auto loan — or prevent a driver from getting a new car. It is also taking longer for borrowers to catch up on underwater debt. Borrowers who have negative equity when they trade in owe an average of $6,458 more than what their car is worth, Edmunds said. About 22% owe $10,000 or more. The share of drivers with negative equity is higher among those who have financed their vehicles since 2022. Some 46% of drivers with electric vehicles are underwater, CarEdge found. (Subscription required.) Read more.

Latest "Unordinary Course" Podcast Examines Financial Challenges Facing Colleges and Universities​​​

The latest episode of the ABI Business Reorganization Committee’s “Unordinary Course” podcast series features host Lee Pacchia of ICR talking with Mark Podgainy, a managing director at Getzler Henrich & Associates LLC, about the financial and operational challenges facing institutions of higher education. Listen to the podcast here.

A Wall Street Landlord Bought Your Neighbor’s House. It’s a Mixed Blessing​​​

Wall Street landlords don’t have a huge foothold in residential property yet, but they want one in the future. A handful of neighborhoods offer a preview of what that could mean for the U.S. housing market, the Wall Street Journal reported. More than a decade ago, private-equity giant Blackstone began spending hundreds of millions of dollars on family homes that went into foreclosure after the 2008-09 global financial crisis, creating a completely new asset class for institutional investors. Since then, corporate landlords, including Invitation Homes and Amherst, have bought more than 600,000 houses across the U.S. Nationally, Wall Street landlords that have more than 1,000 units in their portfolios own just 1% of all of America’s family homes and 4% of all of the houses that are rented out. In most areas, their presence is still too small to have much effect on local housing dynamics. If current trends continue, though, their share of the market for single-family rentals could increase 10-fold by the end of the decade, MetLife Investment Management estimates. There are a handful of U.S. neighborhoods where investors are densely clustered, particularly in Georgia, North Carolina, Florida and Texas. They have bought more than 1,000 homes in 53 zip codes, putting their ownership of the local housing stock at anywhere from 4% to 12%, according to data from real estate analytics firm Parcl Labs. The data includes some houses temporarily owned by builders, as well as foreclosed properties on banks’ books, but most are held by institutional landlords. (Subscription required.) Read more.

Don't Miss Part 1 of ABI's Consumer Practice Extravaganza Nov. 11-12!​​​

ABI's Consumer Practice Extravaganza, the largest online consumer bankruptcy practice event of the year, will be delivering so many great sessions that it has been split into two parts! The first part will be taking place Nov. 11-12, featuring the following panels:

- "Combating the Creative Consecutive Filer"
- "Explaining Racial Disparities in Personal Outcomes"
- "Issues Spotting and Preparing Schedules Properly for Consumer Bankruptcy and Family Law Issues"
- "Injunction of Law in Light of Purdue Pharma"

For just $100, attendees will be able to access live programming, or watch recordings to experience the conference on your schedule! All November Part 1 programs, plus Part 2 sessions taking place in January 2025, are included in the registration price. Register today!

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!

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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