Analysis: Purdue Pharma Bankruptcy Deal Ruling Is Taking Courts by Storm​​​

The Supreme Court’s decision striking down Purdue Pharma’s bankruptcy settlement is already being craftily applied by lawyers looking to push its authority as far as possible and carefully parsed by judges interpreting the extent of its impact, according to a Bloomberg Law analysis. The Court, in rejecting liability releases for members of the billionaire Sackler family who owned Purdue, found they were illegal because they were given without the consent of some people who sued the family over its opioid sales tactics. The long-awaited ruling in Harrington v. Purdue Pharma was bound to shake up the bankruptcy world, which has relied on litigation shields to protect people and companies that aren’t bankrupt — such as the Sacklers — against legal claims related to an underlying chapter 11 case. In the month since the decision came down, lawyers have started testing how the guidance can be used to benefit their clients, despite the Supreme Court’s insistence that its decision wasn’t intended to be wide-ranging. The 5-4 decision has quickly made the rounds in complex corporate bankruptcy cases, including cases involving electric scooters and genetic tests, with lawyers and judges alike applying it to restructuring plans and temporary restraining orders. The Justice Department’s bankruptcy watchdog, which brought the Purdue case over the nondebtor — or third-party — releases all the way to the Supreme Court, was quick to draw its new sword. The U.S. Trustee on July 15 challenged the validity of medical genetic testing company Invitae Corp.'s requirement that creditors check a box on its bankruptcy ballot to indicate that they want to opt out of the releases. That requirement makes the releases nonconsensual because it binds some voters who didn’t provide a response, the U.S. Trustee argued. After Purdue, “it is clear that merely voting for a plan” doesn’t qualify as consent, the U.S. Trustee said. The judge overseeing Invitae’s case hasn’t ruled on the proposed plan. The U.S. Trustee tried to apply the ruling slightly differently in the bankruptcy of SVB Financial Group, the former parent of Silicon Valley Bank. The company’s plan created nonconsensual releases for third parties when it added a group of senior noteholders to its list of released parties after other creditors had submitted their votes for the plan, the U.S. Trustee said in an objection. However, SVB Financial amended the provision to resolve the issue quickly, meaning a judge likely won’t consider the argument. Read more.

Be sure to pick up your copy of ABI's The Purdue Papers featuring the decision, briefs filed in the case, exclusive commentary on the decision and more!

To watch ABI's webinar featuring experts examining the Supreme Court's decision in Purdue Pharma, please click here.
 

U.S. Economy Grew a Robust 2.8% in Second Quarter​​​

The U.S. economy accelerated in the second quarter as consumers increased their spending, businesses invested more in equipment and stocked inventories, and inflation cooled, the Wall Street Journal reported. Gross domestic product — the value of all goods and services produced in the U.S., adjusted for inflation and seasonality — rose at an annual rate of 2.8% for April through June, the Commerce Department said Thursday. That was more than the 1.4% rate during the first quarter. Household spending, the main driver of the U.S. economy, increased at a 2.3% rate in the second quarter, picking up from 1.5% in the first. Spending on goods increased while services spending moderated slightly. The report shouldn’t change the outlook for the Federal Reserve’s next moves. Officials have signaled that they expect to hold interest rates steady at their meeting next week but could cut rates at their subsequent meeting, in September, if inflation continues to cool. A key category of business spending picked up: Nonresidential fixed investment, reflecting spending on commercial construction, equipment and software, rose at a 5.2% rate. Capital expenditures were led by 11.6% growth in spending on equipment, while spending on structures declined. Excluding volatile food and energy prices, the personal-consumption expenditures price index rose 2.9% in the second quarter at an annualized rate, cooling from 3.7% in the first quarter. (Subscription required.) Read more.
 

Fewer Americans Filed for Unemployment Benefits Last Week​​​

Fewer Americans filed for unemployment benefits last week, but applications remained at recently elevated, though not troubling, levels, the Associated Press reported. Jobless claims for the week ending July 20 fell by 10,000 to 235,000 from 245,000 the previous week, the Labor Department reported Thursday. It’s the ninth straight week claims came in above 220,000. Before that stretch, claims had been below that number in all but three weeks so far in 2024. The total number of Americans collecting unemployment benefits fell for the second time in three weeks. About 1.85 million Americans were collecting jobless benefits for the week of July 13, around 9,000 fewer than the previous week. The four-week average of claims, which evens out some of the week-to-week volatility, rose by 250 to 235,250. Read more.
 

America’s 60-Year-Olds Are Staring at Financial Peril​​​

Born in a midcentury, postwar America brimming with promise, many of the youngest boomers are still sporting financial bruises from the 2007-09 recession and the nation’s steady shift away from guaranteed pensions, the Wall Street Journal reported. Older Americans — including young boomers with retirement accounts powered by a booming stock market — remain a major force in the economy. Those 55 and up control nearly 70% of U.S. household wealth, Federal Reserve data show. But that age group also includes older adults with little if any retirement funds socked away, or only Social Security to lean on, who are facing golden years laden with risk. For millions of younger boomers, who could live at least two more decades, a lost job or expensive medical problem could upend their stability while ramping up pressure on younger generations. About a third of younger boomer households lacked retirement benefits beyond Social Security in 2022, the most recent year available, according to a closely watched Federal Reserve tool called the Survey of Consumer Finances. When the older boomers were roughly the same age, a smaller amount — one quarter — were missing these retirement benefits. (Subscription required.) Read more.
 

Commentary: Why Paper Checks Refuse to Die​​​

Target stopped accepting personal checks as a form of payment this month, which might inspire the following question: What took so long?, according to a New York Times commentary. Check fraud has more than doubled in recent years, and it costs at least a dollar for businesses to process each check they receive. Plenty of young adults have never even written one. But if you haven’t used a check in years and consider it a badge of honor, that may say a lot about where you live and what you pay for. In many industries, checks continue to be a popular form of payment, and sometimes they are required. According to consumer survey data from the Federal Reserve Bank of Atlanta, which tracks the percentage of payments that consumers make by check, the following industries receive the most check payments: Contractors, like electricians and plumbers, get 25 percent of their payments by check. Charitable and religious organizations are next at 22 percent. Landlords, government taxing authorities and professional-service firms also receive double-digit percentages of their payments by check. There are many pockets of commerce in which checks are required. Some consumers said that they still write checks for a number of things, like homeowners’ association dues and haircuts and the occasional long-term-care insurance policy. Some people like it this way, though they cite many different reasons. Read more.
 

Next Week: Two abiLIVE Webinars to Provide Insights on Filing Trends and Merchant Cash Advances​​​

Two abiLIVE webinars next week will present expert perspectives on bankruptcy filing trends and the intersection of merchant cash advances and bankruptcy:

- Tuesday: Year-over-year bankruptcy filings continued to show double-digit increases across nearly all chapters for the first six months of 2024. Join ABI and statistical partner Epiq Bankruptcy Analytics next Tuesday for a special abiLIVE webinar featuring experts who will break down the consumer and business filing trends that emerged in the first half of 2024, and offer their predictions on what might unfold over the remainder of the year. Complimentary registration.

- Thursday: The "Intersection of MCAs and Bankruptcy" webinar will feature bankruptcy practitioners discussing all facets of merchant cash advance (MCA) funding, its history, and its interplay with bankruptcy. The panelists will provide different perspectives — MCA company, debtor and subchapter V trustee — on the legal implications of merchant cash advances in chapter 11 bankruptcy proceedings, as well as practical solutions for dealing with MCAs in chapter 11 cases. Complimentary registration. 

Donate to the Kevin J. Carey Memorial Scholarship ​​​

Hon. Kevin J. Carey (ret.), who served as ABI’s President from 2022-23 after previously having served as ABI’s Vice President-Membership, among other leadership roles, died on April 11 at his home in Devon, Pa., at the age of 69. An ABI member since 1997, he had served as a U.S. Bankruptcy Judge for the District of Delaware from 2001-19, then as senior counsel at Hogan Lovells in Philadelphia from 2019 until his death. The Carey family is grateful for the continued prayers and support they have received since Judge Carey’s passing, and have since formed a scholarship in his name at Villanova University School of Law, which will be awarded to academically talented students enrolled in the Charles Widger School of Law with demonstrated financial need. To donate in support of the Kevin J. Carey Memorial Scholarship, please send a check to Villanova University at 299 North Spring Mill Road, Villanova, PA 19085, with “The Kevin J. Carey Memorial Scholarship” in the memo. Donations also can be made online at givecampus.com/campaigns/36916/donations/new. From there, select “Other/Your Choice” to write in “The Kevin J. Carey Memorial Scholarship.”  

Get Your Copy of The Purdue Papers — Now Updated with the Supreme Court’s Ruling!​​​

The Purdue Pharma L.P. case, overturned at the end of June by the U.S. Supreme Court, generated a mountain of commentary in the form of amicus briefs, petitions and other related background material. Guided by editor David R. Kuney (who represented one group of amicus filers), ABI has gathered together all of this material in a fully searchable form — more than 3,500 pages worth! This digital book includes the final Supreme Court decision, a commentary by ABI Editor-at-Large Bill Rochelle, and a transcript of ABI’s July 2 webinar discussing the implications of the decision. It’s an invaluable resource for anyone working in the area of third-party releases, whether as a practitioner, an academic or just an interested party. Get your digital copy for only $25!

Pick Up Your Copy of Driving the Recovery Bus​​​

Make sure to pick up your copy of Driving the Recovery Bus: Augmenting Creditor Recoveries Through Claims Brought by a Litigation Trustee. Written by Gordon Z. Novod, this book is not only for litigation trustees, but also for creditors who serve on official committees of unsecured creditors, attorneys and other professionals who frequently represent official committees of unsecured creditors, and others with a general interest in the pursuit of causes of action by litigation trustees. Get your copy of Driving the Recovery Bus. 
 

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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