Commentary: Reflections and Predictions on the Oral Argument in Purdue Pharma: The Supreme Court Should Reverse the Second Circuit* ​​​

by David R. Kuney
Georgetown University Law Center; Washington, D.C.

On Dec. 4, 2023, the U.S. Supreme Court heard almost two hours of oral argument in Harrington v. Purdue Pharma. The oral argument was an opportunity to probe some of the issues underlying nonconsensual third-party releases, which have been described as the “great unsettled” question of bankruptcy law. More than one month has now passed since oral argument. Further reflection on what was presented to the Court seems in order. This essay examines whether oral argument revealed any insight into how the Court might rule on this great unsettled question, as well as the Court’s views on bankruptcy law in general, and in particular, on the legitimacy of a bankruptcy court expanding its powers to resolve mass-tort and other complex chapter 11 reorganization issues. Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Kuney and a host of other ABI members with views on both sides of the case are working on a special publication to be released shortly after the Supreme Court’s decision in Purdue Pharma. Check the ABI Bookstore soon after the decision for its availability!
 

New Disruptions, Geopolitics Hang over 2024 Supply Chains ​​​

Companies that assembled new supply chain strategies in the wake of the COVID-19 pandemic are having to put those plans into practice far faster than they may have thought possible, the Wall Street Journal reported. Global supply chains are entering 2024 roiled by disruptions at two of the world’s crucial trade corridors — the Panama Canal and the Suez Canal — even as geopolitical tensions appear set to take a more prominent role in sourcing and distribution. That could potentially force countries and companies to redraw trade maps that have been built over decades. At the same time, startups and longstanding businesses are establishing the new supply chains behind clean energy, including the operations backing an automotive sector that is a foundation of manufacturing logistics networks. All of this is buffeting supply chains from semiconductors to consumer goods, pressing companies that sought to bring greater resilience and flexibility into their operations to act in a fast-changing manufacturing and shipping environment. The sudden shocks and shifts will pose a challenge this year to ocean carriers, truckers and other freight and logistics companies that will have to divert resources according to diversions in cargo flows and swings in demand. Wars in Ukraine and in the Middle East are threatening flows of grain, oil and consumer goods. Climate change and mass migration are disrupting trade lanes from the Panama Canal to the U.S./Mexico border. Growing geopolitical tensions are making international supply chains ever more complex. Read more. (Subscription required.) Read more.

Three Webinars in January Will Help Provide You with a Well-Informed Start to 2024! ​​​

ABI will be holding two abiLIVE webinars and, in collaboration with NCBJ, one "Behind the Bench" webinar to make sure you have a well-informed start to the New Year! Be sure to register for these complimentary webinars:

- "2023 Filing Trends and What to Expect in the Year Ahead" abiLIVE on Jan. 9 at 2:30 p.m. ET. Register here.

- "Revisiting Evidence in Bankruptcy with the Authors of ABI’s Quick Evidence Handbook" abiLIVE on Jan. 16 at noon ET. Register here.

- "Behind the Bench: Chapter 13 Plan Issues – The Good, The Bad, and The Ugly" in collaboration with NCBJ on Jan. 23 at 1 p.m. ET. Register here.

Analysis: A Real Estate Juggernaut Ran Off the Rails in 2023 ​​​

From 2019 to 2022, a new type of real estate fund became one of the hottest fundraising juggernauts on Wall Street by giving individual investors the chance to participate in the soaring values of apartment buildings, warehouses and other types of commercial property, according to a Wall Street Journal analysis. Last year, those funds, known as nontraded real estate investment trusts, ran off the rails. As concerns increased about the troubled commercial-property market, fundraising plummeted by the funds’ sponsors, many of them giant investment firms such as Blackstone and Starwood Capital Group. Meanwhile, redemptions soared as shareholders rushed to cash out. Sponsors were hit by so many redemption requests at the same time that they had to implement fund rules limiting the rate at which people could get their money back during such runs. Like public REITs, nontraded REITs buy commercial property, allowing investors to share in their incomes and increases in value. They are also known for paying high dividends. The main difference is that shares in public REITs are traded on stock exchanges, while investments in nontraded REITs are made mostly by individuals through financial advisers. Nontraded REITs raised $9.8 billion last year through November, compared with $33.2 billion during all of 2022, according to Robert A. Stanger & Co., an investment-banking firm that tracks the industry. Meanwhile, investors redeemed about $17.4 billion through November, far surpassing the $12 billion redeemed in all of 2022, Stanger said. Redemptions slowed toward the end of 2023, but outflows are expected to continue to exceed funds raised as 2024 begins, making the business a symbol of one of the worst downturns to hit the commercial-property industry since World War II. (Subscription required.). Read more.

Chill in the Housing Market Seeps into Other Industries ​​​

High home prices and elevated mortgage rates, which squeezed the housing market last year, have dragged down a number of other related sectors, like real estate services and mortgage lending, the New York Times reported. But housing is such a crucial cog in the American economy that its slowdown has also threatened industries like home improvement and storage. Sales of existing homes, which make up most of the nation’s housing stock, were down roughly 7 percent in November from a year earlier, according to the National Association of Realtors. Federal Reserve policymakers held interest rates steady at their meeting in December and signaled that the central bank would begin cutting interest rates in 2024, offering hope to the residential market, which is more sensitive to interest-rate changes. The factors that kept people from buying a home in 2023 were myriad, including soaring prices. The median price of an existing single-family home was $392,100 in November, according to the Federal Reserve Bank of St. Louis, making home buying unaffordable for a large swath of the population, even as mortgage rates have dipped below 7 percent. Would-be buyers are also facing a lack of houses on the market. Some homeowners don’t want to sell their homes and forfeit the low mortgage rates they landed just a few years ago. About four out of five homeowners with mortgages have a rate lower than 5 percent, and about a quarter have a rate lower than 3 percent, according to a study conducted by online brokerage firm Redfin. Even baby boomers who might consider downsizing are finding that it might not be cost-effective to take out a new mortgage with rates at their current levels. Read more.

Millennials Have Found a Way to Buy Houses: Living with Mom and Dad ​​​

The strategy of remaining in their parents’ house until they can afford to buy property has gained traction among young adults trying to bridge the gap between sky-high rents and a daunting real estate market, the Washington Post reported. In 2022, the share of first-time buyers who moved directly from a friend’s or family member’s home and into their own hit 27 percent, according to the National Association of Realtors. That’s the highest share since the group started keeping track in 1989. Though that number trended lower this year to 23 percent, it remains elevated, said Jessica Lautz, deputy chief economist and vice president of research at NAR. For swaths of millennials, hunkering down with family gave them breathing room to save for a home. The trade-off comes down to temporarily relinquishing a measure of independence to achieve a milestone increasingly out of reach for people their age. Lautz said this generation faces a host of obstacles — student loan debt, car payments and child-care costs, among them — but none loom larger than record-high rental prices. As of November, the national median for a one-bedroom apartment was roughly $1,500 a month, according to Zumper. But it’s significantly higher in large urban areas that are beacons to young professionals, including New York ($4,300), San Francisco ($2,970), Miami ($2,600) and D.C. ($2,330). Read more.

Surveys Must Be Submitted by Monday for ABI’s Diversity Working Group Survey! ​​​

As part of the ABI Diversity Working Group’s (DWG) ongoing efforts to address issues with diversity and inclusion (D&I) within ABI and the insolvency industry, the DWG wants to ensure that ABI’s D&I initiatives align with your interests and needs, including the specific D&I topics, issues and areas of learning that matter most to you. Please take a few minutes to share your thoughts by completing this survey by Monday. Take the Survey.

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, who 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, although please note that abstracts to be considered for the upcoming Annual Spring Meeting, being held April 18-20, 2024, at the Marriott Marquis in Washington, D.C., must be submitted no later than December 31, 2023. 

Miss Any of the 25+ Hours of CLE Programming at CPEX23? Access All Replays for Only $100!

Leading practitioners over two weeks examined key issues across the consumer bankruptcy landscape during ABI’s 2023 Consumer Practice Extravaganza (CPEX). Did you miss any of the sessions, including an exclusive “Fireside Chat” with EOUST Director Tara Twomey and deep dives into student loans, technology and the future, subchapter V of chapter 11, tax issues and more? Get access to all replays via a state-of-the-art virtual platform for only $100! All sessions will conveniently remain available until Jan. 31! 

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