Commentary: Solicitor General to Seek Certiorari in Purdue Pharma*​​​

by David R. Kuney
Washington, D.C.

A recent article in the Bankruptcy Brief by Thomas Salerno criticizes the announcement by the U.S. Solicitor General that its office would be filing a petition for a writ of certiorari in the Purdue Pharma bankruptcy case. I respectfully disagree. First, at its most elementary level, one should ask, “How could the UST not challenge the validity of third-party releases?” The issue of whether nonconsensual third-party releases of nondebtor parties are permitted under the Bankruptcy Code may well be one of the most important bankruptcy issues currently before the courts — one that will shape the reorganization process for years to come. It was the focus of a recent meeting of the American College of Bankruptcy, which discussed the backlash against permitting such releases. This issue has been recognized as the “great unsettled question” among the courts and “the most controversial issue[] in Chapter 11 bankruptcy.” The time has come for the Supreme Court to resolve it. Click here to read Kuney’s full commentary.

*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.

Cliff White, the former director of the Executive Office for U.S. Trustee’s weighed in with a commentary in last week’s Bankruptcy Brief.

The Solicitor General filed an application in the Supreme Court on July 28, asking the high court to stay issuance of the mandate pending disposition of the government’s forthcoming certiorari petition, according to a special analysis from ABI Editor-at-Large Bill Rochelle on Tuesday. The Supreme Court immediately directed that responses be filed by noon tomorrow, August 4. Rochelle said that the response deadline suggests that a grant or denial of a stay could come as early as tomorrow afternoon.

Analysis: A NY College Shutters After 200 Years, Exposing More Higher-Ed Distress​​​

When tiny Cazenovia College announced it was shutting its doors for good in late June, it became just the latest example of the mounting economic crisis facing countless private institutions in the U.S. today, Bloomberg News reported. Like scores of smaller, less-prestigious schools before it, plummeting enrollment pushed Cazenovia to the point where it couldn’t pay back the $25 million it owes creditors. Now, as the 200-year-old institution in rural upstate New York embarks on the tough task of winding down and liquidating, Cazenovia serves as a useful reminder of the challenges that other troubled colleges could face in the ever-widening shakeout of higher-ed in America — and for Wall Street as investors pick apart the school’s assets. Cazenovia’s president, David Bergh, said that the college plans on filing for chapter 11 protection, but the timing is undetermined. In the meantime, a regulatory filing in late July sheds some light on Cazenovia’s long journey. For Cazenovia, located 250 miles from New York City, its real estate holdings include a 240-acre equine facility with roughly 70 stalls, which can be sold separately. Bondholders, which include Nuveen LLC and abrdn Plc, have the right to foreclose on the property, but they have not done so. Such a move could devalue the real estate. The campus was appraised at $26 million in 2022, when the school unsuccessfully sought to sell bonds to refinance the debt that would go on to trigger the school’s closure. ​Read more.

U.S. Weekly Jobless Claims Rise Moderately; Layoffs Drop to 11-Month Low​​​

The number of Americans filing new claims for unemployment benefits rose slightly last week, while layoffs dropped to an 11-month low in July as labor market conditions remain tight, Reuters reported. Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 227,000 for the week ended July 29, the Labor Department said today. The labor market has largely weathered 525 basis points in interest rate hikes from the Federal Reserve since March 2022. Claims are in the lower end of their 194,000-265,000 range for this year, in part benefiting from difficulties adjusting the data for seasonal patterns. Automakers typically idle plants in July to retool for new models. But these temporary closures do not always happen around the same time, which could throw off the model the government uses to strip out seasonal fluctuations from the data. Nevertheless, the overall labor market remains solid as employers hoard workers after struggling to find labor during the COVID-19 pandemic. While there have been high-profile layoffs in the technology and finance sectors, small businesses are still boosting headcount after being squeezed out by large enterprises snapping up workers. The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 21,000 to 1.700 million during the week ending July 22, the claims report showed. These so-called continuing claims remain low by historical standards, indicating that some laid-off workers are experiencing short spells of unemployment. ​Read more.

Crypto Rules Delay Puts Billions in Tax Revenue at Risk​​​

Implementation of a law to catch crypto tax cheats is delayed inside the Treasury Department, putting billions of dollars in federal revenue at risk and frustrating members of the president’s own party, the Wall Street Journal reported. The department missed its first deadline to implement a 2021 law in time for the current tax year. Now, following further delays, it might be close to too late for tax year 2024. Closing a gap that can make it easier for cryptocurrency investors to dodge taxes was projected to raise $28 billion over a decade, but declining cryptocurrency prices might have altered that figure. The tax rules are part of the administration’s strategy of making crypto investors play by the same rules as others. Now, Sen. Elizabeth Warren (D-Mass.) and three other senators are pushing the Biden administration to move quickly. “These new rules were urgently needed when President Biden signed them into law in 2021. Over the past two years, that urgency has only intensified,” Warren, Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.) and Bernie Sanders (I-Vt.) wrote to Treasury officials this week. “Given the chance, tax evaders and the crypto intermediaries willing to aid them will continue to game the system, exploit loopholes, and siphon off billions of dollars a year from the U.S. government. You must not give them that chance.” Last December, the Treasury Department and Internal Revenue Service said that brokers wouldn’t have to report any information until the administration issues final rules addressing questions such as the definition of a broker. More than seven months later, Treasury hasn’t taken the first formal step of issuing a proposal, which would kick off a months-long — or years-long — process before those final rules are done. (Subscription required.) ​Read more.

Mortgage Rates in U.S. Rise for Second Straight Week, Hitting 6.9%​​​

Mortgage rates in the U.S. climbed for the second week in a row, hitting the highest level in three weeks, Bloomberg News reported. The average for a 30-year, fixed loan rose to 6.9% from 6.81% last week, Freddie Mac said in a statement today. Buyers are confronting a tough housing market in many parts of the U.S. Mortgage rates have been hovering close to 7% in recent weeks, and prices have crept higher as inventory remains tight. That’s made it even harder for first-time buyers to crack into the market. “The combination of upbeat economic data and the U.S. government credit rating downgrade caused mortgage rates to rise this week,” Sam Khater, Freddie Mac’s chief economist, said in the statement. ​Read more.

Nominations Being Accepted for ABI's International Matter of the Year Award!​​​

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

All nominations must be received by August 31.

Public Notice for Reappointment of Bankruptcy Judge Mildred Cabán​​​

The current term of office of Hon. Mildred Cabán, U.S. Bankruptcy Judge for the District of Puerto Rico, is due to expire on March 16, 2024. The U.S. Court of Appeals for the First Circuit is considering reappointment of Judge Cabán to a new term of office and has determined that she appears to merit reappointment subject to public notice and opportunity for public comment. Members of the bar and the public are invited to submit comments for consideration by the court of appeals regarding the reappointment of Bankruptcy Judge Cabán to a new term of office. All comments will be kept confidential and may be submitted via U.S. Mail to Susan J. Goldberg, Circuit Executive, John Joseph Moakley United States Courthouse, 1 Courthouse Way, Suite 3700, Boston, Massachusetts 02210, or in the form of a PDF letter attached to an email to Susan_Goldberg@ca1.uscourts.gov. The circuit executive will then submit the comments to the court of appeals for its decision. Comments must be received no later than Friday, September 8, 2023. 

Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!

Tap into Rochelle’s Daily Wire via the ABI Newsroom and Twitter!