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A new judge has been assigned to oversee tens of thousands of lawsuits in New Jersey federal court against Johnson & Johnson over its talc products, two weeks after an appeals court rejected the company's plan to offload the claims into bankruptcy, Reuters reported. U.S. District Judge Michael Shipp, based in Trenton, will take over the long-running litigation from former Chief District Judge Freda Wolfson, who retired from the bench on Feb. 1, according to an order filed on Monday. The cases, numbering more than 38,000, had been on hold since October 2021, when a J&J subsidiary newly created to hold the talc liabilities filed for bankruptcy. Plaintiffs have said that J&J's Baby Powder and other talc products contain asbestos and caused cancer. J&J maintains its consumer talc products are safe and confirmed through thousands of tests to be asbestos-free. The company has said it will challenge the ruling by the Philadelphia-based 3rd U.S. Circuit Court of Appeals dismissing the bankruptcy, which it said was intended in good faith to resolve talc claims efficiently and equitably.

Biopharmaceutical company Sorrento Therapeutics Inc. has filed for bankruptcy weeks after being hit with judgments totaling more than $173 million in a licensing dispute with affiliates of billionaire health entrepreneur Patrick Soon-Shiong’s NantWorks LLC, WSJ Pro Bankruptcy reported. Sorrento filed for chapter 11 on Monday in the U.S. Bankruptcy Court in Houston, an action that immediately pauses NantWorks affiliates’ attempt to collect the judgments awarded over alleged breaches by Sorrento of an exclusive licensing agreement between the companies related to the development of anticancer immunotherapies. An arbitrator awarded NantCell Inc. and Immunotherapy NANTibody LLC the judgments in December, a decision confirmed last week by a Los Angeles Superior Court judge. NantCell was awarded more than $156.8 million and NANTIbody was awarded more than $16.6 million, according to U.S. Securities and Exchange Commission and bankruptcy filings. The judgments are part of a broader legal dispute between Sorrento, NantWorks affiliates and Dr. Soon-Shiong. In December, Sorrento was awarded $125 million in a separate arbitration with NantPharma LLC related to the development of the cancer drug Cynviloq. Sorrento said that before filing for bankruptcy that it faced significant disruption to its business because the NantWorks affiliates planned to immediately take steps to levy the company’s assets to satisfy the judgments it was awarded in the licensing dispute. Sorrento said in December that it believed the arbitration was wrongly decided and would explore its options for vacating the judgments.

The founders of failed hedge fund Three Arrows Capital Ltd. have resurfaced with a $25 million crypto-exchange venture that will let users trade bankruptcy claims from insolvent platforms and funds, including their own, the Wall Street Journal reported. Open Exchange, or OPNX, was created by Su Zhu and Kyle Davies — who set up Three Arrows together — and the two founders of crypto exchange CoinFLEX. The new platform is expected to launch by the end of this month, Mr. Su said. It has begun accepting applications from individuals who want to be among the first to trade their crypto claims; Mr. Su tweeted on Sunday that there were more than 3,600 sign-ups so far. U.S. residents are among those that aren’t eligible for the wait list, the company said. The company’s website said there is a $20 billion market of crypto claimants, and the exchange will allow creditors to convert their claims into cryptocurrencies to use them as margin collateral for crypto futures trading. Claims against Three Arrows Capital are among those that can be traded on the new exchange, in addition to claims against FTX, Genesis Global Capital, Celsius Network LLC and others, OPNX said. Further down the road, OPNX wants to introduce decentralized custody and clearing services and also stocks and foreign-exchange products, Mr. Zhu said in a tweet.

A U.S. judge on Thursday extended a ban on FTX cryptocurrency exchange founder Sam Bankman-Fried's ability to contact employees of companies he once controlled and use encrypted messaging technology while out on bail awaiting trial on fraud charges, Reuters reported. U.S. District Judge Lewis Kaplan on Feb. 1 had temporarily barred Bankman-Fried from contacting any current or former employees of FTX or Alameda Research, his hedge fund, after prosecutors raised concerns that the 30-year-old former billionaire may be trying to tamper with witnesses. As a condition of his release on $250 million bond, the judge also prevented Bankman-Fried from using messaging apps such as Signal that let users auto-delete messages. After rejecting an agreement between defense lawyers and prosecutors to loosen those conditions on Tuesday, Kaplan on Thursday said the restrictions would remain in place until Feb. 21 and instructed both sides to explain by Feb. 13 how they could be sure Bankman-Fried would not delete electronic messages.

FTX’s bankruptcy lawyers, legal and financial advisors have billed the company more than $19.6 million in fees for their work done in 2022, according to court documents unveiled on Tuesday, the Wall Street Journal reported. The law firms that billed FTX are Sullivan & Cromwell, Landis Rath & Cobb, and Quinn Emanuel Urquhart & Sullivan. Advisory firms Alvarez & Marsal and AlixPartners also billed the company, according to their applications for compensation.

A group of insurers fighting the Boy Scouts of America’s bankruptcy reorganization plan wants to capitalize on a recent court ruling rejecting Johnson & Johnson’s use of chapter 11 to freeze 40,000 lawsuits linking its talc products to cancer, WSJ Pro Bankruptcy reported. Allianz Global Risks US Insurance Co. and Liberty Mutual Insurance Co. are among the carriers scheduled to appear Thursday in the U.S. District Court in Wilmington, Del., to argue against a bankruptcy court’s 2022 approval of the Boy Scouts chapter 11 plan, which would settle tens of thousands of sexual abuse claims. Last week, they argued in written papers that the now-dismissed bankruptcy of J&J subsidiary LTL Management LLC could apply to the youth group as well. The appeals-court ruling against LTL said that debtors seeking protection in chapter 11 must demonstrate good faith by acting in conformity with the underlying principles of the bankruptcy code, according to the insurers’ recent letter. They have previously said the Boy Scouts plan seeks to inflate financial distress to provide a windfall for sex-abuse attorneys. “Good intentions — such as to protect the J&J brand or comprehensively resolve litigation — do not suffice alone,” the insurers’ letter said, quoting the LTL decision. Some insurers settled with the Boy Scouts, but those that are appealing the chapter 11 plan argue their contractual rights under the policies they issued the Boy Scouts or its affiliates were unfairly disregarded.

Bankrupt cryptocurrency lender Celsius Network’s request to extend the deadline to present its chapter 11 plan has run into opposition because of cash burn and the length of time already taken, Bloomberg News reported. The debtors are seeking to extend the period during which they can exclusively file a plan to the end of March from Feb. 15. They also want to be the only ones who can solicit a plan until the end of June. But the U.S. Trustee, the official committee of unsecured creditors and an ad hoc group of borrowers filed objections on Wednesday, expressing little confidence in the debtors’ ability to come up with a restructuring proposal. Celsius filed for bankruptcy in July after a sharp decline in crypto prices caused risky bets to backfire. The firm is one of a number of digital-asset lenders that hit the buffers in last year’s market rout. A court-appointed examiner late last month blasted Celsius and its former Chief Executive Officer Alex Mashinsky for lacking adequate risk management and misleading customers about its business practices and financial health.

As the cryptocurrency mania raged, Congress took a hands-off approach, keeping the fast-growing industry in legal limbo as it spawned startups and drew billions of dollars from investors. That’s left it to the courts to deal with the wreckage, Bloomberg News reported. The bankruptcies of FTX Group, Celsius Network and Genesis Global are promising to turn judges into after-the-fact rulemakers for an anarchic industry whose pioneers saw it as a way to keep money beyond government reach. With little guidance to go on, the judges will need to decide fundamental questions with high stakes for creditors who bankrolled the companies and the customers who trusted them with their funds. Among them: Is a token more like money or a security like a stock or a bond? What’s owed to those who deposited cryptocurrencies on platforms that are now broke? Who has the right to be repaid first? And how does the court even properly value debts denominated in tokens — just privately concocted bits of digital code — instead of the U.S. dollar? None of that is clear. “Bankruptcy courts are doing things that the normal regulatory system is not able to provide, like guidance,” said Yesha Yadav, a law professor at Vanderbilt Law School and former World Bank lawyer who specialized in financial regulation and insolvency. “It’s essentially becoming like a proxy regulator.” The precedents that emerge from the bankruptcies will have the ability to shape an industry that for years avoided direct oversight as Congress failed to enact legislation to put it under the sway of Washington regulators. In the absence of a cryto-specific law, the Securities and Exchange Commission and the Commodity Futures Trading Commission have been left to decide for themselves how to use their current powers over the securities and derivative industries to crack down on alleged wrongdoing in cryptocurrencies. But the bankruptcy decisions have the potential to affect the business more quickly because regulators typically have to ask a court to enforce their rulings.

*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.

Brazilian hedge fund manager SPX Capital is among asset management firms taking the lead in a group of local bondholders of troubled retailer Americanas SA organizing for restructuring negotiations, Bloomberg News reported. SPX, XP Asset Management, Riza, Icatu Vanguarda, Prada, Moneda and Exes were appointed as members of the committee that will represent a group of holders of the firm’s domestic debt, according to a document reviewed by Bloomberg. The group also approved hiring law firm E.Munhoz Advogados as its legal adviser, according to minutes from a Feb. 6 meeting. Americanas filed for bankruptcy protection last month, just days after finding 20 billion reais ($3.9 billion) of “accounting inconsistencies” that artificially boosted its profits and reduced reported liabilities. SPX, one of Brazil’s largest independent hedge fund managers with over 76 billion reais in assets, hired Albano Franco from Banco BTG Pactual’s asset-management unit in 2019 to build out its credit venture. Earlier this week, another Brazilian hedge-fund power house — Verde Asset Management — said it was stung by the rout in Americanas’ local notes. The firm said exposure to local bonds brought a 14 basis-point loss to its flagship fund last month, trimming January gains to 2.7%. 

A federal judge yesterday rejected a proposal to modify Sam Bankman-Fried's bail conditions, despite an agreement between the FTX cryptocurrency exchange founder and prosecutors to address potential witness tampering concerns, Reuters reported. U.S. District Judge Lewis Kaplan in Manhattan did not provide reasons for the denial, and said a hearing on bail remains scheduled for Feb. 9. A spokesman for Bankman-Fried declined to comment. The office of U.S. Attorney Damian Williams in Manhattan also declined to comment. Bankman-Fried, 30, has been free on $250 million bond and living in Palo Alto, Calif., with his parents, who guaranteed the bond, since pleading not guilty to looting billions of dollars from the now-bankrupt FTX. On Tuesday afternoon, he formally appealed Kaplan's Jan. 30 ruling granting a request by 11 media outlets including Reuters to reveal the names of two other people guaranteeing his bail. Bankman-Fried has said his parents, both Stanford Law School professors, had been harassed and received physical threats since FTX's collapse, and there was "serious cause for concern" the additional guarantors might suffer similar treatment. Prosecutors had asked last month to tighten bail, citing Bankman-Fried's efforts to contact both the general counsel of the FTX U.S. affiliate and new FTX Chief Executive John Ray, ostensibly to provide assistance.