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Experts testifying at a Thursday hearing categorically blamed executive mismanagement for the recent spate of bank failures feared to be hurtling the economy into a recession, The Hill reported. At a Senate Banking Committee hearing, banking and regulatory experts from the University of Richmond School of Law, Catholic University and the U.S. Chamber of Commerce lobbying group all said bad management was the primary causes of the failures. “Those three banks had very unique business models,” Chamber of Commerce vice president Tom Quaadman testified. “Silicon Valley Bank concentrated on capital intensive tech startups as well as biomedical startups. First Republic Bank concentrated on wealth management, whereas Signature Bank had a large exposure to digital assets.” Regulatory lapses on the part of the Federal Reserve were also cited by the experts and by lawmakers of both parties. While the hearing was focused on “holding executives accountable after recent bank failures,” no bank executives were present at the Senate hearing, and no legal actions have been taken against any of them.

Christmas Tree Shops, the discount home-goods chain spun out by Bed Bath & Beyond in 2020, is preparing to file for bankruptcy as early as this weekend, WSJ Pro Bankruptcy reported. The Middleboro, Mass.-based chain of roughly 80 bricks-and-mortar stores recently hired Boston-based law firm Murphy & King to prepare a potential chapter 11 filing. The chain was acquired from Bed Bath & Beyond by Handil Holdings, owned by entrepreneurs Marc Salkovitz and Pam Salkovitz. They embarked on a plan to rebrand the stores as CTS to increase awareness of the breadth of its offerings beyond Christmas items. Mr. Salkovitz told the Wall Street Journal in 2021 that the name of the chain led many customers to believe that the stores only sell Christmas-related items. Christmas Tree Shops could follow its former parent into bankruptcy. Bed Bath & Beyond filed for chapter 11 in April after years of losses and failed turnaround plans left the home-goods chain short of cash.

A federal judge ordered a new round of settlement talks between Johnson & Johnson and lawyers who spurned the company’s offer to pay $8.9 billion to end tens of thousands of cancer claims filed by people who used the company’s popular baby powder, Bloomberg News reported. Holdouts want to take their claims to juries around the country instead of joining a proposal that would resolve all current and future lawsuits related to the health care giant’s talc-based products. About 40,000 people have sued J&J claiming the company for decades sold products like baby powder that were so contaminated that they caused cancer. J&J denies that the products were harmful and is trying for a second time to use a bankruptcy case filed in New Jersey by a small unit to force claimants to accept a deal. Bankruptcy Judge Michael Kaplan overruled objections from some of the holdouts who had opposed one of two mediators that will oversee the confidential settlement discussions.

Bankrupt crypto exchange FTX wants to claw back nearly $4 billion in funds from similarly bankrupt Genesis Global Capital, the company said in a court filing yesterday, CoinDesk.com reported. Genesis was "largely repaid" the nearly $8 billion in loans made to Alameda Research, an FTX-affiliated entity, in the weeks leading up to FTX's bankruptcy in November, the motion said. Genesis is a subsidiary of Digital Currency Group, CoinDesk's parent company. Genesis filed for bankruptcy itself in January. According to yesterday's filing, Alameda repaid $1.8 billion in loans to Genesis and pledged $273 million to Genesis in the 90 days before the various FTX companies filed for bankruptcy. Genesis also withdrew another $1.6 billion from FTX, while Genesis Global Capital International withdrew another $213 million in that same period. "The Avoidance Actions will seek to claw back funds received by Genesis and nondebtor affiliates so that these funds can be shared with all other creditors of the FTX Debtors in the FTX Chapter 11 Cases. These creditors include several million customers owed over $11 billion as of the time of filing of FTX Chapter 11 Cases," the filing said. There will be a hearing on May 25 to discuss the motion.

Johnson & Johnson should not be allowed to use a small unit’s bankruptcy case to end tens of thousands of cancer lawsuits because the strategy is rooted in bad faith, the U.S. Trustee said in a court filing, Bloomberg News reported. The health care products maker is trying for the second time to get itself “out of a jam as cheaply as possible,” using the chapter 11 filing of LTL Management, said the agency, which is an arm of the U.S. Justice Department. J&J created LTL in 2021 and made it responsible for resolving claims that tainted baby powder and similar products caused cancer. In a Monday court filing, the U.S. Trustee joined a group of advocates for cancer victims who have asked a federal judge in New Jersey to dismiss the LTL bankruptcy case. J&J put LTL back into bankruptcy last month about two hours after the first LTL case was dismissed. “In the weeks leading up to its second bankruptcy filing, LTL and its ultimate parent, Johnson & Johnson, engaged in a series of transactions that LTL admits were designed for no purpose other than creating artificial ‘financial distress,’” the U.S. Trustee said in the filing. J&J has an $8.9 billion settlement agreement with the “vast majority” of the law firms representing talc claimants, the company’s head of litigation, Erik Haas, said in an emailed statement. Should the bankruptcy survive and 75% of claimants vote in favor of the deal, all current and future talc suits would be settled.

Revlon Inc. said on Tuesday that it has emerged from bankruptcy after cutting more than $2.7 billion in debt and handing control of the beauty products company to its lenders, Reuters reported. CEO Debra Perelman said in a statement that Revlon is stronger after bankruptcy and well positioned for long-term growth. "We look forward to unlocking the full potential of our globally recognized brands and continuing to offer our customers the iconic products they have loved for decades," Perelman said. Revlon, which has a 91-year history selling lipstick, nail polish and other beauty products, filed for bankruptcy in June, saying that its $3.5 billion debt load and pandemic-related disruptions had left it too cash-poor to make timely payments to critical vendors in its cosmetics supply chain. Revlon has filled its post-bankruptcy board of directors with experienced executives from the consumer, retail, and beauty industries, including former Bloomin' Brands CEO Elizabeth Smith and former Sephora CEO Martin Brok. Revlon's lenders took ownership of the company in exchange for the debt-reduction agreement, wiping out the equity value of existing shareholders.

Silicon Valley Bank’s roughly $7 billion municipal bond portfolio could pose a challenge for BlackRock Inc. as it starts liquidating the failed bank’s securities, investors say, Bloomberg News reported. The lender’s muni holdings were mostly long-dated bonds with low coupons, according to Nicholos Venditti, senior portfolio manager at Allspring Global Investments LLC, who said he saw the breakdown in a list circulated by dealers. The bonds fit solidly into a category of debt that got hammered by rising interest rates, the very phenomenon that ultimately helped spur the turmoil in the banking industry. Munis due in 22 years or longer lost 15.6% last year, almost double the decline of the broader market, data compiled by Bloomberg show. Such bonds are still deep underwater, triggering a tax provision for munis known as the de minimis rule. The measure requires investors to pay higher taxes on debt sold at hefty discounts, should it then appreciate. It’s a backdrop that’s making some money managers still recovering from last year’s pain even more reluctant to dive in. Read more.

​​The Senate Banking Committee will hold a hearing tomorrow at 10 a.m. ET titled, “Holding Executives Accountable After Recent Bank Failures.” Click here for more information.

Avaya Technologies has completed its restructuring, emerging from chapter 11 bankruptcy with $650 million in liquidity, the Triangle Business Journal reported. The company, once headquartered in Durham, N.C., where it initiated layoffs leading up to the bankruptcy, is now headquartered in New Jersey. In a press release about the firm’s transition from chapter 11, CEO Alan Masarek said the plan was to “mov[e] ahead with significant financial resources to accelerate investment in our portfolio as we continue delivering innovation without disruption to our customers.” Avaya’s reorganization plan was approved in March. The plan came after what attorney Aparna Yenamandra with Kirkland & Ellis called “months of intense, arm’s-length and at times adversarial negotiations.” While most objections to the plan were resolved, those tied to shareholder letters were ultimately passed over. Shareholders, some of whom told the Triangle Business Journal they invested after Masarek outlined his vision, were left in the lurch. The company has said in documents tied to the chapter 11 that it does “not expect shareholders to receive any recovery at the end of the court-supervised process, consistent with legal priorities.”

U.S. asset manager Apollo Global Management Inc. plans to apply for approval from Swedish and Danish regulators to take a majority stake in SAS AB as part of the Scandinavian airline's rescue plan, Reuters reported. The news of interest from the U.S. asset manager sent the embattled carrier's shares up as much as 14% in Wednesday morning trading. At 1011 GMT, they were up 5.9%. SAS has lost almost 60% of its value since it filed for chapter 11 bankruptcy protection last July, seeking to slash costs and debt after wage talks with pilots collapsed. A deal with the U.S. private-equity giant, which has also invested in U.S. and Mexican airlines, would be a test of European Union rules, which prevent more than 50% of an airline being held outside the bloc of 27 members. Given that a large part of Apollo's capital originates from Europe-based investors, the fund is hoping to get approval for a deal, according to the source, who declined to be identified because the matter is confidential.