Third Circuit Makes Strict Rules Before Subrogation Rights Kick In
There can be no question about whether the beneficiary of a surety bond has been ‘paid in full’ before the surety has subrogation rights.
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Objections to Priority Claims May Follow Confirmation of a Chapter 13 Plan
Confirming a chapter 13 plan on the assumption that a claim was entitled to priority didn’t bar the debtors from later objecting to the priority of the claim.
Split Heading to the Tenth Circuit on Sovereign Immunity for Section 544(b) Claims
The Tenth Circuit will likely take sides on a split between the Ninth and Seventh Circuits on Section 544(b) state-law claims brought by a trustee in the shoes of an actual creditor.
Civil Penalties for Defrauding Consumers Weren’t Discharged Under Section 1141(d)(6)(A)
Reversing the bankruptcy court, a district judge in New York held that a civil penalty wasn’t discharged even though the fraud wasn’t committed against the government.
Big 3 U.S. Drug Distributors, Johnson & Johnson Reach Landmark $26 Billion Opioid Settlement
A group of state attorneys general unveiled a landmark, $26 billion settlement resolving claims that the three largest U.S. drug distributors and drugmaker Johnson & Johnson helped fuel a deadly nationwide opioid epidemic, CNBC reported. Under the settlement proposal, distributors McKesson, Cardinal Health and AmerisourceBergen are expected to pay a combined $21 billion, while Johnson & Johnson would pay $5 billion. The money from the distributors will be paid out over the next 18 years. J&J will pay over nine years, with up to $3.7 billion paid during the first three years. The distributors were accused of lax controls that allowed massive amounts of addictive painkillers to be diverted into illegal channels, devastating communities, while J&J was accused of downplaying the addiction risk in its opioid marketing. The companies have denied the allegations. The settlement also calls for the creation of an independent clearinghouse to provide all three distributors and state regulators aggregated data about where drugs are going and how often, a tool negotiators hope will help reduce pills being over shipped to communities. The ultimate amount the companies may have to pay will depend on the extent states sign up for the settlement and confirm their cities and counties are on board. The opioid crisis has been blamed for hundreds of thousands of U.S. overdose deaths since 1999, but has hit some regions much harder than others, creating divisions among governments when it comes to evaluating the settlement. At least 44 states must sign onto the deal to receive some of the money, and negotiators hope to gather more support.
Oregon Utility CEO Warns of Possible Power Cuts This Fire Season
Oregon’s largest electric utility is prepared to cut power in some areas to prevent wires from sparking fires in dry and windy conditions this summer, Bloomberg reported. Portland General Electric Co. is focused on safeguarding its grid to reduce wildfire risks and would only interrupt service to customers as a last resort, CEO Maria Pope said. “We focus much more on a daily basis on how we prevent having to do power-safety shut-offs,” Pope said. “Should there ever be circumstances like we were faced with last year, or could be faced with this season given the drought conditions throughout the entire West, obviously shutting the power off is one of the tools we have.” Cutting power to prevent fires is a relatively new and controversial practice that has spurred investigations in California, where utilities defend outages as necessary amid increasingly extreme weather. The state’s utilities say shut-offs must be used until they can sufficiently harden electric grids by covering service lines, strengthening poles or even burying wires. PG&E Corp. in Northern California has been using power cuts to prevent wildfires for several years after its equipment was blamed for starting devastating blazes that drove the utility into bankruptcy. Pope said Portland General has done only one preventative outage before, cutting off 5,000 customers in September as wildfires burned near Mt. Hood. The Oregon Public Utility Commission adopted temporary rules in May to improve communication between utilities and customers around shut-offs.
130 Nations Agree to Support U.S. Proposal for Global Minimum Tax on Corporations
Treasury Secretary Janet Yellen announced that a group of 130 nations has agreed to a global minimum tax (GMT) on corporations, part of a broader agreement to overhaul international tax rules, CNBN reported. If widely enacted, the GMT would effectively end the practice of global corporations seeking out low-tax jurisdictions like Ireland and the British Virgin Islands to move their headquarters to, even though their customers, operations and executives are located elsewhere. The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies. In their place, officials agreed to a new tax plan that would be linked to the places where multinationals are actually doing business, rather than where they are headquartered. Much of the groundwork for adopting a GMT has already been laid by the Organization for Economic Cooperation and Development (OECD), which released a blueprint last fall outlining a two-pillar approach to international taxation. The OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) is the product of negotiations with 137 member countries and jurisdictions. Yellen’s announcement did not include the actual rate at which the GMT would be set, but the Biden administration has pushed for at least 15 percent. G-20 finance ministers and central bank governors are scheduled to meet in Venice, Italy, later this month, and the international tax plan is expected to be high on the agenda. The GMT agreement represents a key part of what President Joe Biden has called “a foreign policy for the middle class.” The strategy emphasizes how foreign policy and domestic policy can be integrated into a new middle ground between the traditional conservative and liberal approaches to global affairs.
CBO: U.S. Deficit to Hit $3 Trillion in 2021, Then Fade as Stimulus Relief Expires
The federal deficit will hit $3 trillion in 2021 for the second consecutive year, primarily because of the national spending blitz in response to the coronavirus pandemic, according to the Congressional Budget Office, MSN reported. The deficit represents a slight decrease from last year but is triple that of 2019, and amounts to one of the biggest imbalances between federal spending and revenue in American history, the nonpartisan budget office said. But the CBO also projected faster-than-expected economic growth, with unemployment falling more sharply than previously predicted — a shift cheered by administration officials. In 2021, the federal government is projected to spend $6.8 trillion — higher than even last year’s total — while collecting about $3.8 trillion in revenue. Although spending is elevated from last year, the U.S. will take in more revenue as the pandemic fades and consumers resume normal activities — which is why the overall deficit will shrink modestly. President Biden’s $1.9 trillion stimulus, passed in March, accounts for much of this year’s spending imbalance, but that measure is temporary and will soon expire. The CBO projects the deficit will fall to $1.2 trillion in 2022 before dropping to $800 billion in 2023 and 2024 as pandemic relief measures fade. However, the budget office projects that the deficit will again begin to widen in 2025 and grow steadily for the rest of the decade, approaching close to $2 trillion by 2031.
Sovereign Immunity Prevailed Because a Slot Machine License Isn’t ‘Property’
In Pennsylvania, a gaming license isn’t ‘property.’ It’s a revocable license that can’t be owned.
Supreme Court Backs Alaska Natives in Clash over COVID-19 Relief Funds
The Supreme Court on Friday ruled that corporations set up by Congress for Alaskan Natives are eligible for a portion of the $8 billion in coronavirus relief funds that lawmakers set aside for tribal governments, The Hill reported. The case hinged on whether Alaska Native corporations (ANCs), which Congress established five decades ago to manage land and settlement issues, qualified as “Indian tribes” under federal law. In a 6-3 decision penned by Justice Sonia Sotomayor, the majority ruled that ANCs met the definition under a 1975 statute called the Indian Self-Determination and Education Assistance Act (ISDA). “The Court today affirms what the Federal Government has maintained for almost half a century: ANCs are Indian tribes under ISDA,” wrote Sotomayor, one of the court’s more liberal members. In turn, the majority ruled, ANCs are entitled to receive roughly $500 million earmarked to them under the CARES Act, the first major coronavirus relief bill that Congress passed in March 2020.
