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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.

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.

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.

Appaloosa Management, Centerbridge Partners and Silver Point Capital are among the titans of distressed-debt investing pushing for big payouts in the bankruptcy case of the former owner of Silicon Valley Bank, new court papers show, Bloomberg News reported. A group of eight firms holds more than $1.1 billion in senior notes and roughly $1.5 billion worth of preferred equity issued by SVB Financial Group, the holding company that went bust after a run on its bank earlier this year. By banding together and sharing the cost of attorneys and financial advisers, such groups can have enormous sway in major corporate bankruptcy cases. Appaloosa holds $345 million worth of SVB debt, Silver Point $231.7 million and Centerbridge $199.8 million, according to the court filings. The other companies in the group are Citigroup’s distressed trading desk, Millennium Management, Citadel, Attestor and Redwood Capital Management. Together, the group holds 35% of the $3.3 billion in senior notes SVB issued and 41% of the preferred stock. When such panels hold more than 34% of any class of debt, they often have veto power over any payout plan they oppose.

Akorn Pharmaceuticals has issued a voluntary recall of its drugs following the company's decision to close shop, USA TODAY reported. The recall list is comprised of 75 human drugs and 9 veterinary drugs, and is not associated with any adverse events, but with the company's February chapter 7 bankruptcy filing, in which they have agreed to shut down. The shutdown includes the closing of their quality program, meaning "the company will not be able to support or guarantee that the products will meet all intended specifications through the labeled shelf life of the product," the company stated in a press release. Akorn products were distributed to wholesalers, retailers, manufacturers, medical facilities, repackagers and consumers via the internet. The company is notifying distributors by mail and asking them to notify consumers and retailers about the recall. They are further advising that consumers discard their recalled products and get in touch with their doctor. For questions regarding the recall, consumers can get in touch with an Akorn at 800-932-5676 available Monday through Friday from 8 a.m. to 5 p.m. CDT.

Bankrupt cryptocurrency lender Genesis Global Holdco and a key creditor group have agreed to meet with a mediator in an effort to save a proposed bankruptcy exit plan backed by the company’s parent, Digital Currency Group, Bloomberg News reported. Genesis lawyer Sean O’Neal said on Friday that the crypto lender has agreed to a 30-day mediation period including its committee of unsecured creditors, which has opposed the proposed restructuring deal. Genesis is hoping to hold two “substantive” mediation sessions before May 8, O’Neal said. Final terms of the deal will also be made public when mediation is terminated, he said. Genesis and the committee still need to pick a mediator who will oversee the discussions. O’Neal told Judge Sean Lane that they have started reaching out to a list of mediators and will submit an order to the court outlining the process once a mediator is picked. The creditors’ committee is opposed to Genesis’s current restructuring proposal and is seeking better terms, Bloomberg News has reported. Philip Abelson, a lawyer representing the creditors’ committee, said his client’s position hasn’t changed “and we do not want our participation in the mediation to be misconstrued.”

A defunct talc supplier owned by Berkshire Hathaway Inc. has filed for bankruptcy, adding to the pileup of cosmetic talc businesses entering chapter 11 to weather mass lawsuits alleging that once-popular consumer products exposed their users to asbestos, WSJ Pro Bankruptcy reported. Former talc supplier Whittaker, Clark & Daniels Inc. and several of its affiliates filed for protection in New Jersey Wednesday, citing liabilities to more than 1,000 personal-injury plaintiffs who allege that asbestos made its way into talc-containing cosmetic products such as Old Spice powder and Mary Kay cosmetics decades ago. Whittaker Clark filed chapter 11 despite the recent appointment of a receiver over its affairs after it was hit by a $29 million verdict in South Carolina in March and found by the trial judge to be in danger of insolvency. Whittaker Clark’s chief restructuring officer, Mohsin Meghji, said in court filings that the company “disputes the validity and enforceability of the receivership order.” His court filing said that Whittaker Clark filed chapter 11 because it lacks any alternative mechanism to efficiently and equitably address its asbestos liabilities. Berkshire Hathaway indirectly owns Whittaker Clark’s parent company, Soco West Inc., which also filed for chapter 11, court papers show. Berkshire Hathaway said Thursday that Whittaker Clark had ceased operations in 2004 and had sold off its operating assets, though it continued to defend against the tort and environmental claims it faced.