%1

Sullivan & Cromwell LLP won court approval to continue representing FTX in bankruptcy following weeks of scrutiny about work the law firm did for the crypto exchange and former executives before the company’s collapse in November, WSJ Pro Bankruptcy reported. Judge John Dorsey of the U.S. Bankruptcy Court in Wilmington, Del., said Friday there is no evidence of any conflicts of interest that would warrant removing Sullivan from the bankruptcy case. Judge Dorsey rejected a challenge brought by two customers of the exchange who argued the law firm’s past work for FTX and its co-founder and former Chief Executive Sam Bankman-Fried should have disqualified it from representing the company in bankruptcy. The decision caps weeks of intense scrutiny of the law firm over its previous connections to the company. A bipartisan group of U.S. senators and the Justice Department’s bankruptcy watchdog this month both sought more information on the law firm’s previous relationship with FTX. Sullivan resolved the questions after providing a sworn statement by one of its lawyers detailing its past work for FTX.

U.S. Attorney General Merrick B. Garland has selected Tara Twomey to serve as Director of the U.S. Trustee Program (USTP) at the Department of Justice, according to a Justice Department press release. “I am confident that Ms. Twomey’s leadership will advance USTP’s mission to promote the integrity and efficiency of the bankruptcy system for debtors, creditors, and the public,” said Attorney General Merrick B. Garland. Twomey has over 20 years of experience working on bankruptcy and consumer credit issues. She currently serves as the Executive Director of the National Consumer Bankruptcy Rights Center, which advances the rights of consumer bankruptcy debtors. She is Of Counsel at the National Consumer Law Center, and serves as a member of the Judicial Conference Advisory Committee on Bankruptcy Rules. She is the author of numerous books and articles on bankruptcy law and practice, and has served as an instructor at Boston College Law School, Harvard Law School, and Stanford Law School. Ms. Twomey is a fellow of the American College of Bankruptcy, a conferee of the National Bankruptcy Conference, a director of the National Association of Consumer Bankruptcy Attorneys, and an active ABI member for 20 years. She earned her Bachelor of Arts in Political Science from the University of California, San Diego, and her Juris Doctor, summa cum laude, from Boston College Law School.

The Consumer Financial Protection Bureau (CFPB) has reached a settlement in its lawsuit against law firm Forster & Garbus, LLP for illegal debt-collection practices, according to a CFPB press release. If approved by the court, the proposed settlement would prohibit Forster & Garbus from filing any new lawsuit against a consumer unless it has specific documents supporting the debt and certifies that an attorney reviewed those documents. The order would also require the company to dismiss any pending lawsuit where it cannot satisfy these requirements. Forster & Garbus would also be required to pay a penalty of $100,000, which would be deposited into the CFPB’s victims relief fund. In 2019, the CFPB sued Forster & Garbus alleging that, from 2014 through 2016, fewer than a dozen attorneys at Forster & Garbus filed more than 99,000 debt-collection lawsuits, while having documents to support only a fraction of those debts. The CFPB further alleges that Forster & Garbus falsely represented to consumers that attorneys were meaningfully involved in preparing and filing the lawsuits, violating the Fair Debt Collection Practices Act’s (FDCPA) prohibition against collecting debts by using false, deceptive, or misleading representations and the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices.

Bed Bath & Beyond Inc. has brought on turnaround consultant AlixPartners as its new restructuring adviser as the troubled home-goods retailer prepares for a likely bankruptcy, WSJ Pro Bankruptcy reported. The company has also been working with law firm Kirkland & Ellis LLP and investment banker Lazard Ltd. on restructuring efforts, and last week said it is considering all options including a bankruptcy filing to battle its declining cash and dropping revenue. AlixPartners replaced Berkeley Research Group LLC, a consulting firm Bed Bath & Beyond had been working with since the middle of last year. A representative for Bed Bath declined to comment on AlixPartners’s hire and added that it has a team “internally and externally with proven experience in helping companies successfully navigate complex situations and become stronger.” BRG was brought on in June to help Bed Bath improve its cash and inventory levels and balance sheet. The retailer secured $375 million in loans in August to shore up its cash position and help pay down some existing debt. The company planned to reduce its spending by cutting $150 million in capital expenditures for fiscal 2022. The loans provided by Sixth Street Partners helped pad its liquidity and assuage vendors’ concerns about the retailer’s ability to pay them. The company went on a roadshow in the fall to convince vendors not to tighten payment schedules on goods shipments.

Party City Holdco Inc. has sought funding for a potential chapter 11 bankruptcy, Bloomberg News reported. The company, which is preparing to enter bankruptcy protection within weeks, is sharing information with potential providers of debtor-in-possession financing, said the people, who asked not to be identified because the matter is private. Rockaway, N.J.-based Party City has been negotiating with a creditor group that includes Capital Group Cos Inc. and Silver Point Capital ahead of the potential filing, Bloomberg reported. Known for selling balloons and other festive supplies, Party City has been squeezed by a higher costs of goods and shipping as well as a helium shortage. Sales during the critical Halloween period disappointed investors. The retailer has been getting advice from Moelis & Co. and law firm Paul Weiss Rifkind Wharton & Garrison.