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Two creditors of TPC Group Inc. lost a bankruptcy court ruling on Wednesday, with a judge saying that the chemical business didn’t act improperly when loan documents were amended to change the pecking order of creditors, WSJ Pro Bankruptcy reported. Judge Craig Goldblatt of the U.S. Bankruptcy Court in Wilmington, Del., said TPC didn’t violate the rights of Cerberus Capital Management LP and Bayside Capital Inc., who combined own about 10% of TPC’s $930 million senior secured notes issued in 2019. TPC in 2021 and 2022 issued roughly $200 million in 10.875% notes senior to its 2019 notes and the transactions were backed by creditors holding most of the existing debt. The Houston-based company filed for bankruptcy protection in June with a restructuring agreement with most creditors. Cerberus and Bayside, who didn’t consent to the agreement, sued TPC shortly after its bankruptcy filing, arguing the company breached its credit agreements by layering new debt on top of the notes Cerberus and Bayside hold without their consent. The court concluded on Wednesday that the loan documents permitted the majority holders to amend the agreement to allow for the subordination of the old debt to the new notes, Judge Goldblatt wrote. “As a result, the debt now held by the majority holders is senior to that of the minority lenders,” he wrote.

A law firm's representation of two insurance companies in an asbestos-coverage case did not disqualify a partner in the firm from opposing the same insurers in the Imerys Talc America bankruptcy case, a federal appeals court held on Thursday, Reuters reported. The U.S. Court of Appeals for the Third Circuit upheld the appointment of Young, Conaway, Stargatt & Taylor’s James Patton as the Future Claimants’ Representative (FCR) in the talc case, over the objections of CNA’s Continental Casualty and AIG’s National Union Fire Insurance Co. The decision resolves a longstanding split in the lower courts about who is qualified to serve as an FCR. The 3rd Circuit agreed with the insurers that the bar should be set high. An FCR “must be more than merely disinterested, and instead be able to fulfill the heightened duties owed by fiduciaries,” Circuit Judge Cheryl Ann Krause wrote. However, the panel also found that the bankruptcy judge had properly applied that standard in appointing Patton. “The decision is important because it is the first by a Court of Appeal to recognize that the fiduciary duty standard … applies to future claimants’ representatives in mass tort cases,” an attorney for the insurers, Tancred Schiavoni of O’Melveny & Myers, wrote in an email. The high standard will “contribute to reform” of the FCR’s role, he said. In a statement, Imerys Talc America said it was pleased with the result, which “maintains stability in the case.” The parties are currently in mediation, after the debtor’s reorganization plan failed to get enough votes for confirmation last fall.

By the spring of 2020, the lottery lawyer wasn’t sure the walls were necessarily closing in. The FBI had started interviewing his insta-millionaire clients, though, and things didn’t look good. The jackpots several winners had entrusted him to invest seemed to be dwindling, and Jay Kurland wasn’t sure how much they blamed him, Bloomberg News reported. Shortly before 9 a.m. on June 19, he hopped on the phone with his neighbor and business partner Francis Smookler, a tanned, easy-living ex-stockbroker. “My Staten Island clients are very concerned,” Kurland said, singling out one couple. “You know, the visits, combined with the lack of payments.” “Do you think that that’s going to explode into some big thing?” Smookler asked. “No,” Kurland replied. “At the end of the day, we made, we’ve got bad business moves, but it was nothing criminal.” There were others in this ultra-specialized field, such as Kurt Panouses of Indialantic, Fla., the so-called Powerball Lawyer. But Kurland was America’s foremost lotto-winner whisperer. Morning shows would book him for soft-focus segments; thelotterylawyer.com and @lotterylawyer were his. In 2018 he started representing the biggest solo lottery winner of all time, a woman who’d bought a $1.5 billion ticket at a convenience store in South Carolina. As Kurland racked up more and richer clients, he started looking for more innovative ways to multiply their money. Side hustles emerged, and the cast of characters he worked with began to look less vanilla: In addition to his neighbor and business partner Francis Smookler and Frangesco Russo, there was Christopher Chierchio, who ran a Staten Island plumbing business and has been identified in the New York tabloids as a Genovese crime-family soldier; Greg Altieri, a wholesale jeweler turned Ponzi schemer; and Kurland’s own brother-in-law, Scott Blyer, aka DrBFixin, a cosmetic surgeon specializing in Brazilian butt lifts. It all came to a head when, on the morning of Aug. 18, 2020, Kurland, Smookler, Russo, and Chierchio were booked on multiple counts of wire fraud and money laundering, accused of bilking three marquee lottery winners out of more than $100 million. Smookler and Russo were also accused of extortion. Federal prosecutors in New York laid out a scheme predicated on the trust Kurland had built with clients who were wildly unprepared for the opportunities and pitfalls of sudden wealth. Following Kurland’s investment advice, lottery winners plowed cash into high-interest lending businesses run by his associates, for which he allegedly received secret kickbacks.

Former Toys “R” Us executives are set to stand trial over allegations they misled suppliers about the retailer’s dire financial condition while the company tried to stay afloat in bankruptcy and then stiffed them on more than $600 million of bills, Bloomberg News reported. Bankruptcy Judge Keith Phillips on Monday said a trial should go forward, rebuffing a request from the former executives to throw out the creditor claims entirely. The former directors and officers have denied wrongdoing. Open questions, according to the judge, include whether the retailer was already insolvent when it paid nearly $18 million to its private-equity backers — Bain Capital, KKR & Co. and Vornado Realty Trust — between 2014 and 2017. The creditors also allege that millions of dollars of bonuses paid to 117 Toys “R” Us executives and managers just prior to the company’s 2017 bankruptcy amount to a breach of the former executives’ fiduciary duty. The largest bonus — $2.8 million — went to former Chief Executive Officer David Brandon. An official committee of low-ranking creditors later negotiated a reduction in the bonus amounts, according to court papers.

The Supreme Court will hear two bankruptcy cases in the term to begin this coming October. Yesterday, the high court granted certiorari to decide whether the failure to obtain the stay of a sale approval order erects a jurisdictional bar to appeal under Section 363(m), according to an analysis in today’s Rochelle’s Daily Wire. The courts of appeals are split 6-2. Led by the Second Circuit, the minority hold that Section 363(m) is jurisdictional and bars an appeal from any order that is “integral” to a sale order. The Fifth Circuit sides with the Second. The majority — composed of the Third, Sixth, Seventh, Ninth and Tenth Circuits — hold that Section 363(m) only sets limits on the relief that a court may grant on appeal from a sale order and is not jurisdictional. With the grant of certiorari, the Supreme Court will review MOAC Mall Holdings LLC v. Transform Holdco LLC (In re Sears Holdings Corp.), 20-1846, 2021 BL 481940, 2021 US App Lexis 37358, 2021 WL 5986997 (2d Cir. Dec. 17, 2021).