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***Please look for the next Bankruptcy in the News on August 8, 2024.***
Executive Branch:
CFPB cracks down on paycheck advance products (The Hill)
“The Consumer Financial Protection Bureau (CFPB) proposed a new rule Thursday that would categorize popular paycheck advance products as consumer loans, which the agency says will ensure lenders provide borrowers with key information about costs and fees.”
Banks:
Why the Synapse Bankruptcy Has the Fintech World on Edge (Pro Bankruptcy/WSJ*)
“For months now, thousands of consumers have been unable to access money they thought was safely deposited at banks.”
See also:
Synapse Bankruptcy Has Ripple Effects For Fintech Industry (Law360)
Housing:
Is buying a home still worth it? (The Hill)
"A recent report found that buying a home in the U.S. today is less affordable than any other time in the last 17 years..."
Evictions Surge in Major Cities in the American Sunbelt (Wall Street Journal*)
"Notices in Houston, Las Vegas and Phoenix remain at elevated levels, even as they have fallen elsewhere."
Cryptocurrencies:
What FTX Case Taught Us About Digital Asset Recoverability (Law360/Analysis)
“This counters two myths about digital currencies and innovation: 1) that transactions involving crypto- or digital assets are nearly impossible to trace and capture, and 2) that the federal government can't keep up with innovation in the private sector to stamp out fraud and corruption.”
Crypto token listings on major exchanges top last year’s total already (BNN Bloomberg)
"The figure doesn’t include the deluge of memecoins that are inspired by internet memes or trends that trade on decentralized exchanges such as Uniswap that allow users to maintain control over their assets."
Energy:
Artificial intelligence needs so much power it’s overwhelming the electrical grid (Study Finds)
"At 2.9 watt-hours per ChatGPT request, AI queries require about 10 times the electricity of traditional Google queries..."
Once worth $2.9 billion, Calif. carmaker Fisker scrambles to dump cars in fire sale (SFGate)
"Fisker is running out of money to pay the workers who are helping to wrap up the company’s business — in fact, it’s started missing severance payments."
U.S. residential solar down 20% in 2024 (pv magazine)
"In 2024, the market continues to weather the high interest rate storm, and numerous large installers have announced bankruptcies."
Restaurants:
The biggest restaurant bankruptcies so far this year (Restaurant Dive)
"It wasn’t just chains that pursued this path. As Restaurant Dive predicted earlier this year, a handful of franchisees went bankrupt, continuing the trend of operators succumbing to financial woes and rising debt."
MOD Pizza has new owner after closing 44 restaurants amid bankruptcy rumors (USA Today)
"Elite Restaurant Group acquired 100% of the equity of MOD Pizza under a merger agreement between the company and an affiliate of Elite."
Retail:
Kroger-Albertsons Deal Is Haunted by ‘Spectacular’ Past Failure (Bloomberg)
“The largest US supermarket deal ever would spin off 579 stores, but critics warn of repeating a decade-old divestiture that left shoppers paying the price.”
Student Debt & For-Profit Colleges:
Student Loan Bankruptcy Discharge Cases Grow Under Fed Guidance (Bloomberg)
“Federal student loan borrowers are increasingly taking advantage of an administrative policy shift to discharge overly burdensome education debts in bankruptcy, the departments of Justice and Education said.”
See also:
More student loan borrowers are getting relief through bankruptcy after Biden policy change (CNN)
Student loan borrowers back in tumultuous spot amid latest legal challenges (The Hill)
“Two cases hit the courts against the SAVE plan earlier this year, arguing it would hurt state revenues…The whole plan was initially halted temporarily before the judges in both cases ruled the administration could go forward with lowering monthly payments. The Education Department is still blocked from giving any more student loan forgiveness from the plan.”
States, Legal Orgs. Urge Justices To Halt Biden's Debt Relief (Law360)
“A U.S. Supreme Court challenge to the Biden administration's latest student debt relief program received backing from seven Republican-led states and a trio of legal groups that assert the estimated $475 billion plan exceeds the executive branch's authority.”
Education Department to forgive $1.2 billion in student debt for 35,000 borrowers (CNBC)
“The Biden administration announced Thursday it will cancel $1.2 billion in student debt for 35,000 workers, as a result of its recent fixes to a popular debt relief program for public service workers.”
Federal appeals court blocks remainder of Biden’s student debt relief plan (AP)
“In a ruling Thursday, the 8th Circuit Court of Appeals granted a motion for an administrative stay filed by a group of Republican-led states seeking to invalidate the administration’s entire student loan forgiveness program. The court’s order prohibits the administration from implementing the parts of the SAVE plan that were not already blocked by lower court rulings.”
Big Pharma / BioTech:
J&J’s Next Talc Bankruptcy May Face Hurdles After Purdue Ruling (Bloomberg)
“The high court’s move to void Purdue Pharma ’s $6 billion opioid settlement last month may spill over into J&J’s push to end more than 60,000 lawsuits with the help of Chapter 11 bankruptcy. That would be a costly development for J&J, which has worked for years to rid itself of talc lawsuit liabilities and has already spent billions on the effort.”
Johnson & Johnson proposes $505M settlement with bankrupt talc miners (FiercePharma)
"J&J’s payments would go, in part, toward the miners’ settlement trust for talc claimants, according to documents filed in bankruptcy court late last week."
Other Bankruptcy News & Analyses:
The N.R.A. Is Facing a Court Fight for Control of Its Future (DNYUZ)
" Its membership fell below 4 million last year, from nearly 5.3 million in 2018."
Midwest Senior-Living Operator With Muni Debt Files Bankruptcy (Bloomberg)
“An operator of 10 senior-living communities across four Midwestern states filed bankruptcy Tuesday, becoming the latest to falter after the Covid-19 pandemic drove up labor and supply costs.”
Former Bankruptcy Judge David R. Jones Under Criminal Investigation Over Relationship With Lawyer (Pro Bankruptcy/WSJ*)
“The Justice Department has opened a criminal investigation into former U.S. Bankruptcy Judge David R. Jones over his romantic relationship with a Houston lawyer who worked on chapter 11 cases before him…”
See also:
Bankruptcy Court Likely to Pare Back Probe into Ex-Judge Romance (Bloomberg)
High Court Rulings Don't Nix Judge Romance Suit, Court Told (Law360)
Canadian Retirement Plan Not Eligible for Bankruptcy Protection (Bloomberg)
“An American professor lost a bid to keep his Canadian retirement plan from being used to pay off his debt in bankruptcy, after the Seventh Circuit affirmed a lower court’s finding that the account wasn’t exempt under federal tax law.”
Bankrupt Former Parent of Parler Fails to Stop Lawsuit Against Backer Mercer (Pro Bankruptcy/WSJ*)
“Judge brings up Supreme Court’s Purdue Pharma ruling in denying request by Parlement Technologies to pause suit against Republican donor Rebekah Mercer and others.”
11th Circ. Affirms Atty Fee Awards In Nursing Home Ch. 7 (Law360)
“The Eleventh Circuit found Monday a bankruptcy court didn't abuse its discretion when it awarded attorney fees to Shumaker Loop & Kendrick LLP, Fox Rothschild and a firm that merged with Venable for representing the Chapter 7 trustee in a nursing home operator's insolvency.”
'Excuse Me?': Judge Vexed By Defamation Claim In Ch. 7 Row (Law360)
“A Connecticut bankruptcy judge on Tuesday appeared skeptical of defamation and tortious interference claims New York-based real estate investor EasyKnock Inc. filed against a trustee handling the Chapter 7 estate of a onetime homeowner, forcing company attorneys to at times to admit they cited no authority to support their case.”
Insurers have been more active in Catholic diocese bankruptcies. Here's why (Daily Journal*)
"The trend grew out of a previous round of clergy sex abuse cases around the nation 10 to 20 years ago, when several large insurers had to pay out millions to settle claims."
Economy:
Snacks are getting cheaper as Americans tire of high prices (CNN)
"The average price of potato chips in June 2024 was $6.56; in June 2020, as the pandemic was taking off, the average price was $5.09, according to Federal Reserve data."
Trapped in zombie economy, a dry cleaner struggles in empty skyscraper (Seattle Times)
“Since the pandemic, the service sector is struggling. Sidewalks are quieter. Elevators are less packed, offices are experiencing record vacancies, and few buildings are emptier than his, 611 Place, still known as AT&T Center.”
Most businesses that failed this year come from one sector of the economy (CNN)
“The majority of businesses that have gone belly up are considered ‘consumer discretionary,’ a broad category of firms that sell goods or services that people don’t need every day, such as restaurants, clothing stores and car dealerships.”
Car Repossessions Surge 23% as Americans Fall Behind on Payments (Bloomberg)
"Repos started ticking up last year and have now surpassed pre-pandemic levels, up 14% compared to the first half of 2019."
Celebrities / Entertainment:
Judge dismisses Giuliani’s bankruptcy case, allowing creditors to try to seize his assets (CNN)
"Judge Sean Lane of the federal bankruptcy court in New York made the decision partly because of Giuliani’s lack of transparency after he filed for bankruptcy more than six months ago."
Redbox set to close as DVD market withers in streaming's shadow (NBC)
"All employees are expected to be laid off and the company’s more than 24,000 rental kiosks will shut down."
Retirement:
Many people retire in debt. Here's how to manage it. (Yahoo)
"Mortgage and credit card debt, however, are a cold reality for over a quarter of retirees, according to new research from the Nationwide Retirement Institute."
Many Aging Migrants Pay Taxes. They Stare Down a Retirement With No Benefits. (WSJ*)
"Unauthorized migrants made a net contribution of about $12 billion to the Social Security system in 2010, the most recent year in which such an analysis was conducted, according to the Social Security Administration. But they are barred by law from receiving benefits from the program."
Retirement is delayed, altered or cancelled for nearly half of Americans: Nationwide (BenefitsPro)
"...61% of investors say that their retirement expectations have changed significantly in the past five years."
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Blog Postings:
LundinOnChapter13.com Weekly Notable Bankruptcy Cases
Consumer Law & Policy Blog
- CFPB proposes interpretive rule regarding “earned wage” loans
- No indemnification rights under EFTA, Sixth Circuit holds
- CFPB proposes rules to help homeowners avoid foreclosure
- Ninth Circuit Rejects CPSA Preemption Challenge to Oregon Toxic Chemicals Law
- CHE essay on how for-profit colleges trick students and student loan forgiveness
- What does the 7th Circuit’s Townstone decision tell us about delegations to the CFPB after Loper Bright?
- Seventh Circuit Holds ECOA Prohibits Discrimination Against Prospective Applicants
Credit Slips blog
- Preliminary Injunctions After Harrington v. Purdue Pharma
Harvard Law School Bankruptcy Roundtable
- [Purdue Pharma Bankruptcy Series] What Happens After the Supreme Court’s Debacle in Purdue Pharma?
- [Purdue Pharma Bankruptcy Series] The End(s) of Bankruptcy Exceptionalism: The Future of Mass Tort Reorganization After Purdue Pharma
- [Purdue Pharma Bankruptcy Series] Now Liquidate Purdue
Mediatbankry
- The “Silent” Creditor Problem In Subchapter V (In re M.V.J. Auto)
- Individual Debtor Discharge v. Corporate Debtor Discharge
Rochelle's Daily Wire
- How to Circumvent the Prohibition of Appealing Abstention Decisions to the Circuit
- Delaware Judge Explains How to Obtain a PI Protecting Nondebtors After Purdue
- Established Law Pointed Judge Lane Toward Dismissing Giuliani’s Chapter 11 Case
- An Order Finding Ineligibility for Sub V Is a Final, Appealable Order
- Circuit Split May Deepen on Assuming a Franchise over the Franchisor’s Objection
- Delaware Judge Pegs Low Values for Crypto Tokens in FTX Bankruptcy Case
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Titan Solar Power closes down operations, files for bankruptcy (ABC 15)
"The company estimated it has between $1 million and $10 million in assets against $1 million and $10 million in liabilities, according to its petition with the U.S Bankruptcy Court for the District of Arizona."
Elon Musk is moving X (formerly Twitter) out of California: ‘This is the final straw’ (Your Central Valley)
"Elon Musk says the downtown San Francisco headquarters of X, formerly Twitter, is moving to Austin, Texas...SpaceX, will move its Hawthorne (Los Angeles County) headquarters to Starbase, Texas."
See also:
X, a stalwart of San Francisco tech, reportedly looks to ditch Mid-Market office (SFGate)
Tender Greens and parent company One Table Restaurant Brands file for bankruptcyy (Nation's Restaurant News)
"Together, Tender Greens and Tocaya operate around 40 locations, mostly in California. According to bankruptcy documents, the Los Angeles-based One Table Restaurant Brands has an estimated $10 million to $50 million of liabilities, with under $50,000 of assets."
See also:
Tender Greens And Tocaya Hit Ch. 11 With Post-COVID Woes (Law360)
Is 600 B St. the first of many downtown office buildings to default? (San Diego Union-Tribune*)
"The owner of the 24-story office tower at 600 B St. is on the brink of losing the building as the lender seeks to recoup more than $83 million in unpaid debt."
Insurance crisis hits Bay Area businesses, with some dropped over ‘crime scores’ (SF Chronicle*)
"Crime is not the only reason for higher costs and less coverage, experts said. Wildfire risk, particularly in the fire-prone North Bay, is leading to an insurance crisis for homeowners and local small businesses."
Meade and Orion Cease Operations - Maybe(Sky & Telescope)
"Optronic Technologies, Inc., better known to backyard astronomers as the parent company of both Orion Telescopes & Binoculars, and Meade Instruments, has shut its offices and storefront in Watsonville, California."
Luxury boxing gym, The BXNG Club, files for Chapter 11 bankruptcy (5 KUSI)
"The gym’s owners filed for Chapter 11 bankruptcy — also known as a financial “reorganization” bankruptcy — late last month, due to a $600,000 disparity between its assets and debts."
‘It ends with us’: Why this successful California winery would rather shut down than sell (San Francisco Chronicle*)
"Carlisle Winery owners Mike and Kendall Officer announced this week that they will “likely” stop making wine after the 2024 harvest season so that they can retire."
Ursula's Costumes is closing after 50 years outfitting Hollywood stars (LA Times*)
"Ursula’s Costumes is a 6,000-square-foot treasure trove filled with a warren of smaller rooms stuffed with petticoats, flapper dresses, pirate outfits, gangsters’ pinstripe suits, nuns’ habits, western wear and Roman legion uniforms."
Acclaimed Bay Area Spanish restaurant has closed after more than a decade (SF Chronicle*)
"Acclaimed Bay Area chef Paul Canales has closed Duende, his popular Spanish restaurant in Oakland."
Why California's interest rates are stifling consumers (LA Times*)
"Inflation has squeezed pocketbooks everywhere. But Californians have been particularly hard hit because prices for such things as energy, housing and some services are already higher."
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Butte's Hallmark store to close August 3 (NBC)
"Everything in the store is currently on sale at a 30% discount."
Local photography school in Missoula closing after 35 years (Fairfield Sun Times)
"The Rocky Mountain School of Photography (RMSP) in Missoula is closing...Registration numbers had been dwindling for years now."
Hecla Mining: Lawsuit Impacting Montana Project Dismissed Due to CEO's Retirement (MarketWatch)
"Hecla Mining said the suit was impacting its Libby Exploration Project, located 23 miles south of Libby, Mont. Denial of permits would have prevented the project from proceeding."
The last cards have been dealt as the iconic Mirage closes its doors on the Las Vegas Strip (AP News)
“A final blast from The Mirage’s signature volcano marked the passage Wednesday of an aging Las Vegas resort that wowed crowds when it opened in 1989 and went on to revolutionize the casino resort industry and reshape Las Vegas as a tourist destination.”
Atomic Golf hopes drones help bring in more customers (Las Vegas Review Journal)
"At least 250 employees have been laid off as a result of a slower business than expected the first few months."
Henderson high-rise declares bankruptcy (8 News Now)
"The bankruptcy filing from June 5, indicates approximately 50 to 99 creditors are seeking payment from the company associated with the high-rise on Water Street."
Titan Solar Power's Nevada business license has been revoked (ABC 13)
""...the judge revoked Titan's business license and slapped the company with $400,000 in fines."
New owner of Portland Tribune, other Oregon newspapers lays off some staff (Oregonian)
“The new owner of the Portland Tribune and roughly 20 other Oregon newspapers on Tuesday laid off an unknown number of employees, including in its newsrooms.”
Oregon’s software industry is shrinking (Oregonian)
“Software employment statewide is down 7.4% from its peak in the summer of 2022, according to data from the Oregon Employment Department. That’s a period during which overall Oregon jobs grew steadily.”
The Portland Restaurant Closings to Know, July 2024 (Eater Portland)
“Bad Habit Room has served its final brunch, and more closing announcements you may have missed.”
See also:
Pioneering Portland Pizzeria American Dream Pizza Is Closed and For Sale (Eater Portland)
Saks OFF 5th in downtown Seattle to close this month (Seattle Times)
“The Westlake Center store, a spinoff of Saks Fifth Avenue, posted signs this week that said all sales are final and that July 20 will be the final day…Saks’ closure will follow other major retailers, including Nike, The North Face and Vans, that have all pulled out of the area…Public safety concerns and sagging retail sales are explanations that have trailed those shuttered stores, but the city has also been grappling with a slow recovery in foot traffic.”
Hobby Lobby in Tacoma shopping center closes (Puget Sound Business Journal*)
“Hobby Lobby has left its space near Target in the Tacoma Central shopping center. The company vacated the 61,484-square-foot space at 3130 S. 23rd St. earlier this month. The arts and crafts retailer still has South Sound stores in Lakewood, Puyallup and Olympia.”
RIP to That Weird Taco Time on 45th in Wallingford (Eater Seattle)
“A Seattle landmark will now be a Chipotle.”
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