Talc, airlines and energy at the center of bankruptcies to watch in 2022


A arrives at the US Bankruptcy Court for the Southern District of New York in Manhattan, New York, United States on January 9, 2020. REUTERS / Brendan McDermid

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December 30 (Reuters) – Some Chapter 11 corporate cases that made headlines in 2021 still have a long way to go before they see a resolution. While some are just getting started, others have been stranded by disgruntled creditors, insurers or state regulators. Here are five cases to watch out for in 2022.

LTL Management LLC (J&J talc liabilities)

Can a financially healthy company with a market capitalization of over $ 400 billion use bankruptcy to offload massive tort liability? Johnson & Johnson is hoping to convince a New Jersey bankruptcy judge that it can. But the pharmaceutical giant, which set up subsidiary LTL Management LLC to file more than 38,000 talc-related claims, faces stiff opposition from plaintiffs suing the company who say J & J’s talc-based products have caused cancer and want their day in court, which is currently detaining him as a result of bankruptcy. LTL is still in the early stages of bankruptcy. If the naysayers get what they want, the Chapter 11 process won’t go much further, as they have filed documents asking for the bankruptcy to be dismissed completely. However, if J&J, which has denied the wrongdoing and maintains its talc products are safe, manages to keep the case alive, it’s unclear how long it will take to reach a potential settlement or how many ‘money plaintiffs can see. J & J’s plan to split into two publicly traded companies adds to the uncertainty.

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Imerys Talc America / Cyprus Mines Corporation

These companies are two separate entities conducting two separate Chapter 11 businesses that are nevertheless impossibly intertwined. The former talc supplier (Imerys) and the miner (Cyprus) are linked by a 30-year-old transaction which transferred part of the talc assets and liabilities from Cyprus to Imerys. Since then, disputes have surfaced over insurance obligations related to a widespread talcum dispute. To complicate matters further, J&J is involved, as Imerys was once the pharmaceutical giant’s primary supplier of talc. A restructuring plan proposed in 2021 that sought to resolve the two bankruptcies was ultimately rejected by creditors after the judge overseeing the two cases won 15,000 votes, effectively sending lawyers back to the drawing board.

Brazos Electric Energy Cooperative

Remember the winter storm that cut power to millions of Texas residents in February? The Electric Reliability Council of Texas has certainly not forgotten, and it still battles with Brazos, the state’s largest wholesale electric co-op, for the $ 2 billion bill it incurred over the course of the nine-day event. Brazos, however, says ERCOT’s prices during the blackout were illegal, up to 500 times the usual cost of electricity. The two have faced each other in Houston bankruptcy court since March, and now Brazos member co-ops fear customers will foot the bill for years to come.

LATAM Airlines Group SA

After a year and a half of bankruptcy, Latin America’s largest airline recently proposed a reorganization plan that would inject $ 8.19 billion into the company. Some junior creditors disagree with the deal, saying it gives too much value to some shareholders and the airline should instead consider other options, including a sale to rival Azul SA. Yet LATAM Airlines is hoping that it has finally secured its ticket out of bankruptcy and will be able to either influence the holdouts to drop their opposition or convince a judge to override their concerns.

Alfred Siegel vs. John Fitzgerald III

Bankruptcy battles don’t often make it to the U.S. Supreme Court, but parties on both sides of this case are hoping it will, as it has divided major appellate courts across the country. . The dispute stems from an alleged inconsistency between the fees that Chapter 11 debtors must pay to the government depending on their location. The alleged disparity arose as a result of a 2017 law that increased fees and created uncertainty over the legal status of around $ 324 million in fees, according to the government. The law was challenged in several districts with conflicting results – the US 4th and 5th Circuit Courts of Appeal upheld the law while the 2nd and 10th Circuits ruled it unconstitutional.

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