Here’s my biggest bankruptcy shocker from 2023:

• the Third Circuit’s rationale for dismissing Johnson & Johnson’s bankruptcy.

I’ll try to explain.

Appalled

I’m still appalled by the lack of concern, from the Third Circuit Court of Appeals in its dismissal opinion, over these disparities it describes in results for similarly situated claimants:

“Bankruptcy provides a valuable and desirable venue for the resolution of [mass tort] disputes” by:

There are many reasons to mandate mediation in certain circumstances.

• One is to improve the quality of justice.
• Another is to manage an expanding docket and burgeoning caseload.
• A third is to create a mediation culture where none currently exists.

There are two ways to mandate mediation:

The history of bankruptcy in these United States teaches this:

• bankruptcy laws can provide an efficient and effective solution for a great variety of financial problems.

But bankruptcy laws, in these United States, face significant problems, and their effectiveness is being diminished.

First Problem

Bankruptcy has a fundamental problem: nobody likes it.

Everyone recognizes that bankruptcy laws are a necessity in our market economy. And bankruptcy laws are even founded upon a provision of the U.S. Constitution:

Every now and then, a bankruptcy ruling elicits an “Oh, no!” response from just about everyone.

And then, subsequent case law starts rejecting and/or chipping-away at that “On, no!” ruling.

We have such an “Oh, no!” situation going on right now on a Subchapter V debt-limit issue.

New Rejecting/Chipping-Away Opinion

The past few weeks have brought more news stories of doom and gloom from the hospitality sector with statistics showing that the number of insolvencies is at an all-time high. Data published by UHY Hacker Young shows the number of pub and bar insolvencies increased from 438 to 725 over the last year. Insolvency specialist Begbies Traynor has recently reported that higher interest rates are pushing an increasing number of companies into insolvency.

I’m reading a U.S. circuit court’s recent bankruptcy opinion that cites Stern v. Marshall, 564 U.S. 462 (2011). I’m startled by that and blurt out (to myself), “Who cites Stern anymore?!” and “Is Stern still a thing?!” and “I thought Stern has been narrowed to nearly nothing?!”

What creditor would ever want to be an involuntary bankruptcy petitioner under these statements of facts and law:

In its much-anticipated 2023 Autumn Statement, the UK Government has committed to extending the relief available to the hospitality, retail and leisure sector. It has also announced that a business rates support package worth £4.3 billion will be available to support small businesses and the high street. However, the hospitality sector remains one of the most vulnerable, and it remains to be seen whether this additional support will be enough.

Oral arguments at the U.S. Supreme Court in Harrington v. Purdue Pharma L.P. happened on December 4, 2023. Here is a link to the official transcript of such arguments.

My Impression

I’ve read that transcript—and still don’t know what the Court is going to do.

But based on the comments/questions of the justices (which are summarized and compiled below), I do have one impression: