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Third Circuit Dismisses J&J Affiliate LTL’s Talc Liability Chapter 11 Filing “Good Faith” Under 1112(b) Requires Financial Distress
2023-02-09

Executive Summary:

Filed under:
USA, Insolvency & Restructuring, Litigation, Cadwalader Wickersham & Taft LLP, Good faith, Third Circuit, U.S. Court of Appeals
Authors:
Ingrid Bagby , Michele C. Maman , Casey Servais
Location:
USA
Firm:
Cadwalader Wickersham & Taft LLP
View Original Article
Third Circuit Dismisses J&J Affiliate LTL’s Talc Liability Chapter 11 Filing; “Good Faith” Under 1112(b) Requires Financial Distress
2023-02-09

Executive Summary:

Filed under:
USA, Insolvency & Restructuring, Litigation, Cadwalader Wickersham & Taft LLP, Good faith, Third Circuit, U.S. Court of Appeals
Authors:
Ingrid Bagby , Michele C. Maman , Casey Servais
Location:
USA
Firm:
Cadwalader Wickersham & Taft LLP
View Original Article
Texas Divisive Mergers Remain Viable After Third Circuit Appellate Decision
2023-02-08

The recent decision by the US Third Circuit Court of Appeals in In re LTL Management, LLC did not address or negate the viability of divisive mergers of entities under the Texas Business Organizations Code (the “TBOC”). Various news articles concerning the decision have reported that the court disapproved of the so-called “Texas Two-Step” transactions undertaken by Johnson & Johnson (“J&J”) in the face of its mounting talc tort litigation.

Filed under:
USA, Texas, Insolvency & Restructuring, Litigation, Hunton Andrews Kurth LLP, Third Circuit
Location:
USA
Firm:
Hunton Andrews Kurth LLP
View Original Article
The Music Stops on the Texas Two-Step: Third Circuit Dismisses LTL Bankruptcy Case
2023-02-06

The United States Court of Appeals for the Third Circuit wasted no time getting the new year off to a roaring start through its ruling in In re LTL Mgmt., LLC, Case No. 22-2003, 2023 WL 1098189 (3d Cir. Jan. 30, 2023). In LTL, the Third Circuit affirmatively dismissed the so-called “Texas Two-Step” by which a solvent corporation had tried to cabin potentially billions of dollars of mass tort liability through an internal corporate restructuring.

In that ruling, the Third Circuit determined that:

Filed under:
USA, Insolvency & Restructuring, Litigation, Ropes & Gray LLP, Third Circuit, U.S. Court of Appeals
Location:
USA
Firm:
Ropes & Gray LLP
View Original Article
Third Circuit Dismisses J&J Bankruptcy Case for Lack of Good Faith
2023-02-06

“The theme is clear: absent financial distress, there is no reason for Chapter 11 and no valid bankruptcy purpose.”

Filed under:
USA, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Bankruptcy, Good faith, Johnson & Johnson, Third Circuit
Authors:
Douglas S. Mintz , Kelly (Bucky) Knight
Location:
USA
Firm:
Schulte Roth & Zabel LLP
View Original Article
Put down your fiddle: Third Circuit halts Johnson & Johnson’s Texas two-step
2023-02-03

On January 30, 2023, the Third Circuit Court of Appeals dismissed the bankruptcy filing by Johnson & Johnson’s subsidiary, LTL Management, LLC (“LTL”). The Circuit Court reversed the New Jersey Bankruptcy Court and held that LTL did not file the bankruptcy case in good faith and therefore was ineligible to petition the bankruptcy court for relief.

Filed under:
USA, Insolvency & Restructuring, Litigation, Third Circuit
Location:
USA
View Original Article
Third Circuit Dismisses Talc Bankruptcy
2023-01-31

On Monday, January 30, 2023, the Third Circuit in In re LTL Management, LLC1 ordered debtor LTL Management, LLC’s (“LTL”) chapter 11 petition dismissed for failure to demonstrate that the petition was filed in good faith pursuant to the Bankruptcy Code.2 The dismissal of LTL’s bankruptcy will also result in the termination of an injunction staying numerous lawsuits against third-parties—including lawsuits against certain third-party retailers being sued for allegedly having sold certain allegedly contaminated products.

Filed under:
USA, Insolvency & Restructuring, Litigation, Hunton Andrews Kurth LLP, Bankruptcy, United States bankruptcy court, Third Circuit
Authors:
Gregory G. Hesse , Brandon Bell
Location:
USA
Firm:
Hunton Andrews Kurth LLP
View Original Article
Opinion Alert: Third Circuit Dismisses LTL Mass Tort Bankruptcy, Holding “Good Faith” Requires “Immediate” Financial Distress
2023-01-30

In a decision likely to have significant impact on certain types of bankruptcy filings going forward, this morning, the Third Circuit Court of Appeals ordered the dismissal of the Chapter 11 bankruptcy case filed by Johnson & Johnson affiliate LTL Management LLC.

Filed under:
USA, Insolvency & Restructuring, Litigation, Mayer Brown, United States bankruptcy court, Third Circuit
Authors:
Sean T. Scott , Aaron Gavant , Joshua R. Gross
Location:
USA
Firm:
Mayer Brown
View Original Article
Substantial Contribution: A New Decision from the Third Circuit
2022-12-29

It’s often hard to persuade a bankruptcy court to grant a motion for substantial contribution. Any attorney thinking about making a motion should first ask herself two questions. First, has my work benefitted both my client and other creditors? Second, did my work result in more than an incidental benefit to the bankruptcy estate? If the answer to either question is no, then the attorney should forget about making the motion. The time spent on it will be wasted, and the motion will be denied.

Filed under:
USA, Company & Commercial, Insolvency & Restructuring, Litigation, Patterson Belknap Webb & Tyler LLP, Third Circuit
Authors:
Daniel A. Lowenthal
Location:
USA
Firm:
Patterson Belknap Webb & Tyler LLP
View Original Article
Fifth Circuit Embraces Flexible Approach to Countryman Test of Executoriness in Bankruptcies Involving Multiparty Contracts
2022-12-05

Whether a contract is "executory" such that it can be assumed, rejected, or assigned in bankruptcy is a question infrequently addressed by the circuit courts of appeals. The U.S. Court of Appeals for the Fifth Circuit provided some rare appellate court-level guidance on the question in Matter of Falcon V, L.L.C., 44 F.4th 348 (5th Cir. 2022). The Fifth Circuit affirmed lower-court rulings determining that a surety contract was not executory because the surety had already posted irrevocable surety bonds and did not owe further performance to the debtors.

Filed under:
USA, Company & Commercial, Insolvency & Restructuring, Litigation, Jones Day, NLRB, US Congress, SCOTUS, United States bankruptcy court, Fifth Circuit, Third Circuit
Authors:
Dan B. Prieto , Mark G. Douglas
Location:
USA
Firm:
Jones Day
View Original Article

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