Monthly Archives: April 2023

A livestreamed Easter Sunday mass is held at St. Louis Cathedral in New Orleans, Louisiana, April 12, 2020. File photo by Kathleen Flynn/REUTERS

A federal judge overseeing the New Orleans Roman Catholic bankruptcy recused himself in a late-night reversal that came a week after an Associated Press report showed he donated tens of thousands of dollars to the archdiocese and consistently ruled in favor of the church in the case involving nearly 500 clergy sex abuse victims.

U.S. District Judge Greg Guidry initially announced hours after theAP reportthat he would stay on the case, citing the opinion of fellow federal judges that no "reasonable person" could question his impartiality. But amid mounting pressure and persistent questions, he changed course late Friday in a terse, one-page filing.

"I have decided to recuse myself from this matter in order to avoid any possible appearance of personal bias or prejudice," Guidry wrote.

The 62-year-old jurist has overseen the 3-year-old bankruptcy in an appellate role, and his recusal is likely to throw the case into disarray and trigger new hearings and appeals of every consequential ruling he's made.

READ MORE: Catholic bankruptcy case rulings clouded by judge's donations

But legal experts say it was the only action to take under the circumstances, citing federal law that calls on judges to step aside in any proceeding in which their "impartiality might reasonably be questioned."

"This was a clear and blatant conflict that existed for some time," said Joel Friedman, a longtime legal analyst in New Orleans who is now a law professor at Arizona State University. "It creates the exact problem the rules are designed to avoid, the impression to the public that he's not an impartial decisionmaker."

Guidry's recusal underscores how tightly woven the church is in the city's power structure, a coziness perhaps best exemplified when executives of the NFL's New Orleans Saintssecretly advisedthe archdiocese on public relations messaging at the height of its clergy abuse crisis.

AP's review of campaign-finance records showed that Guidry, since being nominated to the federal bench in 2019 by then-President Donald Trump, gave nearly $50,000 to local Catholic charities from leftover political contributions from his decade serving as a Louisiana Supreme Court justice. Most of that giving, $36,000, came in the months after the archdiocese sought Chapter 11 bankruptcy protection in May 2020 amid a crush of sexual abuse lawsuits.

Guidry also served on the board of Catholic Charities, the archdiocese's charitable arm, between 2000 and 2008, as the archdiocese was navigating an earlier wave of sex abuse lawsuits.

In the bankruptcy, Guidry frequently issued key rulings that altered the momentum of the bankruptcy and benefited the archdiocese.

Just last month, he upheld a $400,000 sanction against Richard Trahant, a veteran attorney for clergy abuse victims who was accused of violating a sweeping confidentiality order when he warned a local principal that his school had hired a priest who admitted to sex abuse. He also rebuffed at least one request to unsealsecret church documents, part of a trove of records detailing clergy abuse in New Orleans going back decades.

Guidry referred the potential conflict to the Washington-based Committee on Codes of Conduct, which noted that none of the charities he donated to "has been or is an actual party" in the bankruptcy.

It also noted that Guidry's eight years on the board of Catholic Charities ended more than a decade before the bankruptcy and that his church contributions amounted to less than 25 percent of the campaign funds he had available to donate.

"Based upon that advice and based upon my certainty that I can be fair and impartial, I have decided not to recuse myself," Guidry told attorneys in the case on April 21.

But it was not clear what details Guidry shared with the committee, and he refused to release its advisory opinion. The opinion also raised eyebrows because one of the judges Guidry consulted on the potential conflict, Jennifer Walker Elrod, is scheduled to hear an appeal from the bankruptcy next week for the 5th U.S. Circuit Court of Appeals.

"We have no reason to rely on this secret opinion because we have no idea what the analysis is," said Kathleen Clark, a legal ethics professor at Washington University in St. Louis, adding it was "utterly reasonable to question Guidry's ability to be impartial under these circumstances."

"The public shouldn't have to rely on a judge's personal certainty about his own rectitude," Clark added. "The fact that he would even make this assertion shows how misguided and ethically blind this judge is."

Charles Hall, a spokesman for the Administrative Office of the U.S. Courts, said Guidry had no comment beyond the recusal order.

James Adams, a creditor in the bankruptcy who alleges he was abused by a priest as a fifth grader in 1980, says the judge's recusal was long overdue.

"Like the church, some federal judges will often do the right thing only after the press begins to investigate and question them," he said. "Inflated ego and arrogance can be a dangerous side effect of putting on a black robe."

Mustian reported from New York.

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Judge in New Orleans Roman Catholic bankruptcy recuses himself over church donations - PBS NewsHour

FuzzMartin

Whittaker, Clark & Daniels, Brilliant National Services, L.A. Terminals, and Soco West filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of New Jersey on Wednesday. The equity of the four companies had been acquired by an indirect subsidiary of Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A) in December 2007.

Although the companies had ceased operations in 2004 and sold all their operating assets before the acquisition, they still faced liabilities related to asbestos, talc, and environmental claims at the time of the acquisition, Berkshire Hathaway (BRK.B) said in a statement Thursday.

At the time of the filing, the firms' consolidated liabilities were estimated at $1B-$10B and consolidated assets were estimated at $100M-$500M, according to the filing.

"No Berkshire (BRK.B) company ever operated, or had any involvement in, the manufacturing and chemical operations that gave rise to the companies liabilities, and no Berkshire insurer issued it any insurance in connection with the acquisition," the company said.

In 2010, a Berkshire Hathaway (BRK.A) unit assumed asbestos and pollution risks held by CNA Financial (CNA) for $2B. Then the next year, it agreed to take on $3.5B in potential asbestos liabilities from AIG (AIG) in exchange for ~$1.65B payment.

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Four companies indirectly owned by Berkshire Hathaway file for bankruptcy (NYSE:BRK.B) - Seeking Alpha

NEW YORK Lucira Health, which broke new ground in 2020 with the first rapid at-home COVID-19 test but filed for bankruptcy this year, said in a recent US Securities and Exchange Commission filing that it has been acquired by Pfizer for $36.4 million through a bankruptcy auction.

According to the SEC document, the asset sale closed on April 20.

The Emeryville, California-based firm filed for bankruptcy on Feb. 22, just two days before receiving US Food and Drug Administration Emergency Use Authorization for the first over-the-counter at-home molecular test to differentiate SARS-CoV-2 and influenza A and B. The firm said in its bankruptcy petition that the business had $146 million in assets and $85 million in debts as of Dec. 31. In the SEC filing, it said Pfizer entered the winning bid in an April 6 auction for Lucira's assets.

Lucira had received the first FDA EUA for an at-home rapid self-test, the Lucira COVID-19 All-in-One Test Kit, in November 2020, and the firm announced in April 2021 that it had nabbed over-the-counter EUA for its Lucira Check It test kit for SARS-CoV-2. The firm's tests use a handheld battery-powered real-time testing instrument with nasal swab samples and loop-mediated isothermal amplification to provide results in 30 minutes.

In November 2022, the FDA granted the firm EUA for point-of-care use of its RT-LAMP-based COVID-19 and flu test. While Lucira posted its first net positive revenues in the first quarter of 2022, it posted losses later in the year and announced plans to lay off 150 of its 225 employees.

The firm was among the companies that emerged in the pandemic only to struggle to keep the lights on as COVID-19 testing volumes plummeted. Industry watchers have predicted a tough road ahead for the COVID-19-focused firms that have not been expanding their menus.

In announcing its Chapter 11 plans, Lucira said a protracted EUA process for its COVID-19 and influenza test had been costly, leading to the bankruptcy filing and sale process. The firm also said in a previous SEC filing that a lack of clinical data had forced it to limit its combination test to point-of-care use until it could obtain more prospective clinical data.

FDA officials responded to the statements about a perceived lengthy EUA process with a statement that the agency had found Lucira's COVID-19 and flu test had contained a toxic substance in one of the test components, making it unsuitable for home use and delaying the EUA process. After the redesign, the EUA request included only nine positive influenza A clinical samples, which was too few to assess the test's performance.

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Pfizer Buys Lucira Health for $36.4M Through Bankruptcy Auction - GenomeWeb

Benzinga| Detroit Free Press

The S&P 500 logged a weekly gain following the release of encouraging inflation data and a weaker-than-expected first-quarter economic growth report.

On Friday, the Bureau of Economic Analysis reported the personal consumption expenditures price index increased by 4.2% year-over-year in the month of March, down from 5% in February. Core PCE, which excludes volatile food and energy prices and is the Fed's preferred inflation gauge, was up 4.6%, above analyst estimates of a 4.5% gain.

On Thursday, the Bureau of Economic Analysis reported U.S. GDP grew 1.1% year-over-year in the first quarter, far below the 2% growth economists predicted. GDP growth slowed from 2.6% in the fourth quarter and 2.1% full-year growth in 2022.

On Monday, First Republic Bank reported its deposits dropped nearly 41% in the first quarter, sending the stock tumbling nearly 50%. With shares down more than 95% year-to-date, investors are concerned First Republic may be the next bank to collapse in the ongoing U.S. regional banking crisis that brought down Silicon Valley Bank, Signature Bank and Silvergate in March.

Shares of Bed, Bath & Beyond dropped to around 10 cents on Friday following the company's Chapter 11 bankruptcy protection filing last Sunday. Bed, Bath & Beyond announced on Tuesday that it received a notice from Nasdaq that its common stock will be delisted from the exchange and trading will be suspended on May 3.

More: Rolling back Michigan's retirement tax triggers plenty of questions, confusion

Meta Platforms shares jumped Thursday after the Facebook and Instagram parent company reported its first positive revenue growth in four quarters and exceeded expectations with its second-quarter guidance.

Shares of popular restaurant chain Chipotle Mexican Grill also gained nearly 14% on the week after the company reported first-quarter earnings and revenue numbers that beat analyst expectations.

In the week ahead, investors will get more quarterly reports from Ford Motor, Uber Technologies and Advanced Micro Devices on Tuesday and Apple on Thursday.

S&P 500 net profit margins are on track to decline for the seventh consecutive quarter, according to FactSet.

Following the March PCE inflation data, Wall Street will get more economic updates on Wednesday when the Federal Reserve releases its latest interest rate decision and related commentary and on Friday when the Labor Department releases its April U.S. jobs report.

More: Higher living costs force Americans to cut back on retirement savings, survey says

Benzinga is a financial news and data company headquartered in Detroit.

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Bed Bath & Beyond shares drop after it files for bankruptcy protection - Detroit Free Press

UPDATED April 27, 10:50 p.m.: George Filopoulos gave up on a Greenwich Village building, but the troubled loans left behind have triggered a bizarre legal fight over the property, which is now being offered for sale as a condominium development site.

The drama began when the longtime real estate investors LLC was notified in August 2020 that it had defaulted its $9.3 million first mortgage at 307-309 Sixth Avenue.

The LLC in which Filopoulos says he owned a 10 percent interest in separate from his firm, Metrovest Equities failed to repay the loan at its maturity date and lender Castellan Capital filed to foreclose.

The case laid quiet during the pandemic and in December of 2021 Castellan sold its loan, according to property records. Filopoulos then transferred its interest in the property in May 2022, according to an attorney for his firm. A court filing does not say who took control of the ownership LLC. Paperwork for the entity was signed by a person named William Schneider, who in November filed project plans for a seven-story, 39-unit building with ground-floor retail and community space.

The judge in the foreclosure case ruled in June that the LLCs debt had grown to about $15 million, and a foreclosure sale was scheduled for Dec. 14.

But on the eve of the auction, another stakeholder went to bankruptcy court to prevent it from going through.

William Rainero, whose family sold Filopoulos LLC the property in 2017, said in court papers that he had provided the buyer a $5 million mortgage to close the $17 million deal. That loan is in the second position behind the one originated by Castellan.

Rainero argued in court papers that the new owner was conspiring to wipe him out by agreeing to hand the property back to the lender. The bankruptcy court agreed to put off the sale. The new ownership LLC filed its own bankruptcy case and the side-by-side buildings at 307 and 309 Sixth Avenue are now being marketed for sale by a team at Meridian Investment Sales led by David Schechtman.

The ownership LLC asserted in a January 2023 bankruptcy filing that Filopoulos, who owns the upscale Gurneys Montauk resort in the Hamptons, had recognized the Greenwich Village development site was underwater and had agreed not to contest the foreclosure and to transfer ownership to an entity affiliated with his lender.

Filopoulos disputes that, saying he has nothing to do with the bankruptcy case and divested his interests in the property after trying to find retail tenants for it.

The Rainero familys attorney, meanwhile, said they will enforce their rights in the owners bankruptcy case.

My clients the Rainero family have owned property in Greenwich Village for over 100 years, attorney Bruce Bronson wrote in a text. They are owed $7 million and expect to be paid. Filopoulos said that second mortgage became the buyers responsibility when he sold the two-story Sixth Avenue buildings.

In court papers, Rainero insinuated that the lender may be paying the LLCs legal fees in order to take the property over.

The independence of the debtor is critical to the proper marketing of the property to obtain the best price, his lawyers wrote.

This story and the photo were updated after George Filopoulos provided evidence he sold his interest in the property prior to the ownership group filing for bankruptcy, which he and Metrovest are not parties to.

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Bankruptcy Battle Breaks Out Over Greenwich Village Dev Site - The Real Deal

Distressed US companies are increasingly resorting to debt restructurings to avoid expensive bankruptcy proceedings, but many borrowers ultimately end up in court anyway with their deals amounting to little more than can-kicking exercises.

Almost three-quarters of US corporate debt defaults last year were out-of-court distressed exchanges, where a company offers creditors assets worth less than their original bonds or loans, according to a report by Moodys this month. That is up from roughly half in 2020, the rating agency said.

Moodys predicts that far-reaching private equity ownership of companies with very weak ratings will further fuel the growth of distressed exchanges because this type of restructuring can protect such backers investments.

Private equity sponsors heavily favour distressed exchanges as a debt restructuring tool of choice because it helps them sidestep bankruptcy and preserves their equity, Moodys said.

However, many businesses default again following such restructurings. The re-default rate monitored by Moodys currently stands at 47 per cent.

Some companies are just kicking the can with distressed exchanges and merely delaying an inevitable bankruptcy, said Sinjin Bowron, head of high-yield and leveraged loans at Beach Point Capital Management.

In the event that theres a distressed exchange at a company, not only are you potentially losing asset value as a lender he said.But also, if the company is having operational difficulties, then it doesnt necessarily fix those problems.

Of the companies tracked by Moodys that defaulted a second time, the majority ended up in bankruptcy. Mattress company Serta Simmons entered bankruptcy proceedings in January. KKR-backed Envision Healthcare is also reportedly considering filing for bankruptcy, according to the Wall Street Journal, while retailer Bed, Bath and Beyond not backed by private equity filed for Chapter 11 on Sunday after a distressed exchange in 2022.

Envision did not respond to a request for comment.

The accelerating trend underscores the challenges faced by distressed companies that face a combination of rising borrowing costs and a slowing economy. These difficulties, and investor scrutiny of such businesses, are likely to intensify this year against a backdrop of rising recession fears.

Rating agency S&P sees the US junk-grade default rate reaching 4 per cent by December, from a rate of 2.5 per cent in the 12 months to March. Moodys anticipates a US rate of 5.6 per cent by next March, up sharply from its own figure of 2.7 per cent as of March 31.

As more companies are forced to renege on their borrowings, some may opt for exchanges because they believe the business overall is sustainable with a lower debt load, said Matt Mish, head of credit strategy at UBS. Heading into a more difficult financial environment, they want to resize the capital structure, he added.

The proliferation of distressed exchanges follows a dealmaking frenzy when buyout groups took advantage of cheap borrowing costs to pile leverage on to lowly rated companies with already creaking balance sheets, funding billions of dollars worth of mergers and acquisitions.

In recent years, much of this debt has comprised leveraged loans, instruments sold by junk grade businesses, whose coupons move with prevailing interest rates. These were considered attractive when monetary policy was ultra-loose with issuance roughly doubling to $615bn between 2019 and 2021 as interest rates plunged early in the Covid pandemic, according to data provider LCD but have lost their appeal as the Federal Reserve embarked on its most aggressive campaign of interest rate rises in decades to tame inflation.

High-yield or sub-investment-grade corporate bond issuance also picked up as interest rates were slashed after the outbreak of Covid, reaching $465bn, compared with $263bn in 2019, according to Refinitiv data.

Historically, unsecured bonds debt not backed by company assets were usually restructured in distressed exchanges. However, since the start of the pandemic, the rising number of defaulting loan-only borrowers without bonds has changed that dynamic.

At first glance, distressed exchanges can be appealing to lenders who typically recover a greater proportion of their outlay than they would in a bankruptcy, according to Julia Chursin, senior analyst at Moodys.

But the current repeat rate for defaults means that often, you get hit once, then a second time your recovery rate deteriorates, Chursin said.

Historical data for unsecured bonds indicates that if a company goes through a distressed exchange, then files for bankruptcy, [creditors] losses can accumulate and it can be worse than just filing for bankruptcy.

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US companies in distress turn to debt exchanges to dodge bankruptcy - Financial Times

Texas-based home goods retailer Tuesday Morning will close its remaining 13 stores in South Carolina, including locations in the Midlands, Upstate, along the Grand Strand and in the Charleston area.

According to reports from the stores Dallas headquarters, the company was sold out of bankruptcy for $32 million to a liquidation company, Hilco Merchant Resources.

Tuesday Morning first filed for bankruptcy in the early months of the COVID-19 pandemic in 2020. Earlier this year the store had about 480 stores nationwide, down from more than 700 prior to the pandemic.

After filing for bankruptcy a second time in February, the company closed more than 250 of its stores nationwide, including six in South Carolina.

An employee at one of the Columbia-area locations confirmed Friday morning that employees had been notified of the stores closing, but no details have been released on when liquidation sales will begin.

This is the latest big retailer to shut down stores statewide. Bed Bath and Beyond is shuttering all stores remaining in South Carolina after its announcement earlier in April that it would be going out of business.

Reach Christina Lee Knauss at 803-753-4327.

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National retailer sold out of bankruptcy, will close remaining South ... - columbiabusinessreport.com

Twitter CEO Elon Musk has been implementing various changes to the platform and policies since taking over the company last year. The latest change that has caused an uproar among employees and the public is the reduction of paid parental leave from 20 weeks to just 14 days for those employees who work in states in the US that do not have a paid leave policy. The information was revealed through internal company documents cited by the New York Post.

The reduction in paid parental leave has received severe criticism from many quarters. As per a report in the New York Post, there is no federal law in the United States mandating paid parental leave. However, the Family and Medical Leave Act allows for "unpaid, job-protected leave for specified family and medical reasons'' for up to 12 weeks for certain employees. Additionally, 12 states provide paid family and medical leave of some kind. California allows up to eight weeks of paid leave under state law, while both New York and New Jersey permit up to 26 weeks of unpaid, job-protected leave in addition to 12 weeks of paid leave.

Many Twitter users expressed their disappointment and frustration at the reduction of paid parental leave. Some accused the company of breaching an acquisition deal that protected benefits for one year after close. Others pointed out that reducing the leave will have a significant impact on new mothers who need time to rest, recover, and spend time with their newborns. Several users argued that the reduction of paid parental leave will contribute to the gender pay gap as women will have to choose between returning to work after two weeks or taking a long, unpaid break from work.

Some users also questioned the logic behind reducing paid parental leave, especially at a time when there is a global concern about declining birthrates. One user commented, "You can't be obsessed with declining birthrates and then incentivise your employees to not have children." Another user accused the company of making the decision due to financial troubles, saying, "Only a company facing bankruptcy does this."

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Companies facing bankruptcy do this: Internet irate after Elon Musk led-Twitter reportedly slashed parental leaves - Business Today

Who says no one wants a Midtown office?

Brooklyn investor Tim Zisss Allied Properties entered into a contract to buy a vacant seven-story office at 14 East 52nd Street for $22.5 million in February, but he claims the owner Inmoprisa, which was once tied to Spanish fashion mogul Alberto Palatchi balked on an extension prior to its April deadline.

Inmoprisa sent Ziss a notice of default and put his $3 million deposit at risk. So he filed a bankruptcy petition to keep the contract in place.

We made a good-faith effort to secure a short extension and close as planned, said Ziss in a statement. The seller was unwilling to accommodate, leaving us no option but to seek protection of our interest and allow for the needed time to close.

Although bankruptcy is often a last-ditch effort to refinance or sell a property prior to a foreclosure, it can also be used to extend contracts.

Using bankruptcy to preserve a contract is nothing new. [It] has been done before many times, said Adam Stein-Sapir of Pioneer Funding, a bankruptcy specialist uninvolved in the case. Its seen as an asset of the estate.

PincusCo first reported the bankruptcy.The building was previously occupied by Pronovias, a luxury Spanish wedding dress designer who used the building as a showroom and office headquarters, but moved to 45 East 58th Street in 2019. The site also has 19,000square feet of unused air rights. It is being listed for sale by Avison Young.

The property was once eyed by Harry Macklowe as a piece in his plans tobuild a 1 million-square-foot supertall office tower known as Saint Stevens New York. He acquired neighboring properties to create an assemblage.

Macklowe was believed to be connected to entities shielded by the late lawyer Steven Holm. In 2016, a Holm entity acquired the property at 12 East 52nd Street for $32 million. In 2018, a Holm entity entered a contract to buy 14 East 52nd Street from the owners of Pronovias in 2019, but the deal never closed.

Tim Ziss is no stranger to bankruptcy. The investor, whose legal name is Efthimios Zisimopoulos, recently acquired a 100,000-square-foot Bay Ridge office building out of bankruptcy through a $25 million credit bid. He attracted controversy over his sale of a Nathans restaurant in South Brooklyn to New York City School Construction Authority for more than double what hed paid for it just six months earlier.

An investigation by The City found that Ziss had been paying New York Building Congress head Carlo Scissura to meet with local leaders and elected officials about the development of five properties in Bay Ridge.

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Tim Ziss Files For Bankruptcy To Extend Contract For Midtown Office - The Real Deal

The future is uncertain for Structurlam Mass Timber Corp.'s Conway plant as the company moves through bankruptcy proceedings, an official said Tuesday.

The Conway plant, which was producing cross-laminated timber for buildings in Walmart's new headquarters campus in Bentonville, had about 144 employees when it was suddenly shut down in January after Walmart canceled the contract.

Mercer International Inc., a global forest products producer, has reached an agreement to buy the 288,000-square-foot Conway plant and all of Structurlam's assets for $60 million, according to the bankruptcy announcement.

That proposal, however, is subject to a court-supervised auction process.

"Mercer International has not yet acquired ownership of the Structurlam company and its Conway facility," Paul Sehn, Structurlam's senior vice president of sales and marketing, said, noting the agreement is binding but is subject to a better offer from another bidder.

"During the auction process, other interested parties can provide higher bids, including Mercer," Sehn said in a statement. "The process is expected to conclude towards the end of May, at which time one successful party will take ownership of Structurlam's operating assets."

Structurlam stirred great interest in December 2019 when it announced a $90 million investment to make the Conway facility the company's first manufacturing facility outside Canada, highlighting a strategic partnership with Walmart that included an equity investment from the retailer. The investment was tied to a deal to produce 1.7 million cubic feet of timber for Walmart's new corporate headquarters in Bentonville.

The company also outlined ambitious expansion goals, which included adding sales offices in Atlanta, Dallas and Nashville, Tenn., to win other clients.

In the bankruptcy filing, Structurlam listed assets between $100 million and $500 million and the same range in liabilities. Walmart was the largest unsecured creditor at $34 million.

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Future at Conway plant unclear after bankruptcy - Arkansas Online