The House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law will hold its rescheduled hearing titled "Oversight of Bankruptcy Law and Legislative Proposals" tomorrow at 10 a.m. EDT. Robert J. Keach of Bernstein Shur (Portland, Maine), a former ABI President and co-chair of the ABI Commission to Study the Reform of Chapter 11, will testify on ABI's behalf. For further information on the hearing, please click here.
A little-known division of the Justice Department is using the nation’s bankruptcy courts to impose the federal marijuana ban in states that have legalized pot, preventing people who work in the cannabis industry from using the bankruptcy system to save their home or business, the Wall Street Journal reported. Claude and Kerri Hayes were kicked out of bankruptcy court in 2017 after the couple filed to stop a mortgage company from foreclosing on their Mt. Vernon, Wash., home. A representative of the U.S. Trustee Program, the DOJ arm that monitors federal bankruptcy law, said in court papers the reason they couldn’t use bankruptcy was Hayes’ employment with a marijuana business called Skagit Organics LLC. Marijuana use, cultivation and distribution remain illegal at the federal level, and workers and small businesses are discovering that ties to marijuana may prevent them from getting a fresh start in bankruptcy. People earning regular wages can use chapter 13 of the bankruptcy code to halt foreclosure and repay debt over a period of three to five years. The inability to use bankruptcy presents a risk to the more than 211,000 people who have found work in the pot industry, an estimate by the cannabis site Leafly, or others providing ancillary services, as more states and territories legalize the drug.
About a year after shuttering U.S. operations, the remnant of defunct toy chain Toys “R” Us is set to return this holiday season by opening about a half dozen U.S. stores and an e-commerce site, Bloomberg News reported. Richard Barry, a former Toys “R” Us executive who is now CEO of new entity Tru Kids Inc., has been pitching his vision to reincarnate the chain to toymakers, including at an industry conference last week. The stores are slated to be about 10,000-square feet, roughly a third of the size of the brand’s big-box outlets that closed last year, the people said. The locations will also have more experiences, like play areas. The startup costs could be minimized with a consignment inventory model in which toymakers ship goods but don’t get paid until consumers buy them. It remains to be seen how much of a boost the retailer’s comeback will provide the toy industry, including giants such as Hasbro Inc. and Mattel Inc. The original Toys “R” Us, the only national toy chain, left a huge hole when it went under. It had been generating about $7 billion in sales a year in the U.S. through more than 700 locations, including the Babies “R” Us brand.
Not enough money has been raised in sales of businesses controlled by Lynn Tilton to lock in an extended peace pact with backers of her Zohar collateralized loan obligation funds, according to a lawyer for the bankrupt investment vehicles, WSJ Pro Bankruptcy reported. Only one company out of a dozen that were marketed has reached a deal, Zohar funds attorney Michel Nestor said at a Friday hearing in the U.S. Bankruptcy Court in Wilmington, Del. The sale of Denali Inc., a maker of industrial storage tanks with plants in California, Oklahoma and Pennsylvania, is up for court approval next week. The Zohar funds, which Tilton placed under bankruptcy protection last year, would get between $72 million and $78 million from the Denali sale, according to court papers. But Zohar investors are owed more than $1.8 billion they put up years before to help Tilton, a turnaround executive, rescue distressed businesses.
Nearly 400 claims have been filed against New Mexico's largest and oldest Roman Catholic diocese as part of a pending bankruptcy case that stems from the clergy sex abuse scandal, church officials announced on Friday, the Associated Press reported. The Archdiocese of Santa Fe reported that 395 people filed claims against the church as of the June 17 deadline. That included 374 claims involving allegations of sex abuse. The remaining 21 were related to other grievances. The archdiocese shocked parishioners across much of New Mexico when it filed for chapter 11 reorganization last year, joining nearly two dozen other dioceses around the U.S. that have been struggling with the fallout from the abuse scandal. When it first announced its decision to file for reorganization, the archdiocese said it had already paid out $52 million in insurance money and its own funds to settle 300 claims that had been filed over the years. In its bankruptcy petition, the archdiocese claimed nearly $50 million in assets, including real estate valued at more than $31 million. The filing also showed more than $57 million in property was being held in trust for numerous parishes, and property transfers worth an additional $34 million were done over the past couple years.