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Banks Ordered to Disclose Bondholder Information to Puerto Rico Board

A judge yesterday ordered banks to comply with a request from Puerto Rico’s federally created financial oversight board to disclose customer information related to certain debt issued by the bankrupt U.S. commonwealth, Reuters reported. The ruling boosts a potential effort by the board to recover billions of dollars in payments made to bondholders should a federal court hearing Puerto Rico’s bankruptcy cases choose to invalidate disputed debt issued by the government and its agencies. U.S. Magistrate Judge Judith Gail Dein’s order said “good cause exists” to grant the board’s motion, which seeks to compel banks to submit bondholder names and addresses along with Puerto Rico debt payments the bondholders received between 2013 and 2017. The Bank of New York Mellon, Bank of America Corp, JP Morgan Chase Bank, and U.S. Bank objected to the board’s request last week, citing concerns over disclosing confidential customer information, as well as the cost and ability to produce a large amount of information by the April 19 deadline set by the board.
 

PG&E Ratepayers Lobby for a Voice in Utility’s Bankruptcy

A push for an official voice for ratepayers in PG&E Corp.’s bankruptcy case is gaining momentum as California’s largest utility confronts the fallout from years of wildfires linked to its equipment, the Wall Street Journal reported. The Utility Reform Network, or Turn, is asking for a seat at the bargaining table for customers as PG&E negotiates with investors and wildfire victims over its future. Ratepayers want to make sure they don’t have to pay the price for PG&E’s safety failures, said Turn Executive Director Mark Toney in an interview. Backed by representatives of big utility customers and the Public Advocate’s Office of the California Public Utilities Commission, the nonprofit is campaigning for the appointment of an official committee in PG&E’s bankruptcy case. PG&E filed for chapter 11 protection at the end of January, after being hit with claims for an estimated $30 billion in damage from wildfires. PG&E hasn’t responded to the request for a ratepayer committee, which came in a series of filings in the U.S. Bankruptcy Court in San Francisco. California Gov. Gavin Newsom (D) has suggested a state fund be created to cushion utilities against the shock of wildfire damages, exciting both shareholders and bondholders. Ultimately, someone will have to pay, either shareholders or ratepayers, for such a fund, which is being talked about as a fund of $15 billion or more, according to a recent report from Moody’s Investors Service.

J&J Aims to Use Supplier Bankruptcy to Fight 2,400 Talc Lawsuits

Johnson & Johnson asked a federal judge to take over 2,400 baby-powder lawsuits it faces instead of allowing the cases to go before state court juries around the country, where the company has a mixed record, Bloomberg News reported. The health care company is seeking to take advantage of court protections available to J&J’s bankrupt talc supplier Imerys Talc America Inc. Under chapter 11 protection, Imerys is able to temporarily halt lawsuits it faces while the company negotiates with plaintiffs and tries to reorganize. Because it isn’t in bankruptcy, J&J would normally not be able use those protections. In this case, the company is arguing that because it has contractual ties to Imerys, J&J has the right to force any cases that could involve both companies to be adjudicated in U.S. District Court in Wilmington, Delaware. J&J is facing more than 14,000 claims that its talc products caused ovarian cancer or mesothelioma, a rare cancer linked to asbestos exposure. The company has denied that its products are harmful. The case is In re Imerys Talc America Inc., 19-00103, U.S. District Court, the bankruptcy case is 19-10289, U.S. Bankruptcy Court. Both cases are in the District of Delaware (Wilmington).

U.S. Will Not Prosecute Miami Gold Refinery after Money Laundering Probe

The U.S. Attorney’s Office said it has agreed not to prosecute one of the country’s biggest gold refineries, Republic Metals Corp. (RMC), after an investigation into possible money laundering, Reuters reported. The probe is part of a broader crackdown by U.S. authorities on imports of gold from South American countries such as Colombia and Peru that is illegally mined or used to launder drug money. Investigators in 2017 said that  another U.S. refiner, Elemetal, had bought billions of dollars’ worth of illegal gold from South America. Several of its employees received jail terms. The U.S. Attorney’s Office in the Southern District of Florida said on Wednesday that it had agreed a non-prosecution deal with RMC after “an investigation focusing on money laundering and violations of the Bank Secrecy Act.” RMC would continue to cooperate with an ongoing investigation and improve its anti-money laundering and compliance programs, it said in a statement on its website. Miami-based RMC declared bankruptcy last year. Its assets are being bought by rival refiner Asahi.

Connecticut Man Pleads Guilty to Bankruptcy Fraud

The U.S. District Attorney’s Office for Connecticut said that Joel C. Reilly of Wallingford, Conn., pleaded guilty to one count of bankruptcy fraud on Wednesday after allegedly securing credit using another individual’s name, then declaring bankruptcy on their behalf for those same loans, the New Haven Register reported. Reilly “fraudulently applied for and obtained loans and lines of credit in the name of another individual... without the victim’s knowledge or permission, using her name and personal information,” according to the U.S. District Attorney's office. The outstanding debt on the loans was approximately $211,142 as of December 2016, spokesman Tom Carson said, which Reilly could not repay.

New CFPB Director to Continue Review of Complaints Database, Fair Lending

The new director of the Consumer Financial Protection Bureau will continue with reviews, begun by her predecessor, of its public complaints database and how the agency enforces discriminatory lending laws, Reuters reported. Kathy Kraninger said the agency was discussing how the public complaints database, a key source of the bureau’s investigations, should operate. “It is on the agenda this year to address what is the public kind of discussion about what the database should be,” she said. The financial industry and consumer advocates have been watching closely to see whether Kraninger would continue with a number of controversial projects begun by Mick Mulvaney, formerly the agency’s interim director and now President Donald Trump’s chief of staff. Kraninger acknowledged that the database, which went public in 2012 to boost transparency of consumer issues, supported the bureau’s mission to protect borrowers, but did not rule out making it private.
 
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