Tag: bankruptcy

Soros And Fortress To Acquire Vice Media Out Of Bankruptcy

Vice Media, which once had a valuation of $5.7 billion, went woke and is now broke, is set to be acquired out of bankruptcy at a valuation of around $400 million by Fortress Investment Group and Soros Fund Management, according to The Wall Street Journal, citing people familiar with the matter.

A bankruptcy filing appears imminent and would be a fitting ending to the tumultuous story of Vice, a new-media Phoenix that rose out of the ashes with its iconoclastic, counterculture facade, then quickly sought to supplant the media establishment before persuading it to invest hundreds of millions. In 2017, after a funding round from the private-equity firm TPG Group, Vice was worth $5.7 billion. Around this time, the company realized that for the money to keep flowing, it would need to curb its rebellious ways and quickly turned woke, losing most of its fans in the process…. just in case anyone wonders why Vice went woke.

As a result, the company’s current valuation is only a fraction of what it was five years ago, as we mentioned earlier this week when discussing the imminent bankruptcy filing.

WSJ said under the deal to purchase the distressed media company out of bankruptcy, all stockholders, including TPG, Sixth Street Partners, and media tycoon James Murdoch would be wiped out in the proposed reorganization plan. The people said outstanding debts held by TPG and Sixth Street “would also be impaired as part of the plan.”

The company’s largest debtholder, hedge fund Fortress, will likely end up controlling the company. The hedge fund would probably take control of management. They said Fortress would find another role within the company for Vice co-founder Shane Smith.

Another buyer could emerge and outbid Vice’s lenders for control in a court-supervised sale in Chapter 11 that is expected to begin next week.

Source : https://www.zerohedge.com/markets/soros-and-fortress-acquire-vice-media-out-bankruptcy-court

J&J unit files for second bankruptcy to pursue $8.9 billion talc settlement

A bottle of Johnson and Johnson Baby Powder is seen in a photo illustration taken in New York, February 24, 2016. Consumers expressed concern on social media about a talc-based baby powder made by Johnson & Johnson on Wednesday after a Missouri jury ordered the company to pay $72 million in damages to the family of a woman who said her death from cancer was linked to use of the product.

Johnson & Johnson (JNJ.N) has agreed to pay $8.9 billion to settle tens of thousands of lawsuits alleging that talc in its iconic Baby Powder and other products caused cancer, the company said. The amount dwarfs J&J’s original offer of $2 billion.

The agreement follows a January appeals court ruling invalidating J&J’s controversial “Texas two-step” bankruptcy maneuver, in which it sought to offload the talc liability onto a subsidiary that immediately filed for Chapter 11.

The J&J subsidiary, LTL Management, filed for bankruptcy protection late Tuesday for a second time with the intent to present a reorganization plan containing the proposed settlement to a judge as soon as May 14, the subsidiary said in a court filing. J&J said in a statement that about 60,000 talc claimants had agreed to the proposal.

The J&J subsidiary filed for bankruptcy in New Jersey, the same jurisdiction where it faced the appeals court defeat. J&J crafted new financing arrangements with its subsidiary to avoid running afoul of the appeals ruling, the subsidiary said in a court filing. The ruling determined LTL Management had no legitimate claim to bankruptcy because it was not in financial distress.

The appeals court rejection effectively raised the price tag for J&J to rid itself of the sprawling talc litigation, after plaintiffs’ lawyers had resisted the company’s tactics and prevailed. J&J’s board met over the weekend and approved paying the vastly larger settlement to current and future plaintiffs with various gynecological cancers and mesothelioma, according to Mikal Watts, one of the plaintiffs’ lawyers who negotiated the agreement.

J&J reiterated on Tuesday that its talc products are safe and do not cause cancer. Company lawyers said talc claims lacked scientific merit and accused plaintiffs’ lawyers of continuing to advertise for clients in the hopes of extracting large financial sums.

The company still faces significant risk that other plaintiffs could continue to oppose the settlement and appeal the case again to the same court that has already rejected the subsidiary bankruptcy — the 3rd U.S. Circuit Court of Appeals in Philadelphia.

Attorneys representing thousands of plaintiffs issued a release late Tuesday opposing the settlement. “This sham deal does not even pay for most victims’ medical bills,” said Jason Itkin, founding partner of the Houston-based personal injury law firm Arnold & Itkin LLP.

Reuters reported earlier on Tuesday that J&J was exploring placing its talc subsidiary into bankruptcy proceedings a second time and that a lawyer for the company had approached plaintiffs’ attorneys in recent weeks proposing the two sides craft a new settlement agreement that could be consummated in a second J&J subsidiary bankruptcy. Reuters last year detailed the secretive planning of Texas two-steps by J&J and three other major companies in a series of reports exploring corporate attempts to evade lawsuits through bankruptcies.

Under terms of the newly proposed settlement, plaintiffs diagnosed with cancer before April 1 would be paid from a bankruptcy trust within one year of a judge approving the Chapter 11 plan creating it, according to Watts, the plaintiffs’ lawyer who helped negotiate the deal. Plaintiffs diagnosed later will have access to money set aside in the trust for the next 25 years.

The massive settlement emerged after the legal failure of J&J’s original Texas two-step bankruptcy, filed in October 2021. The novel tactic involved using a Texas state law to divide a company being sued into two, then shifting liability to one of the newly created entities. LTL Management, the new subsidiary that absorbed the liability, declared bankruptcy almost immediately after it was created.

Plaintiffs lawyers portrayed J&J’s two-step as an abuse of the bankruptcy system by a multinational conglomerate with a market capitalization exceeding $400 billion and in little danger of running out of money to pay cancer victims.

J&J and its subsidiary have argued the bankruptcy served a greater good for all parties, including plaintiffs: The restructuring could deliver settlement payouts more fairly, efficiently and equitably than a “lottery” offered by trial courts, where some litigants get large awards and others get nothing.

Source: https://www.reuters.com/legal/jj-unit-goes-bankrupt-second-time-pursue-89-bln-talc-settlement-2023-04-04/

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