Brown Rudnick Cases Highlighted in Law360 Story ‘Bankruptcy Cases to Watch In 2022’

Brown Rudnick is playing a lead role in the three cases listed in a Law360 report on “Bankruptcy Cases to Watch In 2022.” In the January 3 article, Law360 noted that these particular cases “could have far-reaching implications that could shift the restructuring landscape.”

According to the newswire, legislators seemed keen on tackling some of the issues raised in these cases in 2021, from liability stemming from opioid liability, sexual abuse, or talc and asbestos injury claims. But with 2022 being an election year, efforts may be fizzling to eliminate non-consensual releases of claims against nondebtors; to reform the bankruptcy vehicle selection rules; and to ban the “Texas two-step” practice that has been used a handful of times in asbestos cases.

“My guess is that, if you’re a betting person, this legislation does not get enacted this year,” said Brown Rudnick partner David Molton, who is involved in the three cases. “As the courts deal with it there may not be a need anymore for it to be prioritized.”

Brown Rudnick is representing the Official Committee of Talc Claimants in the bankruptcy case of LTL Management, the entity created by Johnson & Johnson to take on the company’s talc-related liabilities. As the largest bankruptcy case of 2021, the impact of the LTL Management/Johnson & Johnson bankruptcy case will likely impact 2022 as one of the cases where Law360 predicts that “legislative action could … cause monumental changes in the bankruptcy practice.”

Law360 reported that LTL is facing a challenge to its Chapter 11 case, with talc injury claimants arguing the corporate machinations that created the J&J entity amount to bad faith, placing the so-called Texas two-step under the scrutiny of the court. The divisive merger strategy creates two new subsidiaries: a “GoodCo” that retains the assets linked to the tort claims, and a “BadCo” that holds the liabilities.

“The whole issue of these divisive mergers in order to cabin tort liability – or any liability – in a newly created debtor, thereby allowing the company that had the liability and has the assets to shed itself of the liability and go on its merry way, is something that everybody is paying a lot of attention to,” Molton said.

Brown Rudnick is also representing the Coalition of Abused Scouts for Justice in the Boy Scouts of America bankruptcy proceedings. The Coalition represents approximately 18,000 survivors of sexual abuse. As bankruptcy counsel, the Firm played a leading role in the negotiation and formulation of a restructuring support agreement, and continues to play a leading role in the continuing steps toward confirmation. Law360 noted that a landmark decision occurred in mid-December when U.S. District Court Judge Colleen McMahon vacated the order confirming Purdue’s Chapter 11 plan on appeal. According to the newswire, the 142-page opinion rode roughshod over an increasingly common facet of restructuring plans in mass tort liability cases: third party releases ranted to nondebtor entities.

“She took a flamethrower to it,” Molton told Law360. “What happens to [the plan] is a good question.”

Additionally, Brown Rudnick lawyers are advising on the Purdue Pharmaceuticals opioid bankruptcy, precipitated by the thousands of lawsuits brought against the debtors by states, municipalities, and American Indian tribes. Purdue Pharma is one of the largest pharmaceutical companies in the United States and was the creator of Oxycontin.

Brown Rudnick is a nationally recognized leader in bankruptcy, corporate restructuring, and mass-tort litigation. The Firm regularly represents official committees, ad hoc committees, debtors, and other key parties in many of the nation’s largest restructurings.

Read Law360’s “Bankruptcy Cases to Watch In 2022” article here.