August 09, 2021

What We’re Reading This Week [August 9, 2021]


The Wall Street Journal reports on OxyContin-manufacturer Purdue Pharma LP’s efforts to defend its proposed chapter 11 plan including its proposed multibillion-dollar settlement with the Sackler family, Purdue’s former owners.  The confirmation hearing on Purdue’s proposed plan is set to begin on Thursday, August 12th.  The plan is supported by the unsecured creditors’ committee, a committee representing the interests of opioid victims, and 40 different states.  However, nine states and the District of Columbia have opposed the plan as have the U.S. Department of Justice and the U.S. Trustee’s office.  The outcome of the bankruptcy currently hinges on the proposed settlement with the Sacklers via which the family has offered to contribute approximately $4.5 billion to Purdue’s estate in exchange for nearly complete legal protection against all future claims for all Sackler family members and related entities.  If approved, the Sackler family would make an immediate payment of $350 million and continue payments through 2030.  Purdue filed for chapter 11 protection in 2019 and plead guilty to federal felonies over sale and marketing of opioids last year.  [WSJ; August 6, 2021]

The New York Times reports on Treasury Secretary Janet Yellen’s continued efforts to have Congress raise the debt ceiling.  In a letter to Congress, Secretary Yellen warns that the country’s “failure to meet its obligations would cause irreparable harm to the U.S. economy and the livelihoods of all Americans.”  [NYT; August 9, 2021]

Per reporting from Bloomberg, last Friday, August 6th, District Judge William Alsup ordered utility company PG&E Corp. to explain its involvement in the ongoing California wildfires.  Specifically, PG&E must explain its role in igniting the “Fly fire” that has merged with the “Dixie blaze” and burned more than 447,000 acres since its ignition on July 13 and is only about 21% contained.  PG&E had been driven into bankruptcy in 2019 because its equipment contributed to wildfires in California that destroyed more than 22,000 structures and killed more than 100 people.  Although the utility emerged from bankruptcy last year, any subsequent involvement in new wildfires will test the company’s solvency.  Judge Alsup is demanding information on PG&E circuits suspected of igniting fires as well as the names of PG&E officers, employees or contractors who allowed the circuit to remain energized as part of PG&E’s criminal probation.  [Bloomberg; August 6, 2021]

The Wall Street Journal also reports that chip inspection firm SVXR Inc., which filed for chapter 11 protection in the U.S. Bankruptcy court in San Jose California, is now planning on selling itself out of bankruptcy to its competitor.  Formerly known as Silicon Valley X-Ray, SVXR mainly provides data analytics tools and warranty services in addition to the manufacturing of “X200” which allows customers to monitor and detect defects as semiconductors are being made.  The early-stage company had apparently never been cash-flow positive and entered bankruptcy with only $100,000 on hand. SVXR had been pursuing a debt refinancing for roughly a year and defaulted on its secured obligations.  Now, SVXR has roughly $10.5 million in debt, $8.2 million of which is owed to secured bondholders.  The company plans on selling itself to its competitor, Bruker Nano Inc. for $11.8 million but the failure of the deal, or any comparable proposal, would “very likely” lead the debtor to convert its case into a chapter 7 liquidation.  [WSJ; August 6, 2021]

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