What We’re Reading This Week [May 12, 2022]
The Wall Street Journal reports that Pennsylvania-based Armstrong Flooring Inc. filed for chapter 11 bankruptcy relief in Delaware on May 8, 2022, citing supply chain disruptions and increased costs for materials and transportation. Armstrong Flooring, a publicly-traded company that was founded in 1860, stated that it intends to pursue a sale of its business through the bankruptcy process. [WSJ; May 9, 2022]
Reporting from Reuters on the LTL Management, LLC chapter 11 bankruptcy case indicates that a mediator will be appointed by May 24, 2022, to resolve allegations that Johnson & Johnson violated state consumer protection laws in connection with its talc products. The claims asserted by various states exceed the $2 billion that Johnson & Johnson initially set aside for LTL-related settlements, and at least 40 states have sought to join the mediation. LTL Management, LLC is an affiliate of Johnson & Johnson that was formed to resolve thousands of lawsuits against Johnson & Johnson and filed for chapter 11 bankruptcy relief in October 2021. Some talc claim plaintiffs have argued that the filing was an abuse of the bankruptcy system and are appealing the judge’s decision to allow the case to proceed in bankruptcy. [Reuters; May 4, 2022]
The Wall Street Journal reports that the Federal Reserve’s half point interest-rate increase it announced last week is expected to further raise borrowing costs for troubled companies as the sustained period of ultralow interest rates appears to be nearing its end. In 2021, U.S. companies borrowed a record $1.8 trillion in junk-rated loans. However, bond and loan defaults are nevertheless expected to remain low because of the large amounts of private capital available, and it is possible that the effects of higher interest rates will not be seen for several years. [WSJ; May 5, 2022]
Yahoo! Finance reports that the total number of U.S. bankruptcy filings in April 2022 was down 21 percent compared to April of last year, according to data provided by Epiq Bankruptcy. Additionally, commercial bankruptcy filings specifically were down 16 percent year-over-year, and April 2022 saw a 3 percent drop-off in commercial filings compared to March 2022. [Yahoo! Finance; May 4, 2022]
