What We’re Reading This Week [March 1, 2023]
Telecom giant Avaya, Inc. filed a “Chapter 22” bankruptcy petition earlier this month (colloquially referred to as such given that it is Avaya’s second Chapter 11 filing since 2017) with the intent to exit bankruptcy within 90 days. According to Law360, the company reentered Chapter 11 with support from approximately 90% of its secured lenders pursuant to a restructuring support agreement that contemplates slashing the company’s debt from $3.4 billion to $800 million (or about 75% of its outstanding debt) and “position Avaya to better compete in the rapidly changing telecom space that it has struggled to adapt to in the last two years.” To date, the company has already received court approval for two rounds of debtor-in-possession financing, totaling approximately $628 million, which is expected to convert to exit financing once the company leaves bankruptcy. A confirmation hearing on the company’s plan of reorganization is scheduled for March 22nd. [Law360; Feb. 14, 2023, Feb. 15, 2023]
The Supreme Court is set to hear oral arguments beginning on Tuesday, February 28th, regarding President Biden’s federal student-loan forgiveness plan. According to The Wall Street Journal, at stake is the fate of the administration’s $400-billion loan forgiveness program and the limits of presidential power. The Supreme Court agreed to take up the matter late last year after a federal judge in Texas struck down the administration’s plan, calling it “an unconstitutional exercise of Congress’s legislative power.” The Supreme Court has now taken up appeals in that case and a related one, putting both cases on a fast-track timeline that should produce a final ruling by the end of its term in June. [WSJ; Feb. 28, 2023]
According to Bloomberg, home prices in the US fell for the sixth month in a row in December, as rising mortgage rates and a potential recession continued to push prospective buyers out of the housing market in the latter half of 2022. All 20 cities included in the latest S&P CoreLogic Case-Shiller US National Home Price Index reported lower price increases in the year ending December 2022 compared to the year ending in November 2022, with a median decline of 1.1%. Further good news may be on the horizon for prospective purchasers, too, as slightly-lower mortgage rates at the beginning of 2023 provided buyers some incentive to get back into the market. Indeed, the National Association of Realtors reported Monday that contracts to purchase previously-owned US homes rose 8.1% in January from December, the biggest jump since June 2020. [Bloomberg; Feb. 28, 2023]
