What We’re Reading This Week [December 16, 2021]
Fox Business reports that Boy Scouts of America’s insurer Chubb Ltd. has pledged to contribute $800 million to the Boy Scouts of America’s bankruptcy settlement deal. Boy Scouts of America, which filed for bankruptcy in February 2020, is currently on track to settle with approximately 82,500 tort claimants who claim they were sexually abused as children by troop leaders. The latest contribution by Chubb raises the total amount of available funds to resolve the claims to more than $2.7 billion. The fund is also backed by Boy Scouts of America’s primary insurer, the Hartford Financial Group, as well as the Church of Jesus Christ of Latter-day Saints. Ultimately, Boy Scouts of America’s emergence from Chapter 11 hinges on a settlement with tort claimants, and, while several victims have voiced support for the settlement deal, a separate committee of claimants voiced concerns that the deal compromises too much in exchange for a quick exit. The abuse claimants have until December 28th to vote on the reorganization. [Fox Business; Dec. 13, 2021]
The Wall Street Journal reports that USA Gymnastics, the U.S. Olympic and Paralympic Committee (USOPC) and their various insurers, have agreed to fund a $380 million settlement with the victims of longtime team doctor Larry Nassar. As part of the ongoing Chapter 11 bankruptcy of USA Gymnastics in the Southern District of Indiana, the final holdout insurer, TIG Insurance Company, recently confirmed its pledge to pay a substantial share of the settlement. Originally, TIG had refused to contribute to the settlement on behalf of the USOPC, but has since softened its stance after the Department of Justice filed an opposition to the release of the USOPC from claims that it fostered an environment for sexual abuse for Nassar. The committee representing the survivors of the assault is now expected to agree to the release of USOPC, and the settlement, once finalized, will likely allow USA Gymnastics to emerge from the bankruptcy process. Both USA Gymnastics and USOPC will reorganize under new leadership and are expected to begin a re-branding campaign. [WSJ; Dec. 14, 2021]
The Wall Street Journal also reports that trucking company Central Freight Lines Inc. announced its intention to wind down its business in the coming weeks after 96 years. Central Freight has been a large operator in the “less-than-truckload” business, in which carriers transport goods from multiple customers on a single trailer. This sector has thrived during the pandemic due to heavy demand from retailers and manufacturers and a boom of online shopping. However, Central Freight has struggled under its existing debt load. Within the past fiscal year, Central Freight generated $262 million via revenue and an influx in cash (including a $10 million loan as part of the Paycheck Protection Program in April 2020 which was ultimately forgiven by the government). Nevertheless, its turnaround efforts could not remedy a loss of $67 million in 2020 after prolonged years of hemorrhaging cash and operating losses. [WSJ; Dec. 12, 2021]
Bloomberg Law reports that the former owner of Old Country Buffet and affiliated restaurant chains, Fresh Acquisitions LLC, will wind down its bankruptcy estate and create a liquidating trust estimated to pay unsecured creditors more than $21 million. Fresh Acquisitions filed for bankruptcy last April. On Friday, the U.S. Bankruptcy Court for the Northern District of Texas approved a Chapter 11 plan which allows the trustee to pursue a claim against Fresh Acquisition LLC’s directors for misusing loans, paying excessive management fees, and improper transfers. The plan was filed by an official committee representing unsecured creditors with about $73 million in claims against the Debtor. The debtor will also sell various steakhouse chains and other brand assets to BBQ Holdings Inc., the owner of the Famous Dave’s brand, for about $5.3 million. [Bloomberg; Dec. 10, 2021]
