Bankruptcy Issues To Watch In 2025
Herrick Restructuring & Finance Litigation partner, Steven B. Smith, spoke with Law360 about what bankruptcy professionals are anticipating for 2025.
The article noted that there is a level of uncertainty on whether filings and out-of-court restructurings are expected to increase or decrease in 2025. Steve thinks that bankruptcy filings will continue to "surge" in 2025, predicting an overall 12% increase, but said the maturity wall for most COVID-19 refinancings is past 2027, a sufficient distance for "high yield" companies.
"My sense is they still have the ability to kick the can down the road a little bit," Steve said.
Steve anticipates that import-dependent sectors like technology and the automotive industry could face trouble if President-elect Donald Trump follows through on his promise to impose new tariffs, and nearly all the bankruptcy professionals interviewed for the story predicted continued difficulties in real estate, healthcare and retail.
The article highlighted that in the "June [2024] decision on Purdue Pharma's Chapter 11 plan, the U.S. Supreme Court found bankruptcy plans can't include involuntary releases of claims against non-bankruptcy parties, but didn't say what a "voluntary" release looks like."
Steve said the next year may see companies "push the envelope" with strategies to avoid the consent question altogether, such as filing overseas and then seeking Chapter 15 recognition in the U.S.
"You might see mass tort companies stay out of bankruptcy altogether, stay in their [multidistrict litigations]," he said.
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