A New York federal judge put an end to a long-running legal battle waged by a bankruptcy trustee for Millennium Health LLC’s lenders against banks that arranged a nearly $1.8 billion loan for the drug-testing business before its bankruptcy, WSJ Pro Bankruptcy reported. Marc Kirschner, the bankruptcy trustee appointed in Millennium’s chapter 11 case, had sued banks including JPMorgan Chase & Co. and Citigroup Inc. in 2017. Mr. Kirschner alleged that as underwriters for Millennium, the banks had hidden information about a pending government inquiry when they marketed the loan to investors in 2014. Millennium, one of the largest drug-testing companies in the nation, filed for bankruptcy in 2015 after reaching a $256 million settlement with the Justice Department to resolve the investigation, which concerned allegations whether the company billed federal health programs for unnecessary tests. Investors that bought Millennium’s loans took control of the company in bankruptcy and received the right to sue the loan underwriters. In a ruling on Thursday, Judge Paul Gardephe of the U.S. District Court in New York, upheld a 2020 decision by a magistrate judge dismissing the trustee’s case, concluding that even if the banks knew how damaging the government probe into Millennium would be to the company, under its loan agreements they weren’t obligated to share the information with their lenders. The judge’s ruling addressed an amended version of the lawsuit that Mr. Kirschner filed after the New York court dismissed his original case in May 2020. Judge Gardephe on Tuesday issued a dismissal with prejudice, meaning the lawsuit can’t be refiled. Mr. Kirschner can appeal.
