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Rite Aid is negotiating with creditors over the terms of a bankruptcy plan that would include liquidating a substantial portion of its more than 2,100 drugstores, WSJ Pro Bankruptcy reported. Rite Aid has proposed to close roughly 400 to 500 stores in bankruptcy, and either sell or let creditors take over its remaining operations. A group of bondholders would prefer to liquidate a larger number of stores. The two sides are in discussions over the number of stores to be closed, they said. The Philadelphia-based company faces more than $3.3 billion in debt and over a thousand federal lawsuits alleging it oversupplied opioids. A number of its stores are stuck in uneconomical long-term leases that the company can’t get out of, making bankruptcy an effective tool to shed them. The company, which competes with larger drugstore players CVS and Walgreens, plans to conduct an auction process in an effort to sell its Elixir pharmacy unit and other valuable parts of the business. Most of the federal opioid lawsuits against Rite Aid have been consolidated into a multidistrict litigation in Ohio. The company also faces similar cases pending in state courts that allege it contributed to the opioid epidemic, as well as a civil lawsuit by the Justice Department that alleges the company dispensed controlled substances in violation of the False Claims Act and Controlled Substances Act.

The company that has been sued by various states for alleged deceptive business practices surrounding 40-listing agreements, has filed for chapter 11 bankruptcy protection in 33 states, the Real Deal reported. Florida-based MV Realty came under scrutiny for allegedly paying homeowners a few hundred dollars in exchange for the right to be the listing agent in the event a homeowner decided to sell their home. Under the 40-year contracts, MV Realty would receive money if the company sold the property, the homeowner canceled the agreement or if the property was transferred in some other way, including foreclosure or a transfer when the owner dies. The contracts also allegedly permitted MV Realty to obtain mortgages on the homes, unbeknownst to the homeowners. North Carolina, Florida, Pennsylvania, and Massachusetts, among others, have sued MV Realty for alleged deceptive, unfair trade practices. The lawsuits in every state seek to stop MV Realty from entering into new contracts, void the existing contracts and have courts assign civil penalties to the company. MV Realty, which operates in 33 states nationwide, previously denied it engaged in any false or deceptive practices.

The steepening downturn in China’s real-estate markets has led China Evergrande to scrap a $35 billion debt-restructuring plan designed to ensure the property developer’s survival, a sign that China’s ongoing housing crisis could still get worse, WSJ Pro Bankruptcy reported. China Evergrande, among the largest property developers in China, popped the country’s real-estate bubble in 2021 when it spiraled into insolvency and set off a chain of developer defaults. Evergrande’s parent company was on the verge of a restructuring deal with its creditors when the Chinese housing industry sputtered yet again in recent months. Now, Evergrande’s plan to stay alive is falling apart. In a securities filing on Friday, Evergrande said it needed to scrap its restructuring plan because of worse-than-expected property sales and would look for another path forward that “reflects the company’s objective situation.” Evergrande also said in the filing that it has started initial talks on renegotiating the plan with its creditors, including Chinese banks and international bondholder groups. Without a new deal, bondholders who lent around $15 billion to Evergrande could pursue a liquidation of the company and put more pressure on an already-anemic real-estate market in China. Read more.

FTX Chief Executive and Restructuring Officer John J. Ray, whose team is overseeing a mammoth asset recovery task after the crypto exchange’s collapse, is accelerating efforts to recoup billion of dollars just weeks before FTX founder Sam Bankman-Fried heads to trial for what has been called one of the biggest financial frauds in American history, Bloomberg News reported. The week started off in bankruptcy court, where FTX sued Bankman-Fried’s parents on Monday to “recover millions of dollars in fraudulently transferred and misappropriated funds.” The lawsuit claims that Allan Joseph Bankman and Barbara Fried exploited their access and influence within FTX to “enrich themselves, directly and indirectly, by millions of dollars,” at the expense of the debtors and creditors. On Thursday, FTX Trading Ltd. sued four former employees of Salameda Ltd., a Hong Kong-incorporated affiliate of FTX, to recoup $153 million of transfers that they received just before the crypto trading platform collapsed. The former employees used their personal connections to prioritize withdrawals of their funds and digital assets from FTX once it became clear last November that the company was in trouble, according to a complaint filed in the U.S. Bankruptcy Court for the District of Delaware.

American Physician Partners, which until recently provided outsourced emergency room services to 150 U.S. hospitals, said Thursday that a ban on so-called "surprise" medical bills hastened the company's descent into bankruptcy, Reuters reported. The company's chief restructuring officer John DiDonato said at a Thursday bankruptcy court hearing in Wilmington, Delaware, that the 2020 No Surprises Act hampered the company's ability to raise revenue and recover from the long-term impacts of the COVID-19 pandemic. The law was passed to protect patients from surprise billing for care from providers outside their insurers' network. Insurers pay a much lower share of the cost of out-of-network providers than in-network providers. Before the No Surprises Act, providers typically billed patients for the balance of the cost. DiDonato on Thursday said although the law was motivated by a "sound" policy goal, it has unexpectedly worsened negotiations between healthcare providers and insurers who "unilaterally" refuse or delay payment for medical care. The private equity-backed company, which once employed 2,500 physicians, filed for chapter 11 bankruptcy on Monday after transitioning all of its medical services to new contractors and winding down operations. It has more than $570 million in debt. "The No Surprises Act had the unintended consequence of shifting the balance of power toward insurers," DiDonato told U.S. Bankruptcy Judge Brendan Shannon. "Surprise" billing had been particularly prevalent for emergency department visits, when patients would visit a hospital that was part of their insurance network but later receive a bill for out-of-network care from doctors who are not part of the same insurance network as the hospital. About 70% of emergency departments in the U.S. are outsourced, according to American Physician Partners' court filings. The company said that it did not bill patients for costs not covered by insurance. But the regulations implementing the ban have encouraged insurers to unilaterally reduce or deny payments, funneling cost disputes into a slow and ineffective "independent dispute resolution" process, according to the company's court filings.

Small-time crypto traders who invested with Celsius Network have been going toe-to-toe with legal and financial heavyweights — and notching some unlikely victories — as the company works to wrap up its bankruptcy case, WSJ Pro Bankruptcy reported. Much like the online users who banded together to defeat hedge funds’ short bets on AMC Entertainment, retail investors with crypto trapped on the Celsius platform are punching above their weight in the bankruptcy. Among the unlikely combatants: a superyacht stewardess in California, a fundraiser for a progressive nonprofit in Maryland, a college student in Florida, and a crypto influencer in New York who creates digital designs for customized mugs and T-shirts. While most bankruptcies unfold away from public view, hundreds of customers of Celsius have dissected every development online, in real-time and granular detail. Largely acting without lawyers, the crypto owners have caught a mistake by the company’s bankruptcy advisers, publicized confidential company information obtained from employees and faced down big institutional investors also scavenging for its limited assets.

The U.S. Court of Appeals for the Second Circuit decided In re TransCare Corp., No. 21-2547; 21-2576, affirming rulings from the United States District and Bankruptcy Courts for the Southern District of New York, which found that Lynn Tilton — the sole director and indirect owner of TransCare Corp. (the debtor) — breached her fiduciary duties to the debtor and caused other entities she directly and indirectly owned and controlled to engage in an actual fraudulent transfer of the debtor's assets, according to a Reuters commentary. In reaching its decision, the 2nd Circuit joined the 4th, 5th, 8th, and 9th Circuits in holding that a finding of fraudulent intent for purposes of a fraudulent transfer is reviewed for clear error — not de novo.

Miami-based AeroTech Miami, which has a major repair, maintenance and overhaul facility called iAero Tech at Miami International Airport, and iAero Airways, with an expansive charter airline operation, filed for chapter 11 protection, the South Florida Business Journal reported. The two companies, along with 14 affiliates, filed separate chapter 11 petitions in U.S. Bankruptcy Court in Miami on Sept. 19. Interim CEO Kevin Nystrom signed the petitions. All 16 cases were consolidated to be managed on the same court docket. The chapter 11 petition listed liabilities of between $500 million and $1 billion. Its motion for debtor-in-position financing listed its total secured debt at $859.7 million.