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A bankruptcy judge allowed Johnson & Johnson to use chapter 11 to drive a settlement of litigation linking its baby powder to cancer, backing a controversial tactic that has helped profitable companies freeze roughly a quarter of a million injury lawsuits, WSJ Pro Bankruptcy reported. Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., ruled Friday against personal-injury lawyers who asked to throw out the chapter 11 filing of a J&J subsidiary created last year to move into bankruptcy about 38,000 pending lawsuits over allegedly dangerous talc-based products. Judge Kaplan ruled the subsidiary, LTL Management LLC, didn’t file for chapter 11 in bad faith to gain an unfair edge over personal-injury claimants, as they had alleged, but for the legitimate purpose of resolving mass litigation. Instead he sided with J&J, which argued chapter 11 provides cancer victims with a fairer and more efficient forum to receive compensation than the civil jury system. “This chapter 11 is being used, not to escape liability, but to bring about accountability and certainty,” Judge Kaplan said.

Handing a key legal victory to survivors of clergy sexual abuse, U.S. District Court Chief Judge Frances Tydingco-Gatewood on Saturday ruled the assets of Catholic parishes and schools belong to the Archdiocese of Agana as a whole — and could therefore be used to help pay abuse claimants, the Guam Daily Post reported. The judge's ruling capped a three-year-old request from hundreds of survivors, represented by Leo Tudela. Millions of dollars worth of buildings, parking lots, vehicles, cemeteries, bank accounts and other parish and school property are now part of the archdiocese's bankruptcy estate, which could be liquidated. But the judge and the creditors committee, along with the archdiocese, said the end goal is to justly compensate the abuse survivors while keeping the parishes, schools and ministries open.

The U.S. government’s bankruptcy watchdog said the Boy Scouts of America need to explain why it would charge an “excessive and burdensome” $20,000 fee for sexual abuse survivors to get an independent review of their compensation claims, WSJ Pro Bankruptcy reported. The youth group has proposed setting up a roughly $2.7 billion trust to settle abuse claims that drove it into bankruptcy, and survivors may stick with traditional trust distribution procedures at no additional cost. But under an option added earlier this month in a settlement with the official abuse victims committee, claimants who believe their abuse was particularly severe and merits additional compensation may ask for an independent review. Obtaining a review requires individual claimants to pay the settlement trust a $10,000 administrative fee up front, followed by an additional $10,000 immediately before the review begins. After the $20,000 fee generated immediate criticism, including from the Justice Department’s Office of the U.S. Trustee, the Boy Scouts said some of the fee could be waived in certain circumstances. Still, government lawyers said on Friday in court papers the review option is “illusory” and poses a “significant cost barrier.” In an objection filed in U.S. Bankruptcy Court in Wilmington, Del., the U.S. Trustee said the overseer of the settlement fund may reject the recommendation of the outside reviewer. The objection also said claimants could pay the $20,000 and get an estimate of additional compensation, only to have the settlement trustee reject the higher claim amount.

The Archdiocese of Santa Fe, N.M., which is in the throes of chapter 11 bankruptcy, sued four insurance companies this week, claiming they haven't fulfilled their contracts, the Santa Fe New Mexican reported. The archdiocese is trying to raise enough money to settle the bankruptcy case with more than 400 victims of clergy sexual abuse. The complaint accuses the insurers of "failure to honor contractual commitments to provide liability coverage to the Archdiocese for claims alleging decades-old sexual abuse." It "seeks to resolve the sexual abuse claims with proceeds from its liability insurance," the lawsuit says. The archdiocese filed for chapter 11 bankruptcy more than three years ago. It wants to raise an amount of money not publicly specified in order to settle with the victims. The archdiocese has used property sales and auctions and contributions to generate money. But insurance payouts are expected by the archdiocese and others to fund a large chunk of the settlement. Defendants named are Great American Insurance Co., Arrowood Indemnity Co., St. Paul Fire and Marine Insurance Co. and United States Fire Insurance Co.

The three largest U.S. drug distributors and drugmaker Johnson & Johnson have agreed to finalize a proposed $26 billion settlement resolving claims by states and local governments that they helped fuel the U.S. opioid epidemic, Reuters reported. Distributors McKesson Corp., AmerisourceBergen Corp., Cardinal Health Inc. along with J&J had until Friday to decide whether enough cities and counties nationally had opted to join the landmark settlement to justify moving forward with it. The deal aims to resolve more than 3,000 lawsuits largely by state and local governments seeking to hold the companies responsible for an opioid abuse crisis that has led to hundreds of thousands of overdose deaths over the last two decades. The distributors said today that there was "sufficient participation" to proceed. Charles Lifland, an attorney for J&J, in a letter yesterday reviewed by Reuters told lawyers for the states and local governments it also had determined there had been a "sufficient resolution" of the claims. The announcement paves the way for the companies to begin making payments to the governments in April, money that officials say will be used to fund treatment and other programs aimed at addressing the health crisis.

The executive who ran Texas’ power grid during last year’s freak winter storm testified Wednesday that he kept power prices at sky-high levels for days at the behest of a state regulator acting on directives from Gov. Greg Abbott to keep blackouts at bay, WSJ Pro Bankruptcy reported. In a bankruptcy-court trial involving the state’s largest electricity cooperative, William Magness, the former CEO of the Electric Reliability Council of Texas, testified about why he decided to keep prices at the maximum allowed level for more than three days during Winter Storm Uri. Brazos Electric Power Cooperative Inc. questioned Mr. Magness as a witness as it tries to cut down the roughly $1.9 billion bill from Ercot stemming from the winter storm, which knocked out power across the state. In response, regulators ordered Ercot to raise power prices to their maximum level of $9,000 per megawatt hour to try to encourage more generation, hitting Brazos and other energy retailers with huge charges. Mr. Magness testified that at a meeting at Ercot’s control room during the storm, DeAnn Walker, then chairman of the Texas Public Utility Commission, said the governor was concerned the state would have to reimpose blackouts.

A Mexican affiliate of Kimberly-Clark Corp. that sold hand sanitizer made with a toxic, industrial form of alcohol filed for bankruptcy, blaming the mistake on a scramble to find ingredients early in the pandemic’s supply-chain meltdown, Bloomberg News reported. 4E Brands Northamerica, a subsidiary of Kimberly-Clark de Mexico SAB de C.V., blamed its chapter 11 case on a bad batch it made from methanol alcohol near the onset of the COVID-19 outbreak in 2020. Amid a shortage of hand sanitizers, 4E Brands sought new suppliers of ethyl alcohol, a federally approved ingredient, according to court papers filed Tuesday in federal court in Laredo, Texas. The company “sourced some of its raw ingredients from opportunistic suppliers who, whether intentionally or mistakenly, provided methanol instead of ethyl alcohol,” David M. Dunn, the chief restructuring officer, said in court papers. The company now faces multiple personal injury and wrongful death lawsuits, he said. n 2020, the U.S. Food and Drug Administration reacted to a shortage of hand sanitizers by temporarily loosening restrictions on manufacturers, according to Dunn. 4E Brands ramped up production using new suppliers who sold the company the wrong type of alcohol, Dunn said in his filing. 4E Brands “did not know of the substitution. It believed ethanol was used to manufacture the hand sanitizer it distributed,” Dunn said, referring to the safer type of alcohol. “In fact, it contained methanol.”

It was a $1.9 billion bill that forced Brazos Electric Power Cooperative, one of Texas’ oldest and most creditworthy power sellers, into bankruptcy last year. Now a federal judge is being asked to make more than half the sum disappear, Bloomberg News reported. Brazos Electric on Tuesday kicked off a long-awaited trial against the state’s grid operator, the Electric Reliability Council of Texas, over sky-high power bills racked up during a devastating winter storm last year. Ercot raised prices to $9,000 per megawatt-hour — the legal maximum — for several days during the storm, forcing Brazos to buy electricity so pricey it became insolvent in a flash. The extreme prices were supposed to encourage idle generators to provide electricity, but any plants that weren’t frozen or lacking fuel were already producing power, lawyers for Brazos said in a Houston courtroom Tuesday. Their contention is that Ercot wrongly meddled in the market, and without that interference Brazos would owe about $800 million rather than $1.9 billion. “We don’t dispute what we bought, we don’t dispute how much we bought — what we dispute is the price,” Lino Mendiola, an attorney for Brazos, told U.S. Bankruptcy Judge David R. Jones in Houston on Tuesday. “It was literally the most expensive thing Ercot could’ve done and it accomplished nothing.”

The members of the Sackler family who own Purdue Pharma LP have agreed to contribute as much as $6 billion to settle litigation accusing them of fueling opioid addiction, a new attempt to resolve civil liability and get the drugmaker out of bankruptcy after a previous chapter 11 deal was overturned, WSJ Pro Bankruptcy reported. The revised offer marks an increase from the $4.5 billion settlement the Sacklers had previously agreed to under a bankruptcy plan for Purdue, the OxyContin manufacturer closely associated with the opioid epidemic. A federal judge rejected that settlement proposal in December, ruling in favor of the handful of state attorneys general who didn’t accept the Sacklers’ offer. The revised proposal, revealed in court papers filed Friday, has the support of most but not all of the attorneys general who held out from the previous deal. Purdue filed for chapter 11 protection in 2019, overrun with lawsuits alleging its flagship OxyContin drug had fueled addiction. The company pleaded guilty in 2020 to three federal felonies surrounding the marketing and sale of OxyContin. If a bankruptcy plan incorporating the new settlement is confirmed, the Sacklers “would be paying, in total, not less than $5.5 billion and up to $6 billion,” according to a mediator’s report filed in Purdue’s chapter 11 case.