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The final hearing on the Boy Scouts of America’s proposed reorganization plan and underlying sex abuse settlement has been pushed back to allow survivors who may want to change their votes on the pact more time to understand recently revised terms of the deal, Reuters reported. On Friday, U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Del., who is overseeing the youth organization's bankruptcy and will ultimately decide whether to approve the abuse deal, pushed the start of the hearing, which had already been postponed, to March 14. David Buchbinder, an attorney for the U.S. Department of Justice's bankruptcy watchdog, the U.S. Trustee, along with other lawyers, told Silverstein that the recent changes were significant and would likely be confusing to some survivors. The Boy Scouts announced an amended deal on Feb. 10 that brought in key support for the settlement from the official committee representing survivors in the youth organization’s bankruptcy. Survivors have long been split on the deal, but with the committee now on board, the organization is reaching out to survivors who opposed the settlement in an attempt to persuade them to change their votes. The Irving, Texas-based youth group filed for bankruptcy in February 2020 to resolve decades of sex abuse allegations. The settlement still includes a $2.7 billion trust to compensate men who say they were sexually abused as children by troop leaders. But it also provides for an “independent review” option for survivors who say they were subject to especially severe abuse, allowing for a more in-depth evaluation of their claims than the originally envisioned plan. That option comes with a fee of up to $20,000.

A Johnson & Johnson subsidiary proposed on Friday that it would submit to an independent examination of the corporate restructuring the healthcare giant undertook in an attempt to settle in U.S. bankruptcy court thousands of lawsuits alleging that J&J baby powder and other talc products cause cancer, Reuters reported. Greg Gordon, a lawyer for J&J subsidiary LTL Management LLC, raised during a hearing before U.S. Bankruptcy Judge Michael Kaplan the idea of a court-appointed examiner that could "come in and do whatever investigation it wants" to determine whether the restructuring short-changed cancer victims. Cancer plaintiffs have asked Kaplan to dismiss LTL's bankruptcy case and allow them to resume the lawsuits against J&J. Kaplan, who presided over a week-long hearing on the matter in Trenton, New Jersey, has said that he will decide by the end of the month whether to dismiss the case. J&J is attempting to use LTL's bankruptcy case to resolve about 38,000 lawsuits alleging the company's talc products caused ovarian cancer and mesothelioma, an illness linked to asbestos exposure. J&J maintains that its talc products are safe and asbestos-free, but attorneys for LTL argued that bankruptcy is the only practical way to resolve the sheer volume of lawsuits. During closing arguments in the hearing, Gordon floated the option of an independent examiner to clear the air after lawyers for cancer victims argued the bankruptcy was improper.

A year after a historic winter storm left millions of Texans without power for days, the state’s largest electrical co-op is set to open its case in bankruptcy court in Houston today, contending that it was overcharged hundreds of millions of dollars by the Texas grid operator, the Houston Chronicle reported. Waco-based Brazos Electric, which serves 1.5 million customers in Central Texas, argues that the Electric Reliability Council of Texas broke rules governing the state’s power market when it set power prices at the $9,000 per megawatt hour price cap — more than 300 times the normal price. The elevated price was meant to lure generators to quickly return frozen power plants back online. The case is set to be heard by U.S. Bankruptcy Judge David Jones, who will decide what portion of the $1.9 billion ERCOT bill Brazos needs to pay, with the money distributed among power generators and other market partcipants. Claims by other creditors, including $180 million owed to natural gas suppliers like Koch Energy Services and French energy giant TotalEnergies, will be heard later.

Johnson & Johnson should be blocked from using bankruptcy to force an end to 38,000 lawsuits by people who claim the company’s iconic baby powder gave them cancer because the consumer giant has a “perverse incentive” to avoid a deal, lawyers for victims said Thursday at the close of a trial on the company’s legal strategy, Bloomberg News reported. Lawyers for J&J and cancer victims wrapped up four days of testimony about whether the company abused federal chapter 11 rules by shunting all the claims into a new unit and putting it into bankruptcy in order to halt the suits and force a negotiated settlement. The company argued that bankruptcy is fairer to cancer victims because conducting 38,000 jury trials would take thousands of years at the current rate of 10 per year and cost as much as $190 billion. Instead, the company wants to set up a victims trust with at least $2 billion that would take responsibility for resolving all current and future claims. On Wednesday, Saul Burian, an expert who was hired by a committee representing people suing J&J to examine the LTL bankruptcy filing, told the court that J&J is trying to temporarily block the lawsuits without facing any of the stigma or court restrictions of filing for bankruptcy itself. The baby powder lawsuits have been halted while the new unit, LTL Management, seeks to use bankruptcy protection to settle all current and future claims. That gives J&J the upper hand because it can delay while cancer victims die, Burian said. Bankruptcy Judge Michael Kaplan has said he will try to decide by the end of February whether to dismiss the bankruptcy case. Tomorrow the two sides will be back in court for a related hearing on whether J&J should continue to be shielded from lawsuits if the bankruptcy is not dismissed. “LTL’s objective is to reach a fair and equitable resolution for claimants through a plan of reorganization and create a reasonable framework to address the unprecedented number of existing and future talc-related claims,” a representative for J&J said in an emailed statement. “We disagree completely with Mr. Burian’s testimony and stand ready to go to mediation immediately.”

A court-appointed mediator will soon shed fresh light on the status of talks between members of the Sackler family and states opposing Purdue Pharma LP’s sweeping opioid settlement, Bloomberg News reported. U.S. Bankruptcy Judge Shelley Chapman, who is overseeing the talks, will file a report no later than Friday providing her outlook on the mediation, a lawyer for Purdue said during a virtual court hearing Thursday. In two recent reports, Chapman said the Sacklers and states were making substantial progress toward a larger settlement. The court-ordered mediation was scheduled to expire yesterday. Judge Chapman might request additional time for talks, Purdue’s lawyer, Marshall Huebner, said in the hearing Thursday. Members of the Sackler family who own Purdue are said to have mulled adding an additional $1 billion to the existing settlement proposal, which would bring their total contribution to more than $5 billion, Bloomberg previously reported. In exchange, the handful of states that succeeding in overturning the current proposal on appeal would drop their opposition to the deal.

A Johnson & Johnson official testifying Wednesday in defense of its strategy to move litigation over its talc-based products to bankruptcy court indicated the company could increase a $2 billion settlement offer if the chapter 11 case is allowed to continue, WSJ Pro Bankruptcy reported. “The $2 billion is not the only thing, $2 billion is a start,” said John Kim, chief legal officer of bankrupt LTL Management LLC, the J&J subsidiary responsible for the talc litigation. He said the settlement offer “is just the beginning of the funding” and that, under an agreement with the subsidiary, J&J could increase its offer to reach an agreement in chapter 11 with injury claimants. “We hope to have a mediation, to come to a consensus and a plan, to get the appropriate amount put in to resolve these cases,” Mr. Kim testified during the third day of trial in the U.S. Bankruptcy Court in Trenton, N.J. Judge Michael Kaplan is considering injury claimants’ request to dismiss the J&J subsidiary from chapter 11 on the grounds that the bankruptcy was filed in bad faith to gain an unfair litigation advantage. J&J and its subsidiary have denied the allegation and said bankruptcy will provide plaintiffs a fairer forum for quickly resolving about 38,000 talc-injury lawsuits as well as future claims. Read more. 

In related news, Johnson & Johnson’s “perverse incentive” have tainted the company’s strategy to use bankruptcy to force a negotiated end to more than 38,000 lawsuits claiming the consumer giant’s iconic baby powder caused cancer, a restructuring expert testified in court yesterday, Bloomberg News reported. The company is using the chapter 11 case of a small unit J&J created last year to resolve billions of dollars in legal claims without facing any of the stigma or court restrictions of filing for bankruptcy itself, said Saul Burian, a managing director at investment bank Houlihan Lokey Howard & Zukin Inc. Burian has worked on some of the most recognized bankruptcy cases in recent decades, including Sears, Toys ‘R’ Us and Lehman Brothers. The baby powder lawsuits have been halted while the unit, LTL Management, seeks to settle all current and future claims. That gives J&J the upper hand because it can delay while cancer victims die, Burian said. “You have this perverse incentive where J&J can throw up their hands and say, ‘When you’re ready to settle, let me know,’” Burian told the federal judge overseeing the bankruptcy in Trenton, New Jersey, about 30 minutes away from J&J’s sprawling headquarters in New Brunswick. Johnson & Johnson denied that the talc in its baby powder causes cancer and that it is abusing the bankruptcy system by putting LTL into chapter 11. Read more. 

Purdue Pharma will ask a bankruptcy judge on Thursday to extend a legal shield that prevents opioid lawsuits from going forward against some members of the wealthy Sackler family who own the OxyContin maker, Reuters reported. The hearing before Judge Robert Drain in White Plains, New York, comes as the Sacklers try to reach a deal with eight states and the District of Columbia to resolve litigation alleging they fueled the opioid epidemic. The legal shield protecting the Sacklers has been in place while the parties try to work out a deal. An agreement could clear the path for the company to exit bankruptcy and distribute billions of dollars to governments hard hit by the addiction crisis. A previous $4.33 billion settlement was rejected in December on appeal by a U.S. District judge in Manhattan. Purdue filed for bankruptcy in 2019 in the face of thousands of lawsuits accusing it and Sackler family members of helping cause the U.S. opioid epidemic through deceptive marketing that played down addiction and overdose risks. The company pleaded guilty to misbranding and fraud charges related to its marketing of OxyContin in 2007 and 2020. The Sacklers have denied wrongdoing. U.S. Bankruptcy Judge Shelley Chapman, who is mediating talks between the Sacklers and the attorneys general, said in court filings in recent weeks that the parties were close to an agreement and the Sacklers would make a "substantial" additional contribution beyond the $4.33 billion proposed in the original bankruptcy exit plan. The current round of mediation includes representatives for the Raymond Sackler and Mortimer Sackler branches of the Sackler family, as well as eight states including California, Connecticut and Washington.

Sexual-abuse victims of the Boy Scouts of America have a new option to potentially receive more compensation. But to initiate the process, they must pay as much as $20,000 to the youth group’s settlement trust, WSJ Pro Bankruptcy reported. The option was part of a deal the bankrupt Boy Scouts reached Thursday with one of its harshest critics, the official committee representing more than 82,000 abuse victims. The youth group, which apologized for past failures to protect children from pedophiles, hopes the new agreement can bring it closer to ending a bankruptcy that began two years ago. The organization faces a trial scheduled for March on its bankruptcy-exit plan, which includes roughly $2.7 billion for abuse victims. How much victims stand to get is disputed. Victims of the worst abuses are eligible to receive as much as $2.7 million each, though many plaintiffs’ lawyers believe that most will get a fraction of that amount. Under the new option, victims who believe that their abuse cases were particularly severe and that they should be entitled to additional compensation can ask for an independent review of their claims. The review will be conducted by an outside party picked from a panel of retired judges with tort experience. To trigger the review, victims would need to pay the Boy Scouts trust an initial $10,000 administrative fee, followed by an additional $10,000 immediately before the review begins. The Justice Department’s bankruptcy watchdog and an abuse victim criticized the fees during a virtual Boy Scouts hearing in the U.S. Bankruptcy Court in Wilmington, Del., on Friday, saying they place an unreasonable burden on claimants.

Johnson & Johnson adopted its controversial strategy for battling cancer claims tied to baby powder after a $2 billion court loss sparked concern that the company’s perfect credit rating could be damaged by the growing number of similar lawsuits, a retired J&J treasurer testified, Bloomberg News reported. Michelle Ryan exchanged emails with credit rating firms previewing the company’s bankruptcy options last year before the court strategy was implemented, according to records shown Tuesday in a federal trial on whether that tactic is legitimate. Through the maneuver, J&J shunted all its baby-powder liabilities into a separate unit and then put that entity in bankruptcy. Victims suing J&J have asked U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey to dismiss the chapter 11 filing of the unit, LTL Management, arguing that case wrongly manipulates the bankruptcy system. The legal strategy would force a negotiated end to more than 38,000 lawsuits alleging that the talc in baby powder causes cancer. Should J&J lose, victims would be free to resume jury trials, potentially exposing the company to billions in additional payouts. The consumer giant says that it filed bankruptcy to create a fair and efficient process for paying all current and future talc claims. Advocates for cancer victims say the bankruptcy is just a way for J&J to cap how much it has to pay out.

The families of nine victims of the Sandy Hook Elementary School shooting announced yesterday they have agreed to a $73 million settlement of a lawsuit against the maker of the rifle used to kill 20 first graders and six educators in 2012, the Associated Press reported. The case was watched closely by gun control advocates, gun rights supporters and manufacturers, because of its potential to provide a roadmap for victims of other shootings to sue firearm makers. The families and a survivor of the shooting sued Remington in 2015, saying the company should have never sold such a dangerous weapon to the public. They said their focus was on preventing future mass shootings by forcing gun companies to be more responsible with their products and how they market them. As part of the settlement, Remington also agreed to allow the families to release numerous documents they obtained during the lawsuit including ones showing how it marketed the weapon, the families said. It’s not clear when those documents will be released. Remington, one of the nation’s oldest gun makers founded in 1816, filed for bankruptcy for a second time in 2020 and its assets were later sold off to several companies. The manufacturer was weighed down by lawsuits and retail sales restrictions following the school shooting.