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The 3-year-old bankruptcy reorganization of the Archdiocese of Santa Fe, N.M., entered a critical phase yesterday, with insurance companies and clergy sex abuse claimants meeting in a confidential mediation with attorneys for the church, the Albuquerque Journal reported. At issue is how to resolve the impasse in reaching a universal settlement in the case, particularly how much the archdiocese’s insurance companies will contribute to a payout for nearly 400 people who have filed claims alleging they were sexually abused as children by priests and other clergy in the archdiocese. The mediation includes for the first time a nationally recognized mediator who was brought in during the recently settled chapter 11 bankruptcy reorganization filed by USA Gymnastics. The organization agreed last year to pay $380 million in the wake of revelations about former team doctor Larry Nassar, who was convicted in 2018 of sexually assaulting hundreds of girls and women. U.S. Bankruptcy Judge David T. Thuma appointed Austin-based mediator Paul Van Osselaer at the request of the Archdiocese of Santa Fe. Van Osselaer’s specialty is mediation and arbitration of insurance coverage issues, according to his website. The archdiocese and the nearly 400 sexual abuse survivors who filed claims last year tentatively agreed on a payout figure representing the archdiocese’s portion of any settlement, but that amount is confidential. Meanwhile, the archdiocese has been selling off what is considered “non-mission essential” property and other assets in Albuquerque, Santa Fe, and around northern New Mexico for months. Local parishes also have been asked to contribute up to $100,000 each.

A federal judge authorized Purdue Pharma LP and its Sackler family owners to appeal a ruling that threw out their $4.5 billion settlement of thousands of lawsuits linked to the bankrupt company’s OxyContin painkiller and its role in the opioid crisis, WSJ Pro Bankruptcy reported. Purdue has until Jan. 17 to apply to the Second U.S. Circuit Court of Appeals for an expedited appeal, U.S. District Judge Colleen McMahon of the Southern District of New York ruled. The Second Circuit can choose whether to accept Purdue’s appeal, which aims to revive a chapter 11 plan to resolve an onslaught of lawsuits alleging that the company and its family owners contributed to opioid addiction. Most U.S. state and local governments backed the settlement with the Sacklers, who received broad releases from opioid-related liability under the bankruptcy plan in exchange. Attorneys general from California, Connecticut and a handful of other states have held out, unsatisfied with the deal terms. Last month, Judge McMahon struck down the chapter 11 plan, saying it went too far by releasing those states’ claims against the Sacklers. On Friday, Judge McMahon allowed Purdue’s appeal to move forward, ruling against the objecting states. The judge acknowledged that allowing the appeal might change states’ negotiating positions with Purdue, but said she didn’t believe it would delay final resolution of the litigation. She said the states were objecting because they were “flush with victory on their appeal and determined to use it to their negotiating advantage.”

The judge overseeing the reorganization of opioid maker Mallinckrodt Plc questioned the fairness of a plan to protect company executives and others from future lawsuits, Bloomberg News reported. Under the company’s $5.45 billion bankruptcy exit plan, company officers and directors could not, in most cases, be sued for their alleged role in America’s opioid epidemic. During a virtual court hearing yesterday on the proposal, U.S. Bankruptcy Judge John Dorsey asked how the legal protections would affect creditors who may want to keep suing Mallinckrodt. The company has argued that the provisions should be approved because the reorganization plan would fall apart without the protections, known as third-party releases. A federal judge in New York rejected similar provisions in Purdue Pharma’s reorganization, a legal finding that, if not overturned on appeal, would blow up the drug maker’s plan to end its multi-billion dollar bankruptcy. “It’s not just an issue of necessity, it’s a question of fairness,” Judge Dorsey said in the Mallinckrodt case. “How is it fair to them? What does it give to them?” The company and critics spent three days in a virtual courtroom this week arguing about whether Dorsey should approve the reorganization plan. The judge, based in Wilmington, Delaware, said he would rule as soon as possible. Most creditors have backed the company’s reorganization plan, including the legal releases. A handful have attacked Mallinckrodt’s proposal, in part because it would strip creditors of the right to sue certain people and entities that are not in bankruptcy, but had a role in Mallinckrodt’s operations. Like Purdue, Mallinckrodt has proposed a trust fund to compensate public agencies and others who claim they were harmed by the addictive painkillers that flooded America and caused a spike in overdose deaths. Mallinckrodt disputes those accusations, but filed bankruptcy in part to find a way to resolve the claims, company attorney Christopher Harris said in court on Thursday.

An Iowa nursing home chain repeatedly accused of providing substandard care for hundreds of seniors has filed for bankruptcy protection, the Iowa Capital Dispatch reported. QHC Facilities, based in Clive, Iowa, operates eight skilled nursing facilities in Tama, Madison, Humboldt, Jackson, Linn, Webster and Polk counties, as well as two assisted living centers. Collectively, the facilities have a maximum capacity of more than 700 residents. The company employs roughly 300 full-time and part-time workers. The company filed for bankruptcy last week, claiming $1 million in assets and $26.3 million in liabilities. In recent years, QHC and its affiliates have been hit with some of the largest federal fines ever imposed against an Iowa nursing home chain, with inspectors stating the company had placed residents in immediate jeopardy due to substandard care. At the same time, however, the company has sued its elderly residents for failure to pay for that care, and has neglected to pay more than $700,000 in fines.

Knox Clinic Corporation in Galesburg, Ill., will file for chapter 11 bankruptcy, according to a letter sent to employees on Tuesday, the Galesburg Register-Mail reported. The clinics at 834 N Seminary St. are connected to Galesburg Cottage Hospital, which lost its accreditation and was notified in December about losing Medicare and Medicaid payments. A letter from Cottage Hospital CEO Sanjay Sharma told employees the clinics, not the hospital, will file for chapter 11 bankruptcy, which will allow it to reorganize and preserve services. News of the hospital losing accreditation and Medicare and Medicaid payments broke Dec. 28. Medicare and Medicaid payments represented 72% of the hospital's net inpatient and outpatient revenue in 2020. Payments for Medicare and Medicaid patients at Cottage Hospital will continue for patients admitted before Jan. 15.

The Boy Scouts of America fell short of winning the level of support it sought from sex-abuse victims for the nearly $2.7 billion settlement plan that would lift the organization out of bankruptcy, according to a preliminary vote count released Tuesday, WSJ Pro Bankrptcy reported. The proposed settlement of 82,200 claims of childhood sexual abuse earned the support of just over 73% of those who cast votes, falling just shy of the 75% support the Boy Scouts were targeting. The youth group has said it believes that level of acceptance would ease court approval of its chapter 11 plan, while anything less makes it more vulnerable to challenges from the minority of abuse victims who reject it. Nearly 54,000 survivors cast ballots, according to the Tuesday court filing. “Today, the Boy Scouts of America (BSA) announced the plan of reorganization that it has been pursuing failed to garner the required votes to proceed to a confirmation hearing in February,” Pfau Cochran Vertetis Amala PLLC, one of the law firms opposing the settlement said Tuesday. The bankruptcy plan includes compensation from the Boy Scouts, hundreds of affiliated local councils, its biggest insurers and some troop-sponsoring churches, which struck deals with the law firms representing the bulk of the abuse claimants. The current tally isn’t final, and marks the first of several steps along a possible path out of bankruptcy for the Boy Scouts, which has been dogged for years by allegations of widespread childhood abuse. The youth group has apologized for past failures to protect children and said bankruptcy is the fairest way to resolve its liabilities and compensate survivors. While bankruptcy law generally requires two-thirds approval from creditors for a proposed deal, chapter 11 cases involving mass injury and tort liabilities typically have to garner greater support. The youth group is under intense financial pressure to resolve the bankruptcy case and leave chapter 11. But there is still time for the Boy Scouts to try to flip votes to yes from no and potentially clear the 75% threshold ahead of a trial on the settlement plan scheduled for next month. The judge presiding over the chapter 11 case in the U.S. Bankruptcy Court in Wilmington, Del., is likely to view the settlement plan more favorably the more support it garners.