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A federal jury found that an Arizona helicopter maker backed by financier Lynn Tilton defrauded the U.S. military, awarding $36 million in damages to the government and whistleblowers, an amount that could be tripled under a federal law, WSJ Pro Bankruptcy reported. A jury in the U.S. District Court in Huntsville, Ala., determined on Friday that MD Helicopters Inc. broke federal rules for government contractors through its relationship with Col. Norbert Vergez, an Army procurement officer involved in awarding contracts to the company in 2011 and 2012. After retiring from the Army, Col. Vergez went to work in 2013 for Ms. Tilton’s management firm Patriarch Partners LLC and later for MD Helicopters directly, court records show. In 2015, Col. Vergez pleaded guilty to a criminal conflict of interest stemming from his connection to MD Helicopters and to making other, unrelated false statements. Col. Vergez was sentenced in 2016 to five years of probation and a $10,000 fine. Former MD Helicopters employees in 2013 filed a whistleblower complaint against the company and Ms. Tilton, its CEO at the time, saying MD had groomed the colonel for employment while enlisting his aid to secure government work. His job at Patriarch was merely a cover for his true employment at MD Helicopters, according to the complaint. Andrew Wirmani, a lawyer for the whistleblower plaintiffs, said that the amount MD has to pay out in damages is likely to be tripled, as permitted by the federal False Claims Act.

A group of Intelsat SA equity holders will make its case on Wednesday for the appointment of an independent examiner to investigate potential areas of value that it says the bankrupt satellite operator has overlooked, Reuters reported. Intelsat, which is about six weeks away from a hearing on its proposed reorganization plan, says the request is a last-ditch attempt to gain some leverage by equity holders who are expected to see little to nothing under the plan. The equity group, on the other hand, says Intelsat has completely ignored valuable net operating losses and potential causes of action that it believes could provide some recoveries to shareholders. The satellite operator filed for bankruptcy in Virginia in May 2020, saying it needed to restructure as it prepared to transfer some of its so-called C-band spectrum to the U.S. Federal Communications Commission, which planned to use the spectrum to build out a 5G network. In exchange, Intelsat is receiving about $4.9 billion from the FCC. The equity group, which represents retail holders of about 2% of Intelsat’s equity, says the restructuring has been designed for the benefit of Intelsat affiliates at the expense of the ultimate parent company whose shares they hold. An examiner is necessary to probe the full value of the company’s assets because it has so far been “ignored or devalued without explanation” in the plan, the group said in court papers. Institutional shareholders, including Cyrus Capital Partners and Appaloosa, are not part of the group seeking an examiner. Under the proposed plan, Intelsat’s debt stack would be cut from $15 billion to about $7 billion. A hearing on the plan, which has the support of about 75% of the company's debt holders, is set for Nov. 8 before U.S. Bankruptcy Judge Keith Phillips. 

U.S. units of Ireland’s Trane Technologies PLC have reached a proposed $545 million deal to help settle asbestos claims that pushed them into bankruptcy last year, WSJ Pro Bankruptcy reported. Aldrich Pump LLC and Murray Boiler LLC sought protection from creditors in June 2020 as a way to address tens of thousands of asbestos lawsuits. In papers filed Friday in the U.S. Bankruptcy Court in Charlotte, N.C., the businesses said they had reached a proposed agreement with a representative for individuals with future asbestos claims. According to a term sheet, the asbestos trust will have an initial lump-sum cash payment of $540 million, nearly all of which — $495 million — will be for asbestos claims, with the remainder for administrative costs. The plan will be funded in part through insurance proceeds. The trust will also include a $5 million promissory note from the business. The plan’s asbestos trust provides for both current and future classes of asbestos claims. At least $125 million of cash in the asbestos trust will be available to pay current asbestos claims, including those made by individuals who came down with mesothelioma, a type of cancer that has been linked to asbestos, before the bankruptcy. The business believes there are roughly 80,000 such claims.

The Justice Department, continuing its fight against a roughly $4.5 billion settlement that will shield the family who owns OxyContin maker Purdue Pharma LP from opioid lawsuits, is seeking to pause the deal until after federal appeals courts have weighed in on the agreement, WSJ Pro Bankruptcy reported. U.S. Trustee William Harrington, who is part of the Justice Department unit monitoring the nation’s bankruptcy courts, said in a Wednesday court filing that U.S. Bankruptcy Judge Robert Drain was wrong to approve the settlement earlier this month and said that his ruling authorizing the deal between Purdue and its Sackler family owners will likely be overturned by a higher court. The Justice Department challenge represents the next stage in the fight over the settlement, which will likely move to an influential federal appeals court that oversees bankruptcy courts in New York, where Purdue filed for chapter 11. Mr. Harrington is joining attorneys general in Washington, Connecticut, Maryland and the District of Columbia who have said they also intend to challenge the settlement in the higher courts. Harrington is advancing several legal arguments to overturn the deal, including that the settlement is unconstitutional because it effectively deprives people of their right to take the Sacklers to court. Legal claims citizens might hold against the Sacklers are a form of property that the settlement cannot take away without providing them their day in court, which is protected by the constitution, Harrington said. If upheld on appeal, legal releases granted to members of the Sackler family will protect them from civil litigation that could be brought by private citizens or state authorities, regardless of whether they agreed to the settlement. “The Sackler family’s attempt to hold [Purdue’s] reorganization hostage unless the non-debtor releases are imposed does not justify taking third parties’ property...without their consent, adequate notice, or any opportunity to be heard,” Harrington said.