Lawmakers heard arguments on Wednesday in favor of amending laws to limit protections for non-bankrupt individuals through a company’s bankruptcy, a move prompted by concerns that members of the wealthy Sackler family who own Purdue Pharma LP may avoid accountability for their role in promoting opioid sales, Reuters reported. The hearing yesterday before the U.S. House of Representatives’ Judiciary’s Subcommittee on Antitrust, Commercial and Administrative Law came as Sens. Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.) and Richard Blumenthal (D.-Conn.), as well as Reps. Jerry Nadler (D-N.Y.) and Carolyn Maloney (D-N.Y.), announced legislation in the House and Senate aimed at reforming certain areas of bankruptcy law. The Nondebtor Release Prohibition Act of 2021 would prohibit litigation shields for owners or insiders of bankrupt companies. Though not included in the legislation, Wednesday’s hearing also focused on potential reforms to limit the ability of bankrupt companies to select judges they think will be favorable to them. The issue of so-called third-party or non-debtor releases, has been a hot topic in Purdue’s chapter 11 case. Connecticut Attorney General William Tong testified yesterday’s hearing that legislation is needed to prevent cases like Purdue’s, where Sackler family members are set to receive releases of lawsuits over their role in the national opioid epidemic in exchange for $4.5 billion. The money is being put toward trusts that will distribute the funds to states for opioid abatement programs and to people and entities that brought opioid-related lawsuits. Tong is one of a handful of remaining state attorneys general opposing the Purdue deal. Lawmakers also heard from bankruptcy experts about the ability of lawyers for large companies to select the judge they feel will provide the best results for them. Prof. Adam Levitin of Georgetown University Law School testified that bankruptcies should be randomly assigned to judges within a district without regard to which division they sit in. Read more.
https://www.reuters.com/article/us-bankruptcy-reform-bill-idUSKBN2EY2XO
Click here to view the witness list, prepared testimony and an archive file to watch a replay of the hearing.
https://judiciary.house.gov/calendar/eventsingle.aspx?EventID=4666
People alleging that Johnson & Johnson’s talc-based baby powder caused their cancer are seeking to restrain the company from taking steps toward a possible bankruptcy filing covering liabilities from thousands of personal-injury claims, WSJ Pro Bankruptcy reported. A committee representing talc-injury claimants said in court papers filed Tuesday that it needed a federal court order forbidding J&J from any “corporate machinations” that would isolate talc liabilities from the rest of the business. J&J has told personal-injury lawyers it is considering placing a corporate subsidiary with talc liabilities in bankruptcy as a way to resolve thousands of personal-injury lawsuits. Placing a corporate affiliate in bankruptcy would give J&J powerful legal tools to drive settlements of thousands of lawsuits linking Johnson’s baby powder to ovarian cancer and the asbestos cancer mesothelioma. The injury claimants disclosed the request for a restraining order in the bankruptcy proceedings of a separate company, Imerys Talc America Inc., which supplied talc to J&J and is named as a co-defendant in pending talc lawsuits. Overwhelmed by the litigation, Imerys filed for bankruptcy in 2019 and has proposed a settlement with injury claimants that isn’t supported by J&J. Read more.
In related news, A U.S. congressional panel has asked Johnson & Johnson (JNJ.N) to provide it all documents related to the company's plans to put its talc liabilities into bankruptcy, according to a letter sent on Wednesday and seen by Reuters. Democrat Raja Krishnamoorthi, chairman of the U.S. House of Representatives Committee on Oversight and Reform's subcommittee on economic and consumer policy, wrote that the panel is trying to learn how J&J's plans may affect people who have said they were harmed by the company's baby powder. Krishnamoorthi also asked J&J to turn over documents showing how much funding it would provide to the new entity. The level of funding could determine payouts for victims. The healthcare company faces legal actions from tens of thousands of plaintiffs, including women suffering from ovarian cancer and others with mesothelioma, alleging that its baby powder and other talc products contained asbestos and caused cancer. Read more.
Sen. Richard Blumenthal (D-Conn.) and Connecticut Attorney General William Tong said Monday that they are backing federal legislation that would block the Sackler family from using bankruptcy law to protect a fortune earned from Purdue Pharma’s manufacture of deadly opioids, the Hartford Courant reported. Blumenthal and Tong said that a bill before Congress would close a loophole in the U.S. Bankruptcy Code which they say the Sackler family has used to evade liability in government lawsuits. Connecticut and other states are still pursuing litigation against Purdue Pharma, which is owned by the Sackler family. The bill, dubbed the SACKLER (“Stop Shielding Assets from Corporate Known Liability by Eliminating Non-Debtor Releases”) Act, would amend bankruptcy law to prevent non-bankrupt individuals from receiving legal protections through a company’s bankruptcy. Speaking at the State Capitol Monday, Blumenthal argued that the Sackler family, which owns Purdue Pharma, has used the company’s bankruptcy proceedings to gain release from liability. Purdue Pharma filed for chapter 11 protection in 2019 in an attempt to settle about 3,000 lawsuits it faced from state and local governments and other entities. The plaintiffs had claimed that the company’s marketing of its painkiller drove a crisis that has resulted in nearly 500,000 deaths across America in the last two decades.
Remington Arms Co. on Tuesday offered to pay nearly $33 million to nine families to settle lawsuits claiming that its marketing of firearms contributed to the 2012 Sandy Hook school massacre in Newtown, Connecticut, where 26 people died, Reuters reported. The proposed settlements would provide $3.66 million to relatives of each victim, subject to approval by the federal judge overseeing Remington’s bankruptcy case in Alabama. Remington’s proposed payout is only a small fraction of the damages that the nine families claimed to have suffered. In a February court filing, their lawyers estimated that wrongful death claims likely totaled more than $225 million, and total claims including punitive damages could exceed $1 billion. Remington had filed for chapter 11 protection in 2018 and emerged the same year under the control of its creditors. It filed for bankruptcy again in July 2020, after more retailers restricted gun sales following other school shootings.
Endo International Plc’s $35 million settlement of a multi-billion-dollar Tennessee opioid lawsuit spares the drugmaker a potentially disastrous blow but leaves other threats to the company in place and shows how the larger legal fight is evolving, Bloomberg News reported. The agreement in principle announced Thursday — one day after the mammoth deal that Johnson & Johnson and three drug distributors struck with U.S. state and local governments — requires more than two dozen local governments to sign off. Cash-poor Endo “could have headed for Chapter 11” bankruptcy proceedings if the $2.4 billion Tennessee suit had succeeded, said Richard Ausness, a University of Kentucky law professor who has been following the U.S. opioid litigation. “If the counties are willing to let them settle for $35 million, the Endo guys should take that and run,” he said. “It will let them live to fight another day.” But even if it seals the deal, Endo has many more lawsuits to work through. The pact is for local governments from only three of at least 15 of the state’s judicial districts in which suits have been filed against the company. Meanwhile, Endo is among the defendants in a lawsuit by New York counties seeking more than $2 billion.
A health care nonprofit that offers an alternative to traditional health insurance has filed for chapter 11 protection and ceased operations, leaving its New Hampshire members without coverage, The New Hampshire Union Leader reported. Sharity Ministries Inc. — formerly known as Trinity Healthshare Inc. — operates as a health care sharing ministry. Members pay premiums and voluntarily agree to share their medical expenses in accordance with their Christian beliefs, according to the company's previous website. In October 2019, the New Hampshire Insurance Department ordered Sharity, along with the Aliera Companies, which had administered and marketed the health coverage, to stop issuing new plans or renewing coverage in the state after receiving dozens of complaints. At the time, about 1,400 New Hampshire residents had signed up for the plans. Similar orders were issued in California, Connecticut, Colorado, Maryland, Missouri and Washington. Such cost-sharing models are less expensive than traditional health insurance but can leave customers vulnerable. Many thought they were signing up for health insurance, only to find their claims were denied because of preexisting conditions or the claims were deemed inappropriate for a "Christian lifestyle," according to the department. Sharity filed for chapter 11 bankruptcy on July 8, and later made the decision to cease operations.
OxyContin maker Purdue Pharma LP said today that creditors voted in favor of its reorganization plan that would provide billions of dollars to the governments that sued the company for its role in the U.S. opioid crisis, Reuters reported. More than 95% of the 120,000-plus votes submitted were in favor of the plan, Purdue said, citing preliminary voting results. Purdue expects to release the final voting results by Aug. 2, but added that it does not expect any material changes. Purdue’s plan aims to resolve some 3,000 lawsuits brought by U.S. communities alleging that Purdue and its wealthy Sackler family owners contributed to the opioid crisis that has claimed the lives of roughly 500,000 people since 1999, according to the U.S. Centers for Disease Control and Prevention. The Stamford, Conn.-based company and family members have denied the allegations in the litigation. Earlier in July, Purdue reached an agreement with several states over the litigation. The agreement, supported by longstanding holdouts including Massachusetts and New York, sets the stage for Purdue to gain court approval in coming weeks for its bankruptcy plan, which the company values at more than $10 billion.
The bankrupt Limetree Bay oil refinery in the U.S. Virgin Islands asked to halt pollution lawsuits from proceeding against its current and former private-equity backers, saying that it can’t afford to be drawn into litigation against them, WSJ Pro Bankruptcy reported. The lawsuits already are on hold against Limetree Bay Refining LLC after it filed for chapter 11 earlier this month, but are proceeding against its co-defendants, including its controlling owner, EIG Global Energy Partners LLC. On Monday, the refinery asked the judge overseeing its bankruptcy to extend the litigation reprieve for 60 days to EIG and other, prior owners. If granted, the request also would suspend litigation against a nearby oil-storage facility that depends on the refinery for business. EIG, which backs both the refinery and the terminal, declined to comment. Personal-injury and property-damage claims have piled up against the refinery since February, when it restarted after several years offline. Months later, federal authorities shut the refinery after several polluting incidents, including a release of airborne oil droplets that rained down on neighboring areas in May. Bankruptcy followed. The refinery said Monday it is so intertwined with its co-defendants that allowing lawsuits to go forward against them would distract its management from more pressing tasks. Even if the refinery isn’t involved in the proceedings, it would be affected by any liability findings, according to its filing in the U.S. Bankruptcy Court in Houston.
