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Houston-based oil field equipment and service provider OFS International LLC has filed for bankruptcy and is suing a Cyprus-registered steel company to recover $10 million it paid to buy back shares in 2019, WSJ Pro Bankruptcy reported. OFSI said in a lawsuit filed on Monday in the U.S. Bankruptcy Court in Houston that the company was likely insolvent when management struck a deal in 2019 to acquire a 49% stake in its corporate parent owned at the time by TMK Steel Holding Ltd. OFSI said that it got nothing of value in return for a $10 million payment it made to TMK Steel because the shares were likely worthless when it bought them. The company is now seeking to use chapter 11 powers to unwind the transaction, saying that creditors were owed money when the deal was struck and remain unpaid. The total value of the deal was $15 million, but OFSI said it didn’t make a $4.5 million payment that was due in June 2020. An initial $500,000 payment was made at closing by OFSI President and CEO Konstantin Semerikov, who following the deal was the sole shareholder of the parent company OFSI Holding LLC.

Details of a recent deal struck between the LeClairRyan bankruptcy estate and the collapsed law firm’s now-disbarred longtime general counsel will remain a mystery for the foreseeable future, despite objections from one of the biggest creditors in the case, RichmondBizSense.com reported. A judge ruled last week to seal all documents and hearings related to the trustee’s settlement with Bruce Matson. That decision came much to the chagrin of UnitedLex, a legal services firm that is owed $8 million from LCR and is in the midst of litigation with LCR trustee Lynn Tavenner. United Lex argued that to seal the details of the Matson matter harms its position as both a creditor and defendant in the LCR case. UnitedLex, which formed a controversial joint venture with LCR shortly prior to the law firm’s dissolution in 2019, is facing a lawsuit filed by Tavenner accusing it of keeping LCR alive longer than it should have in order to “improperly and unfairly extract millions of dollars from the estate, to the detriment of LeClairRyan’s creditors.” Tavenner is seeking up to $128 million in damages.

West Virginia Gov. Jim Justice (R) is personally on the hook for nearly $700 million in loans his coal companies took out from now-defunct Greensill Capital, according to people familiar with the loans and documents described to the Wall Street Journal reported. Justice’s personal guarantee of the loans, which hasn’t been reported, puts financial pressure on the popular Republican governor. He is also dealing with unrelated lawsuits alleging parts of his sprawling network of coal companies breached payment contracts or failed to deliver coal. Greensill packaged the loans and sold them to investment funds managed by Credit Suisse Group AG. Credit Suisse and Greensill ran $10 billion in supply-chain finance funds that extended financing to a range of borrowers. The Swiss bank froze the investment funds in March and is in talks with Justice’s Bluestone Resources Inc. and other borrowers to recoup money to make investors whole, according to the people familiar with the discussions. Credit Suisse is under pressure to recover money quickly and has named Bluestone as one of three large borrowers from the Greensill funds that it has identified in its recovery efforts. Bluestone hadn’t expected to begin repaying the Greensill loans until 2023 at the earliest, it said in a lawsuit brought in March in a New York federal court alleging Greensill committed fraud in its lending practices. Greensill was a once-hot private finance firm whose bankers said could have been worth $40 billion in a potential initial public offering. It attracted investment from SoftBank Group Corp. before collapsing into bankruptcy in March when it lost a key type of insurance that backed up its loans. Greensill specialized in supply-chain finance, a type of cash advance that helps companies manage cash flow.

A Manhattan real-estate lawyer under criminal investigation by New York City and federal authorities allegedly can’t account for $17 million in client funds, according to liquidators called in to sift through his failed law firm, WSJ Pro Bankruptcy reported. The collapse of real estate firm Kossoff PLLC has destroyed livelihoods, tarnished reputations and left a trail of unpaid creditors behind, said liquidation attorney Neil Berger during a court hearing yesterday. Lawyers are only beginning to sort through the trove of documents associated with the defunct firm, which was pushed into liquidation last month after a wave of civil allegations that its namesake lawyer had absconded with client money. Berger said in a virtual hearing in the U.S. Bankruptcy Court in New York that liquidators are focused on collecting books and records for their investigation of the allegations and the firm’s collapse. The whereabouts of the firm’s top lawyer, Mitchell Kossoff, have been unknown since last month, according to the liquidators, who sought a court order yesterday forbidding anyone from taking or destroying documents from the firm’s offices at 217 Broadway or anywhere else. The Manhattan district attorney’s office and the U.S. attorney’s office in Brooklyn also are investigating Mr. Kossoff, whose lawyer said in the hearing that many of the documents at issue had been seized by prosecutors. Before the firm’s bankruptcy, Mr. Kossoff was accused in lawsuits of disappearing with client funds that were supposed to be sitting in escrow for real estate deals. He hasn’t been charged with a crime. 

Bankruptcy Judge Robert D. Drain in New York indicated yesterday that he would permit Purdue Pharma’s proposal to remake itself as a nonprofit company to be put to a vote by thousands of plaintiffs, who have sued to compel the maker of OxyContin to help pay for the terrible costs of the opioid epidemic, the New York Times reported. The restructuring plan is at the centerpiece of an intensely negotiated blueprint for a collective settlement with more than 600,000 claimants who contend that for two decades the company falsely and aggressively marketed its prescription opioid OxyContin as a nonaddictive painkiller, and as a result contributed to hundreds of thousands of opioid-related overdoses and deaths. Besides protecting the company from further legal action over opioids, the plan includes a blanket release from civil lawsuits for Purdue’s owners, members of the billionaire Sackler family. The issue of the Sacklers’ liability has been perhaps the most contentious in the proceedings, ever since Purdue filed for bankruptcy protection in 2019, seeking a shield against rapidly accruing lawsuits. The individual Sacklers, members of one of the wealthiest families in the U.S., did not seek bankruptcy protection, but they argue that they should be covered by the same release from all present and future lawsuits that their company would be given if the plan is confirmed. In return, the Sacklers have agreed to relinquish ownership of Purdue and contribute $4.5 billion to the settlement, including $225 million to the federal government. The money would be paid in installments over nine or 10 years, most of it going to a national opioid abatement trust fund, which would then be disbursed to states and municipalities to support addiction prevention and treatment programs. Judge Drain said that the plan provisionally cleared the legal hurdles of sufficiency, and that he was waiting for a handful of issues to be resolved before the plan is distributed. Purdue is expected to mail out information packets next week that describe the reorganization plan to the roughly 614,000 claimants in the bankruptcy case, with voting to conclude by July 14.

The judge overseeing the bankruptcy of hotel owner Eagle Hospitality Real Estate Investment Trust is considering referring two of its shareholders to prosecutors for possible criminal conduct over accusations they absconded with government COVID-19 relief, WSJ Pro Bankruptcy reported. At a hearing on Wednesday, Judge Christopher Sontchi in the U.S. Bankruptcy Court in Wilmington, Del., called the behavior of Taylor Woods and Howard Wu “beyond the pale,” “reprehensible” and an “abuse” of the U.S. government’s “attempt to help businesses survive the pandemic.” On Friday, Eagle Hospitality alleged that the businessmen, part-owners of the Singapore-based company, received $2.4 million in Paycheck Protection Program funds without authorization on behalf of hotel operations at the Queen Mary ocean liner in Long Beach, Calif. The two used the money for their own benefit, according to the company’s court filing. Eagle Hospitality, which has 15 U.S. hotels, said it has asked Woods and Wu to return the loan proceeds to no avail, and believes the funds have been depleted in ways not intended by the PPP, the popular source of forgivable, government-backed loans set up early in the pandemic, mainly to aid small business. PPP loans can be forgiven if they are mostly used to avoid layoffs. Eagle Hospitality has said it worries that it could be on the hook for repaying a loan it never received. Judge Sontchi said yesterday that he believed that fraud had been committed against Eagle Hospitality and that he would consider referring the matter to federal prosecutors for further investigation.

Kennedy Lewis Investment Management LLC is suing the lenders that took control of the New York Sports Clubs and Lucille Roberts gym chains out of bankruptcy, saying the chapter 11 sale they orchestrated left the company in a precarious state, WSJ Pro Bankruptcy reported. Kennedy Lewis, formerly the largest single lender to the chains’ parent company, Town Sports International Holdings Inc., said the company’s other lenders put together a flawed deal that fell apart, forcing the investment firm to accept shares in a “virtually worthless” company. The lawsuit, filed Tuesday in New York federal court, alleged that lenders including Abry Partners LLC, Apex Credit Partners LLC and CIFC Asset Management LLC breached their credit agreements during the Town Sports chapter 11 case. The Kennedy Lewis lawsuit “is factually wrong, legally meritless, and jurisdictionally improper,” lawyers at Gibson, Dunn & Crutcher LLP representing lenders targeted by the lawsuit said in an emailed statement. The lenders named in the lawsuit intend to seek damages against Kennedy Lewis, possibly in the Delaware bankruptcy court where the case belongs, or in federal court in New York, the lawyers said. Abry, Apex, CIFC and others engineered a proposed deal to buy out Town Sports’s assets in bankruptcy, along with private-equity firm Tacit Capital LLC. But Tacit later backed out of a promise to put $47.5 million in capital into the company. Tacit’s commitment wasn’t binding, according to the lawsuit.

Texas lawmakers are poised to pass several measures designed to help pay for the billions of dollars of energy costs stemming from catastrophic blackouts during the severe winter storm that hit the state this year, Bloomberg News reported. The Texas House of Representatives approved a bill on Tuesday that would allow electric co-operatives including bankrupt Brazos Electric Power Cooperative to cover unpaid power expenses from the disaster by selling debt that can be paid back over 30 years through charges on customer bills, a process known as securitization. The measure, which needs final Senate approval before heading to the Governor’s desk, would offer financial relief to electric co-ops that make up the bulk of the nearly $3 billion in payments owed to the Electric Reliability Council of Texas, the state’s main grid operator. Brazos filed for bankruptcy in March, citing about $2 billion in debts to Ercot.

California regulators said PG&E Corp. should pay a $20 million fine for flaws in the way it carried out intentional power cuts in 2019 to prevent live wires from sparking wildfires, Bloomberg News reported. PG&E’s total penalty was $106 million, but that amount will be offset by $86 million in bill credits that were already provided to customers at the direction of Governor Gavin Newsom, according to a statement yesterday by the California Public Utilities Commission. The $20 million will be paid by PG&E shareholders in the form of customer bill credits and a contribution to a backup battery program, according to a decision by an administrative law judge with the commission. The judge said the penalty was due to violations that included the failure of PG&E’s website during the intentional blackouts, the inaccuracy of PG&E’s outage maps and the failure of PG&E to notify 50,000 customers of the impending power cuts. The order will become final unless a party to the case files an appeal or a commissioner requests a review of it. PG&E said that it was reviewing the judge’s order and will evaluate whether to appeal it. The company said it has taken a number of actions to correct the issues that occurred. PG&E started resorting to deliberate blackouts after its equipment caused some of the worst wildfires in California history, forcing the company into bankruptcy in 2019. The utility emerged from chapter 11 last July after having paid $25.5 billion to resolve fire claims.