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For Purdue Pharma LP, the rationale behind a proposed $4.3 billion settlement with the members of the billionaire Sackler family that own the company comes down to uncertainty. The bankrupt OxyContin maker -- as well as creditors seeking to hold Purdue and its owners accountable for the opioid crisis -- could use wide-ranging legal theories to try to extract billions of dollars from members of the Sackler family. But the endeavor would be convoluted, expensive, and could fail entirely, Purdue’s lawyers argue in new bankruptcy court papers, Bloomberg News reported. Their argument comes as Purdue is seeking approval to collect creditor votes on its bankruptcy plan at a hearing scheduled for this week. Certain details of the settlement with its owners aren’t yet finalized, and more than 20 U.S. states still don’t support the plan. The Sackler family is large, fragmented, and scattered across the globe. Its wealth -- recently estimated at $11 billion -- is concentrated in “dozens” of trusts in the U.S. and abroad, including islands off the coast of France, according to court papers. To get to the money, the company and others would “have to separately sue, prevail, and collect against each of these individuals, and expend considerable resources in the process without any guarantee of success,” Purdue’s attorneys wrote.

The U.S. Supreme Court declined to take up a case that would have challenged financially troubled coal companies’ use of bankruptcy law to end federally mandated payments to the industry’s multiemployer pension plan, WSJ Pro Bankruptcy reported. The Court said yesterday that it won’t hear a dispute arising from the 2018 bankruptcy of Westmoreland Coal Co., which used chapter 11 to sell its coal mines to its creditors. The appeal challenged a strategy used in chapter 11 by Westmoreland and other bankrupt coal companies to end payments assessed under the Coal Act, a 1992 law meant to keep the industry pension plan financially sound and guarantee retiree benefits for coal miners. Yesterday’s decision leaves in place an August ruling by the U.S. Court of Appeals for the Fifth Circuit, which held that the power of bankruptcy law to modify or eliminate retirement liability trumps obligations under the Coal Act. That decision followed a 2018 ruling by the U.S. Court of Appeals for the Eleventh Circuit in favor of a different bankrupt coal company. Those two federal appellate courts cover parts of the Southeast and Texas. The appeal the Supreme Court denied was brought by trustees who represent the interests of the coal pension plan. Trustees argued unsuccessfully in the Westmoreland case that the Coal Act assessments that companies are required to pay are a tax and therefore cannot be undone under the section of chapter 11 that allows corporate debtors to modify or end their legacy retirement obligations. But the Fifth Circuit in August agreed with Westmoreland, which said that Coal Act obligations are the codification of retirement benefits and therefore are subject to the chapter 11 provision that lets companies end retirement obligations. In its ruling, the Fifth Circuit said Congress “made no clear indication” that it intended to specifically carve out Coal Act obligations from the power of chapter 11 to cut corporate costs and liabilities.

The group representing individuals and government entities with opioid-related claims against Mallinckrodt Plc say the pharmaceutical company needs to provide more information and time for them to determine whether they will vote in support of its proposed restructuring plan, Reuters reported. A virtual hearing on the matter is scheduled for Wednesday before U.S. Bankruptcy Judge John Dorsey in Wilmington, Del. The official committee of opioid claimants on Friday filed objections to Mallinckrodt’s disclosure materials and motion to begin soliciting plan votes. Mallinckrodt filed for bankruptcy in October with $5.3 billion in funded debt to resolve widespread litigation brought by states, local governments and private individuals accusing it of deceptively marketing opioids. The company is now pursuing a reorganization plan that would set up a $1.6 billion trust to resolve opioid-related claims. The plan would put unsecured noteholders in control of the company and eliminate $1.3 billion in debt. General unsecured creditors would split $150 million in cash. In court papers filed on Friday, the committee took issue with the provisions of the plan that would restrict opioid claimants’ ability to bring future claims against certain parties, including current and former officers and directors of the company. At the same time, the committee said, the disclosure materials don’t adequately explain opioid claimants’ recoveries. The committee argued that they need more details beyond the $1.6 billion figure attached to the trust. Additionally, the committee contends that claimants are not being given enough time or adequate notice of their rights. The U.S. departments of Health & Human Services and Veterans Affairs also filed an objection to the disclosure materials, saying that Mallinckrodt needs to explain how the opioid trust funds will be allocated. Mallinckrodt’s unsecured creditors’ committee and the U.S. Department of Justice’s bankruptcy watchdog, among others, have filed objections as well. The unsecured creditors' committee and trustee demanded more information about estimated creditor recoveries and challenged the plan's proposed releases for officers and directors.

Bankrupt hotel chain Eagle Hospitality Real Estate Investment Trust alleged in a court filing that two of its big investors received $2.4 million in federal coronavirus aid on behalf of its Queen Mary operations, but used the money for their own benefit, WSJ Pro Bankruptcy reported. In a filing Friday in the U.S. Bankruptcy Court in Wilmington, Del., Eagle Hospitality said Taylor Woods and Howard Wu defrauded the unit, Urban Commons Queensway LLC, last year by getting a Paycheck Protection Program loan in that business’s name, even though they lacked the authority to do so, and then took the money. Woods said yesterday that the allegations are unfair and incorrect. Wu said that there was never any intention to do anything inappropriate involving the PPP loan. Urban Commons Queensway said it asked Woods and Wu to return the loan proceeds by last Thursday, but the request has gone unmet. The company said the loan proceeds have been rapidly depleted in ways that the U.S. Small Business Administration didn’t intend. The loans are eligible for forgiveness if they are mostly used to avoid layoffs. Urban Commons Queensway said it is concerned that if it doesn’t get a preliminary injunction, the assets could be diverted to “unreachable locations.” Eagle Hospitality has said it worries it could be on the hook for repaying a loan that it never received. More than two dozen U.S. units of Singapore-based Eagle Hospitality Real Estate Investment Trust filed for bankruptcy in January. Days later, Eagle Hospitality also filed for bankruptcy in the U.S.

When the Boy Scouts of America filed for bankruptcy last year and asked alleged victims of childhood sexual abuse to step forward, roughly 84,000 did, with many hoping the legal proceeding would help usher a financial settlement — and some closure to their ordeals, the Wall Street Journal reported. But 15 months later, those who came forward are still waiting as the Boy Scouts’ odyssey through chapter 11 approaches the finish line without a clear resolution of their claims. Boy Scout lawyer Jessica Lauria said in a court hearing last week that the only way to preserve the organization’s mission is to reorganize it rather than liquidating assets to pay sex abuse claims. Breaking up the Boy Scouts would harm 700,000 active Scouts, she said. But to turn the page on a legacy of sexual abuse and the resulting legal exposure, the Boy Scouts need to reach consensus with most survivors, who have the right to vote on any settlement the organization puts forth. Closed-door mediation sessions and more than $100 million spent on legal fees haven’t closed the gap between the ask and the offer. The Boy Scouts have made progress in recent days toward a potential agreement with a coalition of law firms that represents the bulk of the victims who have filed claims over childhood abuse. But the Boy Scouts are farther apart from a separate official committee of survivors. A court hearing that was slated for Monday, where a judge was to decide whether to allow victims to vote on the Boy Scouts settlement, was delayed a week, so talks could continue.

The company that bought The Weinstein Company’s assets out of bankruptcy does not have to pay a producer of the 2012 film “Silver Linings Playbook” amounts he claims he is owed for his work on the movie, an appeals court ruled on Friday, Reuters reported. In a 25-page decision, a three-judge panel of the 3rd U.S. Circuit Court of Appeals upheld lower court rulings that rejected producer Bruce Cohen’s claim that Spyglass Media Group LLC, which purchased the Weinstein assets out of bankruptcy in July 2018, owes him $400,000 under his work-for-hire contract. Spyglass acquired the Weinstein assets, including production contracts, for $289 million when the company filed for bankruptcy in 2018 following widespread allegations of sexual misconduct against co-founder Harvey Weinstein. A lawyer for Cohen, Angela Butcher of Elkins Kalt Weintraub Reuben Gartside, did not immediately respond to a request for comment. Craig Martin of DLA Piper, representing Spyglass, did not immediately respond either. The Cohen contract is one of several The Weinstein Company had with film and television talent before its bankruptcy. Spyglass's predecessor sued Cohen in October 2018 seeking a declaration that it acquired the company's assets free of any requirement to honor prior compensation obligations. “Silver Linings” stars Bradley Cooper and Robert De Niro have since become involved in the litigation, but Cohen’s contract was effectively used as the bellwether case for such agreements in the Delaware bankruptcy court that handled the Weinstein case.