Fraud allegations against the National Rifle Association should be investigated by a bankruptcy examiner before the group is allowed to reorganize, a former director for the organization argued in an unusual request to the federal court overseeing the case, Bloomberg News reported. Phillip Journey, a Kansas judge and former state legislator, asked a Texas bankruptcy judge to appoint an independent investigator to determine the truth of claims made by New York regulators in a lawsuit. “Former and current board members have grave concerns about the overall propriety and oversight that the NRA’s board used to exercise,” Journey said in the filing yesterday. The board of directors “to this day, has reduced its role to merely that as a ‘figure head.’” Journey served on the NRA’s board of directors from 1995 to 1998, according to the filing. He also spent more than 20 years on the Kansas State Rifle Association’s board. Journey based much of his request on the lawsuit brought by officials in New York and other cases filed around the country. New York Attorney General Letitia James is seeking to dissolve the NRA, arguing misappropriation of money and breach of fiduciary duty. The NRA filed bankruptcy last month in an effort to reorganize and resolve the many lawsuits its faces. The group said it wants to move its corporate charter to Texas because James’s lawsuit is a political attack.
Bankruptcy Judge David T. Thuma shot down a request by the Archdiocese of Santa Fe and its parishes to derail three lawsuits claiming church officials are shielding millions of dollars in assets to limit payouts to clergy sex abuse victims, the Albuquerque Journal reported. Judge Thuma will allow the three lawsuits filed by attorneys for nearly 400 victims to proceed while church lawyers appeal directly to the 10th Circuit — a protracted process that could take a year or two and cost an estimated $5 million. But it may not come to that. “The mediation process is continuing and we hope this ruling will result in getting a consensual deal done (on a settlement of the case),” said James Stang, a Los Angeles attorney representing the nearly 400 claimants who say they were abused as children by priests and other clergy in the archdiocese. Archdiocese attorney Ford Elsaesser at a hearing last week told Judge Thuma that four settlement offers had been exchanged in the past 60 days and “we’re at the narrowest gap we’ve ever been between the settlement discussions that began approximately 14 months ago.” About two-thirds of the claims are fully or partially covered by insurance, he said, but there is no such coverage for the remaining 120 or so filed in the case. Thuma’s ruling came more than two years after the archdiocese, the state’s largest, filed for chapter 11 reorganization, citing financial losses from clergy sexual abuse cases and the prospect of more being filed. Victims’ attorneys contend that, before the filing, the archdiocese transferred most of its property to its 94 parishes, with the intent “to hinder, delay, or defraud its creditors (almost entirely sex abuse claimants),” Thuma wrote in his ruling. Some of the assets were transferred to trusts or a savings and loan fund.
A group representing Boy Scouts of America sex abuse survivors is urging a judge to reject insurers' requests for more details about the survivors' claims filed in the youth organization's bankruptcy case, Reuters reported. The Coalition of Abused Scouts for Justice made its statements in court papers filed on Friday in the U.S. Bankruptcy Court for the District of Delaware. The group called the insurers' request for more information about the sex abuse claims "wasteful and ugly games" and a delay tactic "to prevent the (Boy Scouts) from reorganizing on terms that treat sexual abuse victims fairly." The dispute between the insurers — affiliates of Chubb Ltd and Hartford Financial Services Group — and the survivor representatives comes as the Boy Scouts, represented by White & Case, aims to submit a restructuring proposal that would settle widespread allegations of sexual abuse spanning decades. The chapter 11 case has been going on since last February. The insurers filed papers in January suggesting some of the 95,000 claims filed in the case may be fraudulent, noting that some plaintiffs' attorneys working with the coalition filed "implausibly high" numbers of claims on behalf of survivors. A hearing on the motion, as well as the insurers' recent motion seeking more disclosures about who the coalition represents, is scheduled for Feb. 17 before U.S. Bankruptcy Judge Laurie Selber Silverstein. Chubb and Hartford said in their filings that several plaintiffs' firms conducted an "extraordinary claim-mining operation" that has resulted in some sex abuse claims that "are deficient on their face." They say that some plaintiffs' lawyers ran a deceptive media campaign that may have resulted in illicit claims filed against the organization and failed to vet the claims that were submitted. The insurers argue that it will be nearly impossible to obtain court approval of a reorganization plan that attempts to address 95,000 sex abuse claims. In its response, the coalition says the insurers are focused on attacking the lawyers involved "whenever possible" and that their motion for more details about the sex abuse claims are "filled with invective and unsubstantiated allegations."
With plaintiffs lawyer Tom Girardi and his law firm both forced into insolvency proceedings, arguments over Girardi's mental competency are moving to center stage, Reuters reported. But even if a judge finds that Girardi requires a guardian ad litem, it won't serve to keep his creditors at bay, experts said. "It really doesn't affect the debts, it doesn't affect the liabilities. What it affects is the procedure under which you would go about attempting to figure out what debts are what," said Bruce Markell, a bankruptcy professor at Northwestern University Pritzker School of Law and a former Nevada bankruptcy judge. U.S. Bankruptcy Judge Barry Russell in Los Angeles is slated to hear arguments on Feb. 16 over whether Girardi's brother, Robert Girardi, should be appointed guardian of both Girardi and his firm, Girardi Keese. Robert Girardi said in a January court filing that his brother is incapable of understanding the bankruptcy proceedings. Tom Girardi suffers from short-term memory loss and is unable to have "a reasoned conversation" about the issues at stake, the filing said.
The guardianship bid has drawn opposition from Elissa Miller, the chapter 7 trustee for Girardi Keese, and from Edelson PC, whose allegations that Tom Girardi misappropriated $2 million in client settlement funds helped spark the bankruptcies.
State attorneys general intensified pressure on drug companies to settle claims over the opioid crisis, following consulting firm McKinsey & Co.’s agreement to pay nearly $600 million over its advice to pharmaceutical companies to rev up sales, the Wall Street Journal reported. McKinsey’s settlements, reached with every state but Nevada, are an unexpected first source of revenue to stem from yearslong investigations into drug industry players that states say helped exacerbate an opioid epidemic. It has killed at least 400,000 people in the U.S. since 1999. “We do not want to be in litigation for years on this, spending money and resources while people are dying,” Colorado Attorney General Phil Weiser said Thursday. “We want to get fair settlements now. Others need to follow suit.” States have been negotiating since 2019 with the nation’s three largest drug distributors, McKesson Corp., AmerisourceBergen Corp., Cardinal Health Inc., as well as drugmaker Johnson & Johnson. The companies have publicly disclosed that they have set aside a collective $26 billion for the deal, most of it to be paid over 18 years, but no final agreement has been reached.
McKinsey & Company has agreed to pay $573 million to settle investigations into its role in helping “turbocharge” opioid sales, a rare instance of it being held publicly accountable for its work with clients, the New York Times reported. The firm has reached the agreement with attorneys general in 47 states, the District of Columbia and five territories, according to five people familiar with the negotiations. The settlement comes after lawsuits unearthed a trove of documents showing how McKinsey worked to drive sales of Purdue Pharma’s OxyContin painkiller amid an opioid epidemic in the United States that has contributed to the deaths of more than 450,000 people over the past two decades. McKinsey’s extensive work with Purdue included advising it to focus on selling lucrative high-dose pills, the documents show, even after the drugmaker pleaded guilty in 2007 to federal criminal charges that it had misled doctors and regulators about OxyContin’s risks. The firm also told Purdue that it could “band together” with other opioid makers to head off “strict treatment” by the Food and Drug Administration. The consulting firm will not admit wrongdoing in the settlement, to be filed in state courts today, but it will agree to court-ordered restrictions on its work with some types of addictive narcotics, according to those familiar with the arrangement. McKinsey will also retain emails for five years and disclose potential conflicts of interest when bidding for state contracts. And in a move similar to the tobacco industry settlements decades ago, it will put tens of thousands of pages of documents related to its opioid work onto a publicly available database.
The National Rifle Association may have handed ammunition to its critics when it filed bankruptcy as part of an effort to defend itself from New York regulators and others and reincorporate in Texas, Bloomberg News reported. Sometime in the coming weeks, the group, known for its aggressive political and legal tactics in defense of gun rights, will be forced to release a detailed list of cash payments it has made to insiders in the last year and any unusual property transfers it has made to anyone within two years. And if the NRA had a stake in any other business of 5% or more in the last six years, that information must be made public as well. Before then, the U.S. Trustee, an arm of the U.S. Department of Justice, will set up an official committee of unsecured creditors with the power to launch new investigations into the NRA’s spending. “Each bit of information in that filing can open the door for more inquiries and discovery,” Dallas bankruptcy attorney John Penn said. The NRA filed for bankruptcy last month as part of a strategy to resolve many of the lawsuits it faces in one location and to reincorporate in gun-friendly Texas. The association claims it is the subject of a political attack by regulators in New York.
