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A group of 25 state attorneys general oppose a settlement of U.S. opioid probes being negotiated with Purdue Pharma LP and members of the wealthy Sackler family who own it, arguing that the deal would improperly entangle state and local officials with future sales of the company’s addictive pain drug OxyContin, Reuters reported. In a letter to U.S. Attorney General William Barr, the state attorneys general take issue with the Justice Department’s condition that Purdue transform into a “public benefit company” that would be run on behalf of thousands of U.S. communities suing the drugmaker and Sackler family members. The letter cited a previous Reuters report detailing discussions to resolve the investigations. One controversial aspect of that proposal is that the entity would steer proceeds from continued sales of OxyContin to those litigants, which include myriad state and local governments. The attorneys general say that the proposal “compromises the proper roles of the private sector and government” as officials attempt to hold alleged perpetrators of the nation’s opioid crisis accountable, according to a copy of the correspondence reviewed by Reuters. They contend that Purdue should instead be sold to a private buyer, adding that one unidentified suitor for the company has emerged.

About 7,300 men who say the Boy Scouts of America failed to protect them from sexual predators are waiting to hear whether they can participate in talks aimed at calculating how much the organization must pay in a settlement, WSJ Pro Bankruptcy reported. Judge Laurie Selber Silverstein said she was likely to issue a decision this week on the matter, a controversy that erupted as the bankruptcy case the Boy Scouts initiated in February reaches a crucial phase. The men are part of an informal group represented by a collection of law firms calling itself the Coalition of Abused Scouts for Justice. An official committee that speaks for all those with sexual-abuse claims is already taking part in negotiations with the Boy Scouts, and the informal group wants to join in as well. Claims are still coming in, but lawyers say the Boy Scouts could ultimately face accusations from tens of thousands of men. Mediation has been going on for months in the bankruptcy case, which halted the hundreds of sex-abuse lawsuits the organization already faced. The group asking to join the talks is an informal committee like those that typically play roles in major bankruptcy cases, negotiating on behalf of groups of bondholders or shareholders. Members include about 7,300 people who have formally authorized their attorneys to participate, Sunni Beville, a lawyer representing the coalition, said during a hearing yesterday in the U.S. Bankruptcy Court in Wilmington, Del.

Mallinckrodt Plc became the third major opioid maker to go bankrupt after being swamped by claims it profited by fueling the U.S. opioid epidemic, Bloomberg News reported. The drug company said yesterday that it filed for chapter 11 protection in Delaware after getting creditors and claimants to agree on a restructuring plan that hands ownership to bondholders, wipes out shareholders and sets aside $1.6 billion to resolve all opioid litigation. The filing also will help resolve a U.S. government probe into whether the company defrauded Medicaid by overcharging for Acthar Gel, its top-selling multiple sclerosis drug. The move comes as Mallinckrodt was readying for two trials over accusations it illegally marketed opioids and failed to properly oversee large shipments of the highly addictive pills, which have been tied to an epidemic of abuse that killed thousands of Americans. A judge is likely to halt all litigation while the bankruptcy plan makes its way through the court process. The agreement includes certain debt holders, state attorneys general and lawyers for municipalities that sued to recoup billions in tax dollars spent on battling opioid addictions. Mallinckrodt will set up a trust to oversee payments from the $1.6 billion fund to claimants, and give them warrants to buy a stake in the reorganized company that could total nearly 20 percent, according to a statement.

The bankrupt operator of New York Sports Clubs and Lucille Roberts gyms has received court approval to conduct a speedy chapter 11 sale process, positioning the company to sell itself by next month to a group of lenders and a private-equity firm, WSJ Pro Bankruptcy reported. The lenders and Tacit Capital LLC last month agreed to serve as the lead bidder, or stalking horse, to acquire assets of Town Sports International Holdings Inc., valuing their deal at about $85 million, the minimum price for other bidders to beat. Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., said Friday he would approve the bidding rules that will subject the Tacit-led offer to other bids. “I’m perfectly happy to approve the bid procedures order as modified and as consensual and uncontested,” Judge Sontchi said during a hearing held by phone and video. The deadline to submit qualified bids is Oct. 26, followed by an auction, if necessary. The company is targeting early November to get the sale approved given liquidity concerns, Town Sports lawyer Joshua Altman said.

A U.S. bankruptcy judge in Albuquerque has ruled that lawyers for clergy sex abuse survivors can file lawsuits alleging the Archdiocese of Santa Fe (N.M.) fraudulently transferred an estimated $150 million in assets to parishes in an attempt to avoid bigger payouts to victims, the Albuquerque Journal reported. The decision by Judge David T. Thuma in the chapter 11 reorganization case opens the door to what could be a multimillion-dollar boon to hundreds of alleged victims. Or it could set off protracted, costly legal appeals that would tap funds that could have paid valid abuse claims. Lawyers for the 94 archdiocese parishes, several of which predate the archdiocese by many decades or even centuries, predicted at a court hearing in August that the “decimation” of certain parishes would result if the lawsuits into the transfers go forward. Judge Thuma didn’t address whether he thought the claims surrounding the transfers ultimately would succeed, but wrote in an 18-page ruling filed on Sunday that some litigation might be needed “to help the ongoing efforts to reach a global settlement in this case.” Negotiations between the parties have stalled in the nearly 2-year-old bankruptcy case, which the archdiocese filed in late 2018 to deal with a surge of claims alleging childhood sexual abuse perpetrated by priests and other clergy. An estimated $52 million has been paid in out-of-court settlements to victims in prior years.

Investors sued Boardriders Inc., the company behind the Quiksilver and Billabong brands, over a $431 million rescue financing package they said elevated the interests of a select group of lenders and private-equity backer Oaktree Capital Management LP, WSJ Pro Bankruptcy reported. Intermediate Capital Group PLC, York Capital Management and other lenders filed a lawsuit in the Supreme Court of New York on Friday, challenging an August financing deal that supplied the surfwear-inspired apparel company with $110 million in fresh capital from a group of lenders. In return for the infusion, Boardriders gave those parties top-ranking collateral rights on $321 million of loans they already held, pushing other lenders that didn’t participate down in the payment line, according to the complaint. The lenders that filed the suit are seeking a judgment invalidating and unwinding the transaction.

The Securities and Exchange Commission has accused SAExploration Holdings Inc. and four former executives of an accounting fraud that falsely inflated the bankrupt seismic-data company’s revenue by about $100 million and hid the theft of millions of dollars, WSJ Pro Bankruptcy reported. Houston-based SAExploration filed for bankruptcy in August after warning about an investigation by the SEC and the Justice Department over matters related to revenue recognition and accounting. The SEC, in a lawsuit filed Thursday in a federal court in New York, said four former SAExploration officials, including former Chairman and Chief Executive Jeffrey H. Hastings, carried out a fraud to improperly book about $100 million of revenue from a purportedly legitimate and unrelated customer, Alaskan Seismic Ventures LLC. In reality, Alaskan Seismic was controlled by Mr. Hastings and former SAExploration Chief Financial Officer and General Counsel Brent N. Whiteley, creating the appearance of a major independent source of revenue for SAExploration, the SEC said. In fact, Alaskan Seismic was unable to pay SAExploration for seismic data, according to the complaint, yet in 2015 and 2016 SAExploration reported $141 million in revenue generated from the relationship.

A Brentwood, Pa., restaurant ordered to close for ignoring COVID-19 masking requirements has filed for chapter 11 bankruptcy, the Pittsburgh Post-Gazette reported. The Crack’d Egg filed the petition on Friday in U.S. Bankruptcy Court in Pittsburgh, and it will continue to operate while the owners reorganize. The restaurant, owned by Kimberly Waigand, made headlines last month after the Allegheny County Health Department ordered it to close for flouting COVID-19 masking rules. In response, the restaurant filed a federal civil rights lawsuit against the Health Department. The shutdown order and the lawsuit have been stayed while the bankruptcy case proceeds. Attorneys said the restaurant’s financial woes are largely due to a loss in revenue following statewide COVID-19 mitigation rules that reduced maximum restaurant capacity to 25 percent. According to the restaurant’s bankruptcy filing, it owes nearly $445,000 in unsecured debt to its creditors. The largest amount, $350,000, comes from Waigand’s husband, Donald. The money for the investment came from a settlement Waigand received after he was in an accident, Cooney said. The restaurant has been under scrutiny since Allegheny County sought its closure after inspectors repeatedly saw employees without face masks, a health violation under the COVID-19 guidelines.

Mallinckrodt Plc, a maker of opioids and other drugs, is nearing a deal to hand majority ownership to its unsecured bondholders as part of a bankruptcy filing, Bloomberg reported. The bonds would be traded for most of Mallinckrodt’s equity and some new debt, and the debt of higher-ranked lenders would be reinstated or replaced by new securities that fully cover their claims. The lenders and opioid claimants would be included in the agreement. Debtwire reported earlier on that there were negotiations to give the bondholders equity and new debt. Most of the company’s unsecured debt trades at about a quarter of its original value. Mallinckrodt would become the third major opioid producer to file for bankruptcy, amid an addiction crisis that kills more than 100 Americans daily. The companies are facing off against thousands of plaintiffs from states, cities and counties that blame drug makers and distributors for the epidemic of overdose deaths.