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A diocese on Long Island is filing for bankruptcy protection to deal with legal expenses that stemmed from multiple sexual abuse lawsuits, NBCNewYork.com reported. The Diocese of Rockville Centre says that it needs chapter 11 protection to restructure and to help facilitate settlements to dozens of sexual abuse victims who filed sexual misconduct lawsuits under the state's Child Victims Act. “We believe that this process offers the only way to ensure a fair and equitable outcome for everyone involved, including abuse survivors whose compensation settlements will be resolved by the courts,” Bishop Barres said in a statement. Last year, the diocese filed a legal challenge arguing that the Child Victims Act, which loosened statutes of limitations on molestation cases, violates the New York state constitution. Back in 2018, the diocese agreed to pay claims to more than 200 sex abuse victims, before the Child Victims Act was passed and even more lawsuits were filed. Rockville Centre is not the first to seek bankruptcy protection under the weight of sexual misconduct lawsuits. The Roman Catholic Diocese of Rochester was the first to do so in New York. 

Investors in two subordinated bonds from Lehman Brothers received word that a payment is coming, just two weeks after the 12th anniversary of one of the world’s most spectacular banking collapses, Bloomberg News reported. A proposed “initial interim payment” will go to owners of a 200 million euro ($234 million) note and a $500 million issue, according to a statement from liquidators distributed on Tuesday. The size of this payment will be disclosed in a formal payment notice. The collapse of one of the world’s largest investment banks on Sept. 15, 2008, was the iconic moment of the great financial crisis, prompting fear among policymakers that the global economy would seize up. While the Federal Reserve’s subsequent intervention staved off total disaster, Lehman Brothers has since become a byword for the nadir of the crisis. The noteholders who stand to gain from the new payout hold “enhanced capital advantaged preferred securities,” or ECAPS. The notes, issued backed in 2007 by U.K.-based special purpose entities, were designed to raise regulatory capital and benefited from a guarantee by the parent group. Following Lehman Brothers’ bankruptcy a year later, the price of these high-coupon notes fell to mere cents. Both notes are still indicated at around 3 cents in a thin market, with at least one broker offering a bid at less than a cent, based on data compiled by Bloomberg. The liquidators at RSM Restructuring Advisory LLP held 9.8 million euros, net of costs, in a fund set up for the entity that issued the euro-denominated notes, according to a notice to holders a year ago. It held more than $27 million in the dollar note issuer’s fund. 

A Democratic Senator wants information about a decision by the maker of OxyContin to file for bankruptcy in a New York City suburb known as a popular landing spot for large corporate restructurings because of the single judge overseeing chapter 11 cases there, the Wall Street Journal reported. Sen. Tammy Baldwin (D-Wis.) yesterday asked Purdue Pharma LP’s board to turn over any emails and other information documenting the company’s decision to change its New York address for receiving legal documents from Albany to White Plains about six months before filing for chapter 11 last year. Judge Robert Drain is the only bankruptcy judge sitting in White Plains, meaning that cases filed there were until recently assigned exclusively to him. That sets White Plains apart from other popular bankruptcy venues such as Delaware, where cases are randomly assigned to one of several judges. Purdue changed an address it has registered with the New York Department of State shortly before Chief Executive Craig Landau said in an interview published in the Washington Post that the business was considering filing for chapter 11 protection, according to the letter Sen. Baldwin sent Purdue. She and other Democratic lawmakers previously urged Judge Drain not to grant Purdue’s request to pay Landau a bonus that could be worth millions of dollars. Purdue is using bankruptcy to try to implement a multibillion-dollar settlement of thousands of lawsuits brought by states, local governments and Native American tribes accusing the company of contributing to widespread opioid addiction. The settlement proposal, which requires court approval, would cede control of Purdue to creditors and includes a roughly $3 billion payment from the Sackler family members that own the company. Based in Stamford, Conn., Purdue changed registered agents to one that has a White Plains address in March 2019, according to filings with the New York Department of State.

Remington Outdoor Co. won court approval of a series of sales that will bring in more than $156 million to its coffers in bankruptcy court amid concerns that the deals will endanger what could be more than $100 million of insurance that could compensate gun victims, WSJ Pro Bankruptcy reported. Judge Clifton Jessup signed off on the sales at a hearing in the U.S. Bankruptcy Court in Decatur, Ala., where the iconic weapons maker filed for chapter 11 protection in July. Deals with buyers including Vista Outdoor Inc. will keep Remington’s weapons and ammunition in production, leaving cash, real estate and insurance in a chapter 11 shell company that will pay off creditors. Whitebox Advisors LLC and Franklin Advisers Inc., two of the company’s largest lenders, are at the front of the line to be paid from the sale of Remington’s businesses. Nine families affected by the 2012 Sandy Hook Elementary School shooting fear they will be too far back in the line to recover damages. The Sandy Hook families have been suing Remington since 2015, accusing the company of running afoul of a Connecticut law punishing improper marketing.

Workers dismissed by bankrupt Art Van Furniture Inc. are demanding that private equity owner Thomas H. Lee Partners pay back money they contributed to their own flexible spending benefits accounts that was lost in the chain’s liquidation, Bloomberg News reported. The workers forfeited as much $525 each when they lost access to cash in their flexible savings accounts and health care savings accounts as part of the retailer’s liquidation, according to a copy of a letter to T.H. Lee reviewed by Bloomberg News. It’s the latest instance of workers pushing for better treatment in retail bankruptcies, which has been forcing lenders and private equity owners to rethink their assumptions about the costs of dismantling a company. Art Van went bankrupt in March, putting about 4,500 people out of work. T. H. Lee created a $1 million hardship fund following worker protests over the earnings and benefits they lost, but the workers group said the payment amounts to about $400 per person and is “woefully inadequate.” The employees asked for $1,500 each to cover three months of out-of-pocket health insurance coverage so they could weather the coronavirus pandemic, plus the return of any unused funds in their flexible spending accounts and the removal of a cap that excludes anyone who earned more than $99,000 a year.

Victims of the opioid crisis are calling on a bankruptcy judge to lift a protective shield that is keeping them from suing members of the Sackler family who own Purdue Pharma LP, WSJ Pro Bankruptcy reported. The demand comes as Purdue, after a year in bankruptcy, prepares to file a chapter 11 plan that will offer billions of dollars to states, tribes and others with claims against the company and its owners over allegedly improper marketing of OxyContin, a powerful opioid. Terms of the chapter 11 plan are being worked on behind closed doors and are slated to include provisions that permanently immunize the Sacklers from lawsuits, according to papers filed in the U.S. Bankruptcy Court in White Plains, N.Y., by a coalition of opioid victims known as the accountability committee. Purdue’s September 2019 bankruptcy filing stopped action against the drugmaker in thousands of lawsuits over its marketing of OxyContin, blamed for a significant portion of the epidemic of addiction. Hundreds of the cases also name as defendants some members of the Sackler family. Unlike Purdue, the Sackler defendants didn’t file for bankruptcy protection. Still, U.S. Bankruptcy Judge Robert Drain in White Plains ordered a stay of legal challenges against Purdue’s owners. Purdue, based in Stamford, Conn., wants to extend that stay until March. The personal-injury claimants say the Sackler defendants need to face a public reckoning sooner. The Sackler defendants have denied any blame for the alleged improper sales of OxyContin, though they have offered to add $3 billion in cash to a proposed Purdue settlement. The drugmaker and about half the states that have sued have agreed to that deal, but other states, including New York, have turned it down.

Auto-parts maker Garrett Motion Inc. rejected an alternative bankruptcy loan offered by Oaktree Capital Management and Centerbridge Partners, and a second one from a group of bondholders, instead selecting a revised deal from senior lenders, Bloomberg News reported. The renegotiated debtor-in-possession loan from senior lenders is a “material improvement” from the original and is the best option available, Chief Restructuring Officer Bruce Mendelsohn said yesterday in court papers. The revised terms remove certain milestones for the company in court, allow longer financing extensions and reduce certain fees. The debtor-in-possession financing must be approved in court and be supported by the majority of creditors. A hearing has been rescheduled to 10 a.m. on Thursday in New York. Garrett filed bankruptcy last week, struggling to deal with a pandemic-related slowdown in business on top of asbestos liability reimbursements it owes to its former parent Honeywell International Inc. The payments relate to asbestos claims stemming from Honeywell’s old Bendix brake business. Garrett’s initial proposed $250 million financing package was attacked by shareholders and Honeywell, in part because it contained deadlines that could rush a potential $2.1 billion sale to KPS Capital Partners. The deal had the support from holders of 61 percent of its outstanding senior secured debt but didn’t include a plan to resolve the asbestos liabilities, which sit behind other forms of debt in line for repayment.

The long-standing taxation issue between King Mountain Tobacco Co. Inc. and the federal government took a sudden turn late last week when the company filed for chapter 11 protection, the Yakima (Wash.) Herald reported. The Yakama cigarette maker said that it was forced to file after the federal Alcohol and Tobacco Tax and Trade Bureau sent a final notice to King Mountain on Aug. 25, demanding repayment of $75 million in outstanding excise taxes, interest and late fees. In that notice, the bureau threatened to levy against the company’s assets if payment was not made within 30 days. With the company unable to make the entire payment on short notice, filing bankruptcy was the only means to prevent closure and the loss of 66 jobs, King Mountain CEO Jay Thompson said yesterday. It would be devastating to the Yakama Nation, which has had to contend with poverty and high unemployment, he said. According to a declaration filed by Thompson in U.S. Bankruptcy Court, the company employs 63 full-time and three part-time employees. King Mountain has maintained that the tribal-owned enterprise should be exempt from federal excise taxes because it operates on tribal land held in federal trust, and taxation is barred under the 1855 Yakama Treaty. However, in 2014, the U.S. District Court ruled in favor of the federal government and said King Mountain must pay $58 million in federal excise taxes and fees dating back to 2009. The court ruled that cigarettes are a manufactured product, not derived directly from the land, and therefore subject to taxes. That ruling was upheld by the Ninth Circuit Court of Appeals. In 2019, the U.S. Supreme Court denied King Mountain’s request to review the case further.

The Aspen Club and Spa’s debts to construction firms, lenders and other creditors, as well as the recent foreclosure action taken against it, will be consolidated into a single case overseen by a state district judge, the Aspen (Colo.) Times reported. Pitkin County (Colo.) District Judge Chris Seldin yesterday ordered that the outstanding cases, which had been on hold because of the club’s bankruptcy, be folded in with the foreclosure case. Judge Denise Lynch will preside over the case moving forward, Judge Seldin said. Attorneys for the majority of creditors attending the conference call agreed that consolidation would help simplify an indisputably complex matter where there are more than $25 million in mechanics’ liens the club still owes, as well as $42 million owed to one note holder, GPIF Aspen Club LLC, and $12 million to another, Revere High Yield Fund, among other creditors. Aspen Club declared Chapter 11 in May 2019, effectively staying a case carried against it by mechanics’ lien-holders with claims for labor and material related to the Aspen Club’s redevelopment project. Unable to get the Denver bankruptcy court’s approval for a $140 million exit loan, the Aspen Club gave up on the bankruptcy proceedings earlier this month, agreeing with its creditors to dismiss the case Sept. 1. On Sept. 2, GPIF took foreclosure action against the club in Pitkin County District Court. With Seldin’s ruling, the foreclosure case as well as previous litigation in district court against the club are now folded into once case.