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LVMH Moët Hennessy Louis Vuitton SE sued Tiffany & Co. over their soured merger deal, saying that the U.S. jeweler’s business has been so deeply damaged during the pandemic that their takeover agreement is invalidated, the Wall Street Journal reported. The lawsuit, filed yesterday in Delaware Chancery Court, counters a lawsuit that Tiffany filed this month against LVMH after the French conglomerate — owner of Louis Vuitton, Dior and dozens of other luxury brands — said it was backing out of its $16 billion acquisition of the jeweler. LVMH’s lawsuit says that Tiffany has suffered a material adverse change to its business, triggering a standard provision in merger agreements that allows the buyer to walk away. Tiffany has been mismanaged during the pandemic and is particularly vulnerable to the disruption the industry is likely to suffer in the years to come, LVMH says. The complaint says Tiffany’s dependence on the U.S. market and foot traffic in malls means the jeweler’s prospects are particularly grim compared with the broader luxury industry, which has been thrown into turmoil by the pandemic.

Mallinckrodt PLC is preparing to file for bankruptcy within weeks, setting up a potential battle with state and local governments over the drugmaker’s alleged role in fueling opioid addiction in the U.S., WSJ Pro Bankruptcy reported. The Ireland-based company is negotiating with key creditors over a restructuring proposal covering more than $5 billion in debt. The framework for restructuring that debt isn’t supported by the states and U.S. territories that have sued Mallinckrodt and other pharmaceutical companies over the opioid crisis. Most state attorneys general reached a settlement with Mallinckrodt in February for $1.6 billion in payments over eight years, plus a minority stake in the business. But in March, Mallinckrodt’s capacity to fulfill its end of the settlement was damaged after the company suffered an adverse court ruling: A federal judge ordered it to pay $640 million for retroactive rebates related to its multiple-sclerosis treatment Acthar. Mallinckrodt has appealed the ruling, but the bill is close to coming due, prompting the drugmaker to pursue a chapter 11 bankruptcy filing that would give it financial breathing room.

Remington Outdoor Co., the 200-year-old gun maker that filed for bankruptcy again in July, has been auctioned off in court, Bloomberg News reported. Seven bidders will each purchase a portion of the company’s businesses, according to a filing in the northern district of Alabama. The development caps a hunt for buyers to bring in funds to pay off creditors. Cerberus Capital Management had acquired Remington in 2007, and the firearms and ammunition giant accumulated nearly $1 billion in debt. The company said previously that it had $437.5 million in sales last year, about half the business it did in 2016. Here are the details on the successful bidders and the Remington businesses they are buying: Vista Outdoor Inc. for its Lonoke ammunitions business and certain IP assets; Roundhill Group LLC for its non-Marlin firearms businessSierra Bullets LLC for its Barnes ammunitions business; Sturm, Ruger, & Co. for its Marlin firearms business; JJE Capital Holdings LLC for DPMS, H&R, Stormlake, AAC and Parker brands; Franklin Armory Holdings Inc. for Bushmaster brand and some related assets; and Sportsman’s Warehouse Inc. for Tapco brands. 

California has rejected a proposed settlement with Exide Technologies LLC, roiling the lead-acid battery maker’s push to walk away from a legacy of toxic contamination by way of bankruptcy court, em>WSJ Pro Bankruptcy reported. Exide, in bankruptcy court for the third time in 16 years, failed to make good on the promises it made to California on its last trip through chapter 11, Daniel Cantor , a lawyer for the state’s Department of Toxic Substances Control, said at a hearing yesterday in the U.S. Bankruptcy Court in Wilmington, Del. According to Cantor, Exide was supposed to pay $50 million to clean up a battery-recycling plant, located about 5 miles south of downtown Los Angeles in Vernon, Calif., and make sure it isn’t a danger to the surrounding community. It hasn’t done so, he said. The Vernon plant has been closed since 2015 as part of a deal to avoid criminal prosecution. Exide, based in Milton, Ga., has disputed allegations of danger and failure to make good on its nonprosecution deal. “For decades, the Vernon site, your honor, recycled batteries and released thousands of pounds of lead, which is a powerful neurotoxin,” Cantor told Judge Christopher Sontchi. The plant requires daily maintenance to ensure that toxic lead dust isn’t blown into the surrounding communities, he said. Exide has called off a planned Friday hearing on its chapter 11 exit plan, which would hand lenders ownership of its non-U.S. businesses and get them off the hook for contamination.

Oaktree Capital Management and Centerbridge Partners are seeking the support of Honeywell International Inc. for their proposed Garrett Motion Inc. bankruptcy loan as they consider making a bid for the assets of the bankrupt auto supplier, Bloomberg News reported. The two investment firms would aim to cut a deal with Honeywell to resolve Garrett’s $1.3 billion in disputed asbestos liabilities and win the conglomerate’s approval for their bid, according to people familiar with the plans. Honeywell hasn’t yet indicated its position, and other creditors may pitch additional proposals. Garrett looks attractive to many potential buyers or investors as its finances are largely stable apart from the asbestos liability overhang. Garrett filed bankruptcy this week, in part because of asbestos reimbursements owed to Honeywell, its former parent. Honeywell objected to a proposed bid from KPS Capital Partners at a court hearing on Monday, saying that the deal would relieve Garrett of its responsibility for the asbestos payments. Garrett said at that hearing that it would consider Oaktree and Centerbridge’s competing loan proposal, which could put them in prime position to ultimately own Garrett. Auto-parts maker Garrett was part of Honeywell until its 2018 spinoff, and blames the firm’s asbestos-related liabilities for helping put it into bankruptcy this week. Making a deal with Honeywell to resolve those claims would provide a potential bidder with an upper hand in the company’s bankruptcy auction process. 

Senate Democrats are challenging OxyContin maker Purdue Pharma LP’s request to pay its chief executive a bonus that could total millions of dollars while the company is in bankruptcy, saying such an award would be offensive to the thousands of families harmed by the opioid crisis, the Wall Street Journal reported. Companies restructuring their affairs in chapter 11 commonly seek to pay executive bonuses either right before or during a bankruptcy to hold on to top management, though the practice has been controversial. Purdue CEO Craig Landau could get between $2.6 million and $3.5 million under an executive incentive program the company is proposing in the U.S. Bankruptcy Court in White Plains, N.Y., dependent on the drugmaker hitting certain performance targets. Five Senate Democrats sent a letter yesterday urging the judge overseeing Purdue’s bankruptcy, Robert Drain, to reject the proposed bonus, saying that Landau led Purdue during a period during which the company was accused by state and federal authorities of fueling the opioid crisis through misleading marketing of OxyContin. In response to the letter, Purdue said that stable leadership is critical to a successful reorganization and that Landau has kept the company profitable “in order to maximize value for claimants and the American public.” Judge Drain last year approved an earlier round of bonuses for Purdue’s executive team after the company agreed to reduce the size of the awards.

Consumer law firms are working to help shoppers recoup the value of unused gift cards from bankrupt retail chains, hoping to revive court claims that might otherwise be deemed worthless, WSJ Pro Bankruptcy reported. Gift-card holders filed proposed class-action claims on Friday in the bankruptcy cases of Lord & Taylor and Sur La Table Inc., seeking priority status for those stuck holding potentially unusable gift cards. At the same time, the law firms representing them are planning to request that the U.S. Trustee, the U.S. government’s bankruptcy watchdog, appoint official consumer committees in the same bankruptcy cases. “As retailers are lining up to file bankruptcy because of circumstances that really are beyond their control, ordinary Americans are being left in the cold,” said Thomas Burt, a partner at the law firm filing the claims, Wolf Haldenstein Adler Freeman & Herz LLP. “Their values have gone poof, because somebody messed up.” The litigation firm, along with bankruptcy law firm Sto Helit PLLC, is also seeking class representatives who have unredeemed and unexpired gift cards and gift certificates from Stein Mart Inc. and Century 21 Department Stores LLC, also bankrupt. Each individual holding gift-card claims should get up to $3,025 per person in priority payments, according to the firm. Bankrupt retailers that are permanently closing their stores could collect a windfall if prepaid gift cards are never redeemed. Roughly $2 billion to $4 billion, or up to 4 percent, of gift cards typically go unused every year in the U.S., according to research from Mercator Advisory Group Inc. Retailers that filed for bankruptcy and are shutting down stores usually give gift-card owners about a month to use them. But consumer advocates and lawyers argue that retailers often fail to give proper notice to customers that they might be entitled to a claim just by having a gift card.

The bankrupt owner of New York Sports Clubs and Lucille Roberts said it was prepared to pay out as much as $850,000 in an effort to quell a social-media-fueled backlash over its billing practices during the coronavirus pandemic, WSJ Pro Bankruptcy reported. The company, Town Sports International Holdings Inc., said that it set aside that amount for customer refunds after filing for bankruptcy Monday. Many more gym members than expected have asked for their money back due to pandemic-related closures, the company said. Some customers complained on social media that they were charged fees even though their local gyms remained closed. Town Sports had initially expected to set aside about $225,000 to cover such requests, a lawyer for the company said during a court hearing on Wednesday. The company’s billing practices are the subject of a continuing probe by New York state authorities. Town Sports said in court documents that it earmarked the money “to compensate customers for certain inconveniences over the past six months that have been caused by the COVID-19 pandemic.”