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Noble Corp. wants to pause a multibillion-dollar trial over the 2014 spinoff of Paragon Offshore PLC, a transaction creditors allege loaded up Paragon with old rigs and an unsustainable amount of debt, WSJ Pro Bankruptcy reported. London-based Noble, an offshore oil-and-gas drilling rig operator, on Tuesday asked U.S. Bankruptcy Judge David Jones to either pause the lawsuit outright or to expand a bankruptcy stay — a legal shield that halts the lawsuit, brought against Noble for the benefit of Paragon creditors — to include members of its board. Noble filed for chapter 11 protection last week in Houston after reaching a deal with bondholders on a debt-for-equity swap that wipes out $3.4 billion in debt. The company’s request comes before a trial is set to begin next month in Delaware bankruptcy court, where Paragon filed for chapter 11 about 18 months after the spinoff. The lawsuit, which seeks more than $2.6 billion in damages, alleges the spinoff was fraudulent. The Paragon trust, which filed the lawsuit, also accuses Noble of inflating the spinoff’s projections and concealing the poor condition of some of the rigs it transferred to the company.

A group of hedge funds and debt investors that once dreamed of taking over PG&E Corp. are demanding hundreds of millions of dollars from the troubled utility, complaining they were unfairly shut out of a lucrative deal with big shareholders, WSJ Pro Bankruptcy reported. Led by New York hedge fund Elliott Management Corp., the group of bondholders say that PG&E failed to do what it could to ensure they received a slice of equity-raising action, which carried rewards for investors willing to take a chance and aid the California utility’s exit from bankruptcy. A PG&E spokesperson said Wednesday the utility strongly disagrees with the bondholder argument and will respond in due course to motions which were recently filed in the U.S. Bankruptcy Court in San Francisco. PG&E was driven into bankruptcy in 2019 by an estimated $30 billion in claims over property damage, injuries and deaths from years of wildfires linked to its equipment. The San Francisco-based utility was determined to exit bankruptcy this summer, which experts project will be the start of another bad fire season. To do that, it needed to raise $20 billion in debt and equity. Fire risks, political complications and tumult in the capital markets linked to the COVID-19 pandemic made PG&E’s shares a risky bet. Stock that sold for nearly $18 a share in the pre-pandemic market was selling for less than $10 a share when PG&E left bankruptcy protection at the end of June. PG&E needed to issue new debt and equity to cover the $25.5 billion it pledged to pay to compensate fire victims and insurance companies for their losses. Bondholders say they agreed to support PG&E’s chapter 11 exit in a pact that included a pledge by the company to see they got a slice of the equity. That didn’t happen, the bondholders say, as PG&E dashed into the open market and raised cash by way of an underwritten offering and a private sale of equity, on terms that conferred benefits on big investors able to participate.

The Justice Department is seeking as much as $18.1 billion from bankrupt opioid maker Purdue Pharma LP, new filings show, a demand that could disrupt the company’s monthslong effort to reach a settlement with states and local communities that accuse it of helping fuel the opioid crisis, the Wall Street Journal reported. The filings, made by the Justice Department in connection with Purdue’s bankruptcy case, also telegraph for the first time the nature and scope of yearslong criminal and civil investigations into the OxyContin maker. Federal prosecutors are investigating whether Purdue’s marketing and distribution of opioids violated criminal statutes including anti-kickback laws, misbranding under the Food, Drug and Cosmetic Act and conspiracy, according to the filings. On the civil side, they are looking at whether Purdue offered kickbacks to doctors and pharmacies to encourage them to prescribe and dispense more OxyContin, and whether the company transferred cash to hide money from creditors, the new filings show. In the filings, the Justice Department valued its civil claims at $2.8 billion, which could be tripled under the law. In the event of criminal charges and a conviction, the government said it would seek a $6.2 billion fine and the forfeiture of potentially $3.5 billion more. Purdue filed for chapter 11 bankruptcy protection in September to try to implement a multibillion-dollar settlement plan with states and local governments that had sued the company, claiming that its aggressive marketing of the powerful painkiller OxyContin led to widespread opioid addiction. The company has denied the allegations and said it is committed to helping alleviate opioid addiction.

Offshore driller Noble Corp may have to defend itself against a $2.7 billion fraudulent transfer lawsuit as it embarks on a chapter 11 case in which it is trying to wipe out $3.4 billion in debt, Reuters reported. The company, which filed for bankruptcy on Friday, has been tied up in litigation surrounding its 2014 spinoff of Paragon Offshore. Paragon creditors, via a litigation trust, sued Noble in 2017 after Paragon completed its own bankruptcy, saying the spinoff was a fraudulent transfer. The Paragon creditors and Noble defendants filed competing motions for partial summary judgment, which were slated for a trial to begin on September 14 in Delaware bankruptcy court. That trial is on hold as a result of Noble's bankruptcy and the automatic stay protecting chapter 11 debtors from litigation. But a lawyer for the Paragon creditors, Jeffrey Zeiger of Kirkland & Ellis, said during Noble's first bankruptcy hearing on Monday that the creditor trust will seek relief from the stay, which would allow the trial to continue, absent a settlement of the creditors' claims. Despite mediation before retired U.S. Bankruptcy Judge Kevin Gross, the two sides have been unable to resolve the claims, Zeiger said during Monday's hearing. Gross has said in court papers that he believes the parties will ultimately settle, but Zeiger and Noble lawyer George Panagakis of Skadden, Arps, Slate, Meagher & Flom said that they are preparing to deal with the litigation if no agreement is reached.