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Quorum Health Corp. is set to skirmish with activist investor Mudrick Capital Management LP over how long the hospital operator should hang around in bankruptcy in expectation of a federal bailout, WSJ Pro Bankruptcy reported. Money from the Coronavirus Aid, Relief and Economic Security Act, also known as the Cares Act, could help in averting a wipeout for Quorum shareholders, according to Mudrick, a distressed-debt-focused hedge fund run by Jason Mudrick. Quorum says in court papers that Mudrick is trying to “extract holdup value” by advancing speculative valuations, which would justify a return to shareholders. The investor is urging a delay in a chapter 11 plan process that Quorum hopes will get it out of bankruptcy by June, with a trimmer balance sheet. A bankruptcy judge in Delaware is slated to preside over the debate today.

PG&E Corp. is asking a court to halt a recent round of probation requirements, saying that they are “more likely to undermine wildfire safety than they are to promote it,” Bloomberg News reported. The company is challenging four new requirements laid out by a judge on April 29, including that the company employ its own inspectors for vegetation management, that it identify the age of equipment on every transmission tower and line and that it ensure its inspection contractors carry enough insurance in case a fire erupts. The requirements interfere with actions from the state legislature and regulator, known as the CPUC, to address the same issues, the San Francisco-based company said in a court filing on Wednesday. To meet the new conditions, PG&E said that it “will be forced to divert significant resources from its CPUC-approved Wildfire Safety Plan to satisfy the Court’s conditions, with no evidence that those conditions will enhance safety and a risk that they may well decrease it.” California’s largest utility is on probation after it was convicted in 2016 of gas-pipeline safety crimes. Judge William Alsup has pushed the company to prevent its equipment from causing another devastating wildfire, as happened in 2017. PG&E is working through probation as it simultaneously navigates a complicated exit from bankruptcy.

Murray Energy Corp. allegedly violated a bankruptcy financing agreement after manipulating financial information, according to court papers filed by one of its lenders, Bloomberg News reported. GACP Finance Co., owed some $90 million under a loan tied up in Murray Energy’s bankruptcy financing package, delivered a notice of default yesterday to the coal miner, court papers show. The lender alleges Murray improperly included non-coal receivables in a financial report in an attempt to remain compliant with a credit agreement. The lender is seeking a court order barring anyone from interfering with its ability to freeze the Murray Energy bank accounts that serve as collateral for its loan. GACP called Murray’s actions a “brazen attempt” to “improperly manipulate” the weekly financial report, adding the current assets underpinning its loan “are rapidly disappearing at an alarming rate.” Murray Energy, America’s largest privately-held coal producer, filed for bankruptcy in October following a years-long decline in demand for coal. Rival coal producer Consol Energy Inc. is urging a bankruptcy judge to convert Murray’s case to chapter 7, a liquidation. Murray itself previously said that it may have to liquidate unless it could cut health-care payments to retirees. The case is Murray Energy Holdings Co., 19-bk-56885, U.S. Bankruptcy Court Southern District of Ohio (Columbus).

The government agency responsible for assuming the pension obligations of distressed companies said this week that it will take on McClatchy Co.’s plan if a bankruptcy judge determines that the local news company won’t survive otherwise, McClatchyDC.com reported. The court filing by the federal Pension Benefit Guaranty Corp. was among several key developments this week as the company seeks to exit chapter 11 bankruptcy. In another, McClatchy’s deadline for accepting initial bids from interested buyers passed on Tuesday, triggering the next phase of bankruptcy proceedings that the company had hoped would be over by now. But that was before the Covid-19 crisis, which upended the global economy and slowed the company’s negotiations with creditors, scrambling its restructuring plans. McClatchy has said that at least 20 potential buyers signed non-disclosure agreements to look into the finances of the nation’s second largest local news company. It hinted in previous filings that it expected multiple offers in a process that set a July 24 deadline for Bankruptcy Judge Michael E. Wiles to approve a buyer. A spokeswoman for McClatchy declined to say Wednesday how many parties submitted an initial bid. The deadline for final bids is July 1.

A U.S. bankruptcy judge heard arguments yesterday over whether a prominent lawyer for victims of fires blamed on PG&E Corp. has a potential conflict of interest in the case that taints the voting of thousands of claimants on the power company’s reorganization plan, Bloomberg News reported. A fire survivor and an attorney who represents a former member of the committee for victims in the bankruptcy argued that lawyer Mikal Watts had a possible conflict after disclosing that two PG&E investors had bought stakes in a $100 million line of credit provided to his law firm, Watts Guerra LLP. Attorney Steven Kane asked the court to require Watts to disclose the potential conflict in writing to his more than 16,000 clients and obtain waivers from them. Watts said that the investments by Centerbridge Partners LP and Apollo Management didn’t constitute a conflict of interest and that he had disclosed their involvement in his loan to his clients on multiple occasions including during town hall meetings in December, April and May. Watts said that Centerbridge and Apollo were “bit” players in the bankruptcy negotiations and their representatives introduced him to the principal negotiators in the case.

A bankruptcy judge in New York held turnaround executive Lynn Tilton responsible under state law for covering wages to employees who went unpaid in the bankruptcy of defunct ambulance company TransCare Corp., WSJ Pro Bankruptcy reported. Transcare filed for bankruptcy in February 2016, leaving its ambulances driven by people who wouldn’t get their final paychecks, according to a ruling issued Thursday by Judge Stuart Bernstein of the U.S. Bankruptcy Court in Manhattan. Court-appointed trustee Salvatore LaMonica, unable to get assurances he would get money for payroll and worried that ambulance workers would simply abandon vehicles complete with their caches of drugs, shut down the business and rounded up the vehicles. The ruling granted partial judgment to a class of employees that sued in bankruptcy court for unpaid wages after the ambulance company laid them off. It clears the way for a trial on claims by 1,800 ambulance company employees who were put out of work by TransCare’s collapse. In addition to state-law claims for unpaid wages, which could add up to about $1.7 million, former TransCare employees are pursuing damages under laws requiring advance notice of mass layoffs.

Rural broadband provider Windstream Holdings Inc. is closer to exiting from chapter 11 under a proposal that would allow hedge-fund manager Elliott Management Corp. and other investors to buy the bulk of the company’s equity out of bankruptcy while wiping out most junior debt, the Wall Street Journal reported. Bankruptcy Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said on Friday that he would approve Windstream’s settlement deal with Uniti Group Inc., over a lease dispute. Uniti is a Windstream spinoff whose broadband network is crucial to the telecom company’s operations. The settlement will add about $1.25 billion in net present value to the Windstream estate. Windstream’s unsecured creditors had opposed the settlement, saying that it leaves them out in the cold. In a court hearing held by phone, Judge Drain also said that he would approve a multi-month commitment by Windstream lenders to invest in the reorganized company as well as an updated version of the disclosure documents describing its chapter 11 plan, with some modifications. The judge’s rulings make way for a proposed restructuring of Windstream that would deliver all but a sliver of equity control to top lenders led by Elliott, the company’s largest creditor, while virtually wiping out roughly $1.1 billion in lower-ranking bonds. Windstream, of Little Rock, Ark., has the support of the majority of its creditors, those holding about $4.1 billion of its $5.5 billion total debt, a lawyer for the company said at the court hearing.

The role of local Boy Scout councils in the national organization’s chapter 11 bankruptcy, and the sexual abuse crisis that propelled it, is a flashpoint in a slew of new lawsuits on behalf of men who say they were abused as scouts, USA Today reported. The latest case, filed in Montana on Tuesday by attorneys with Abused in Scouting, includes 10 men who say they were abused by scout leaders. In it, 10 John Does claim that the Montana Scout council is controlled by Boy Scouts of America to such a degree that it is “the alter ego of the BSA.” The same group filed another suit last month on behalf of eight men in Hawaii. Attorneys with the firm Crew Janci also filed five suits last week in Montana for six clients. Gillon Dumas of Dumas & Vaughn of Oregon filed another four in the last month. Another Seattle-based firm filed three more. The lawsuits come nearly four months after Boy Scouts filed for bankruptcy reorganization, anticipated for months as a way to limit liability in the abuse cases by carving off assets of the more than 260 local scout councils. In documents filed in February, and subsequent statements, Boy Scouts of America has argued that the national organization should be the only entity required to cover financial settlements in the sexual abuse cases that landed the organization in a state of near financial collapse.

An investor is pushing back against Brentwood, Tenn.-based Quorum Health's chapter 11 bankruptcy reorganization plan, according to court documents and a filing with the Securities and Exchange Commission, Becker's Hospital Review reported. Quorum, which operates 23 hospitals across 13 states, filed for chapter 11 bankruptcy in Delaware on April 7 and entered into a restructuring agreement. Mudrick Capital Management, which owns nearly 15 percent of Quorum's shares, is now arguing that the restructuring agreement is "factually and legally stale" because of the grants available to Quorum through the Coronavirus Aid, Relief and Economic Security Act and the Paycheck Protection Program and Health Care Enhancement Act. "Although the debtors were unaware of the full amount of the cash infusion coming their way, to date, none of that value is in the debtors' valuation, none goes to equity, none of the underlying facts have been disclosed, and the debtors have yet to exercise their much-touted 'fiduciary out,’” Mudrick’s attorneys wrote in an April 30 court filing. "It is plain that the debtors should terminate the [restructuring agreement] and withdraw the plan." According to the Nashville Post, Mudrick claims Quorum has received $19.2 million in federal aid and could receive at least another $127 million.