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Two dozen state attorneys general are trying to end bankruptcy protections for Purdue Pharma LP’s controlling Sackler family, saying that shielding them from lawsuits during settlement talks sends the wrong message about the justice system, WSJ Pro Bankruptcy reported. California, New York and 22 other states filed court papers in Purdue’s bankruptcy case seeking permission to resume lawsuits against nine members of the Sackler family who own the opioid manufacturer. Protecting the family members, who haven’t declared bankruptcy themselves, gives the impression “that wealthy people can avoid having to answer for alleged wrongdoing,” according to a Thursday court filing. Those lawsuits have been on hold since October, when the judge overseeing the chapter 11 proceedings extended to the family the same shield against litigation that Purdue got automatically when it filed for bankruptcy. “Our family continues to believe that the bankruptcy reorganization process is the most efficient and effective way to reach a resolution that delivers critical resources to the individuals, families and communities most in need,” a Sackler spokesperson said. Purdue has proposed a settlement of thousands of lawsuits from states, local governments and Native American tribes accusing the company of helping fuel drug addiction through misleading marketing of its flagship opioid, OxyContin.

BMO Harris Bank, a unit of Bank of Montreal, must face billions of dollars in investor claims tied to a massive Ponzi scheme run by former client Tom Petters, a judge ruled, Bloomberg News reported. A request by BMO Harris to have the case thrown out before trial was rejected Friday by a federal judge in St. Paul, Minnesota. The claim was brought by a court-appointed trustee seeking to recover money for a group of hedge funds that were victimized in the fraud. Petters, a Minnesota businessman, convinced investors he and his associates were financing the purchase of consumer electronics for resale to big-box retailers, but he never bought any and used money from new investors to pay returns to older ones. Prosecutors pegged losses at $3.5 billion. Petters was convicted of fraud in 2009 and sentenced to 50 years in prison. Paul Gammal, a spokesman for the bank, said that the allegations relate to a period before BMO’s involvement. Petters originally used an account at National City Bank, which was acquired by M&I Marshall and Ilsley Bank in 2001. M&I was in turn bought by BMO in 2011. Friday’s ruling by U.S. District Court Judge Wilhelmina Wright upholds an earlier one by U.S. Bankruptcy Judge Kathleen Sanberg in favor of the trustee, who is seeking $3.5 billion. Judge Sanberg is overseeing the bankruptcy of Petters Company Inc.

A bankruptcy trust for creditors who lost money in the Toys “R” Us Inc. bankruptcy sued former Chief Executive David Brandon and several directors tied to owners Bain Capital LP, KKR & Co. and Vornado Realty Trust, alleging that they siphoned money out of the company before it went under, the Wall Street Journal reported. The lawsuit also accused Brandon and other Toys “R” Us executives and board members of conspiring to keep the company’s suppliers in the dark about its dire financial straits in the months before it collapsed. As a result, suppliers and other creditors lost $800 million, according to the complaint. Toys “R” Us filed for bankruptcy in September 2017 and liquidated in March 2018, leaving behind a pile of unpaid bills, mostly to vendors. Bob Bodian, an attorney who represents the Toys “R” Us executives and directors, said they “acted in the best interest of the company and its stakeholders.” The lawsuit is a “misguided effort to pressure insurance carriers to pay meritless claims,” he said. When Toys “R” Us filed for bankruptcy in 2017, the company touted its access to $3.1 billion in bankruptcy loans but quickly defaulted on the loan, leaving many suppliers and other creditors with $800 million in unpaid bills, the largest amount ever in a chapter 11 case, according to the lawsuit.

Bankruptcy Judge Robyn L. Moberly this week criticized a proposed USA Gymnastics financial settlement with the survivors of Larry Nassar that would release the U.S. Olympic and Paralympic Committee from all current and future claims related to Nassar’s sexual abuse of young athletes, the Orange County (Calif.) Register reported. Judge Moberly at a hearing on Monday expressed her displeasure with the proposed settlement that would release the USOPC from liability without paying anything to survivors. USA Gymnastics, facing hundreds of lawsuit related to the sexual abuse of Nassar, the former U.S. Olympic and women’s national team physician, Don Peters, a former U.S. Olympic team coach, and Marvin Sharp, a former U.S. national team coach, and others, filed for protection under chapter 11 in U.S. Bankruptcy in December 2018.The USOPC is named in many of those suits. USA Gymnastics has proposed $217-million settlement is part of a reorganization plan filed with the court earlier this year. A 77-page disclosure statement related to the settlement proposal states that if the 517 Nassar survivors would agree to release “any and all claims arising from or related to Abuse Claims or Future Claims.” In addition to the USOPC, the settlement proposal also calls for the release of former USA Gymnastics CEO Steve Penny, Peters, former U.S. national team directors Bela and Martha Karolyi, five Karolyi-related businesses, 2012 Olympic coach John Geddert, former USA Gymnastics senior vice president Rhonda Faehn, former USA Gymnastics board chairman Paul Parilla, former USA Gymnastics president Bob Colarossi, former USA Gymnastics national teams manager Amy White, former USA Gymnastics sports medicine official Debra Van Horn and the All Olympia Gymnastics Center in Southern California.

The attorney representing a creditors committee of clergy abuse survivors told a judge this week that it may seek standing in the case to challenge the Archdiocese of Santa Fe’s (N.M.) movement of assets before it filed for bankruptcy, the Albuquerque Journal. “The committee is ready to move forward on standing motions to avoid fraudulent conveyances that we believe occurred when the archdiocese corporately reorganized,” James Stang, a Los Angeles-based attorney representing the committee, said on Monday. Parties in the chapter 11 case were in court on Monday updating a federal bankruptcy judge on the status of mediation. In court filings, the committee said that offers and counteroffers have been exchanged, but the archdiocese and creditors have not been able to reach an agreement on the terms of a reorganization plan. A third mediation session is scheduled for next week. One impediment they’ve discovered, the committee says, is a move by the archdiocese before filing for bankruptcy to incorporate all of its parishes and to transfer substantial property to a real estate trust of which the archdiocese and parishes are beneficiaries. A substantial amount of money was also moved into a trust.

PG&E Corp. has come to terms with federal and state first responders, who have agreed they won’t take money set aside for victims of the wildfires that drove California’s largest utility into bankruptcy, WSJ Pro Bankruptcy reported. Announced at a hearing yesterday in U.S. Bankruptcy Court in San Francisco, the utility’s agreements with the U.S. Federal Emergency Management Agency and state agencies clear up a major trouble spot for PG&E, which is racing to meet a June 30 deadline to emerge from bankruptcy. PG&E filed for chapter 11 bankruptcy protection in January 2019 and is proposing a $59 billion bankruptcy exit plan, which earmarks $25.5 billion for insurance companies, cities and people with damages stemming from fires linked to PG&E equipment. As Judge Dennis Montali weighed the company’s bid for approval to start the voting process on the plan, lawyers announced the agreements with FEMA and California agencies. Due to the agreements, people who lost loved ones, homes and businesses to the blazes of 2017 and 2018 will no longer have to worry that they will be forced to share with government emergency services the $13.5 billion earmarked for fire victims under PG&E’s proposed chapter 11 plan. California is dropping its claims to recoup about $300 million it spent on firefighting and emergency services, while FEMA has agreed to chop its claim from $3.9 billion to $1 billion. Additionally, FEMA has agreed it will only attempt to collect after all individual victims are paid in full from the $13.5 billion.

A settlement between the Diocese of New Ulm, Minn., and sexual abuse survivors has been approved, KTSP.com reported. The $34 million settlement deal was presented in a Brown County courtroom yesterday. The diocese filed for bankruptcy after 93 people claimed they were sexually abused by priests and others in the church. According to a statement from the bishop, funds for the settlement come from $26 million in diocesan and parish insurance coverage, $7 million in cash contributions from the diocese and a total of $1 million contributed by all parishes within the diocese, including parishes with no claims against them. Another important part of the settlement is the names of priests who have been credibly accused of abusing children are now public.

The Federal Bureau of Investigation raided a health care business linked to Joe Biden’s brother in late January, seizing boxes of documents, Politico reported. The raid of an Americore Health hospital represented a deepening of the legal morass surrounding James Biden’s recent venture into health care investing at a time when questions about the business dealings of Joe Biden’s relatives, and their alleged connection to the former vice president’s public service, continue to dog his presidential campaign. In the weeks since the raid, two small medical firms that did business with James Biden have claimed in civil court proceedings to have obtained evidence that he may have fraudulently transferred funds from Americore “outside of the ordinary course of business,” and a former Americore executive has told Politico that James Biden had more than half a million dollars transferred to him from the firm as a personal loan that has not yet been repaid. Tom Pritchard, a former Americore executive familiar with the business' finances, told Politico that James Biden’s arrival exacerbated Americore’s financial problems. Holding out the promise of a large investment from the Middle East based on his political connections, James Biden introduced Americore’s founder to his older brother and helped land a bridge loan to Americore from a hedge fund, Pritchard said. Meanwhile, Americore found itself increasingly hamstrung by high-interest loans and unable to pay employees and vendors, a situation that disrupted the operations of the rural hospitals it owns. Now, the business is in bankruptcy court.