Opioid maker Insys Therapeutics Inc. has revised its bankruptcy windup plan in an effort to appease critics that feared the defunct company was too generous with its grants of legal immunity, WSJ Pro Bankruptcy reported. States, municipalities and Native American tribes that sued Insys for damages stemming from the opioid crisis will get a chance to challenge the company’s decisions about who can still be sued over its collapse, according to a filing in U.S. Bankruptcy Court in Wilmington, Del. The defunct company also made clear that most creditors will get pennies on the dollar of what they are owed, and the U.S. Department of Justice may get a fraction of a penny for its $283 million claim. Insys filed for chapter 11 protection in June, not long after former top executives were convicted of racketeering by a jury in Boston. The convictions, and guilty pleas by other former Insys leaders, were related to tactics that included the payment of kickbacks to drive sales of the company’s top moneymaker, Subsys. An under-the-tongue formulation of the powerful painkiller fentanyl designed for breakthrough cancer pain, Subsys was prescribed for conditions like back pain and ended up addicting many users. Insys sold off its pharmaceutical business while in bankruptcy in order to raise money to pay creditors. For weeks, the company faced opposition from many creditors to a bankruptcy plan that meant little cash for them but large barriers to continued lawsuits.
Former Bumble Bee Foods LLC Chief Executive Officer Chris Lischewski was convicted in a price-fixing conspiracy, capping a years-long U.S. investigation that shook the packaged seafood industry and pushed Bumble Bee into bankruptcy last month, Bloomberg News reported. Lischewski was found guilty yesterday by a federal jury in San Francisco after just a few hours of deliberations in what experts say is likely the final piece of the Justice Department probe. Prosecutors alleged that he conspired with colleagues and executives at rival companies on a “peace proposal” in order to boost prices and meet earnings targets set by Bumble Bee’s 2010 sale to Lion Capital. The former CEO faces up to 10 years in prison and a fine of $1 million, according to the indictment. San Diego-based Bumble Bee, owner of the largest North American brand of packaged seafood, pleaded guilty in 2017 to a felony charge of conspiring with competitors Starkist Co. and Chicken of the Sea Inc. to fix and raise prices of canned tuna in the U.S. from 2011 through at least late 2013. The company’s guilty plea carried a criminal fine of $25 million, a reduced figure that the Justice Department agreed to after Bumble Bee argued that a stiffer penalty would tip it into bankruptcy. Subsequent lawsuits filed against Bumble Bee by its customers, mostly major U.S. grocers, added to the financial pressure, forcing the tuna company to file for chapter 11 protection from creditors on Nov. 21.
A damning report about the cause of the deadliest wildfire in California history poses a huge setback to Pacific Gas & Electric as it tries to resolve a complex bankruptcy and prove to its customers and elected officials that it takes safety seriously, the New York Times reported. PG&E repeatedly failed to properly maintain a power line built nearly a century ago even though it cuts through a heavily wooded and mountainous area that experiences strong winds, a 700-page report by the California Public Utilities Commission concluded. A live wire broke from the line, called the Caribou-Palermo, in November 2018 and ignited the Camp Fire, which killed 85 people and destroyed the town of Paradise. The report, which the commission posted on its website over the Thanksgiving holiday with no announcement, could jeopardize PG&E’s future as an independent business. The company was already on probation after being convicted of six federal criminal charges for causing another disaster — a gas pipeline explosion that killed eight people in San Bruno, south of San Francisco, in 2010. Critics of the company, including a group of California mayors and Gov. Gavin Newsom (D), have proposed selling PG&E to Warren E. Buffett’s holding company, breaking it up, having the state take it over or turning it into a cooperative owned by its customers. The report has also raised fresh questions about why the utilities commission did not identify PG&E’s safety lapses in previous investigations and audits of the company. The report did not address that issue but implied that the problems could have been discovered years earlier. It said that “long-duration exposure to higher winds, age and historical inspection methodologies likely all contributed” to the equipment failures that caused the fire.
The chief executive officer of OxyContin-maker Purdue Pharma LP should not collect a potential $1.3 million bonus when he has been accused of contributing to the opioid epidemic, a group of state attorneys general said yesterday in a court filing, Reuters reported. The attorneys general from 24 states said that Craig Landau should not collect a bonus that would lift his pay to $3.9 million because of his alleged role in downplaying the risks of Purdue’s drugs. The filing also said that Purdue increased Landau’s potential pay in 2018 “in preparation for the filing of this case,” and possibly to circumvent the bankruptcy code’s restrictions on such bonuses. Purdue is on track to pay $24 million in bonuses to eligible employees based on its 2019 performance so far, the company said in a Monday filing. However, Purdue said that to get support for its bonus plan it would limit Landau’s potential bonus to 50%, or $1.3 million of his $2.6 million base pay. Other employees would still get their target bonus. The attorneys general said documents that have not been made public tie Landau to the alleged misconduct by the Sackler family owners of Purdue.
A wave of new laws in 15 states that allow people to make claims of sexual abuse going back decades could result in thousands of new cases against the Roman Catholic Church and more than $4 billion in payouts, the Associated Press reported. It's a financial reckoning playing out in such populous Catholic strongholds as New York, California and New Jersey, among the eight states that go the furthest with "lookback windows" that allow sex abuse claims no matter how old. AP interviews with more than a dozen lawyers and clergy abuse watchdog groups offered a wide range of estimates but many said that they expected at least 5,000 new cases against the church in New York, New Jersey and California alone, resulting in potential payouts that could surpass the $4 billion paid out since the clergy sex abuse first came to light in the 1980s. This summer, when New York state opened its one-year window allowing sexual abuse suits with no statute of limitations, more than 400 cases against the church and other institutions were filed on the first day alone. That number is now up to more than 1,000, with most against the church. New Jersey's two-year window opens this week and California's three-year window begins in the new year, with a new provision that allows plaintiffs to collect triple damages if a demonstrable cover-up can be shown. Arizona, Montana and Vermont opened ones earlier this year.
Bankrupt California power producer PG&E Corp. did not properly inspect and replace transmission lines before a faulty wire sparked a wildfire that killed more than 80 people in 2018, a probe by a state regulator has concluded, Reuters reported. The Caribou-Palermo transmission line was identified as the cause of the Camp Fire last year, which virtually incinerated the Northern California town of Paradise and stands as the state’s most lethal blaze. “PG&E failed to maintain an effective inspection and maintenance program to identify and correct hazardous conditions on its transmission lines ... as are necessary to promote the safety and health of its patrons and the public,” a 700-page report by the California Public Utilities Commission said. The report was dated Nov. 8, 2019, but it was released to the public yesterday. The probe concluded that PG&E’s inspection shortcomings were part of a pattern of ‘inadequate’ execution of those tasks. In response to the report, PG&E acknowledged the role of its equipment in the fire and apologized. The utility filed for bankruptcy in January, citing potential civil liabilities of more than $30 billion from wildfires linked to its gear.
Bumble Bee Foods LLC’s former Chief Executive Officer Chris Lischewski is pleading ignorance of any plans to fix prices of canned tuna in the U.S. to try to get a jury to clear him of criminal charges, Bloomberg News reported. But prosecutors claim that he conspired with other executives at rival companies on a “peace proposal” so he could boost prices and meet earnings targets set by Bumble Bee’s 2010 sale to Lion Capital. The thinly-veiled plan included coded language between executives at Bumble Bee and Starkist Co. to fix prices by “setting their own secret rules,” in which the competitors “stepped back” to accept their historical sales, and “no one is attacking anyone,” prosecutor Manish Kumar told a jury in San Francisco yesterday at the end of Lischewski’s trial. “Even though their scheme only stole a few cents at a time, those numbers added up and they added up fast,” Kumar said. San Diego-based Bumble Bee, owner of the largest North American brand of packaged seafood, filed for bankruptcy protection Nov. 21 after pleading guilty in 2017 to a felony charge of conspiring with Starkist Co. and Chicken of the Sea Inc. to fix and raise prices of canned tuna in the U.S. from 2011 through at least late 2013. Bumble Bee’s sale to Lion Capital required the company to hit $140 million in earnings to justify the acquisition price, Kumar said. The companies choreographed price increases on hundreds of millions of cans of tuna sold annually, the prosecutor said.
Imerys SA is exploring options for its North American talc operations, which filed for bankruptcy after being drawn into cancer lawsuits connected to Johnson & Johnson’s baby powder, Bloomberg News reported. The company is considering strategic alternatives that could include a sale of the businesses. Paris-based Imerys’ U.S. unit, Imerys Talc America, plans to work with advisers at PJT Partners Inc., though a formal mandate will require court approval. Three North American units of Imerys filed for chapter 11 protection from their creditors in February, citing more than 14,000 claims in U.S. courts brought mostly by women who allege the company’s talc caused their ovarian cancer. Others say they have mesothelioma brought on by asbestos in the talc. The businesses generated about $174 million of combined revenue in 2018, according to a court filing. Deliberations are at an early stage, and no final decisions have been made. Proceeds from any sale could provide funds for settling lawsuits. When the North American talc business filed for bankruptcy, Alexandra Picard, who was chief financial officer at the time, said the goal was to set up a trust to handle cancer and asbestos lawsuits filed against Imerys Talc. To set up and fund the trust, Imerys Talc planned to negotiate with its creditors, including those with medical claims, and insurers. So far, the company has not sought permission to sell itself at a court-supervised auction, according to court documents.
A month after shutting down operations for all six of its teams, the Arena Football League filed for chapter 7 bankruptcy on Nov. 27 — officially ceasing all operations after more than three decades in existence, USA Today reported. "We simply weren't able to raise the capital necessary to grow the League, resolve the substantial legacy liabilities and make it financially viable," league commissioner Randall Boe said in a statement. "We're all disappointed that we couldn't find a way to move forward, and we wanted to thank our fans, our players, coaches, everyone who loved Arena League Football." The Arena Football League was one of the longest-running indoor football leagues in the country, beginning in 1987. The six remaining teams were Albany, Atlantic City, Baltimore, Columbus, Philadelphia and Washington, D.C. The league suspended local business operations in October and had been evaluating potential strategic operations before Wednesday's decision. The league was mostly hurt by a lawsuit filed by one of its insurance carriers.