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Lenders to Mallinckrodt Plc are mobilizing with legal counsel ahead of a $200 million settlement payment for the drugmaker’s role in the opioid epidemic, Bloomberg News reported. The payment — due June 16 and earmarked for an opioid trust — is supposed to be Mallinckrodt’s first since exiting bankruptcy a year ago and some lenders want the company to skip the payment in order to safeguard its liquidity, said the people, who asked not to be identified because the matter is private. Law firm Gibson Dunn & Crutcher held a call earlier this week with a group of first-lien lenders, while Paul Weiss Rifkind Wharton & Garrison hosted a call Wednesday for creditors with holdings in both the company’s first- and second-lien loans, they added. Both firms represented creditor groups during the company’s chapter 11 process back in 2020. Meanwhile, the drugmaker is consulting with its long-standing adviser Guggenheim Partners. An initial $450 million payment was made upon Mallinckrodt’s emergence last year. The pharmaceutical company in February 2022 won court approval of its bankruptcy exit plan, clearing the path for a settlement of thousands of lawsuits related to its opioid drugs. The plan handed control of the company to creditors and placed opioid litigation claims in a trust set aside for their settlement and payment.

Federal bank regulators must turn over any tax refund checks made out to SVB Financial Group, a judge said Wednesday, handing the bankrupt holding company a victory in its strategy to pay bondholders, Bloomberg News reported. Over the next two years, SVB Financial is expecting about $300 million in tax refunds, company attorney James Bromley said during a court hearing in Manhattan. A few checks have already been mailed out, but wound up in the hands of the federal receiver or with First Citizens Bank & Trust Company, which took over Silicon Valley Bank’s deposits. Bankruptcy Judge Martin Glenn denied a request by the Federal Deposit Insurance Corp. to hold the checks in an escrow account while SVB Financial and bank regulators decide how to split up the tax refunds. Under a tax-sharing agreement, the money will eventually be divided between the holding company and an FDIC receiver, who is overseeing the remnants of Silicon Valley Bank. “There is a process,” Glenn told FDIC lawyer Derek Baker. “You want to bypass all that and keep the money for yourself.” When SVB Financial filed for bankruptcy in March, it had huge net operating losses and was owed substantial tax refunds. The refund checks and the right to use the losses to reduce future income taxes are among the most valuable assets available to pay creditors, Bromley said.

Johnson & Johnson has set aside $400 million to resolve U.S. state consumer protection actions as part of its broader $8.9 billion effort to settle claims that its Baby Powder and other talc products cause cancer, Reuters reported. J&J subsidiary LTL Management filed a bankruptcy plan in New Jersey late on Monday that details how the company intends to pay different types of cancer victims in a bankruptcy settlement. J&J has said that its talc products are safe and do not cause cancer. It is attempting for a second time to resolve more than 38,000 lawsuits in bankruptcy and prevent new cases from coming forward in the future. LTL's bankruptcy plan would pay $400 million into a separate trust for claims filed by state attorneys general alleging that J&J violated state unfair business practices and consumer protection laws by misleading consumers about the safety of its talc products. Several states had begun consumer protection actions against J&J before LTL's first bankruptcy filing stopped those investigations from moving forward in 2021. New Mexico and Mississippi had already filed lawsuits against Johnson & Johnson before then, and the states of Arizona, Maryland, North Carolina, Texas and Washington had issued civil investigative demands or subpoenas, according to LTL's court documents.

Kidde-Fenwal, the fire-protection business bankrupted by possible liability for “forever chemicals,” said it believes it has potentially hundreds of millions of dollars in insurance coverage to help pay claims, WS Pro Bankruptcy reported. However, the Carrier Global subsidiary might have trouble tapping that coverage as its insurers are disputing their obligations and aren’t helping to defend the business, a Kidde-Fenwal lawyer said Tuesday during the company’s debut in bankruptcy court. “None of the insurers are currently paying claims,” Kidde-Fenwal lawyer Andrew Dietderich said in the U.S. Bankruptcy Court in Wilmington, Del. “One of the big tasks we have in front of us is to get to the bottom of that and figure out what insurance coverage may be available." Kidde-Fenwal’s options in bankruptcy include seeking settlements with, or suing, insurers or the chemical suppliers that made the allegedly harmful substances used in the company’s products, he said.

Silicon Valley Bank's former CEO Greg Becker told senators at a hearing that he was unaware the bank was in trouble when he sold stock in the months leading up to the regional U.S. lender's collapse, Reuters reported. Becker, who sold SVB shares through the first quarter — the largest sale of which occurred on Feb 27, less than two weeks before the bank collapsed on March 10, triggering a rout in banking shares globally. Responding to questions from senators, Becker painted a picture of an unprecedented, unpredictable crisis at the bank. He said the bank took risk management seriously and had liquidity of around $80 billion at the end of last year. Lawmakers were unimpressed. "Why did you ignore admonitions from regulators?" Ohio Senator Sherrod Brown said in his opening statement. "There is a simple answer, the same answer we find for most big bank failures — because the executives were getting rich." Responding to criticism about the bank lacking a risk officer in the months leading up to its collapse, Becker said he had been advised by regulators to look for a more experienced executive for the position. He pledged to cooperate with regulators as they look at executive compensation.

Kidde-Fenwal Inc., an industrial fire-detection and -suppression business owned by Carrier Global Corp., has filed for bankruptcy to deal with more than 4,000 lawsuits, becoming the first major reorganization to try to contain liability over health and property damage caused by “forever chemicals,” WSJ Pro Bankruptcy reported. Kidde-Fenwal filed chapter 11 on Sunday after being embroiled in mass litigation stemming from the past sale and distribution of firefighting foam that allegedly contained man-made substances commonly known as PFOA and PFOS, or forever chemicals because they take a long time to break down. Bankruptcy offers a path for corporate defendants to resolve mass lawsuits in a single forum and has been used to address tort claims stemming from opioid misuse, asbestos poisoning and other allegedly dangerous or defective products. In recent decades, research has linked exposure to these long-lasting chemicals with health problems including kidney and testicular cancers, thyroid disease and high cholesterol, according to the U.S. Environmental Protection Agency. The chemical industry has disputed some of the EPA’s findings, but a wave of liability lawsuits has targeted manufacturers that once used those substances, alleging water contamination, property damage and personal injury.

Bankrupt cryptocurrency lender BlockFi plans to liquidate its cryptocurrency lending platform after concluding that selling the business to a new owner wouldn’t generate enough value for its creditors, WSJ Pro Bankruptcy reported. Jersey City, N.J.-based BlockFi outlined its chapter 11 plan of reorganization, which will be sent to creditors — including more than 100,000 retail customers — for a vote, in a document filed Friday with U.S. Bankruptcy Court in Trenton, N.J. The company said that after having engaged with potential buyers to solicit a sale of its digital-assets platform and about 660,000 client accounts since January, it concluded that a sale might not generate meaningful value for creditors. The company cited recent regulatory developments as one reason that it didn’t receive value-maximizing offers from prospective buyers. BlockFi said how much clients will recover largely depends on the outcome of pending litigation against its commercial counterparties, including crypto exchange FTX and trading firm Alameda Research, both founded by Sam Bankman-Fried, as well as cryptocurrency hedge fund Three Arrows Capital and crypto miner Core Scientific. The success or failure of these lawsuits “will make a difference in excess of $1 billion to clients,” BlockFi said in the filing.

Austin-based startup accelerator Newchip announced May 12 it is shutting down, the Austin Business Journal reported. "It's with a heavy heart that I announce the closure of Newchip today,” founder and CEO Andrew Ryan posted to LinkedIn, along with a lengthy explanation. The company, legally known as AstraLabs Inc., has been dealing with a chapter 11 reorganization case that started on March 17. On May 12, a bankruptcy judge ordered the case to be converted into a chapter 7 business liquidation. A meeting of creditors has been set for June 16. The Austin-based company was founded in 2016 by Ryan, Nihar Patel and Travis Brodeen and has operated a virtual incubator and accelerator to help early-stage founders grow their businesses. Newchip raised $7.9 million across several rounds of venture funding, including a $250,000 round in February this year, according to Crunchbase. Despite its history of connecting entrepreneurs with startup capital — Newchip's website boasts that it works with investors at Elevate Capital, DreamIt and others — the accelerator's finances have fallen into disarray, according to a May 10 motion from Shane Tobin on behalf of Eric Terry, the U.S. Trustee assigned to the case. The document states the company doesn’t have enough money on hand to cover its next payroll on May 15 or its other expenses.