%1

A bankruptcy judge on yesterday concluded a five-day court hearing to examine whether a chapter 11 filing of 3M Co.'s earplug unit Aearo Technologies LLC should be thrown out of court, MarketWatch.com reported. Following a federal appeals court's decision to dismiss Johnson & Johnson's first chapter 11 filing to freeze its talc lawsuits, 3M's earplug lawsuit claimants in February petitioned Judge Jeffrey Graham with the U.S. Bankruptcy Court in Indianapolis to dismiss Aearo's bankruptcy filing. J&J's case was dismissed because the federal appeals court deemed its bankrupt unit was not in financial distress. A significant time in the Aearo hearing was spent to argue the 3M unit's financial condition at the time of bankruptcy filing in July 2022. The judge is expected to rule in several weeks.

Cancer victims on Monday urged a U.S. judge to dismiss a Johnson & Johnson subsidiary's second bankruptcy filing, saying the company is abusing the bankruptcy system in its renewed attempt to resolve tens of thousands of lawsuits alleging that J&J's baby powder and other talc products caused cancer, Reuters reported. The J&J subsidiary, LTL Management, this month filed for bankruptcy a second time, seeking to settle all current and future talc claims for a proposed $8.9 billion. LTL's first bankruptcy was dismissed after a federal appeals court ruled the company was not in financial distress and therefore not eligible for bankruptcy. Plaintiffs have filed more than 38,000 lawsuits that have been consolidated in federal court in New Jersey alleging that J&J talc products sometimes contained asbestos and caused ovarian cancer or mesothelioma. J&J has said its talc is safe, asbestos-free and does not cause cancer. The plaintiffs allege that J&J’s actions amount to a manipulation of the bankruptcy system by a multinational conglomerate valued at more than $400 billion and in little danger of running out of money to pay cancer victims or their family members. LTL could have made a honest settlement offer after its first bankruptcy failed, but instead allowed itself to be stripped of funding so that its second bankruptcy could impose the settlement on unwilling plaintiffs and future claimants, the plaintiffs' attorneys wrote in a Monday filing in U.S. bankruptcy court in Trenton, New Jersey.

The Pill Club, a birth control and telehealth provider backed by an affiliate of venture financing firm TriplePoint Capital LLC, went bankrupt after California authorities accused the startup of fraudulently billing the state’s Medicaid program for contraceptives customers didn’t order and counseling sessions it never provided, Bloomberg News reported. The San Mateo, California-based business is trying to sell itself in chapter 11 as it braces for the possibility that other states will launch additional investigations into its billing practices. The company, also known for a time as Favor, filed bankruptcy months after agreeing to pay a total of $18.275 million to settle California regulators’ claims without admitting wrongdoing. The Pill Club is finalizing an agreement to sell the business in chapter 11, a deal that would be subject to higher offers, company lawyer Timothy Walsh said Friday during a court hearing. Walsh didn’t disclose the name of the potential buyer. The startup is also discussing with TriplePoint and other parties the terms of proposed chapter 11 financing, which could be finalized over the weekend, he said. TriplePoint Venture Growth BDC Corp. is the collateral agent for a $30 million loan to The Pill Club and holds a senior lien on the company’s assets, court papers say. TriplePoint also owns shares in the startup, according to a securities filing. Walsh said The Pill Club and TriplePoint are currently at an impasse over a request to continue using lenders’ cash, though he said the company is hopeful an agreement will be reached soon. TriplePoint did agree to The Pill Club’s use of as much as $850,000 to pay wages for its approximately 220 employees, said Dan McGuire, another lawyer for startup.

Failed crypto lender Celsius Network Ltd. has attracted two new bidders in a three-way auction set for Tuesday, according to a Saturday filing by Kirkland & Ellis, which is overseeing the bankruptcy, Bloomberg News reported. Joining an earlier bid by NovaWulf Digital Management to manage a restructured version of the bankrupt cryptocurrency company are Fahrenheit LLC, a consortium backed by Techcrunch Inc. founder Michael Arrington, and Blockchain Recovery Investment Committee, backed by Gemini Trust, run by the Winklevoss twins, and exchange-traded fund manager Van Eck Absolute Return Advisers Corporation. Meanwhile, the official committee of Celsius creditors won court approval on April 18 to assert claims including fraud and negligent misrepresentation against the failed crypto lender on behalf of its account holders. Allegations of fraud and misrepresentation have plagued Celsius since it filed for bankruptcy with a $1.19 billion deficit in July. The company made false statements publicly that signaled keeping money with Celsius was safer than that of a bank, Aaron Colodny, a lawyer representing the official unsecured creditor’s committee, said during the April 18 hearing.

A federal judge refused on Friday to recuse himself from the New Orleans Roman Catholic bankruptcy after an Associated Press report that he donated tens of thousands of dollars to archdiocese charities and consistently ruled in favor of the church in the contentious case involving nearly 500 clergy sex abuse victims. U.S. District Judge Greg Guidry told attorneys in the high-profile case that a panel of federal judges he asked to review the possible conflict determined no “reasonable person” would question his impartiality despite his contributions and longstanding ties to the archdiocese. Judge Guidry read from the opinion of the Washington-based Committee on Codes of Conduct, which noted that none of the charities he donated to “has been or is an actual party” in the bankruptcy and that Judge Guidry’s eight years on the board of the archdiocese’s charitable arm ended more than a decade before the bankruptcy. “Based upon that advice and based upon my certainty that I can be fair and impartial, I have decided not to recuse myself,” said Guidry, who oversees the bankruptcy in an appellate role.

A bankruptcy judge has again shielded Johnson & Johnson from jury trials in roughly 40,000 pending talc-related lawsuits, advancing the company’s second attempt to resolve mass cancer claims through the chapter 11 system, though he cautioned J&J faces an “uphill battle” ahead, WSJ Pro Bankruptcy reported. Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., on Thursday extended to the healthcare-products company the same protection against talc-related trials enjoyed by its subsidiary LTL Management LLC, a vehicle created by J&J to carry its talc-related liabilities into chapter 11. The freeze on jury trials will last through mid-June while LTL moves through bankruptcy, Judge Kaplan said. His ruling marks the second time he has frozen jury trials in tort litigation alleging that J&J’s talc products cause cancer, which the company denies. The judge granted similar protections to J&J after LTL’s initial entry into chapter 11 in 2021 to give the company breathing room to negotiate with talc claimants and their lawyers on a settlement plan. A federal appeals court threw out that bankruptcy case this month, but LTL filed for bankruptcy again hours later, this time with a settlement offer supported by some plaintiffs’ law firms. That offer, valued at $8.9 billion, would rank among the largest tort settlements ever if accepted.

The U.S. government reached an agreement with Voyager Digital Ltd. allowing the bankrupt cryptocurrency platform to sell its user accounts to Binance.US, meaning Voyager customers will be able to access their funds again, WSJ Pro Bankruptcy reported. Federal authorities have agreed to allow a key part of Voyager’s chapter 11 plan—the transfer of customer accounts to Binance.US—to go ahead while a related government appeal of a narrow provision in Voyager’s reorganization continues, according to court papers filed Wednesday. Various state and federal regulators including the Securities and Exchange Commission opposed the Binance.US deal, which was approved in bankruptcy court only to be put on hold by appellate judges. The government has said a provision in Voyager’s chapter 11 plan could tie regulators’ hands in taking future enforcement actions against the parties involved in distributing its cryptocurrency. Voyager has said the provision is necessary to protect those involved in implementing the court-approved chapter 11 plan.

A former US Secret Service agent who specializes in probing financial cybercrime supported anonymity for creditors in the FTX bankruptcy because of risks from the criminals who stalk the cryptocurrency sector, Bloomberg News reported. Identifying customers of the fallen crypto exchange “imposes a severe and unusual risk of identity theft, asset theft, personal attack, and further online victimization,” Jeremy A. Sheridan, managing director in the blockchain and digital assets practice of FTI Consulting Inc., said in a filing on Thursday. FTI Consulting is the financial adviser for the official committee of unsecured creditors in the five-month-old FTX bankruptcy. Early in the case a judge agreed to keep the names of the 50 biggest unsecured creditors secret. The US Bankruptcy Code normally requires the names be filed in public documents. The U.S. Trustee and several media companies, including Bloomberg News, unsuccessfully fought to have the names of FTX customers made public earlier this year, arguing that their names would be listed if they were creditors in any other bankruptcy case. Naming customers with bigger crypto holdings is like “placing a target on their back and facilitating fraudulent schemes by malefactors,” Sheridan said.