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A growing number of hospital operators across the country are in financial distress or have declared bankruptcy under the pressure of labor shortages and high inflation in the wake of the pandemic, WSJ Pro Bankruptcy reported. Small independent hospitals serving rural communities have been hit especially hard. More than 600, or about 30%, of all rural hospitals in the country are at risk of closing, according to the Center for Healthcare Quality and Payment Reform, a national policy center. As of August, 13 rural hospitals had shut their doors, exceeding seven and three in 2022 and 2021, respectively, according to the Cecil G. Sheps Center for Health Services Research, a unit of the University of North Carolina at Chapel Hill. Rural hospitals number about 1,800 out of roughly 6,100 total in the U.S., according to the American Hospital Association. As of August, eight hospital operators have filed for chapter 11, the highest number for the eight-month period since at least 2019, according to Gibbins Advisors, a healthcare restructuring advisory firm that keeps track of hospital filings with liabilities of more than $10 million. The sector’s troubles resurfaced after enhanced government funding during the COVID-19 pandemic dried up. Some hospitals are still on the hook to repay some of the pandemic aid, and consistently rising labor costs have been goaded by inflation, outpacing reimbursement increases. Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

A small, private university in West Virginia declared bankruptcy yesterday, a month after announcing that it planned to stop operating, the Associated Press reported. Alderson Broaddus University filed for chapter 7 bankruptcy in U.S. Bankruptcy Court for the state’s northern district. According to the filing, the university estimated it had between $1 million and $10 million in total assets, liabilities of between $10 million and $50 million and owed money to between 100 and 199 creditors. The filing was signed by Alderson Broaddus interim president Andrea Bucklew. The campus community was notified of the decision, the university said in a statement. Alderson Broaddus Board Chairman James Garvin said the panel “is grateful to the students, employees, alumni and donors who have embodied the Christian spirit of the University, and through them, the legacy of AB will live on.” On July 31 the university’s Board of Trustees voted to develop a plan to disband after another board overseeing the state’s four-year colleges and universities revoked its ability to award degrees effective Dec. 31. The university said the revocation meant the school could have offered only limited classes to about 20 students this fall. The Baptist university’s 625 students on the Philippi campus were forced to scramble to enroll at other colleges.

3M Co.’s $6 billion settlement of lawsuits accusing the company of selling defective combat earplugs to the U.S. military could fall apart if enough veterans reject the deal as inadequate for their injuries, Bloomberg News reported. Given 250,000 or so active claims of hearing loss 3M has identified, the accord works out to about $24,000 a head, and would be even less after court costs and legal fees. That may not be enough to make up for the life-altering injuries service members say they suffered after the earplugs failed to protect them from the roar of heavy artillery and tanks. 3M itself can walk away from the pact if it doesn’t get the support of at least 98% of claimants eligible for compensation. But that would force the company back to the negotiating table and leave it facing hundreds of thousands of lawsuits and a formidable array of jury trials — the very outcome it sought to avoid by striking the deal. Under the terms of the settlement, which Bloomberg reported Sunday and 3M announced Tuesday, the plaintiffs will have about six months to decide whether to accept a payout under the accord, opt out of the deal to demand a trial, or drop their suit, according to court filings. The lawsuits have been consolidated in a multi-district litigation case in federal court in Pensacola, Florida — one of the biggest MDLs in U.S. history.

Benitago, one of a slew of investment groups that acquire businesses selling their products through Amazon, has filed for bankruptcy, less than two years after raising $325 million in funding, Wall Street Journal reported. The New York-based online seller sought protection from creditors Wednesday in the U.S. Bankruptcy Court in Manhattan, listing both assets and liabilities ranging from $50 million to $100 million. Tom Studebaker at advisory firm Portage Point Partners has been appointed as Benitago’s chief restructuring officer. The company, founded in 2016, operates in a small but lively wing of the e-commerce market in which groups of investors buy small third-party sellers on Amazon’s online marketplace and run them as a group, providing greater marketing and logistics expertise to the businesses. Many of those sellers use the Fulfillment by Amazon warehousing and delivery service and can gain better pricing when they consolidate their purchasing under a single owner.

Starry Group Holdings Inc., the Boston-based wireless broadband provider, is emerging from bankruptcy with a new leader who has a more sober view on growth and a rediscovered bias toward reaching profitability, Bloomberg News reported. The company filed for chapter 11 protection in February and has restructured as a closely held venture, according to a statement Thursday. The board will include co-founders Alex Moulle-Berteaux and Chet Kanojia. Ditching earlier hyper-growth aspirations that ran aground when the capital markets dried up, Starry Chief Executive Officer Moulle-Berteaux said he has a fully funded moderate-growth business plan that will get the company to break-even in two years or less. Moulle-Berteaux, a Starry co-founder, was previously the company’s chief operating officer. Wireless broadband connections start at $50 a month at Starry, which is cheaper than cable and landline internet services. The company sells service in Boston, Los Angeles, New York City, Denver and Washington. Currently it has fewer than 100,000 broadband subscribers, Moulle-Berteaux said. Starry’s second act comes at a highly competitive time in the broadband industry. All three of the major U.S. mobile service providers have been using new super fast 5G networks to beam signals into homes to provide internet access. The lower cost wireless broadband offerings, where Starry will be competing, have been popular with customers looking for cheaper alternatives to landline internet offerings and have undercut subscriber growth at the cable companies including Comcast Corp. and Charter Communications Inc.

More than three years after filing for bankruptcy protection amid mounting claims of child sex abuse by local clergy, the Archdiocese of New Orleans is preparing to sell off seven properties — including the shuttered Sacred Heart of Jesus Church, the St. Jude Community Center and the Catholic Bookstore Uptown — as a way to generate cash that could be used to help settle those claims, NOLA.com reported. In court documents filed this week, the archdiocese is seeking court approval to hire commercial real estate broker The McEnery Company to market the properties. If sold for their proposed asking prices, the properties would generate nearly $10.4 million for the local Roman Catholic Church. That’s likely a drop in the bucket relative to the cost of the bankruptcy process and the claims an estimated 500 or so abuse victims are seeking. Attorneys fees and other costs of the bankruptcy process have already totaled some $25 million, while the total amount of money victims are seeking has yet to be tabulated. It’s also still unclear how many victims will be allowed to file claims because of a 2021 state law that has extended the window to allowing alleged victims of clergy sex abuse to file suit. Until those questions are resolved, the chapter 11 reorganization plan cannot be finalized. Selling off the properties, however, is a first step. “The Archdiocese of New Orleans has stated since filing for chapter 11 reorganization that we anticipated property sales would be part of the proceedings,” archdiocese spokesperson Sarah McDonald said.

VanMoof, the Dutch e-bike maker that gained a zealous following but declared bankruptcy last month, has been acquired by Lavoie, an upscale electric scooter company, the firms announced on Thursday, the New York Times reported. Riders of the expensive and technologically advanced VanMoof bikes were left in limbo by the company’s bankruptcy, because the machines are built from proprietary parts that only the company made and many of the bikes’ functions are linked to a smartphone app that runs on the company’s servers. Despite the buzz around the brand, VanMoof had run into financial problems that led to a production backlog and monthslong waits for sales and repairs. But riders will not be completely out of limbo under the new ownership. “What they can’t expect in the first couple of weeks is definitive answers to the problems,” said Nick Fry, the chairman of McLaren Applied, the British motorsports technology company that owns Lavoie. The price of the acquisition was not disclosed, but Mr. Fry said Lavoie would spend “tens of millions” on the transaction as well as in investments over the coming months to “rectify some of the challenges we face.” One of the new owner’s priorities, he added, is improving the availability of parts and repairs, something that had become increasingly difficult for VanMoof owners. Regular bike shops could not — or sometimes would not — fix the bikes. Mr. Fry said he wanted other bike mechanics to be able to fix VanMoof bikes and maybe make the bikes available for sale in retailers other than the shops owned by the brand. Another priority, he said, is to address some of the reliability issues that plagued the bikes.

Drugmaker Mallinckrodt's opioid creditors will support an expedited second bankruptcy, despite a "gruesome" $1 billion reduction in settlement money for victims of the U.S. opioid crisis, attorneys said yesterday, Reuters reported. Mallinckrodt, which makes both branded and generic drugs, filed for its second bankruptcy on Monday after previously emerging from chapter 11 in June 2022. The company blamed higher interest rates on its debt, upcoming opioid settlement payments, and reduced sales for blockbuster drugs like its Acthar gel treatment for multiple sclerosis and infantile spasms. Mallinckrodt's second restructuring, which would wipe out existing equity shares, will reduce the company's debt by $1.9 billion. It will also trim $1 billion from its previously agreed opioid settlement, which resolved about 3,000 lawsuits alleging that the company used deceptive marketing tactics to boost generic opioid sales. The restructuring agreement has the support of over 90% of its lenders and the trustees in charge of the opioid settlement funds, attorneys said at a hearing yesterday in the U.S. Bankruptcy Court for the District of Delaware. David Molton, an attorney for the opioid trust, said that losing $1 billion in settlement money was a "particularly gruesome" result for states, local governments, individual victims and others who would have benefited from the settlement money. Those creditors will receive just $700 million after Mallinckrodt agreed to an up-front of $250 million payment just before its second bankruptcy. Molton told U.S. Bankruptcy Judge John Dorsey that none of the opioid victims were happy with the deal.

A bankruptcy judge rejected a sex-abuse compensation plan for the Diocese of Camden, N.J., saying that it would violate the rights of insurance companies on the hook for payment to abuse survivors, Bloomberg News reported. Judge Jerrold Poslusny said that he couldn’t release the Camden diocese from bankruptcy because its plan for compensating hundreds of sex-abuse victims would expose its insurers to paying potentially inflated or fraudulent claims. Camden’s failure to win court approval to exit bankruptcy after nearly three years highlights the growing discord among sex-abuse plaintiffs, insurers and religious organizations in a handful of recent chapter 11 cases stemming from childhood abuse. The Roman Catholic diocese, bankrupted by sex-abuse lawsuits, agreed last year to contribute more than $87 million to compensate over 360 abuse survivors on its way out of chapter 11. The reorganization plan left room for victims to pursue further compensation from insurance companies through litigation once the bankruptcy case ended. Judge Poslusny of the U.S. Bankruptcy Court in Camden took issue with several aspects of the Camden diocese’s proposed plan, including the appointment of a so-called neutral third party with the power to value each survivor’s sex-abuse claims. He also determined that abuse plaintiffs would have too much influence over the neutral administrator, potentially inflating the value of abuse claims and ultimately the amount of money the trust would pursue from insurance companies.

An increasing number of creditors are pushing back against a plan to cut the debt load of Puerto Rico’s bankrupt power utility by 75%, with investors and insurers accounting for $3.6 billion of the bonds set to vote against the proposal, a lawyer warned yesterday, Bloomberg News reported. Investors holding approximately $1.8 billion of Puerto Rico Electric Power Authority debt plan to join GoldenTree Asset Management, Syncora Guarantee and Assured Guaranty in opposing the restructuring plan submitted Friday to the court by a federally appointed financial oversight board, Thomas Lauria, a lawyer representing GoldenTree, said Wednesday during a court hearing before U.S. District Court Judge Laura Taylor Swain. Prepa, as the utility’s called, is seeking to restructure $8.3 billion after years of mismanagement and economic decline. The amount of bonds in opposition could increase to about 50% of the utility’s debt, Lauria said. “They intend to vote against the plan,” Lauria told Judge Swain. That $3.6 billion against the debt-cutting plan surpasses the creditor pool that’s in favor of it. That includes an ad hoc group of bondholders led by BlackRock Financial Management along with National Public Finance Guarantee. Swain plans to hold a confirmation hearing on that plan in March, she said Wednesday.