%1

Sacks Weston LLC filed for chapter 11 protection in U.S. Bankruptcy Court for the Eastern District of Pennsylvania on Friday, , the Philadelphia Business Journal reported. Founded in 1984, the law firm, focuses primarily on class actions and complex litigation. David Smith of Malvern, Pa.-based law firm Smith Kane Holman, which is representing Sacks Weston in the bankruptcy case, said in a statement to the Business Journal that the Philadelphia firm filed for chapter 11 protection in order to "reorganize its affairs" and ultimately expects to do so successfully and emerge from the bankruptcy process. He added that Sacks Weston does not currently anticipate any changes to its staff but declined to say how many people the firm employs or comment further on the case. Nine people are listed as Sacks Weston employees on LinkedIn. According to the bankruptcy filing, Sacks Weston has between $10 million and $50 million in both estimated assets and liabilities. The law firm has less than 50 estimated creditors. Sacks Weston owes more than $1.13 million to its creditors with the 20 largest unsecured claims, according to the filing. That includes nearly $700,000 to Sacks and Weston for loans, $200,500 to PNC Bank for a line of credit, and $124,000 to Jordan Litigation Funding for another loan. Other creditors include the law firm’s landlord 1845 Walnut Associates LTD, which is an affiliate of Frankel Enterprises Inc., as well as Chase Bank and consulting firm ARCCA.

A hedge fund that owns a big stake in Yellow is pushing for a larger voice for shareholders in the trucking company’s liquidation because of the unfolding bidding war for its assets, the Wall Street Journal reported. Yellow shut down and filed for bankruptcy earlier this month and is now selling off its assets, which so far have garnered bids high enough to cover its financial debt. If Yellow also pays off its other obligations, any excess value could flow to its shareholders, which include Boston-based hedge-fund manager MFN Partners as well as the U.S. government. MFN, which holds a roughly 42% stake, is now seeking the appointment of an official committee to represent shareholders’ interests in Yellow’s bankruptcy case, the company said in a securities filing on Friday. MFN has asked the Justice Department’s bankruptcy division to appoint an official group of shareholders in Yellow’s bankruptcy case, according to Friday’s filing. If granted, MFN’s request would allow the shareholder committee to bill its legal fees to Yellow. In the letter, MFN also put forward a candidate to fill one of two vacant positions on the company’s board of directors and intends to present another choice for the second empty seat, Yellow said on Friday. (Subscription required.)

Sam Bankman-Fried has appealed a decision to jail him for alleged witness tampering ahead of his Oct. 3 trial over the collapse of his FTX cryptocurrency exchange, Reuters reported. In a filing late on Friday with the U.S. Court of Appeals for the Second Circuit, Bankman-Fried's lawyers said that the 31-year-old former billionaire simply exercised his First Amendment rights by sharing writings by his former colleague and romantic partner Caroline Ellison with a New York Times reporter. Ellison is one of three former members of Bankman-Fried's inner circle expected to testify against him after pleading guilty to fraud. Bankman-Fried's lawyers said he shared her writings to defend his reputation, not to intimidate her. "It is unclear how a cooperating witness who has promised to testify against a defendant could be meaningfully threatened by nothing but their own statements being published by a reputable newspaper," Bankman-Fried's lawyers wrote. In her writings, which predated FTX's November 2022 collapse, Ellison described feeling "unhappy and overwhelmed" with her job and "hurt/rejected" from her breakup with Bankman-Fried. Prosecutors said Bankman-Fried released those writings to harass Ellison and to dissuade others from testifying if they thought he would make them look bad in the press.

Drugmaker Mallinckrodt said today that the company and some of its units have filed for a second bankruptcy in three years in the U.S., with the newest restructuring plan set to reduce its debt by about $1.9 billion, Reuters reported. The Ireland-based company initiated chapter 11 proceedings after reaching a debt reduction deal that would cut $1 billion from the amount it owes to victims of the opioid crisis. The company is one of the largest manufacturers of opioids. It also makes generic and branded drugs such as Acthar Gel, which is used to treat multiple sclerosis and infantile spasms. Mallinckrodt, which had also filed for bankruptcy in 2020, was a defendant in more than 3,000 lawsuits alleging that it used deceptive and misleading marketing tactics to boost its sales of highly addictive opioid drugs. After court approval, the company will have excess of $450 million of liquidity comprising cash, commitments received for $250 million in new financing from certain of its creditors, it said in a statement.

Rite Aid is preparing to file for bankruptcy in coming weeks to address mass federal and state lawsuits the drugstore chain is facing over its alleged role in the sale of opioids, WSJ Pro Bankruptcy reported. The chapter 11 filing would cover Rite Aid’s more than $3.3 billion debt load and pending legal allegations that it oversupplied prescription painkillers. Philadelphia-based Rite Aid hasn’t agreed on a settlement with federal, state government and private opioid plaintiffs to resolve those opioid liabilities in a potential chapter 11 and is currently planning to treat them as general unsecured claims, they said. Unsecured claims rank behind a company’s collateralized debt in bankruptcy and share in the amounts left over after secured claims are paid in full. The terms offered to Rite Aid’s opioid-related claimants in a potential chapter 11 could change. Rite Aid faces more than a thousand federal lawsuits that were consolidated into a multidistrict litigation in Ohio. The company also faces a significant number of similar cases pending in state courts that allege it contributed to the opioid epidemic, as well as a civil lawsuit by the Justice Department that alleges the company dispensed controlled substances in violation of the False Claims Act and Controlled Substances Act.

3M Co. has tentatively agreed to pay more than $5.5 billion to resolve over 300,000 lawsuits claiming it sold the U.S. military defective combat earplugs, Bloomberg News reported. The settlement would avert a potentially much larger liability that 3M sought to curb though a controversial bankruptcy case that ultimately collapsed. The sum is about half the roughly $10 billion some financial analysts predicted 3M could end up paying over allegations that the earplugs didn’t adequately protect the hearing of service members. Bloomberg Intelligence had estimated that the company’s potential liability was as much as $9.5 billion, while analysts at Barclays put it at about $8 billion. The accord would end a torrent of litigation facing the St. Paul, Minnesota, company even as it faces thousands of other lawsuits over PFAS “forever chemicals” likely to cost several times more than the earplug deal to resolve. 3M has lost 10 of 16 early trials over the earplugs so far, with over $250 million awarded to more than a dozen service members. In the most recent trial, a Florida jury ordered the manufacturer in 2022 to pay a U.S. Army veteran James Beal $77.5 million in damages over his hearing loss from the earplugs. Beal, who tested weapons over a four-year period starting in 2005, said he developed hearing loss and tinnitus, a buzzing or hissing sensation in the ears.

A new plan for restructuring $10 billion in debt owed by Puerto Rico’s power company was filed late Friday in the latest attempt to end a lengthy bankruptcy process marked by acrimonious negotiations, the Associated Press reported. The plan filed by a federal control board that oversees the U.S. territory’s finances would cut the debt of Puerto Rico’s Electric Power Authority by nearly 80% to some $2.5 billion. “We hope that we will be closing not just the chapter but most of the book on the largest public sector bankruptcy in the United States,” Robert Mujica, the board’s executive director, said in a meeting with reporters. If confirmed by a federal bankruptcy judge, the plan would mean an increase in already high power bills for many people on the island if the new charge is approved by Puerto Rico’s Energy Bureau. On average, residential bills would increase by nearly $9 a month and commercial bills by $35. Some 1.4 million customers would not pay the new charge if they consume less than 425 kilowatt-hours a month, the plan states. The average monthly power consumption for a U.S. residential customer is about 886 kilowatt-hours, according to the U.S. Energy Information Administration.

China Evergrande Group delayed key votes on its offshore-debt restructuring plan just hours before they were to occur Monday, adding to uncertainty in a protracted process to finalize one of the country’s biggest restructurings ever, Bloomberg News reported. The distressed developer, at the epicenter of a property crisis that’s unleashed record delinquencies in a threat to China’s financial markets, delayed the meetings for the group and some units to Sept. 25-26, it said in a filing. Evergrande cited a desire to let creditors evaluate recent developments including resumption of trading in its stock, as well as the terms of the proposals. Its shares slumped as much as 87% in Hong Kong trading following a 17-month halt, becoming a penny stock. “Not enough votes is probably the reason for the delay,” said Ting Meng, a senior credit strategist at Australia & New Zealand Banking Group, adding that it is uncertain whether the meeting will be further delayed later. While resumption of share trading helps creditors gauge value as they think about how to vote, the sharp drop in the stock price has likely given them more concerns, she said. Investor patience is running thin. Evergrande shot past previous targets in unveiling its restructuring plan, and global money managers are still seeking clarity on what they might recover some 20 months after the firm’s first public bond default. The last-minute change Monday is also the second such abrupt delay from a major distressed Chinese developer in just days, after Country Garden Holdings Co. pushed back voting Friday on its request to extend payment on an onshore bond.

A bankrupt California hospital will receive a $10 million loan from a new state program to aid troubled providers, Bloomberg News reported. The loan would throw a lifeline to the San Benito Health Care District, which operates Hazel Hawkins Memorial Hospital in Hollister. San Benito filed for a rare Chapter 9 bankruptcy in May as it faced waning cash and unfunded pension obligations. Hazel Hawkins is one of 17 facilities to receive a loan through the program, a state press release outlined on Thursday. The community hospitals will be award a combined total of close to $300 million of assistance. “Across the country, community hospitals are experiencing financial stress like never before. These hospitals are often the only acute health care access point in their area,” said Governor Gavin Newsom said in the statement. “In partnership with the legislature, we are working to keep the doors open so Californians can access critical care close to home.” Like hundreds of other ailing rural hospitals, Hazel Hawkins caters to poorer patients lacking private insurance, or any insurance at all. Meanwhile, US hospitals still contend with higher labor costs and staffing shortages exacerbated by the pandemic. Hazel Hawkins said it would exhaust its cash next year and needed to restructure its outstanding obligations as it sought a buyer or partner, according to court papers. 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 group of bond investors is expected to back a new restructuring plan for Puerto Rico’s power utility but would have to contend with other creditors that want to keep fighting for a better deal, the Wall Street Journal reported. BlackRock, Nuveen and Franklin Advisers are nearing a restructuring deal to write down $8.3 billion in debt owed by the bankrupt electric monopoly to a fraction of that amount. The new deal would open a path to ending the Puerto Rico Electric Power Authority’s six-year bankruptcy case and has divided bondholders that until recently were united in negotiations. Bondholders including GoldenTree Asset Management are preparing to battle in court to try to sink the debt plan, due to be filed in court today. BlackRock and others owed nearly $2.4 billion recently broke with a longstanding Prepa bondholder committee advised by law firm Kramer Levin Naftalis & Frankel and formed their own splinter group with lawyers from Paul Weiss Rifkind Wharton & Garrison, court records show. GoldenTree also has hired its own lawyers from White & Case.