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New details revealing how Archegos Capital Management founder Bill Hwang hid his fund's extreme exposure from its lenders raise fresh questions about the risk management policies at these global banks, former regulators and risk experts said, Reuters reported. Hwang and Archegos Chief Financial Officer Patrick Halligan were arrested Wednesday on charges they lied to banks to increase Archegos' credit lines and used the money to ramp up their exposure to a handful of stocks, which they also manipulated, according to a Justice Department complaint. The pair vigorously deny all the charges. Archegos defaulted in late March 2021 after the value of its trades sank and banks called in their credit lines, leaving global lenders, including Credit Suisse AG, Nomura Holdings, Morgan Stanley and UBS Group AG, with combined losses of around $10 billion. While the Justice Department portrays the banks as victims who were lied to by Archegos executives, the indictment reveals red flags that banks could have acted on to reduce their exposure to Archegos' aggressive trades, risk experts said. These include the fund's unwillingness to provide certain details on its portfolio; its failure to provide evidence to corroborate its claims; the huge spike in some stocks owned by Archegos; and the fund's frequent breach of its credit limits.

Lenders to KKR & Co.’s Envision Healthcare are considering litigation after the physician-staffing company moved roughly half its value beyond their grasp to secure a fresh source of financing, WSJ Pro Bankruptcy reported. Centerbridge Partners LP and Angelo Gordon & Co. led the first-lien financing deal, which moved an estimated $2.5 billion in collateral away from most of Envision’s existing lenders, the people familiar said. The term lenders, which met to consider legal options on Monday, said the deal came at their expense as the first-lien debt was mostly provided by third-party financial institutions that had little existing credit exposure to Envision. Envision said on Friday that it would borrow up to $1.3 billion in first-lien loans and $1.3 billion in second-lien loans that would help repurchase existing debt and reduce the company’s total indebtedness by roughly $600 million. The new borrowing is backed by AmSurg Corp., an ambulatory services unit that made up around half of Envision’s earnings in 2021, according to people familiar with the matter. Lenders to the company previously had collateral rights on AmSurg as part of their collateral package before the liens were released and roughly 80% of the subsidiary moved to a new affiliate. Lenders yesterday explored potential legal remedies against the company with law firm Kasowitz Benson Torres LLP. The original lenders allege that the transaction may not be allowed under the company’s debt documents. The lenders also questioned whether the company is still allowed to carry the same amount of outstanding debt in the remaining company after the assets are moved.

A federal appeals court on Friday weighed a multibillion-dollar settlement offer by the Sackler family members who own Purdue Pharma LP, questioning whether Congress has authorized a key feature of the drugmaker’s bankruptcy plan that would end civil opioid litigation against them, WSJ Pro Bankruptcy reported. A three-judge panel for the Second U.S. Circuit Court of Appeals questioned lawyers who crafted the proposed settlement, which offers the Sacklers broad legal protections through Purdue’s chapter 11 plan even though they haven’t filed personal bankruptcy. The deal is broadly supported by state attorneys general, opioid victims and other Purdue creditors but is being challenged by the Justice Department’s bankruptcy watchdog. The appeals court could cement the bankruptcy plan or scuttle it. In December, a federal judge in Manhattan threw out the proposed deal that would have extinguished civil suits against the Sacklers in exchange for roughly $4.5 billion from the family, which was opposed at the time by a handful of state attorneys general. While the appeal was pending, the Sacklers won unanimous support from state authorities for a revised settlement worth up to $6 billion.

Honeywell International Inc.’s fight with an asbestos bankruptcy trust has shifted into more than a financial dispute as plaintiffs’ lawyers request to seal from public view the names of law firms that filed claims against a Honeywell-backed trust, WSJ Pro Bankruptcy reported. The U.S. Bankruptcy Court in Erie, Pa., is scheduled next week to consider whether to bar disclosure of the names of law firms that Honeywell might link to alleged misuse of the compensation system for a Honeywell unit’s asbestos trust. A committee of asbestos plaintiffs’ firms is requesting the secrecy order ahead of a trial on the industrial conglomerate’s allegations of mismanagement against the compensation trust established by former subsidiary North American Refractories Co., bankrupted in 2002 by mass asbestos claims. While the trial is technically between the Narco trust and Honeywell, the company has put the conduct of asbestos law firms at issue, detailing alleged instances in which claimants’ lawyers submitted questionable affidavits to win compensation. The trust allegedly waved through payments for years that weren’t supported by competent and credible evidence of exposure to a Narco product, according to Honeywell’s complaint. Honeywell said in court papers on Thursday that the law firm names should remain public because the conduct of those law firms is relevant to the company’s case.

A Hess Corp. unit filed for bankruptcy to resolve asbestos-injury claims stemming from an oil refinery the company used to own in St. Croix in the U.S. Virgin Islands, WSJ Pro Bankruptcy reported. Honx Inc., previously known as Hess Oil New York Corp., filed for chapter 11 bankruptcy to drive a settlement of personal-injury lawsuits stemming from alleged exposure to asbestos, silica and other toxic substances, court papers say. There are roughly 580 cases pending, including a potentially consequential trial set to begin next week. The energy company has faced asbestos litigation for decades from contractors and employees who worked at the St. Croix oil refinery, known from its 1966 opening through 1998 as Hovic, when it was owned solely by Hess, and later as Hovensa and then Limetree Bay. The lawsuits had been “relatively dormant, with no trials scheduled” in the Virgin Islands until July 2021, when lawmakers there allowed people older than 65 to request an expedited trial date within 180 days, according to court papers filed by the Honx subsidiary. The first of these preference trials is scheduled to begin next week, court papers say.

A reorganization plan for Eagle Senior Living will reduce the company’s debt by approximately $40 million and promises $28 million in new financing, according to the operator’s attorney. The U.S. Bankruptcy Court for the District of Delaware approved the plan Wednesday, McKnight's Senior Living reported. The Wilmington, Del.-based company operates independent living, assisted living and memory care communities in Alabama, Colorado, Florida, Minnesota, Ohio, Tennessee and Wisconsin. Eagle initiated a voluntary chapter 11 process in January in a move to strengthen its financial structure and provide flexibility to make necessary capital improvements. Parent company American Eagle Lifecare Corp. and management company Greenbrier Senior Living were not included in the filing. “The debt restructuring caused the company significant debt relief,” said attorney David Gordon of Polsinelli, adding that the Eagle began restructuring negotiations 11 months ahead of the Jan. 14 Chapter 11 filing. The company’s bond debt is broken into three tranches, he said. The A tranche was $171 million, the B was $36 million and the C was $24 million. The A bond debt will be reissued at the original $171 million, but with lower interest rates and amortization to push the payments into the future for the time being, the attorney said. The interest rate was reduced to 5%, with interest-only for payments for the first four years. The maturity of the debt has been extended to 35 years.

Hertz Corp. faces more complaints that customers were arrested at gunpoint because of disputed reports that they stole the cars they’d rented, a problem the company’s new chief executive has been vowing to eradicate, Bloomberg News reported. Lawyers suing Hertz say they’re preparing to file about 100 new claims, a move that would boost the total of false arrest allegations to more than 300 and complicate efforts to resolve a legal fight playing out in federal court. The new claims are an early challenge for Chief Executive Officer Stephen Scherr, who took over in February and pledged this month that Hertz would change its practices to protect customers who’ve done nothing wrong from false arrests. Currently, at least 230 customers say in court papers that Hertz improperly called in police, mostly while the company was haggling with them about overdue rentals. A small number of cases, including two new claims, allege errors by Hertz employees caused police to pull over innocent customers on suspicion of driving stolen cars. The lead attorney for customers is Francis Alexander Malofiy, a Philadelphia lawyer who has spent years fighting Hertz in court. He says many new clients have come to him in the months since news about the false arrest lawsuits became public. The new claims will be filed in the next few weeks, Malofiy said. Most will land in front of a federal judge in Wilmington, Delaware where the company reorganized in bankruptcy as the pandemic began to hurt the economy in 2020. Hertz left bankruptcy protection in June, but a shell company remained behind to resolve disputed debts, including false arrest claims.

Families of victims of the Sandy Hook Elementary School massacre have asked a judge to throw out InfoWars' bankruptcy, saying it was filed to avoid upcoming trials to determine damages in defamation cases the families have won against the right-wing website, Reuters reported. The families filed their motion on Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas, where InfoWars founder Alex Jones placed three holding companies into chapter 11 on April 17. The bankruptcy came in the wake of court judgments that found conspiracy theorist Jones and his media businesses liable in multiple defamation lawsuits after he falsely claimed that the 2012 shooting in Newtown, Conn. that left 20 children and six school employees dead was a hoax. The families said in Tuesday's filing that the bankruptcy is "not typical chapter 11" and that the case has "no valid bankruptcy purpose" and should be dismissed with prejudice as a bad-faith filing. InfoWars attorney Kyung Lee of Parkins Lee & Rubio previously rejected attacks on the legitimacy of the case and argued that the bankruptcy is necessary to preserve the means to eventually pay damages in the defamation cases. The chapter 11 case was filed shortly before a trial to determine how much the families were owed in one of the lawsuits was scheduled to begin in Texas. It was put on hold as a result of the bankruptcy.

Gulf Coast Health Care LLC said it plans to provide at least $11.5 million to unsecured creditors in its bankruptcy, up from the $10 million minimum it earlier envisioned in its chapter 11 proceedings, MarketWatch.com reported. The nursing home company said early Wednesday, during the first day of a hearing to get its liquidation plan approved, that it had an agreement in principle to boost recoveries for unsecured creditors. Those creditors include people who have filed personal injury or wrongful death lawsuits against the business. Lawyers for those plaintiffs, however, continued to question company representatives who testified, including about legal immunity that will be provided for individuals or entities that themselves aren't in bankruptcy.

The top executive at McKinsey & Company, appearing on Wednesday for the first time before Congress to answer for the consulting firm’s role in fanning the opioid crisis, came under sharp criticism from Democratic lawmakers, the New York Times reported. Bob Sternfels, McKinsey’s managing partner, testifying remotely to the House Committee on Oversight and Reform, apologized for McKinsey’s work in helping drive sales at opioid makers. He said that the firm “failed to recognize the broader context of what was going on in society around us.” But Mr. Sternfels did not cede ground on the main topic of the hearing: whether McKinsey’s simultaneously advising opioid makers and their regulator, the Food and Drug Administration, posed a conflict of interest. On that front, he insisted, McKinsey had been “transparent.” “McKinsey did not — did not — serve both the F.D.A. and Purdue on opioid-related matters,” Mr. Sternfels told the committee. “As both McKinsey and the F.D.A. have made clear, our work for the F.D.A. focused on administrative and operational topics including improvements to organizational structure, business processes and technology.” To some Democratic members, Mr. Sternfels’ words rang hollow. “Your apologies feel empty and insincere,” said Rep. Ayanna Pressley (D-Mass.). McKinsey had worked with Purdue, Johnson & Johnson and other opioid makers to identify doctors who were heavy prescribers of painkillers, resulting in highly addictive drugs finding their way to some of the most vulnerable people in America. The work for Purdue began in 2004 and continued for 15 years as opioid-related deaths surged.