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Victims of the opioid epidemic confronted the Sackler family members who own Purdue Pharma LP for the first time in bankruptcy court as the OxyContin maker nears a possible exit from chapter 11 that requires $6 billion in settlement payments from its owners, WSJ Pro Bankruptcy reported. Addressing three members of the Sackler family who served on Purdue’s board, more than two dozen people shared stories Thursday in the U.S. Bankruptcy Court in White Plains, N.Y., of the disastrous effects physician-prescribed OxyContin, an addictive opioid, had on them, their children, siblings, spouses and parents. Dede Yoder said that her son, Chris, died in 2017 of an overdose at the age of 21 after spending most of her retirement savings on addiction treatment and rehab, which mostly wasn’t covered by health insurance. Doctors first prescribed her son OxyContin when he was 14 years old following two knee surgeries, Ms. Yoder said. Dr. Richard Sackler, Theresa Sackler and David Sackler appeared in the hearing remotely and didn’t respond to victims’ statements. They and other family members consented to hearing victims’ impact statements under a proposed settlement approved on Wednesday by the judge overseeing Purdue’s chapter 11 case. The bankruptcy deal, backed by state attorneys general, would end civil litigation accusing the Sacklers of helping fuel the opioid epidemic and taking improper dividends from Purdue, allegations the family denies.

Bankruptcy Judge Robert Drain in White Plains, N.Y., approved Purdue Pharma’s $6 billion opioid settlement funded by its Sackler family owners, overruling objections from the Department of Justice and 20 states that opposed the deal, Reuters reported. Under the settlement, the Sacklers would pay between $5.5 billion and $6 billion to a trust that will be used to pay the claims of states, victims of addiction, hospitals and others who have argued that the Purdue painkiller OxyContin played a central role in the U.S. opioid epidemic. The revised settlement must still be written into a new reorganization plan before getting final approval in bankruptcy court. Members of the Sackler family have denied wrongdoing. They said last week in a statement that they “sincerely regret” that OxyContin “unexpectedly became part of an opioid crisis.” The Justice Department’s Office of the U.S. Trustee, which oversees bankruptcy administration, said that the bankruptcy court does not have authority to approve the settlement because an appeals court must first decide whether the Sacklers can receive sweeping legal immunity in exchange for the payment. The Sacklers’ payment is contingent on ending their exposure to opioid lawsuits. But a U.S. District judge ruled in December that the protections they seek fall outside the bankruptcy court’s authority. Purdue is appealing that decision in the U.S. Court of Appeals for the Second Circuit. The new agreement replaces an earlier $4.3 billion settlement, which was upended after nine attorneys general and others argued that the Sacklers should not receive such sweeping legal protections. After agreeing to the prior deal, 20 states objected to the new settlement because it includes a $277 million payment exclusively to states that negotiated the $6 billion deal. Some have said that it would unfairly reduce the percentage of funds dedicated to addressing the opioid crisis in their own states. The states still have time to negotiate, Judge Drain said, and may be forced to accept terms they do not like rather than inviting the “dog eat dog” litigation that would result if the settlement fails. Purdue said last week that the settlement would provide additional funding for opioid abatement programs, overdose rescue medicines and for victims, while putting the company on track to resolve its bankruptcy case on “an expedited schedule.” Today, victims of the opioid epidemic will address members of the Sackler family in a hearing overseen by Drain. The hearing will be conducted by Zoom due to COVID-19 restrictions and the Sacklers will not be able to respond.

A bankruptcy judge authorized Jones Day to continue representing Johnson & Johnson’s talc subsidiary in chapter 11, rejecting arguments that the law firm can’t be trusted to look out for the interests of cancer victims because it designed the strategy to limit J&J’s liability, the Wall Street Journal reported. Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., said on Tuesday that Jones Day’s past work for J&J on a transaction that sent its talc-related liabilities into chapter 11 doesn’t mean the firm has a disqualifying conflict of interest, as injury lawyers allege. Judge Kaplan said that Jones Day’s work for J&J, which ended two days before the recently-formed talc subsidiary filed chapter 11 in October, doesn’t mean the law firm will favor the interests of the parent company over its bankrupt unit, LTL Management LLC. Instead, the judge said evidence shows that LTL and J&J have a shared interest in settling the talc liability in chapter 11. That fact ensures that neither Jones Day nor LTL could give priority to a competing interest favoring J&J that could influence the bankruptcy case, Judge Kaplan said.

Members of the Sackler family that own Purdue Pharma struck a new settlement last week with a group of eight states and the District of Columbia to resolve widespread litigation accusing the OxyContin maker of fueling the U.S. opioid epidemic. Under the new settlement, the Sacklers will pay between $5.5 and $6 billion to a trust that will be used to pay the claims of opioid creditors, including states, victims of addiction, hospitals, and municipalities, Reuters reported. The Sacklers have denied wrongdoing, but expressed "regret" that OxyContin played a role in the opioid crisis. U.S. Bankruptcy Judge Robert Drain must approve the settlement and will consider the matter at a hearing on Wednesday. The deal replaces a previous $4.3 billion agreement, which was upended on appeal after nine attorneys general argued that the Sacklers should not receive sweeping protection from current and future opioid lawsuits as part of the deal. The Sacklers have said in court testimony and filings that a settlement is predicated on them being shielded from opioid-related lawsuits. But these sweeping legal protections must first be written into a chapter 11 plan of reorganization and approved by a bankruptcy judge. To do this, Purdue must overcome the December ruling concluding that the bankruptcy court did not have the authority to release non-bankrupt parties, like the Sacklers, from litigation. Purdue is appealing that decision to the U.S. 2nd Circuit Court of Appeals, and will make oral arguments in that court on April 25. Purdue filed its briefs on Feb. 11, and opposing papers are due on March 11.

More than 50 years ago, nearly a dozen men incarcerated outside of Philadelphia enrolled in an experiment funded by Johnson & Johnson, according to unsealed documents. Now, those studies have come back to haunt the world’s largest maker of health-care products, Bloomberg News reported. In one study, inmates were paid to be injected with potentially cancer-causing asbestos so the company could compare its effect on their skin versus that of talc, a key component in its iconic baby powder. University of Pennsylvania dermatologist Albert Kligman conducted hundreds of human experiments over two decades at Holmesburg Prison in Pennsylvania. The testing regime, funded by entities such as Dow Chemical and the U.S. government, involved mostly Black inmates and first came to light decades ago in books and newspaper articles. But J&J’s involvement in the talc studies focusing on asbestos hasn’t been made public in the media before now. The unsealed prison-testing files came to light in two trials last year over legal claims that J&J’s talc-based powder causes cancer, and legal experts say that information could be powerful evidence in future cases, justifying punishment awards. While they didn’t dispute the company hired Kligman in the 1960s to do baby powder tests, J&J officials said they regretted the firm’s involvement with the dermatologist. Still, they noted the tests didn’t violate research standards at the time.

A lawyer for the U.S. Department of Justice's bankruptcy watchdog on Friday signaled the government would object to a Florida-based nursing home operator's approach to dealing with potential abuse and negligence claims in its plan to wind down its operations, Reuters reported. Joseph McMahon, representing the U.S. Trustee's office, said during a hearing before U.S. Bankruptcy Judge Karen Owens in Wilmington, Delaware, that his office will challenge what he described as non-consensual releases of certain legal claims brought by residents and their families against Gulf Coast Health Care and people and entities with ties to the company. Gulf Coast, which operates 28 nursing homes across Florida, Georgia and Mississippi, filed for bankruptcy in October with more than $200 million in debt, including $49 million in rent owed to its principal landlord, Omega Healthcare Investors. Gulf Coast has been in the process of transferring its facilities to new operators, including Consulate Health Care, Ventura Services — Florida, Citadel Care Centers and Bedrock Care. The company, which ran more than 50 facilities at its peak, blamed the COVID-19 pandemic for the decrease in occupancy levels, staffing shortages and increased costs for labor and personal protective equipment. It was one of several nursing home systems to seek bankruptcy relief as the pandemic led to nursing shortages and higher death rates among the elderly. One of the new operators taking over Gulf Coast facilities, Consulate Health Care, went through its own bankruptcy last year. Read more. 

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A 318-unit senior living rental housing community in Plano, Texas filed bankruptcy Tuesday, according to a securities filing, Bloomberg reported. BSPV-Plano, a subsidiary of the Spectrum Housing Corporation, issued about $67m of municipal bonds through the New Hope Cultural Education Facilities Finance Corporation in 2018 to finance the construction of Bridgemoor Plano. The project’s construction has been delayed by a winter storm in Texas and the COVID-19 pandemic. Senior bonds with a 7.25% coupon maturing 2053 traded on Feb. 10 at about 72 cents on the dollar. BSPV-Plano filed bankruptcy in the Eastern District of Texas in Plano, listing $50 million to $100 million in assets and liabilities. Read more. 

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One of Iowa’s biggest nursing home chains, now mired in bankruptcy, allegedly owes taxpayers more than $1 million in unpaid fines due to poor quality resident care, the federal government says, the Iowa Capital Dispatch reported. QHC Facilities, which owns eight skilled-nursing facilities and two assisted-living centers in Iowa, filed for bankruptcy in late December. The owner of the company, Nancy Voyna, died a few weeks after the company filed for bankruptcy and her son is now pursuing a sale of the company and all of its assets. The 10 facilities have a combined capacity of almost 750 residents. One potential hurdle to a sale is outlined in recent court filings by the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services. The two agencies provide QHC with a significant portion of its revenue through Medicare and Medicaid payments for resident care. According to CMS, two of QHC’s eight skilled-nursing facilities — one in Mitchellville and one in Winterset — recently faced termination from the Medicare program, which would have shut off all of the federal funding that flows into those homes for resident care. The potential terminations were “based on quality-of-care issues and mold-related issues,” CMS says. Read more.

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West Indies Petroleum will need to negotiate a new consent decree with the U.S. Department of Justice (DOJ) if it wants to own and operate a St. Croix refinery with a history of environmental problems, the DOJ said on Friday, Reuters reported. The Limetree Bay refinery was sold in December 2021 for $62 million to West Indies Petroleum, a Jamaican oil storage company that intends to operate the facility. Private equity investors had poured had $4.1 billion into reviving the aging U.S. Virgin Islands facility, which was shut down by U.S. environmental regulators after a botched restart last year. An earlier owner, Hovensa, was required to spend $700 million on pollution control equipment, among other obligations after violating the Clean Air Act by increasing emissions without first obtaining pre-construction permits and installing required pollution control equipment. Hovensa went bankrupt and shut down the plant the following year; later Limetree Bay Ventures bought the refinery in December 2015. West Indies Petroleum will need to be party to the consent decree the U.S. reached with Hovensa as well as negotiate a new consent decree with Limetree Bay and the DOJ stemming from more recent operational issues, the DOJ said in an email dated March 2.

Ann Taylor’s former owner has obtained bankruptcy court approval for its revised reorganization plan after a judge rejected certain legal protections for people and entities connected to the company contained in an earlier version of the plan, Reuters reported. U.S. Bankruptcy Judge Frank Santoro of the Eastern District of Virginia signed off on Mahwah Bergen Retail Group Inc.’s amended plan during a brief hearing on Thursday. Mahwah, formerly known as Ascena Retail Group, had secured approval of its prior plan last year but was forced to return to bankruptcy court in January after the plan's so-called nondebtor releases that would have shielded non-bankrupt individuals and entities from future litigation were voided on appeal. Ascena filed for chapter 11 protection in July 2020 with more than $1 billion in debt, part of the wave of retail bankruptcies that occurred in the first few months after the COVID-19 pandemic hit the U.S. Ascena later sold its assets, including apparel retailers such as Ann Taylor, Lane Bryant and Loft, to private equity firm Sycamore Partners. In January, U.S. District Judge David Novak of the Eastern District of Virginia held that the nondebtor releases contained in the plan were void and unenforceable. Judge Novak’s decision did not interfere with the Sycamore sale, which had already closed. In his January decision, Judge Novak called the releases “shocking” and said that the bankruptcy court that approved them had exceeded “the constitutional limits of its authority.” As a result, Mahwah, which now exists solely to wind down its estate, reworked the plan to provide that the releases "should be deemed severed from the Plan,” according to court papers.