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Members of the Sackler family who own Purdue Pharma LP are nearing an agreement to boost their more than $4 billion offer to resolve sprawling opioid litigation after negotiating with states that had objected to terms of the OxyContin maker's bankruptcy reorganization, according to a court filing, Reuters reported. Sackler family members and states objecting to terms of Purdue's bankruptcy reorganization are "close to an agreement in principle" to contribute additional cash beyond the $4.325 billion they had pledged to settle opioid litigation, according to a mediator's interim report filed yesterday. The mediation kicked off in January among Sackler family members and several states after a U.S. district judge overturned the original settlement, which was the cornerstone of Purdue's bankruptcy reorganization plan.

Aeromexico on Friday won court approval of its restructuring plan after the airline struck a deal with the remaining holdouts among its creditors, clearing the way for it to emerge from bankruptcy with new controlling shareholders, Reuters reported. "I could not be more pleased to tell you the plan of reorganization is confirmed," U.S. Bankruptcy Judge Shelley Chapman said soon after the agreement to pay a settlement to the creditors was announced during a court hearing. Her approval of the plan allows Aeromexico, one of three major Latin American airlines to seek court protection from creditors during the pandemic, to complete the bankruptcy process, which has been ongoing since June 2020. Aeromexico shares were up 17% on Friday, although those gains did not appear to reflect the creditor deal and final approval, which came as the market was about to close. The plan provides for new infusions of capital into Aeromexico. Apollo Global Management, a frequent investor in distressed companies, will be the largest shareholder. Delta Air Lines Inc., an existing equity holder, is expected to have a 20% stake in the company once the plan is implemented. The deals struck on Friday brought in support from a group of junior creditors who had opposed what they argued was overly beneficial treatment for Delta and four Mexican individual investors.

Cottage Hospital closed at least temporarily Jan. 8 after losing inclusion in the Medicare and Medicare payment program, the Galesburg (Ill.) Register-Mail reported. All of the hospital staff jobs have been terminated. The Cottage clinic remains open, but CEO Sanjay Sharma has filed chapter 11 bankruptcy. A public forum on Jan. 27 covered three general topics: the financial challenges faced by health workers and patients, the mental health challenges currently faced by members of the Galesburg community and the disruption of services and health records. Mike Pearman, a representative from The Workforce Office of Western Illinois, provided information on federal and state benefits that former Cottage employees may qualify for through the Workforce Innovation & Opportunity Act.

Grupo Aeromexico SAB cut a last-minute deal with the main group of its unsecured creditors, easing the way for the airline to seek final approval to exit bankruptcy from a judge in New York, Bloomberg News reported. The official committee of unsecured creditors in the company’s chapter 11 case agreed to join more senior debt-holders who back the plan, including Apollo Global Management Inc. and Delta Air Lines Inc. In return, unsecured creditors will get a note for $40 million, contingent on future performance. The agreement means the only opposition the company faces to its proposal to slash $1.1 billion of debt is a smaller group of unsecured creditors led by Invictus Global Management and Corvid Peak Capital Management. That group objects to the reorganization proposal, which would hand ownership stakes to senior debt-holders Apollo and Delta. The deal was announced at the start of a court hearing in Manhattan being overseen by U.S. Bankruptcy Judge Shelley Chapman, who will hear final arguments about the proposal and then decide whether to approve the reorganization plan and allow Aeromexico to exit bankruptcy.

GWG Holdings Inc., a company known for selling life-insurance bonds, is seeking rescue financing in an effort to avoid bankruptcy after accounting issues and the resignation of its auditor prevented it from selling its products, WSJ Pro Bankruptcy reported. Dallas-based GWG created financial instruments called L Bonds, which pooled money from bond investors to purchase life insurance policies on the secondary market, and then used payouts from the policies when people died to repay the investors. The company sold the bonds through a network of regional broker-dealers, who pitched the products to individual investors, also known as retail investors. GWG’s financial position worsened after the company stopped selling additional L Bonds due to accounting issues that delayed the filing of its 2020 annual report and the resignation of its auditor, according to the people familiar with the matter and disclosures to investors. The company said it missed the Jan. 15 deadline for making $15.6 million in interest and principal payments due to holders of L Bonds. “GWGH relies to a significant extent on L Bond sales to meet our ongoing financial obligations,” the company said in a disclosure to investors on Monday.

A group of bankruptcy law professors are looking to weigh in on Johnson & Johnson’s use of the bankruptcy system to settle lawsuits alleging that its talc products cause cancer, calling the strategy a "serious abuse," Reuters reported. The group filed court papers on Tuesday seeking approval to submit a “friend of the court” brief in support of an effort by a committee representing people who have sued over J&J's talc products to get the bankruptcy of J&J subsidiary LTL Management LLC thrown out. The seven professors argued that the pharmaceutical giant should not be permitted to use bankruptcy to rid itself of its talc-related liabilities when it’s in strong financial health. The filing comes a few weeks before U.S. Bankruptcy Judge Michael Kaplan in New Jersey is set to hear arguments over the committee’s motion to dismiss the case. LTL's bankruptcy was filed in October to resolve around 38,000 claims alleging J&J’s talc-based products caused mesothelioma and ovarian cancer. J&J, which maintains that its talc products are safe, created LTL to offload talc-related liabilities and then placed it into bankruptcy with the goal of settling those claims instead of litigating them individually in various courts. The professors, including Jared Ellias of the University of California Hastings School of Law and Kenneth Ayotte of University of California Berkeley School of Law, accused J&J of attempting to “deprive innocent talc victims of their day in court.” While this is not the first time a company has used bankruptcy to handle tort liabilities, it is an "alarming" trend, the professors said. A spokesperson for LTL said in a statement on Wednesday that courts have recognized that resolving these types of claims through Chapter 11 is legitimate use of the restructuring process. The spokesperson also stated that while LTL does not believe the claims are valid, it expects them to grow in number.

A U.S. bankruptcy court will start considering Grupo Aeromexico SAB de CV's proposed reorganization plan on Thursday, as the Mexican carrier battles junior creditors who say they are being unfairly treated in a hearing likely to stretch over several days, Reuters reported. Aeromexico, which filed for chapter 11 protection in New York in June 2020, will make its case to U.S. Bankruptcy Judge Shelley Chapman for its proposal, which would infuse new capital into the company and make Apollo Global Management, a frequent investor in distressed companies, the largest shareholder. Though the airline has lined up the support it says it needs from its multiple creditor groups, some still say the plan should not be approved unless junior creditors, some of whom may see just pennies on the dollar, receive better recoveries. Judge Chapman has set aside several days for the hearing, so will likely not rule on the plan on Thursday. If she ultimately approves the deal, Aeromexico — one of three major Latin American airlines that filed for bankruptcy during the pandemic — will be able to exit bankruptcy. The plan, according to the airline, would reduce its debt by $1 billion and save around 13,000 jobs. But junior creditors argue it is overly beneficial to existing shareholders, including Delta Air Lines In. and four board members, at their expense.

Latam Airlines Group SA “flatly rejected” Azul SA’s offer to buy the bankrupt carrier even though the sale would be a better deal for creditors, Azul contends in new court filings, Bloomberg News reported. Azul for months has been expressing interest in a tie-up with Chile’s Latam, but the bankrupt airline has refused to seriously engage in talks, lawyers for Brazil-based Azul said in court papers. Azul said its deal outlined in a Nov. 11 term sheet values Latam at $13 billion and would provide more for creditors than Latam’s current proposal, which is on the verge of seeking court approval. Latam has said Azul’s offer lacked critical details — like how the deal would be executed, how long it would take and whether it could be approved by regulators — as well as the requisite support from creditors. Latam’s restructuring plan is backed by a key group of creditors — including SVPGlobal, Sculptor Capital Management and Sixth Street Partners — and its largest equity holders. Latam is approaching a critical juncture in its effort to exit the bankruptcy case, which began with a chapter 11 filing in May 2020 as COVID-19 lockdowns stymied international travel. On Thursday, the company will seek a bankruptcy judge’s permission to begin collecting creditor votes on its restructuring plan. Its official committee of unsecured creditors is opposing that step, alleging the plan violates U.S. bankruptcy law.

Embattled property developer China Evergrande Group said Wednesday that within six months, it aims to release a global restructuring plan that would respect offshore creditors’ legal rights, after a group of its bondholders threatened last week to sue the company for failing to engage with them, WSJ Pro Bankruptcy reported. During a call with offshore creditors, Evergrande promised to follow the rule of law and respect bondholders’ rights, which in some cases include claims on the company’s secured offshore assets, according to people familiar with the matter. Evergrande also said on the call that its founder and Chairman Xu Jiayin might provide additional financial support to the company as it navigates a prolonged restructuring. The company didn’t discuss any details of its restructuring plan, such as potential bondholder recoveries or asset-sale plans, according to the call participants. Evergrande, once China’s largest property developer, defaulted on its debt in December and is struggling to address more than $300 billion in liabilities, including nearly $20 billion in international bonds. Yesterday’s call came a week after a group of Evergrande’s foreign creditors threatened a legal enforcement plan that could potentially include liquidation of the company’s assets. The group said it was fully within its rights to do so after a continued lack of engagement from Evergrande’s side since the company defaulted. On Monday, Evergrande issued a statement asking the creditors for more time.

Grupo Aeromexico SAB de CV is nearing the finish line of its restructuring with a proposed plan to reduce debt by more than $1 billion, but must first overcome opposition from junior creditors who say existing shareholder Delta Air Lines, among others, is benefiting from the deal at their expense, Reuters reported. The Mexican airline, after nearly two years in bankruptcy, will make its case for the plan in a New York bankruptcy court on Jan. 27. Aeromexico, which in June 2020 filed for chapter 11 protection in the United States with $2 billion in debt, says it has secured the votes needed from its creditor classes to move forward with the deal despite lingering objections from some groups. The plan, which Aeromexico says will result in a total enterprise value of $5.4 billion and preserve 13,000 jobs, would give its largest creditor, Apollo Global Management, the largest stake here in the company. But the committee representing general unsecured creditors, some of whom could see just pennies on the dollar, says the plan unfairly benefits insiders. The committee, which includes a pilots union, Falko Regional Aircraft Limited, Nordic Aviation Capital and the trustee to a group of noteholders, argues that the deal must be held to higher standards than a typical chapter 11 settlement because insiders are involved. It said the voting results only show one class of general unsecured creditors in support of the plan because the company used a “loophole” to value certain claims lower than what the creditors say they are worth. Aeromexico, however, said creditors could have challenged that arrangement before the voting procedures were approved but failed to do so.