An Iowa nursing home chain repeatedly accused of providing substandard care for hundreds of seniors has filed for bankruptcy protection, the Iowa Capital Dispatch reported. QHC Facilities, based in Clive, Iowa, operates eight skilled nursing facilities in Tama, Madison, Humboldt, Jackson, Linn, Webster and Polk counties, as well as two assisted living centers. Collectively, the facilities have a maximum capacity of more than 700 residents. The company employs roughly 300 full-time and part-time workers. The company filed for bankruptcy last week, claiming $1 million in assets and $26.3 million in liabilities. In recent years, QHC and its affiliates have been hit with some of the largest federal fines ever imposed against an Iowa nursing home chain, with inspectors stating the company had placed residents in immediate jeopardy due to substandard care. At the same time, however, the company has sued its elderly residents for failure to pay for that care, and has neglected to pay more than $700,000 in fines.
Knox Clinic Corporation in Galesburg, Ill., will file for chapter 11 bankruptcy, according to a letter sent to employees on Tuesday, the Galesburg Register-Mail reported. The clinics at 834 N Seminary St. are connected to Galesburg Cottage Hospital, which lost its accreditation and was notified in December about losing Medicare and Medicaid payments. A letter from Cottage Hospital CEO Sanjay Sharma told employees the clinics, not the hospital, will file for chapter 11 bankruptcy, which will allow it to reorganize and preserve services. News of the hospital losing accreditation and Medicare and Medicaid payments broke Dec. 28. Medicare and Medicaid payments represented 72% of the hospital's net inpatient and outpatient revenue in 2020. Payments for Medicare and Medicaid patients at Cottage Hospital will continue for patients admitted before Jan. 15.
The Boy Scouts of America fell short of winning the level of support it sought from sex-abuse victims for the nearly $2.7 billion settlement plan that would lift the organization out of bankruptcy, according to a preliminary vote count released Tuesday, WSJ Pro Bankrptcy reported. The proposed settlement of 82,200 claims of childhood sexual abuse earned the support of just over 73% of those who cast votes, falling just shy of the 75% support the Boy Scouts were targeting. The youth group has said it believes that level of acceptance would ease court approval of its chapter 11 plan, while anything less makes it more vulnerable to challenges from the minority of abuse victims who reject it. Nearly 54,000 survivors cast ballots, according to the Tuesday court filing. “Today, the Boy Scouts of America (BSA) announced the plan of reorganization that it has been pursuing failed to garner the required votes to proceed to a confirmation hearing in February,” Pfau Cochran Vertetis Amala PLLC, one of the law firms opposing the settlement said Tuesday. The bankruptcy plan includes compensation from the Boy Scouts, hundreds of affiliated local councils, its biggest insurers and some troop-sponsoring churches, which struck deals with the law firms representing the bulk of the abuse claimants. The current tally isn’t final, and marks the first of several steps along a possible path out of bankruptcy for the Boy Scouts, which has been dogged for years by allegations of widespread childhood abuse. The youth group has apologized for past failures to protect children and said bankruptcy is the fairest way to resolve its liabilities and compensate survivors. While bankruptcy law generally requires two-thirds approval from creditors for a proposed deal, chapter 11 cases involving mass injury and tort liabilities typically have to garner greater support. The youth group is under intense financial pressure to resolve the bankruptcy case and leave chapter 11. But there is still time for the Boy Scouts to try to flip votes to yes from no and potentially clear the 75% threshold ahead of a trial on the settlement plan scheduled for next month. The judge presiding over the chapter 11 case in the U.S. Bankruptcy Court in Wilmington, Del., is likely to view the settlement plan more favorably the more support it garners.
Bankruptcy Judge Robert Drain yesterday ordered mediation in the Purdue Pharma bankruptcy, calling for the company, the Sackler family members that own it and nine states to determine whether they can reach a new opioid litigation settlement by Jan. 14, Reuters reported. Judge Drain issued an order directing the parties to negotiate changes to a previous deal rejected by another judge in December that provided the Sacklers protection against future opioid litigation. Bankruptcy Judge Shelley Chapman is serving as the mediator. If they do not reach agreement by then, the mediation will end and an appeal by Purdue against the deal's rejection will continue. Judge Chapman presided over prior mediation that led to the earlier settlement, under which the Sacklers said they would contribute $4.5 billion to Purdue’s reorganization plan, which directs money toward opioid abatement programs. In exchange, the Sacklers, who have denied wrongdoing, received legal protections known as nondebtor releases.
Purdue Pharma is seeking to appeal to the 2nd U.S. Circuit Court of Appeals a judge's decision to unravel its restructuring plan that would have insulated its owners from liability in civil opioid-related cases, according to a court filing late on Thursday, Reuters reported. The appeal came after U.S. Bankruptcy Judge Robert Drain in White Plains, N.Y., extended temporary protections until Feb. 1 against opioid-related litigation for the Sackler family members who own Purdue Pharma, giving Purdue and the Sacklers time to pursue the appeal. The decision Purdue seeks to appeal was made on Dec. 16, when U.S. District Judge Colleen McMahon overturned Drain's ruling that freed the billionaire Sackler family from liability in civil litigation over opioids in exchange for a $4.5 billion payment. In the court's decision on the OxyContin maker’s bankruptcy settlement, McMahon found the bankruptcy court did not have authority to grant the release and had asked the appeals court to address whether such releases were legally acceptable. Purdue argued in the Thursday filing that the Bankruptcy Code permits non-consensual third-party release in its case. It also says the U.S. Trustee, which appealed Drain’s approval of the plan, does not oppose its ability appeal to the 2nd Circuit. Purdue filed for bankruptcy in September 2019 amid 3,000 lawsuits accusing the company and Sackler family members of contributing to a public health crisis that has claimed the lives of about 500,000 people since 1999.
Johnson & Johnson disputed assertions that it was stalling and failing to cooperate in investigating claims related to its bankrupt talc unit, LTL Management LLC, Bloomberg News reported. “There was and continues to be no basis” for the talc claimants to demand that J&J respond on behalf of LTL, Gregory Starner, a partner at White & Case, said in a Dec. 29 letter to the judge overseeing the case. J&J has responded to requests in a timely manner, he said, and “promptly and correctly objected” to requests that it respond on behalf of LTL. J&J’s letter followed a day after a lawyer for claimants suing J&J over its baby powder asked the judge to compel the pharma company to produce requested information. The claimants “issued broad discovery requests” that were privileged or weren’t relevant to the motion to appoint the future claims legal representative, Starner said. J&J spun its talc liabilities into the LTL subsidiary and put the unit into bankruptcy in October. Some Democratic members of Congress have proposed banning the move, colloquially known as the Texas Two-Step, saying that it lets profitable companies exploit rules written decades ago to compensate asbestos victims. The company is facing 38,000 lawsuits charging that its talc products caused cancer and has pushed to create a trust to pay victims. LTL submitted its own response to the claimants’ letter. The company worked “diligently and quickly” to respond to claimant requests, Gregory M. Gordon, a partner at Jones Day, wrote in a Dec. 29 letter.
Philippine Airlines Inc. received approval to tap $150 million in additional financing and plans to cut its debt by $2 billion, after winning approval last month from a U.S. court for its reorganization plan, Bloomberg News reported. “There are immense challenges ahead, but we look forward to tackling them as a reinvigorated Philippine Airlines, better positioned for strategic growth to continue serving our customers,” President Gilbert Santa Maria said in an emailed statement Friday. The flagship carrier, majority owned by billionaire Lucio Tan, is one of several to enter debt restructuring in the U.S. Aeromexico and Colombia’s Avianca Holdings have both sought court protection in New York. Philippine Airlines received the go-ahead from the court after its reorganization plan didn’t face any major opposition from debt holders. The airline has the option to obtain up to $150 million in additional financing from new investors, it said in the statement. It had already been given permission to access $505 million worth of equity and debt financing to help it meet obligations.
A former billionaire has filed a lawsuit against Montana's Department of Revenue seeking hundreds of millions of dollars in damages along with attorneys fees after a federal judge ruled the state wrongfully tried to force him into bankruptcy to collect taxes the state said he owed, the Associated Press reported. The department's communications director, Jason Slead, said Thursday that agency attorneys were aware of Tim Blixseth's complaint but had not seen it and had no comment. Blixseth and his third wife, Edra, founded the exclusive Yellowstone Club resort near Big Sky in the late 1990s. The private ski hill and golf course in the mountains near Yellowstone National Park attracts celebrities and other wealthy members. The club spiraled into bankruptcy in 2008 following the couple's divorce. That launched a legal saga that pitted Blixseth against the club’s creditors, Montana tax authorities and banking giant Credit Suisse, which had loaned the club $375 million it was unable to fully repay. Much of the 2005 loan went to Blixseth, who used it to bankroll a jet-setting lifestyle he said was part of efforts to create an international luxury vacation club modeled after his Montana resort, which eventually emerged from bankruptcy in 2009 under a new owner. In 2006, Blixseth purchased the Tamarindo Resort in Mexico for $40 million and a residence on a private island in Turks and Caicos for $28 million, his complaint states, in listing the financial losses he suffered by having to sell the properties to pay his legal fees. Blixseth consistently denied wrongdoing despite a string of court rulings that found he fraudulently transferred the loan to enrich himself. The Yellowstone Club's creditors suspected Blixseth had hidden assets. They spent years pursuing him, but collected only a small fraction of the $286 million they once sought. Federal courts had issued judgements against Blixseth totaling $525 million.
Bankruptcy Judge Robert Drain in White Plains, N.Y., has extended temporary protections against opioid-related litigation for the Sackler family members who own Purdue Pharma until Feb. 1 after another judge overturned the OxyContin maker’s bankruptcy settlement this month, Reuters reported. Judge Drain extended the litigation shield yesterday, giving Purdue and the Sacklers time to discuss a path forward. The judge in September had approved Purdue’s reorganization plan and underlying settlement that aimed to resolve widespread litigation accusing the company and the Sacklers of fueling the U.S. opioid epidemic through deceptive marketing. The settlement included protections for the Sacklers against future opioid-related lawsuits in exchange for a $4.5 billion contribution to the plan, which would steer money toward opioid abatement efforts. The protections, known as nondebtor releases, prompted appeals from several states and the U.S. Department of Justice’s bankruptcy watchdog. U.S. District Judge Colleen McMahon reversed Drain’s approval of the deal on Dec. 16, finding the bankruptcy court did not have authority to grant the releases. Purdue, which plans to appeal that decision, then asked Judge Drain to extend temporary protections for the Sacklers that have been in place for two years. The current protections were set to expire on Thursday, meaning lawsuits on hold could have resumed absent an extension. Judge Drain approved Purdue’s request over objections from two states that argued that negotiations would be more effective without the shield. He also warned that if the parties, including the Sacklers, did not negotiate in good faith over the next month on an amended deal, there would be “consequences.”
A lawyer for claimants suing Johnson & Johnson over its baby powder wants a bankruptcy judge to force the pharma giant to produce requested information, saying it’s hindering efforts to investigate the case, Bloomberg News reported. “There has been what appears to be a concerted effort to obstruct, limit and delay discovery,” in the case, Michael S. Winograd, co-counsel to two official claimants’ committees, wrote in a Dec. 28 letter. A Dec. 23 response from J&J saying it wouldn’t fulfill the requests “has necessitated a forthcoming motion to compel,” wrote Winograd, a partner at Brown Rudnick. J&J spun its talc liabilities into a separate unit, LTL Management LLC, and put the unit into bankruptcy Oct. 14, adding to the complexity of the case and sparking controversy because it’s a profitable company. It’s facing 38,000 lawsuits charging that its talc products caused cancer and has pushed to create a trust to pay victims. Winograd said the original claimant committee emailed information requests to J&J counsel on Dec. 16. After “radio silence for four days,” J&J said it wouldn’t accept requests about future claims for LTL.
