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The Archdiocese of Santa Fe’s (N.M.) chapter 11 bankruptcy efforts have plodded along for three years with no end visible in the case involving more than 400 clergy abuse victims, Santa Fe Mexican reported. Lawyers say three years is a comparatively long time for chapter 11 proceedings but is far from unheard of. It’s in everyone’s interests — the archdiocese’s and the victims’ — to resolve it through chapter 11, attorneys say. Therefore, an eventual settlement is still expected. “The alternatives are so bad that it’s worth it to stay in the game,” Laura Coordes, associate professor of law at Arizona State University, said of chapter 11. The archdiocese seeks to raise an adequate sum, through property sales, donations and insurance, to reach settlements with the victims. In a blog this month, Archbishop John Wester wrote: “We knew when we filed for chapter 11 that it would not be easy. We are making progress, albeit slow progress. Please pray that this arduous and drawn-out process will bring healing to the victims of sexual abuse, to their families, our parishes and this local Church.” Coordes and Albuquerque bankruptcy attorney Dave Giddens said the alternatives to a settlement typically would be for the case to be converted to chapter 7 bankruptcy, in which a trustee would call the shots on the sale of assets. Or the case could be dismissed, and many victims then would file lawsuits individually.

Philippine Airlines Inc. won court approval for its reorganisation plan, paving the way for the carrier to exit bankruptcy, cut $2 billion in debt and revive its fortunes after a slump in international travel due to the pandemic, Bloomberg News reported. Bankruptcy Judge Shelley Chapman in Manhattan said on Friday that she would approve the chapter 11 plan after unsecured creditors voted to back the proposal. The reorganization didn’t face any major opposition from debt holders. "This case is a model for what can be accomplished in chapter 11,” Chapman said. "You’ve achieved overwhelming consensus.” The company will try implement the plan and exit bankruptcy by the end of the year, if it is able to get approval from securities regulators in the Philippines, a lawyer for the airline said during the court hearing on Friday. The flagship carrier, majority owned by billionaire Lucio Tan, is one of several to enter debt restructuring in the U.S., which companies often consider a preferred location. Aeromexico and Colombia’s Avianca Holdings sought court protection in New York last year. Philippine Airlines already got a green light to access $505 million worth of equity and debt financing to help it meet its obligations. As part of the turnaround, it plans to reduce the size of its fleet.

One of the world’s largest aircraft leasing company filed for chapter 11 as it seeks to restructure its finances for the second time since the beginning of the pandemic. Denmark-based Nordic Aviation Capital A/S sought bankruptcy protection to overhaul about $6 billion of debt, Bloomberg News reported. On Sept. 24, the company reached an agreement in principle with creditors to fix its balance sheet. The company listed both assets and debt of between $1 billion and $10 billion, according to court papers filed in U.S. Bankruptcy Court in Richmond, Virginia. The restructuring framework includes the conversion of “a substantial amount of the group’s debt into equity,” a $300 million equity rights offering and a $200 million revolving credit facility, the company said. Silver Point Capital and Sculptor Capital Management are set to take control of the company as part of the deal, people familiar with the matter said on Sept. 30.

Shuttered New York real estate law firm Kossoff PLLC owes more than $28 million to its former clients and other creditors, its founder Mitchell Kossoff told a Manhattan bankruptcy court this week. But that may be understating the firm's liabilities, the trustee overseeing its liquidation said on Friday, Reuters reported. Kossoff pleaded guilty on Dec. 13 to grand larceny and other charges after prosecutors accused him of misappropriating more than $14 million in client funds. He estimated in bankruptcy court papers filed Wednesday that the firm owes creditors twice that amount. Al Togut, the chapter 7 trustee overseeing the dissolution of Kossoff PLLC, said in an email on Friday that Kossoff's accounting is "dated and incomplete." Togut has been seeking records seized from the firm by the Manhattan district attorney's office in its investigation, which he argues he needs for a fuller picture. Now he's closer to obtaining those documents. Togut's attorney told U.S. Bankruptcy Judge David Jones that the district attorney has obtained a court order allowing it to share Kossoff PLLC records with the trustee. Togut said in a Friday email that he will have access to the records soon and expects to take possession of them once Kossoff is sentenced in April. Kossoff could serve a prison term of 4-1/2 to 13-1/2 years, Manhattan District Attorney Cyrus Vance said in a statement.

U.S. District Judge Colleen McMahon in Manhattan overturned a roughly $4.5 billion settlement between OxyContin maker Purdue Pharma LP and members of the Sackler family who own the drugmaker, a surprising decision that raises questions about the future of the company and its owners, who have been accused of fueling the nation’s opioid crisis, the WSJ Pro Bankruptcy reported. Judge McMahon ruled late yesterday that the legal releases that would shield members of the Sackler family from civil opioid lawsuits are not permitted under the Bankruptcy Code. A handful of state attorneys general and the Justice Department’s bankruptcy watchdog challenged the releases, which would have extinguished the states’ potential legal claims against the Sacklers even though they didn’t support the deal. Such settlements have been used in other large corporate bankruptcies, though Congressional Democrats introduced a bill earlier this year in response to the Purdue settlement that would ban these types of releases. The decision is likely to result in further appeals from Purdue, the Sacklers and groups representing opioid victims and other company creditors who supported the settlement and broader reorganization plan. Judge McMahon said that prior legal rulings from the Second U.S. Circuit Court of Appeals that Purdue and other bankrupt companies have relied on in advancing the types of legal releases the Sacklers would receive haven’t properly analyzed the issue. She said that her ruling Thursday won’t be the last word on the issue. “It must be put to rest sometime; at least in this Circuit, it should be put to rest now,” Judge McMahon said. The family settlement was the centerpiece of a larger financial restructuring of Purdue designed to fund programs to fight the opioid crisis and compensate people harmed by OxyContin. State attorneys general from Washington, Connecticut, Maryland and other states had objected to the settlement, arguing the Sacklers’ contribution was insufficient to deter other corporate wrongdoing. Read more. 

Click here for a copy of the decision. 

Intelsat SA, the satellite operator that has been in bankruptcy for more than 18 months, secured court approval for its restructuring plan after a trial and last-minute settlement that centered on who will get nearly $5 billion in future payments from the Federal Communications Commission, Bloomberg News reported. The plan, which originally faced numerous objections but now has broad creditor support, will cut its debt load from about $16 billion and outlines about $7.9 billion in new borrowings for Intelsat to exit bankruptcy. The company negotiated 11th hour settlements with its hold-out constituents, notably the ad hoc convertible note holders, after a week-long trial that saw both sides arguing over which part of the capital structure should receive the FCC cash. The satellite firm filed for bankruptcy in May 2020 to trim its debt as part of a broader turnaround that hinges on transferring its so-called C-Band spectrum for use by the FCC. The commission has promised Intelsat that it will receive about $4.9 billion in exchange for hitting certain milestones to transfer the airwaves that can be used by mobile phone companies to provide 5G services.

Latam Airlines Group SA’s official low-ranking creditor group is unhappy with the Chilean carrier’s bankruptcy exit proposal, arguing a sale to rival Azul SA could leave its members much better off, Bloomberg News reported. In court papers filed on Wednesday, Santiago-based Latam’s unsecured creditor committee said the airline’s current reorganization plan is so unfair that it can’t win court approval. It flouts U.S. bankruptcy rules by favoring some evenly-ranked creditors over others and giving value to shareholders that don’t deserve it, lawyers for the group wrote. “Rather than use the past eighteen months to negotiate and prepare a value-maximizing plan that treats all constituents fairly and in accordance with the Bankruptcy Code, the Debtors have used their exclusive opportunity to negotiate an unconfirmable insider deal at the expense of non-preferred creditors,” lawyers from the Dechert firm wrote on behalf of unsecured creditors. Under the current proposal, Latam locked arms with key shareholders — Delta Air Lines Inc., Qatar Airways and Chile’s Cueto family — and a major creditor group on a deal that would raise about $5 billion and slash its debt load. Sixth Street Partners, Sculptor Capital and SVPGlobal are leading the creditor group that has agreed to backstop the plan. The plan would result in creditors taking control of the company, while existing shareholders could retain a sizable ownership stake. That’s unusual in U.S. bankruptcy — stockholders are last in line to be repaid — but Latam’s deal would smooth over potentially thorny Chilean securities law issues.

An attorney for the Diocese of Norwich (Conn.) told a federal bankruptcy court judge on Wednesday that it expects to file a proposed bankruptcy plan by April 1 to resolve claims by at least 70 people who say they were sexually assaulted by priests and employees affiliated with the diocese, The Day reported. During the remote hearing before Judge James Tancredi, attorneys for both the Roman Catholic diocese and the committee that represents the claimants also agreed to a plan that temporarily would limit the large sums of money being spent by the diocese on legal and financial services fees. Over the past few months attorneys for the alleged victims — as well as Tancredi — have expressed concern that the millions of dollars in fees will reduce the money that eventually will be available to distribute to the victims. The diocese filed for chapter 11 bankruptcy in July as it faced more than 60 lawsuits filed by young men who charge they were sexually assaulted as boys by Christian Brothers and other staff at the diocese-run Mount Saint John Academy in Deep River from 1990 to 2002. Mount Saint John was a residential school for troubled boys whose board of directors was headed by retired Bishop of Norwich Daniel Reilly. Since then, additional people whose sexual assault allegations involved not only Mount Saint John but diocesan churches have filed claims in the bankruptcy case. Victims have until March 15, 2022, to file claims.

GTT Communications, Inc., a leading global cloud networking provider to multinational clients, announced today that the U.S. Bankruptcy Court for the Southern District of New York has approved the company’s pre-packaged plan, according to a press release. The pre-packaged plan enables GTT to improve its capital structure and execute its long-term business strategy. The combination of the recently completed infrastructure division sale and the transactions contemplated by the plan will reduce the company’s debt by approximately $2.8 billion. GTT expects to emerge from the chapter 11 process following receipt of the necessary regulatory approvals for the restructuring. GTT continues to operate and serve its customers in the U.S. and globally without interruption. Employees and partners are being paid in the ordinary course of business for obligations incurred prior to and after the commencement of the chapter 11 cases. The company also said that it has access to sufficient liquidity to operate its businesses including the payment of all such obligations.