Valley Hospice of Arizona, a Mesa-based end-of-life care facility, has voluntarily filed for bankruptcy protection with at least $2.49 million owed to scores of creditors, ABC15.com reported. Valley Hospice on Nov. 12 declared Chapter 11 bankruptcy, which is the most common type of bankruptcy used to reorganize a failing business. This business is not connected to Hospice of the Valley, a larger chain of health care centers in the area. Documents on file with U.S. Bankruptcy Court for the District of Arizona show that the company owes money to 77 creditors, many of which are unsecured. Valley Hospice owes at least $2.4 million to these unsecured creditors, but it filed under subchapter V of chapter 11, meaning it has less than $7.5 million in total debts owed.
A creditor group claiming bankrupt drugmaker Mallinckrodt PLC took actions that resulted in price-gouging lost its bid to have an examiner appointed to investigate certain chapter 11 claims and votes related to asbestos exposure, WSJ Pro Bankruptcy reported. Judge John Dorsey of the U.S. Bankruptcy Court in Wilmington, Del., at a hearing on Monday declined to appoint an examiner to look into ballots cast on Mallinckrodt’s plan to exit chapter 11 bankruptcy on behalf of thousands of asbestos-injury victims represented by personal injury lawyer Thomas Bevan and other law firms. Mallinckrodt turned to bankruptcy in 2020 to resolve a rising number of lawsuits over the sale of opioid products along with antitrust claims over pricing for its H.P. Acthar Gel drug, used to treat infantile spasms, multiple sclerosis and other conditions. Dublin-based Mallinckrodt also faced more than 11,700 asbestos-related lawsuits, mostly related to legacy operations of predecessor companies. Judge Dorsey ruled against a request made last month by employers and others alleging they overpaid for Acthar treatments. The city of Rockford, Ill., for example, has alleged that beginning in 2007 Mallinckrodt entered into several contracts designed to limit distribution of Acthar and raise its prices more than 1,300%.
A New York real estate lawyer who has been accused by creditors of misusing client funds has reached a plea agreement with prosecutors and will surrender for arrest next month, the Manhattan district attorney's office told a federal bankruptcy judge on yesterday, Reuters reported. In a letter to U.S. Bankruptcy Judge David Jones, prosecutors said they expect attorney Mitchell Kossoff to surrender on or about Dec. 3 and to enter a guilty plea a week later. The letter did not specify the criminal charges or include details about Kossoff's plea. Kossoff PLLC was forced into bankruptcy in May after creditors claimed Kossoff, once a fixture in the New York real estate scene, misappropriated more than $8 million from the law firm's escrow accounts. A lawyer for Kossoff, Walter Mack, declined to comment. Mack has said Kossoff would cooperate in the bankruptcy proceedings if he is granted immunity from prosecution. Kossoff has not responded directly to his creditors' claims in bankruptcy court. The DA's letter asked Jones to extend its deadline to respond to Al Togut, the chapter 7 trustee overseeing the dissolution of Kossoff PLLC. Togut is seeking grand jury materials relating to prosecutors' investigation of Kossoff and asked Jones to force the district attorney to turn them over. Once Kossoff has entered his guilty plea, the grand jury's investigation will be complete, rendering the dispute moot, prosecutors said. The office will seek a court order allowing materials to be shared with Togut, the letter added.
Johnson & Johnson will likely have to wait until next year before it can restart negotiations to resolve 38,000 lawsuits filed by people who claim one of its oldest products, baby powder, causes cancer and other diseases, Bloomberg News reported. A federal judge questioned whether spending money on formal settlement talks makes sense while victim advocates oppose mediation. “I can order it tomorrow, but I don’t have any great anticipation there will be” progress, U.S. Bankruptcy Judge Michael B. Kaplan said yesterday during a court hearing in Trenton, N.J. “I’d rather have their hearts and souls in it.” Last month, J&J created a unit to hold its talc liabilities and then put that company, which has no operations, into bankruptcy. The goal is to negotiate with victims to create a trust with at least $2 billion to pay all current and future baby-powder claims. The bankrupt unit, LTL Management, wants to get mediation started immediately, Greg Gordon, the lawyer leading the chapter 11 case, said in court. Before LTL filed bankruptcy, the groups made “good progress” in settlement talks as part of a separate bankruptcy case filed in Delaware by the former J&J talc supplier, Imerys Talc America, Gordon said. Tens of thousands of women claim the talc in baby powder causes cancer, a charge J&J denies. For years, the company focused on fighting lawsuits one at a time in courts around the country until the consumer giant switched tactics and decided to try to resolve all current and future claims in bankruptcy.
Twenty-six former high-level figures at LeClairRyan, including firm founder Gary LeClair, CEO Eric Gustafson and former general counsel Lori Thompson, have reached an agreement with their insurer and the bankruptcy trustee for the defunct firm to settle a set of pending claims against them for $10 million, Law.com reported. Trustee Lynn L. Tavenner, the 26 defendants, and Columbia Casualty, which issued the firm’s management liability policy, participated in an all-day settlement conference Nov. 16 in which Columbia agreed to pay the trustee $9.425 million to resolve claims including conspiracy, breach of fiduciary duty, and trade secrets against the defendants, and an additional $575,000 to satisfy claim expenses. Together, this sum equals the $10 million liability limit on the Columbia policy.
A group representing people alleging that Johnson & Johnson’s talc-based products cause cancer said on Friday that the planned spinoff of the pharmaceutical giant’s consumer health division will create new problems for talc claimants, Reuters reported. The group, known as the talc claimants’ committee, filed a statement with the U.S. Bankruptcy Court for the District of New Jersey, where the chapter 11 case of J&J’s subsidiary that holds its talc liabilities was transferred this month. The subsidiary, LTL Management LLC, filed for bankruptcy protection in October with the goal of settling 38,000 talc cases. J&J maintains that its talc products are safe. In Friday’s statement, the committee said that J&J’s plan to split its consumer division from its pharmaceuticals business “would create further barriers between tort claimants and assets that should be available to satisfy claims.” It contends that if J&J becomes two separately traded entities, disputes will arise over which one will be on the hook for a funding agreement in the LTL bankruptcy. The committee also accused J&J of using the bankruptcy process as a litigation advantage. J&J said when it announced the split that the move had nothing to do with the talc litigation or the bankruptcy. A status conference is scheduled on Monday before U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey.
Bermuda-based offshore drilling company Seadrill Limited has announced that a new, independent, seven-member board of directors will assume leadership of the new parent company of the Seadrill group upon emergence from chapter 11, the Royal Gazette reported. The company said that it received confirmation of its plan of reorganisation on October 26 and is targeting emergence early in 2022. Julie Johnson Robertson is chairwoman of the board, and Mark McCollum will chair the audit committee. Also joining the board are Karen Dyrskjot Boesen, Jean Cahuzac, Jan Kjaervik, Andrew Schultz, and Paul Smith. Stuart Jackson, chief executive officer of Seadrill, said: "We look forward to welcoming this new board of directors to help grow the Seadrill brand and execute on our strategic priorities. “The new Seadrill will start 2022 in a position of strength and, together with our new board, we will be ready to focus on the reshaping of the industry."
Wesco Aircraft Holdings Inc., a distributor of airplane parts that does business as Incora, faces a cash crunch as depressed demand for new airplanes weighs on earnings and the company grapples with a high debt load, WSJ Pro Bankruptcy reported. Wesco’s cash dwindled to just enough to cover an interest payment it made this week, while another big interest payment is due in May. The Fort Worth, Texas-based company, which took on about $2 billion in debt in a leveraged buyout by Platinum Equity in early 2020, has struggled with weak demand for parts from aircraft manufacturers since the onset of the COVID-19 pandemic. Early this week, the company reported that cash on hand had dwindled to $117 million as of the end of September, before it paid out $110 million in interest on debt this week, according to the people. Wesco has another coupon payment of more than $100 million coming due in May. The company’s cash balance was slightly higher than the $104 million in the prior quarter ended in June, according to an August report by ratings firm Moody’s Investors Service. The company’s liquidity is likely to remain weak throughout 2021, according to the Moody’s report. The company’s earnings have fallen far short of projections it provided to debt investors in early 2020 when it agreed to be bought out by Platinum Equity, as orders for new aircraft slowed sharply since the pandemic, the people said. Wesco reported earnings before interest, taxes, depreciation and amortization for the 12 months ended in September of about $80 million, compared with the company’s projections of $350 million in annual Ebitda when Platinum closed the buyout in January 2020.
Auto repair company Service King has warned its lenders that dwindling cash is casting doubt on its ability to pay debt and continue as a going concern, according to people familiar with the closely held company’s most recent results, Bloomberg News reported. The Blackstone Inc. and Carlyle Group Inc.-backed company reported $31 million in cash as of the third quarter after it drew $72 million on its revolving credit facility and maxed out its borrowing availability, said the people, who asked not to be identified because the results were private. The company also entered into a sale-lease-back agreement with some of its real estate holdings that generated $66 million in gross proceeds, the people said. The auto collision repair company has seen its earnings drop as less drivers took to the road during the pandemic. It reported a loss of $6 million in adjusted earnings during the third quarter, more than the $5.4 million loss it reported in the same period a year ago and far from the $27 million gain the company reported in 2019, the people said.
Riverbed Technology has filed for chapter 11 protection with a view to implementing a pre-packaged financial restructuring plan to eliminate debts of $1.1 billion following struggles caused by the pandemic, The Register reported. The SD-WAN and WAN optimization business first signaled an intent to enter into a restructuring support agreement last month, which it said is fully supported by all its voting lenders, as well as private equity majority owners, Thoma Bravo LLP and Ontario Teachers' Pension Plan (OTPP). In court papers filed with the US Bankruptcy Court for the District of Delaware, Riverbed president and CEO Dan Smoot said the "best option" is to "right-size its capital structure and position itself for long-term success." "Like many similar businesses, Riverbed faced significant COVID-19 related headwinds in 2020, including global supply chain disruptions and labor shortages, which adversely affected Riverbed's financial performance," said Smoot in supporting document. "With factories shut down and stay-at-home orders instituted across the globe, Riverbed faced challenges maintaining its global supply chain as well as driving sales through a suddenly fully remote salesforce." The limitations caused by the pandemic and debt obligations — it was bought by Thoma Bravo and OTPP at the end of 2014 for around $3.6bn — "significantly constrained liquidity through 2020," the CEO added. The business, which employs 1,400 staff and sells to more than 30,000 customers, said the "sustained decrease in workforce participation and declined demand during the pandemic for Riverbed's products and services" kept the pressure on liquidity, leading to the exploration of efforts to reduce its debts to its owners.
