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Mallinckrodt PLC has begun defending its chapter 11 exit plan, a proposal that would reduce its debt and settle litigation the company faces over its production of opioids for roughly $1.72 billion, WSJ Pro Bankruptcy reported. A trial addressing the drugmaker’s chapter 11 reorganization plan opened Monday in the U.S. Bankruptcy Court in Wilmington, Del. Mallinckrodt sought court protection early last year with the framework of a deal already in hand to resolve its opioid liabilities. The trial could last several weeks. Financial advisers hired by Mallinckrodt were questioned yesterday about business projections and other metrics underpinning the restructuring plan. The value of the company once it leaves chapter 11 is projected to be between about $5.2 billion and $5.7 billion, court papers say. Dublin-based Mallinckrodt is among a handful of drugmakers that turned to bankruptcy recently to resolve a deluge of lawsuits over the opioid epidemic. As with other drugmakers that have sought chapter 11, settlement funds would be used to combat opioid addiction, which increased during the COVID-19 pandemic. Mallinckrodt is also seeking to settle liability over pricing for its H.P. Acthar Gel drug, which costs roughly $38,000 a vial and is used treat infantile spasms, multiple sclerosis and other conditions.

Entities linked to 245 Park Avenue, a Manhattan skyscraper tied to China’s HNA Group Co., filed for chapter 11 bankruptcy in Delaware, court papers showed, Bloomberg News reported. The listed assets and liabilities are between $1 billion to $10 billion, the filing showed. Tax authorities in Chicago and New York City were listed as the two biggest creditors, where it owes more than $23 million in property taxes. The filing showed the company has enough funds for distribution to unsecured creditors. Three years ago, HNA listed the Manhattan property among the assets that it was putting up for sale as it marketed more than $40 billion of its holdings to cut its debt load. At the time, the building was valued by the company at $2.21 billion.

Jessica Simpson’s company is set to buy back the singer-turned-fashion entrepreneur’s name from bankrupt Sequential Brands Group Inc. after no other qualified bids emerged, Bloomberg News reported. A court-supervised auction for the branding rights was canceled, according to court documents, leaving Simpson’s firm, With You Inc., as the sole bidder at $65 million. Simpson previously agreed to be the so-called stalking horse that sets the minimum price in the auction, and under bankruptcy rules, she’s required to complete the purchase if no better offer comes in. The auction, which had been delayed by a day, was canceled on Thursday. Sequential’s other major brands will be sold for more than $330 million worth of cash and new debt, the company said in court papers. Gainline Galaxy Holdings agreed to buy Sequential’s Active Division and Centric Brands will acquire Joe’s Jeans. The company is scheduled to ask a judge in Wilmington, Delaware to approve all of the sales on Nov. 4.

GTT Communications, Inc., a global cloud networking provider to multinational clients, announced yesterday that the company and certain of its direct and indirect subsidiaries have commenced pre-packaged chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York to effectuate a deleveraging of GTT’s capital structure, according to a press release. GTT’s foreign businesses and operations outside of the U.S. are not included in the filing and are unaffected by the chapter 11 cases. GTT on Sept. 1 entered into an RSA with key stakeholders, including holders of a majority of its secured and unsecured debt and I Squared Capital, to implement a comprehensive restructuring of the company’s balance sheet following the sale of its infrastructure division to I Squared Capital. The sale closed on September 16, 2021. Subsequent to executing the RSA and the closing of the sale, GTT solicited acceptances of its pre-packaged plan, which received support from its debtholders. Lenders holding over 88% of the aggregate outstanding principal amount of GTT’s secured loans and holders of over 88% of the aggregate outstanding principal amount of GTT’s 7.875% Senior Notes due 2024, including all lenders and noteholders that voted on the pre-packaged plan, voted to accept. The company is seeking to have the pre-packaged plan confirmed in mid-December.

Credit Suisse Group AG and Community Health Systems Inc. have been sued over the 2020 bankruptcy of Quorum Health Corp., facing allegations that their actions burdened the hospital operator with more than $1.2 billion in debt, WSJ Pro Bankruptcy reported. Publicly traded Community Health Systems founded Quorum in 2015 and spun it off a year later. Credit Suisse served as an adviser during the spinoff. When Quorum filed for bankruptcy in April 2020 with roughly $1.3 billion in debt, it said it was financially and operationally troubled from the start. The lawsuit was filed on Monday in the U.S. Bankruptcy Court in Wilmington, Del., by litigation trustee Daniel Golden and by Wilmington Savings Fund Society, which represents unsecured bondholders who are among the creditors who have received less than 10 cents on the dollar of what they are owed. During bankruptcies, a litigation trustee often files and manages lawsuits on creditors’ behalf. According to the lawsuit, Community Health caused Quorum to take on more than $1.2 billion in debt, with proceeds paid to Community Health as a dividend. “No reasonable fiduciary acting in QHC’s best interest would have agreed to burden QHC with that amount of debt, or to pay the proceeds to CHS as a dividend without receiving any value in return,” the lawsuit said. Community Health tapped its investment banker, Credit Suisse, to “nominally” serve as Quorum’s investment banker during the spinoff, according to the lawsuit.

Offshore driller Seadrill Ltd. on Tuesday obtained court approval for its reorganization plan, clearing the way for it to emerge from bankruptcy, Reuters reported. U.S. Bankruptcy Judge David Jones in Houston signed off on the plan during a virtual hearing. Under the plan, creditors will exchange $4.9 billion in debt for equity in the company. Seadrill will also raise $350 million in new financing. Seadrill filed its second bankruptcy since 2017 in February with $5.6 billion in secured debt, blaming its second trip to chapter 11 on the sustained downturn in the oil and gas market and economic impact of the COVID-19 pandemic. The company expects to exit bankruptcy in about 60 days.

Luckin Coffee Inc. reached a $175 million settlement of shareholder class-action claims that the Chinese rival to Starbucks fraudulently inflated its share price by falsifying revenue, Reuters reported. Lawyers for the shareholders called the all-cash settlement, filed on Monday night, an “excellent result,” citing Luckin’s liquidation proceeding in the Cayman Islands and its related filing for protection under the U.S. Bankruptcy Code. The accord also covers Luckin officials, as well as underwriters of the Xiamen, China-based company’s $645 million initial public offering in 2019 and a later offering of American depositary shares. U.S. District Judge John Cronan in Manhattan approved the preliminary settlement on Tuesday and scheduled a Jan. 31, 2022, hearing to consider final approval. The settlement also requires approval by a Cayman Islands court. Founded in 2017, Luckin ended March with about 5,000 stores. Shareholders sued Luckin in February 2020, two weeks after short-seller Muddy Waters Research accused it of inflating revenue. Two months later, Luckin’s share price sank 81% after the company said an internal probe found that its chief operating officer and other staff fabricated about $310 million of sales in 2019, or about 40% of annual sales projected by analysts. Luckin agreed last December to pay a $180 million fine to settle U.S. Securities and Exchange Commission accounting fraud civil charges.

Mexico's Grupo Posadas has filed for chapter 11 protection in a U.S. court, the hotel chain said yesterday, after its business was hit by the global coronavirus pandemic, Reuters reported. The pre-packaged chapter 11, filed in the Southern District of New York, is expected to be complete in about 60 days, Posadas, one of Mexico's biggest hotel groups, said in a statement to the Mexican stock exchange. The debt restructuring, first announced two months ago, is part of Posadas's efforts to "maximize our financial flexibility and better manage the challenges related to COVID-19," chief executive Jose Carlos Azcarraga said in the statement. The company said its hotels will continue to operate without interruption.

Avianca Holdings SA asked a judge for permission to exit bankruptcy under a plan that the airline says will eliminate about $3 billion in debt and preserve over 10,000 jobs, Bloomberg News reported. Latin America’s second-largest airline before the pandemic presented its restructuring plan at a hearing in New York Tuesday. If approved, the 102-year-old company is eyeing an exit from bankruptcy this year. U.S. Bankruptcy Judge Martin Glenn appeared to side with the company when a handful of objectors claimed the proposal wrongly favored some creditors over others. Judge Glenn asked the objecting creditors to file court papers by Thursday evening listing facts related to their complaints. He did not say when he would decide whether to approve the plan. The company said it plans to exit bankruptcy soon after winning final court approval. “We remain focused on moving forward with this process as efficiently as possible,” Avianca said in an emailed statement. Under the plan, Avianca will roll over roughly $1.6 billion of loans it raised during the bankruptcy process and raise $200 million of new equity, according to a regulatory filing. Certain lenders and noteholders, including United Airlines; Kingsland Holdings, which is controlled by Salvadoran mogul Roberto Jose Kriete Avila; and Citadel LLC, the hedge fund founded by billionaire Ken Griffin, will get 72% of the airline’s equity in exchange for canceling more than $900 million of debt, according to court papers.

Latam Airlines Group’s chief executive wants to steer his company out of bankruptcy next year with a shrinking carbon footprint and lower costs that can help it grow in a travel market still recovering from the coronavirus pandemic, Bloomberg News reported. Roberto Alvo said that Latin America’s largest air carrier is making progress on a financing plan that it will submit to a judge next month, putting it on track to exit bankruptcy protection as soon as the first half of 2022. During the chapter 11 process, which it entered last May, the company retooled its fleet and slashed operating costs to compete with low-cost carriers. But Alvo, a two-decade company veteran who took over as CEO last April as the pandemic was upending air travel, is stressing its role as a corporate citizen, including its pledge to cut carbon emissions. Latam “will be financially much stronger than how it entered and very willing and able to take market opportunities to grow,” Alvo said in an interview in Bogota on the sidelines of an airline conference. “But most important is that the countries where we operate understand the company as an asset to society.” Carriers around the globe, including Latam, are vowing to eliminate carbon emissions on a net basis by 2050 as the industry aligns with the Paris Agreement goal to limit global warming. Airlines have few options to reach the goal, at least in the short term, as production of more sustainable fuels remains limited.