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A federal jury found that an Arizona helicopter maker backed by financier Lynn Tilton defrauded the U.S. military, awarding $36 million in damages to the government and whistleblowers, an amount that could be tripled under a federal law, WSJ Pro Bankruptcy reported. A jury in the U.S. District Court in Huntsville, Ala., determined on Friday that MD Helicopters Inc. broke federal rules for government contractors through its relationship with Col. Norbert Vergez, an Army procurement officer involved in awarding contracts to the company in 2011 and 2012. After retiring from the Army, Col. Vergez went to work in 2013 for Ms. Tilton’s management firm Patriarch Partners LLC and later for MD Helicopters directly, court records show. In 2015, Col. Vergez pleaded guilty to a criminal conflict of interest stemming from his connection to MD Helicopters and to making other, unrelated false statements. Col. Vergez was sentenced in 2016 to five years of probation and a $10,000 fine. Former MD Helicopters employees in 2013 filed a whistleblower complaint against the company and Ms. Tilton, its CEO at the time, saying MD had groomed the colonel for employment while enlisting his aid to secure government work. His job at Patriarch was merely a cover for his true employment at MD Helicopters, according to the complaint. Andrew Wirmani, a lawyer for the whistleblower plaintiffs, said that the amount MD has to pay out in damages is likely to be tripled, as permitted by the federal False Claims Act.

A group of Intelsat SA equity holders will make its case on Wednesday for the appointment of an independent examiner to investigate potential areas of value that it says the bankrupt satellite operator has overlooked, Reuters reported. Intelsat, which is about six weeks away from a hearing on its proposed reorganization plan, says the request is a last-ditch attempt to gain some leverage by equity holders who are expected to see little to nothing under the plan. The equity group, on the other hand, says Intelsat has completely ignored valuable net operating losses and potential causes of action that it believes could provide some recoveries to shareholders. The satellite operator filed for bankruptcy in Virginia in May 2020, saying it needed to restructure as it prepared to transfer some of its so-called C-band spectrum to the U.S. Federal Communications Commission, which planned to use the spectrum to build out a 5G network. In exchange, Intelsat is receiving about $4.9 billion from the FCC. The equity group, which represents retail holders of about 2% of Intelsat’s equity, says the restructuring has been designed for the benefit of Intelsat affiliates at the expense of the ultimate parent company whose shares they hold. An examiner is necessary to probe the full value of the company’s assets because it has so far been “ignored or devalued without explanation” in the plan, the group said in court papers. Institutional shareholders, including Cyrus Capital Partners and Appaloosa, are not part of the group seeking an examiner. Under the proposed plan, Intelsat’s debt stack would be cut from $15 billion to about $7 billion. A hearing on the plan, which has the support of about 75% of the company's debt holders, is set for Nov. 8 before U.S. Bankruptcy Judge Keith Phillips. 

U.S. units of Ireland’s Trane Technologies PLC have reached a proposed $545 million deal to help settle asbestos claims that pushed them into bankruptcy last year, WSJ Pro Bankruptcy reported. Aldrich Pump LLC and Murray Boiler LLC sought protection from creditors in June 2020 as a way to address tens of thousands of asbestos lawsuits. In papers filed Friday in the U.S. Bankruptcy Court in Charlotte, N.C., the businesses said they had reached a proposed agreement with a representative for individuals with future asbestos claims. According to a term sheet, the asbestos trust will have an initial lump-sum cash payment of $540 million, nearly all of which — $495 million — will be for asbestos claims, with the remainder for administrative costs. The plan will be funded in part through insurance proceeds. The trust will also include a $5 million promissory note from the business. The plan’s asbestos trust provides for both current and future classes of asbestos claims. At least $125 million of cash in the asbestos trust will be available to pay current asbestos claims, including those made by individuals who came down with mesothelioma, a type of cancer that has been linked to asbestos, before the bankruptcy. The business believes there are roughly 80,000 such claims.

The Justice Department, continuing its fight against a roughly $4.5 billion settlement that will shield the family who owns OxyContin maker Purdue Pharma LP from opioid lawsuits, is seeking to pause the deal until after federal appeals courts have weighed in on the agreement, WSJ Pro Bankruptcy reported. U.S. Trustee William Harrington, who is part of the Justice Department unit monitoring the nation’s bankruptcy courts, said in a Wednesday court filing that U.S. Bankruptcy Judge Robert Drain was wrong to approve the settlement earlier this month and said that his ruling authorizing the deal between Purdue and its Sackler family owners will likely be overturned by a higher court. The Justice Department challenge represents the next stage in the fight over the settlement, which will likely move to an influential federal appeals court that oversees bankruptcy courts in New York, where Purdue filed for chapter 11. Mr. Harrington is joining attorneys general in Washington, Connecticut, Maryland and the District of Columbia who have said they also intend to challenge the settlement in the higher courts. Harrington is advancing several legal arguments to overturn the deal, including that the settlement is unconstitutional because it effectively deprives people of their right to take the Sacklers to court. Legal claims citizens might hold against the Sacklers are a form of property that the settlement cannot take away without providing them their day in court, which is protected by the constitution, Harrington said. If upheld on appeal, legal releases granted to members of the Sackler family will protect them from civil litigation that could be brought by private citizens or state authorities, regardless of whether they agreed to the settlement. “The Sackler family’s attempt to hold [Purdue’s] reorganization hostage unless the non-debtor releases are imposed does not justify taking third parties’ property...without their consent, adequate notice, or any opportunity to be heard,” Harrington said.

Victims of Bernard Madoff's Ponzi scheme can expect to soon receive another $568 million to help cover their losses, the U.S. Department of Justice said on Thursday, boosting total recoveries above $18 billion, Reuters reported. Payouts to nearly 31,000 victims will come from the Madoff Victim Fund, a $4.05 billion government fund set up in 2013 and overseen by former U.S. Securities and Exchange Commission Chairman Richard Breeden. Following the latest distribution, its seventh, the fund will have paid out more than $3.7 billion to individuals, schools, charities, pension plans and others. More than 42,000 claimants are eligible for payouts. The latest distribution boosts their recovery from all sources to 81.35% of their losses, the Justice Department said. Another $14.5 billion has been recouped for customers of the former Bernard L. Madoff Investment Securities LLC by the court-appointed trustee liquidating that firm in bankruptcy.

A federal judge ordered the Archdiocese of Agana to file by Nov. 29 a reorganization plan, which includes how it intends to compensate nearly 300 clergy sex abuse claimants and other creditors, the Guam Daily Post reported. It's been 32 months since the archdiocese sought chapter 11 protection so it can reorganize its finances amid abuse claims exceeding $1 billion, while keeping its Catholic parishes, schools and programs running. District Court of Guam Chief Judge Frances Tydingco-Gatewood, in her order, said the Nov. 29, 2021 deadline for the archdiocese to file the reorganization plan is subject to extension "only upon showing of good cause requested prior to the expiration of the deadline." "The debtor's failure to comply with this deadline will provide cause to dismiss this case," the judge wrote in her order. Parties in the bankruptcy case have gone through mediations but the archdiocese has yet to present a plan agreeable to the creditors. In January 2020, or a year after the bankruptcy filing, the archdiocese released a $21 million plan to pay sex abuse claimants, using proceeds from the sale of real estate properties, payments from insurance firms, and contributions. The survivors and other creditors described the proposal as unreasonable, fundamentally flawed and has little hope of confirmation. No formal vote was taken to approve or disapprove the proposal at the time.

A committee charged with representing tens of thousands of alleged victims of child sex abuse in the Boy Scouts of America bankruptcy asked the judge yesterday to terminate the BSA’s exclusive rights to file a reorganization plan, so that it can file its own, the Associated Press reported. The committee’s court filing came hours after attorneys for the Boy Scouts filed a fifth version of a proposed bankruptcy plan, which contains settlements the committee describes as “grossly unfair.” The committee asserted that it is the only party in the case that can propose a plan that treats abuse survivors “fairly and equitably” and not “sell out” or leave them short. “More than 18 months into the chapter 11 cases, the debtors’ fifth effort at a plan is just as inadequate and flawed as the first four,” the committee's attorneys wrote. The committee, joined by attorneys for several insurance companies, also asked the judge to postpone a key hearing, scheduled for next Tuesday, for at least three weeks to allow parties to review and file objections to the BSA’s new plan. The hearing was intended for the judge to consider the adequacy of a disclosure statement outlining a reorganization plan the Boy Scouts filed in July. That plan was superseded by the plan filed Tuesday, which includes substantial changes and additions.

One of the primary insurers of the Boy Scouts of America announced Tuesday that it has reached a tentative settlement agreement with the organization and with attorneys representing tens of thousands of men who say they were molested decades ago by scoutmasters and others, the Associated Press reported. Under the agreement, insurance company The Hartford will pay $787 million into a fund to be established for the men, the company said in a news release. In exchange for the payment, the Boy Scouts organization and its local councils have agreed to release The Hartford from further liability regarding sexual abuse claims. Under a separate settlement, the Church of Jesus Christ of Latter-day Saints has agreed to pay $250 million into the fund for abuse claimants, said church spokesman Eric Hawkins. The denomination, commonly known as the Mormon church, was the largest single sponsor of Boy Scout troops before ending its partnership with the BSA at the beginning of last year. The proposed settlements are part of an ongoing effort by the Boy Scouts, which declared bankruptcy in February 2020, to forge a reorganization plan that must win approval by a majority of abuse victims and the court. Attorneys are still trying to negotiate a settlement with the Boy Scouts’ other major insurer, Century Indemnity. The proposed settlements are opposed by the official victims committee appointed by the U.S. bankruptcy trustee, as well as law firms separately representing hundreds of men who have filed sexual abuse claims. Representatives of the official victims committee described the proposed settlements as “grossly unfair.” The proposed settlements will be incorporated into a new reorganization plan that attorneys for the Boy Scouts were expected to file late last night. The new agreement with The Hartford was negotiated after the bankruptcy judge last month rejected two key provisions of an $850 million deal that the BSA had reached with attorneys representing a majority of abuse claimants. Judge Laura Selber Silverstein denied the BSA’s request as part of that deal for permission to withdraw from a previous $650 million settlement it had reached with The Hartford. The Boy Scouts sought to withdraw from that April agreement after attorneys for abuse claimants repeatedly insisted that their clients would never vote for a reorganization plan that included it.