Basic Energy Services Inc. is once again seeking voluntary bankruptcy protection and plans to sell off a substantial portion of its Lower 48 assets, Natural Gas Intel reported. Hit by the oil price rout in 2015 and 2016, the Fort Worth, TX-based oilfield services operator successfully emerged from voluntary bankruptcy five years ago. After COVID-19 bashed energy demand last year, Basic shrank its Lower 48 business to three segments from five. The latest restructuring would give Basic the ability to sell assets in separate transactions to Axis Energy Services Holding LLC, Berry Corp. and Select Energy Services Inc. Basic filed for chapter 11 in U.S. Bankruptcy Court for the Southern District of Texas in Houston (No. 21-90006).
A U.S. appeals court on Friday refused to resurrect fraud claims against shareholders involved in Tribune Co.’s disastrous $8.2 billion leveraged buyout, but revived claims against two banks that advised the media company, Reuters reported. The U.S. Court of Appeals for the Second Circuit in Manhattan said a trustee representing Tribune creditors failed to show that large investors who sold back their stock in the media company’s Dec. 2007 LBO were unjustly enriched. Writing for a two-judge panel, Circuit Judge Denny Chin also said that while it was a “close call,” the trustee could try to show that Citigroup Inc and Bank of America Corp’s Merrill Lynch unit did not deserve $12.5 million “success fees.” Marc Kirschner, the trustee, had accused shareholders of pushing for the buyout despite knowing Tribune would be insolvent, portending its December 2008 bankruptcy. He also said the banks knew Tribune’s financial forecasts had been too rosy and the company would become insolvent by more than $1 billion, yet failed to act. The panel rejected claims that the banks intended to defraud creditors or committed professional malpractice. It also rejected all claims against another Tribune adviser, Morgan Stanley, but revived a claim against a valuation research firm that had projected Tribune would remain solvent. Tribune, which then owned the Chicago Tribune, Los Angeles Times, Baltimore Sun and WGN superstation, sought chapter 11 protection as ad revenue plummeted and more readers went online for news. The LBO left Tribune with about $13 billion of debt. Sam Zell, the real estate billionaire who led the LBO and became Tribune’s chief executive, has called the buyout the “deal from hell.” Lawyers for the trustee and Bank of America did not immediately respond to requests for comment. Citigroup said it was pleased with the decision. In July 2019, a Delaware bankruptcy judge approved a $200 million settlement of the trustee’s fraud claims against about 50 defendants, including Zell. None admitted wrongdoing. Read more.
In 2012, former baseball player Curt Schilling abruptly shut down his video game company 38 Studios without giving about 400 employees their final paychecks. Nine years later, many of those people are finally seeing some money — although it’s just a fraction of what they were owed, Bloomberg News reported. Many of the staff who worked for the volatile game developer in either its Rhode Island or Maryland offices will receive payment of about 14% or 20%, respectively, of what the company owed them before it ran out of money and was forced to shut down on May 24, 2012, according to bankruptcy documents. After nearly a decade of litigation through a Delaware court, final payouts were decided in June and recently began being distributed to staff. One former 38 Studios employee told Bloomberg News they received their check this week. Other employees said their checks had been sent to old addresses, as many of them have moved multiple times for new jobs in the years since 38 Studios closed. Schilling founded 38 Studios in the twilight of his baseball career in order to make his dream game, an online role-playing game that would take on the popular World of Warcraft. But his inexperience and mismanagement led the studio to collapse before the game was finished. In 2011, 38 Studios moved from Massachusetts to Rhode Island as part of an elaborate deal in which the state government served as a guarantor for a $75 million loan that was meant to support several years of development. But 38 Studios only received about $50 million and spent lavishly, leading Schilling’s company to run out of money in just one year.
Former Purdue Pharma LP director Mortimer D.A. Sackler testified Thursday he was “shocked and disappointed” when he learned last year the drugmaker his family owns pleaded guilty to federal felonies over its marketing and sale of the opioid OxyContin, saying management assured the board it was complying with relevant laws, WSJ Pro Bankruptcy reported. Sackler said during the second week of a trial in Purdue’s bankruptcy case that before he left the drugmaker’s board in late 2018, briefings by management indicated the company was successfully curbing OxyContin abuse while getting the painkiller to patients with legitimate medical needs. The board got updates on a reformulated, abuse-deterring version of OxyContin as well as an internal program to identify doctors who were overprescribing the drug, Sackler said. He added that management repeatedly told the board that, “Purdue was going above and beyond. We were doing things that no other company had ever done in terms of trying to do that. Trying to reduce prescription opioid abuse.” Purdue filed for chapter 11 bankruptcy protection in September 2019 following an onslaught of lawsuits over OxyContin, the company’s flagship painkiller. The trial is scrutinizing a settlement that would shield Sackler family members from civil litigation accusing them of contributing to the opioid crisis in exchange for a roughly $4.5 billion contribution from them to fund opioid abatement programs. Purdue pleaded guilty last year to three federal felonies over its conduct stretching from 2007, when the company and three of its executives pleaded guilty earlier to federal charges of misleading the public about OxyContin’s addiction risk, to 2017.
The judge overseeing the Boy Scouts of America’s bankruptcy case said the youth group can press ahead with a proposed settlement of sex-abuse claims, while requiring that certain provisions be removed, WSJ Pro Bankruptcy reported. Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court in Wilmington, Del., indicated she would approve a restructuring agreement between the Boy Scouts and lawyers representing abuse survivors, rejecting arguments from insurance companies that it wasn’t the outcome of a fair negotiation. The restructuring deal is a cornerstone of a broader plan to end the Boy Scouts bankruptcy case, the largest ever filed over sexual abuse. Later this month, the Boy Scouts are expected to seek approval of chapter 11 plan disclosures that would give creditors enough information to vote yes or no. The bankruptcy plan also requires approval from Judge Silverstein, who said Thursday she wasn’t determining whether it would pass legal muster. But Judge Silverstein said that she wouldn’t approve certain aspects of the restructuring agreement, such as nullifying an earlier $650 million settlement between the Boy Scouts and insurer Hartford Financial Services Group Inc. The youth group’s obligations, if any, to Hartford must be decided separately, she said. Nor will she let the Boy Scouts cover millions of dollars in legal fees for lawyers that negotiated in the bankruptcy on behalf of abuse victims, she said. It is up to the Boy Scouts and the abuse survivors whether to file a chapter 11 plan consistent with her ruling, she said. The restructuring agreement is designed to lock in support for the bankruptcy plan from the bulk of the 82,500 men who stepped forward to seek compensation after the youth group filed for bankruptcy last year.
Former Purdue Pharma LP president Richard Sackler distanced himself from a program pitched years ago by consulting giant McKinsey & Co. to increase OxyContin sales and denied that his family or the company are responsible for the opioid epidemic, WSJ Pro Bankruptcy reported. Dr. Sackler said that although he remembered having a call with McKinsey about research it had done for the drugmaker, he said during testimony on Wednesday in Purdue’s bankruptcy trial he didn’t recall some details about certain marketing and sale programs including an initiative called “Evolve to Excellence” that federal authorities have alleged led healthcare providers to write medically-unnecessary prescriptions of OxyContin, an opioid painkiller. McKinsey agreed earlier this year to a $573 million settlement with state authorities over advice it gave Purdue and other drugmakers on opioid painkillers, without admitting wrongdoing. Dr. Sackler’s testimony about the E2E program came during the second week of a bankruptcy trial scrutinizing a proposed settlement of litigation against he and other members of Purdue’s controlling family alleging they bear responsibility for fueling the opioid crisis. If approved, the agreement would shield the Sacklers from civil lawsuits over OxyContin in exchange for roughly $4.5 billion from family members to fund opioid abatement programs. The family would also cede control of Purdue under the proposal, which is being challenged by a handful of state and federal authorities.
The remnants of Greensill Capital, the U.K. financing company that collapsed earlier this year, filed for bankruptcy in the U.S., aiming to halt litigation filed by one of its biggest clients, a coal-mining company owned by the governor of West Virginia, WSJ Pro Bankruptcy reported. Greensill’s U.S. bankruptcy filing on Wednesday seeks to halt a lawsuit brought earlier this year by coal supplier Bluestone Resources Inc. and its owners, West Virginia Gov. Jim Justice and his family, according to court papers filed in the U.S. Bankruptcy Court in New York. Read more.
In related news, Greensill Capital’s bankrupt U.S. unit won court approval to sell its Finacity Corp. business to White Oak Global Advisors for $7 million after reaching a deal with unsecured creditors, Bloomberg News reported. The transaction includes an agreement with Finacity founder Adrian Katz, who dropped demands for $21.2 million in payments related to Greensill’s purchase of Finacity in 2019. In return, the bankrupt U.S. unit will not try to sue Katz or certain other insiders for their role in the deal. Greensill is shedding Finacity to raise money for creditors just two years after acquiring the business. Greensill’s U.S. unit filed for bankruptcy in New York in March following the collapse of its parent in the U.K. The U.S. unit had acquired Finacity from Katz, who continued to lead the business after its purchase. Finacity helps companies turn their invoices into structured financing. Read more.
Members of the family that owns OxyContin maker Purdue Pharma won’t contribute billions of dollars to a legal settlement unless they get off the hook for all current and future lawsuits over the company’s activities, one of them told a court Tuesday in a rare public appearance, the Associated Press reported. David Sackler, grandson of one of the brothers who nearly 70 years ago bought the company that later became Purdue, testified at a hearing in federal bankruptcy court in White Plains, New York, that without those protections, “I believe we would litigate the claims to their final outcomes.” “We need a release that’s sufficient to get our goals accomplished,” Sackler said in response to questions from a lawyer for the U.S. bankruptcy trustee. “If the release fails to do that, we will not support it.” That’s the heart of argument over the settlement plans of the family and the company, based in Stamford, Conn. Two offices of the U.S. Justice Department, nine states and the District of Columbia are objecting to the company’s settlement plan largely because it would grant legal protection to members of the wealthy Sackler family even though none of them are declaring bankruptcy themselves.
The National Rifle Association hasn’t cleaned up rampant financial and managerial misconduct as it claimed over the past year, illustrating the need for the gun-rights group to be dissolved, New York Attorney General Letitia James said in a court filing, Bloomberg News reported. A failed bid for bankruptcy protection earlier this year exposed the hollowness of the organization’s claim to have corrected the mismanagement, which included lavish spending by its longtime leader Wayne LaPierre and other serious lapses, James said in an amended lawsuit in New York state court. The attorney general said even the bankruptcy judge had cited the “shocking” level of authority LaPierre exercised over the group. James, who sued to dissolve the New York-chartered nonprofit a year ago, said in her new complaint Monday that the NRA’s “evasion of accountability” has “continued unabated.” She said the organization’s leaders intentionally disregarded proper corporate governance, wasted charitable assets, falsely reported improper transactions, and allowed insiders to take advantage of the NRA. Several alleged abuses were highlighted during a bankruptcy trial in Texas federal court, where a judge in May rejected the NRA’s attempt to reorganize as not having been filed in good faith. The court wrote that the NRA’s bankruptcy was part of an inappropriate attempt to avoid James’s lawsuit. The judge also said he was concerned about the “surreptitious manner” in which LaPierre excluded NRA board members and executives from his decision to file for bankruptcy.
