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A year and a half after the Boy Scouts of America sought bankruptcy protection amid an onslaught of child sex abuse lawsuits, a Delaware judge is poised to issue a ruling that could determine whether the organization might emerge from bankruptcy later this year, the Associated Press reported. Following a three-day hearing that ended Monday, the judge is mulling whether the Boy Scouts can pursue an $850 million agreement with attorneys representing a majority of the 82,500 abuse claimants in the case. Failure to win approval of the agreement could throw the case into chaos. The agreement involves the national Boy Scouts organization, the roughly 250 local Boy Scout councils, the official victims committee, and law firms representing some 70,000 men who say they were molested as youngsters by Scoutmasters and others. The Texas-based Boy Scouts have proposed contributing up to $250 million in cash and property to a fund for abuse victims. Local councils, which run day-to-day operations for Boy Scout troops, would contribute $600 million. The national organization and councils also would transfer their rights to Boy Scout insurance policies to the victims fund. In return, they would be released from further liability for abuse claims. The agreement is opposed by insurers that issued policies to the Boy Scouts and local councils, other law firms representing thousands of abuse victims, and various church denominations that have sponsored Boy Scouts troops.

Fracking contractor Basic Energy Services Inc. filed for bankruptcy Tuesday for the second time in five years, planning to sell itself in parts and setting up a $47.5 million conflict with its controlling shareholder, Ascribe Capital, WSJ Pro Bankruptcy reported. The Fort Worth-based company, which services oil and gas wells across nine states, said in court papers that three buyers have offered a combined $72 million for three business lines, a sum that would cover a fraction of Basic Energy’s $387.5 million in secured debt.

A New York judge declined to clear Oaktree Capital Management LP and Ares Management Corp. of allegations that a $427.5 million rescue package for restaurant supplier TriMark USA LLC trampled the rights of other lenders, WSJ Pro Bankruptcy reported. A group of TriMark lenders can continue pressing claims that last year’s rescue deal ran afoul of the company’s debt contracts by vaulting Oaktree, Ares and others to the top of the payment line, according to the ruling issued on Monday by Justice Joel M. Cohen of the Supreme Court of the State of New York.

More than 900 child sex abuse claims were filed against the Buffalo Diocese in federal bankruptcy court by Saturday, the deadline for abuse victims to come forward if they want part of a potential settlement that could cost the diocese tens of millions of dollars, Buffalo News reported. The number of claims was double the largest number ever filed in the more than 20 prior diocese bankruptcies in the U.S. since 2004. “The total count right now is 924,” said Ilan D. Scharf, attorney for the committee of unsecured creditors in the diocese bankruptcy case. “There are sometimes duplicate claims or amended claims and we’re still working through that, but 924 were filed.” Scharf also said that some claims may still be in the mail or have otherwise not been processed yet. The passing of the deadline Saturday clears the way for the pace of negotiations among the diocese, its insurers and abuse victims to pick up. The diocese filed for chapter 11 bankruptcy protection in February 2020 after it was named as a defendant in 260 Child Victims Act lawsuits. Diocese officials said there was no way the diocese could afford to continue its operations, while litigating or settling the lawsuits. At the time of the filing, diocese officials said they anticipated more than 400 potential claimants.

Boy Scouts of America yesterday made its final case for preliminary approval of a deal to resolve sex abuse claims, urging the judge overseeing its chapter 11 case to reject insurers’ efforts to thwart the settlement, Reuters reported. During a virtual hearing before U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware, Boy Scouts attorney Jessica Lauria argued that the $850 million settlement, was the organization’s best chance of distributing compensation to survivors and keeping the organization’s mission intact. The deal is supported by groups representing 70,000 sex abuse claimants and 250 local councils. The organization has apologized and said that it is committed to fulfilling its "social and moral responsibility to equitably compensate survivors." It said when it filed for bankruptcy in February 2020 that it knew "nothing can undo the tragic abuse that victims suffered" and believed the bankruptcy process was the best way to address the claims. If the judge approves the deal, the Boy Scouts will be able to move forward with a proposed reorganization plan that would allow it to exit bankruptcy by the end of the year.

A member of the billionaire Sackler family that owns Purdue Pharma LP will likely take the stand later this week in bankruptcy court as part of the drugmaker’s opioid settlement trial, Bloomberg News reported. David Sackler, a descendant of Raymond Sackler, provided a sworn, written statement to the bankruptcy court about the sweeping releases he and other family members will receive if Purdue’s bankruptcy judge approves its proposed settlement. He’ll be made available for live questioning sometime this week, lawyers confirmed during the drugmaker’s chapter 11 proceedings on Monday. The exact timing wasn’t immediately disclosed. The testimony will be the first time any member of the Sackler family has appeared live in front of Purdue’s bankruptcy judge. David Sackler testified at a House Oversight Committee meeting in December, denying claims that his family improperly shifted billions of dollars from sales of the controversial opioid-based painkiller OxyContin to offshore accounts. Purdue is in the midst of a multi-week trial over its proposed settlement of trillions of dollars in legal liabilities. The deal, which the company says is worth more than $10 billion in total, would see members of the Sackler family pay about $4.3 billion in exchange for broad protection from OxyContin lawsuits. Some critics of Purdue’s bankruptcy argue that the chapter 11 proceedings have allowed the drugmaker’s owners to avoid accountability for their role in the U.S. opioid crisis. The proceedings are taking place remotely due to COVID-19 protocols, and Sackler would testify by videoconference. Members of the public can listen in by telephone.

The creators of “South Park” have made a deal to save Casa Bonita, a Mexican restaurant and family entertainment center outside Denver that was featured in the plot of an episode of the popular cartoon show and filed bankruptcy earlier this year, WSJ Pro Bankruptcy reported. Trey Parker and Matt Stone, the show’s creators, announced they would purchase the restaurant, pending bankruptcy-court approval, during a conversation with Colorado Gov. Jared Polis, broadcast on the politician’s official Facebook account on Friday. The duo made the announcement about a week after ViacomCBS said it struck a six-year deal with Messrs. Parker and Stone for six new seasons of the TV show on Comedy Central and more than a dozen movies for Paramount+ that will reportedly earn the duo $900 million. The Mexican resort-themed restaurant is known for its 30-foot high waterfall, which cliff-divers, at times wearing gorilla-suits, regularly jump off to entertain guests. In one South Park episode, Eric Cartman, one of the show’s main characters, goes to extreme lengths to crash his on-again-off-again friend and rival Kyle’s birthday at Casa Bonita; Cartman is arrested at the end of the episode after he jumps off the waterfall. Despite the exposure Casa Bonita gained from the episode, the company behind the restaurant filed for bankruptcy protection in April, citing impacts from the COVID-19 pandemic throughout the dining industry. “We’ve come to an agreement with the owner and we bought it,” Mr. Stone said during Friday’s live conversation. 

The family members who own OxyContin maker Purdue Pharma LP required broad legal releases extinguishing opioid lawsuits against them as a condition for funding what became a roughly $4.5 billion settlement proposal, a company director testified yesterday during a bankruptcy trial examining the deal, WSJ Pro Bankruptcy reported. John Dubel, a restructuring specialist who joined Purdue’s board months before it filed chapter 11 in September 2019, said the Sackler family members who own the company required third-party releases as a prerequisite for a settlement so they would “be able to put all of the litigation behind them.” Dubel’s testimony came during the first day of a bankruptcy trial in New York over the settlement and Purdue’s broader chapter 11 plan, which would fund opioid abatement programs. He described the discussions while answering questions from a lawyer for Connecticut, where Purdue is based and one of a handful of states opposing the plan. The inclusion of legal immunity for the Sacklers, under nonconsensual third-party releases, is being challenged in the bankruptcy case by federal and state authorities. These legal releases have also drawn newfound scrutiny from Congressional Democrats. If U.S. Bankruptcy Judge Robert Drain approves the releases, civil claims against the Sacklers would be extinguished even if a minority of creditors and some states oppose the family’s settlement offer. The Sacklers have been named as defendants in civil litigation alleging they share liability for fueling opioid addiction, which they deny. Purdue pleaded guilty to federal felonies last year over its marketing of OxyContin, an opioid painkiller. The company has said the releases are necessary and boosted the value of the settlement to the benefit of all its creditors, while averting years of uncertain litigation.

An attorney for the Boy Scouts of America told a Delaware judge on Thursday that the group’s national board never adopted a resolution approving an $850 million agreement that is the linchpin of the Boy Scouts’ proposed bankruptcy plan, the Associated Press reported. Despite that acknowledgment, the Boy Scouts are asking the judge to rule that the organization properly exercised its business judgment in entering into the agreement and should be allowed to proceed with it as the foundation of a final bankruptcy plan. The agreement involves the national Boy Scouts organization, the roughly 250 local Boy Scout councils, and law firms representing some 70,000 men who claim they were molested as youngsters by Scoutmasters and others. It also includes the official victims committee appointed by the U.S. bankruptcy trustee. The agreement is opposed by insurers that issued policies to the Boy Scouts and local councils, other law firms representing thousands of abuse victims, and various church denominations that have sponsored local Boy Scout troops. The Boy Scouts, based in Irving, Texas, sought bankruptcy protection in February 2020 amid an onslaught of lawsuits by men who said they were sexually abused as children. The filing was part of an attempt to reach a global resolution of abuse claims and create a compensation fund for victims. Under the agreement presented to U.S. Bankruptcy Judge Laura Selber Silverstein, the Boy Scouts have proposed contributing up to $250 million in cash and property to a fund for abuse victims. Local councils, which run day-to-day operations for Boy Scout troops, would contribute $600 million. The national organization and councils also would transfer their rights to Boy Scout insurance policies to the victims fund. In return, they would be released from further liability for abuse claims.

Six months before Los Angeles-based Shepherd University collapsed into bankruptcy in 2017, accounting firm BW CPA Group Inc. gave the school’s finances a clean bill of health, the Wall Street Journal reported. State regulators called the audit “grossly deficient,” saying it missed red flags for potential fraud and left numerous errors in the financial statements uncorrected. The year before, BW CPA Group failed its second every-three-year peer review in a row, state regulators said. Until regulators took disciplinary action in 2019, there was no way for the public to know that a fellow auditing firm twice took the rare step of giving a failing grade to BW CPA. The firm was banned from auditing last year. Firms that audit private entities essentially police each other, often with no public disclosure. A Wall Street Journal analysis of the system shows that auditors give top grades to one another, hardly ever find fault with the biggest accounting firms and often don’t disclose failures among smaller auditors. Of the firms that disclosed their results, 91% got the highest “pass” grade and only 4% the worst “fail” score on the three-grade scale, the analysis found. None of the biggest 100 firms failed, and 99% of them got the top “pass” score, according to the analysis.