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The Boy Scouts of America's insurers will have more time to build their opposition to the youth organization’s proposed settlement with tens of thousands of men who say they were sexually abused as children by group leaders, Reuters reported. U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Del. said during a virtual hearing yesterday that she will push back a preliminary July 20 court hearing on the deal to July 29, giving insurers that could be on the hook for claims coverage more time to prepare their case against the deal. The delay, though only a little more than a week, could cause the Boy Scouts to push back their eventual exit from bankruptcy, which the organization had previously hoped to do by the end of the summer. The organization filed for chapter 11 protection in February 2020 in an attempt to resolve nearly 300 sex abuse lawsuits. Last week, the Boy Scouts reached a deal with representatives of approximately 60,000 sex abuse claimants. Insurers say that the settlement validates, and requires insurance coverage for tens of thousands of claims without proper vetting. They have repeatedly accused the Boy Scouts’ lawyers of leaving them out of critical mediation sessions that led to the deal with survivor groups. The Boy Scouts’ attorneys have denied that allegation.

A giant tobacco cooperative based in Raleigh, N.C., has filed a multimillion dollar bankruptcy petition, the Triangle Business Journal reported. The U.S. Tobacco Cooperative filed papers to reorganize through a chapter 11 petition, listing both assets and liabilities as ranging between $100 million and $500 million. In a statement, USTC said the filing was to meet "short-term contractual obligations to member-growers during crop season 2021." USTC, according to its website, produces flue-cured tobacco grown by its more than 500 members in Florida, Georgia, South Carolina, North Carolina and Virginia. Member-grown tobacco is processed and sold as raw materials to cigarette makers throughout the globe. Over the past few years, the firm has been involved in contentious litigation. In 2018, it sued the federal government, alleging that informants from the Bureau of Alcohol, Tobacco, Firearms and Explosives had “engineered a scheme to steal approximately $24 million from USTC’s farmers.” In the initial lawsuit, USTC claimed the informants had pushed USTC to purchase the assets of two tobacco distribution businesses (Big South Wholesale and Big South Wholesale of Virginia) which were, in actuality, “an ATF front.” The ATF, in the U.S. government’s filings in the case, had explained that its investigations required it to purchase cigarettes, “therefore, ATF could operate in the small world of the tobacco trade only through established tobacco traders,” and denied USTC’s claims of negligence. That lawsuit was ultimately dismissed with prejudice last October. In 2019, USTC again filed suit, this time against certain underwriters at Lloyd’s, claiming the insurers failed to reimburse it “for the millions of dollars of losses it has incurred as a result of physical loss of and damage to its tobacco product arising from mold, humidity, water damage, moisture, flooding and/or other similar perils.” That case is ongoing in federal court. USTC also found itself on the receiving end of what ended up being a $24 million class action complaint, referenced in its bankruptcy statement. The complaint accused it of improperly retaining and using reserve funds held over from the tobacco pricing era, where members were paid for tobacco that failed to sell at auction for more than the minimum support price set by the federal government. USTC denied wrong doing.

Distressed-investment manager MatlinPatterson Global Advisers LLC placed two of its funds in bankruptcy in an effort to shield their assets from foreign litigation while it liquidates them and returns the proceeds to investors, WSJ Pro Bankruptcy reported. Yesterday’s bankruptcy filing covers MatlinPatterson Global Opportunities Partners II LP, as well as an affiliated Cayman Islands fund, which face legal actions in Brazil that have prevented them from returning money to investors, according to papers filed in the U.S. Bankruptcy Court in New York. The funds raised $1.65 billion, primarily from insurance companies, pension funds and other institutional investors to invest in financially distressed companies across industries including chemicals, security, fashion, and electronics, according to a declaration filed by the funds’ chief restructuring officer Matthew Doheny. Beginning in 2013, MatlinPatterson began to wind up the funds, liquidating their investments to return money to their investors. As of June 30, the funds had approximately $142 million in cash, held in bank accounts in the U.S., and $58 million of debt in the form of intercompany promissory notes, Mr. Doheny said. The two funds are facing an arbitration award against them in Brazil that has been upheld by a Cayman Islands court. The funds are also targets of litigation over their former Brazilian investment vehicle, as well as an enforcement proceeding in a Brazilian court based on an allegation they were responsible for the “disappearance” of some money in a Brazilian bankruptcy proceeding, according to Mr. Doheny. The three Brazilian legal claims amount to more than $400 million, surpassing the amount of cash in the funds’ bank accounts, Mr. Doheny said. He said the claims were meritless and that some have been fully released in accordance with U.S. law. The litigation in Brazil could drag on for years, he added.

The city of Long Beach has gained official, legal control of the Queen Mary following a judge’s approval yesterday in Delaware bankruptcy court, the Long Beach Post reported. Long Beach took physical control of the Queen Mary last month when former leaseholder, Urban Commons Queensway, chose to give up the lease after the ship received no qualified bidders at bankruptcy auction. Long Beach owns the Queen Mary but for years has leased the ship as a hotel and tourist attraction to various operators that have struggled to make a profit. In January, Eagle Hospitality Trust, the parent entity of Urban Commons Queensway, filed for chapter 11 bankruptcy with a total of more than $500 million in debt. The city, meanwhile, remains in a legal battle with Urban Commons over a litany of failed lease obligations, with a court hearing scheduled for August. The bankruptcy judge yesterday granted Urban Commons’ request to officially cancel the Queen Mary lease, a move that gives Long Beach complete control of the vessel for the first time in more than 40 years. The city is now tasked with deciding how much to invest in critical repairs for the aging vessel. An inspection report in April determined the ship would need at least $23 million in critical repairs to remain viable in the next two years, while a marine survey released in 2017 found that the ship could need nearly $300 million in critical repairs to stay viable. The ship remains closed to the public as the city plans for millions of dollars in safety repairs.

As the two-year mark in the Roman Catholic Diocese of Rochester’s (N.Y.) bankruptcy draws nigh, a $35 million settlement proposed between the diocese and a handful of its insurers is not sitting well with the bankruptcy’s official creditors’ committee, the Rochester Beacon reported. How the court comes down on the proposed Rochester diocese settlement could set the tone, not just for the Rochester case, but also for chapter 11 bankruptcies of three other New York Catholic dioceses that asked for court protection months after the Rochester diocese’s September 2019 filing. “I believe that the settlement of $35 million is within the range of reasonableness and should be approved by the Court,” wrote diocese special insurance counsel James Murray in a June 24 brief supporting the proposal. “We hope for the Court’s approval and we pray this settlement will be a catalyst for fruitful dialogue and progress in negotiations among the remaining concerned parties in the case,” the diocese said in a June 11 statement announcing the deal. The settlement between diocese and a dozen insurance companies that had balked at paying any claims came after nearly two years of stalled talks in a court-arranged mediation between the diocese and the companies. Not so fast, says creditors’ committee counsel Ilan Scharf, however. If the settlement is approved as proposed, it will either give abuse survivors short shrift or push the diocese into dire financial straits. Four hundred and eighty-five such survivors have filed claims in the case. Not yet clear is what sort of financial compensation each might win. What kind of claims the diocese proposes to pay will be largely determined by how much dozens of insurance companies that wrote liability coverage for the diocese decades ago contribute.

Patterson-UTI Energy Inc. agreed to acquire smaller rival Pioneer Energy Services Corp. in a move that could lead to further consolidation among oversupplied contractors in the oilfield, Bloomberg News reported. The stock-and-cash deal is valued at about about $295 million, which includes the retirement of all of Pioneer’s debt, Houston-based Patterson-UTI said Tuesday in a statement. The addition of Pioneer, which emerged from bankruptcy protection last year, adds rigs to America’s second-biggest drilling fleet and helps Patterson expand outside the U.S. into Colombia. “In a structurally smaller North American market with a customer base that has also consolidated, we applaud this type of consolidating, complementary transaction,” Evercore ISI analysts including Jason Bandel wrote Tuesday in a note to clients. While deals among U.S. shale producers have rebounded this year amid a recovery in crude prices, the oilfield services sector had remained relatively quiet since Liberty Oilfield Services Inc. bought the fracking business from Schlumberger last year in a deal valued at about $450 million at the time.

After nearly a year in the making, American Healthcare Systems, LLC (AHS) purchase of Randolph Health for $10.2 million has been finalized, the Triad Business Journal reported. The deal closed on July 1, allowing AHS to acquire “substantially all of Randolph Health’s operating assets except for the Accounts Receivable,” a spokesperson for Randolph Health said. In early June, N.C. Attorney General Josh Stein gave verbal approval of the deal. In March 2020, Randolph Health filed for chapter 11 protection, in accordance with a plan to seek debt restructuring while searching for a suitable buyer. While looking for a suitor, Randolph Health and Randolph County officials applied for a $20 million loan through the Rural Health Stabilization Program. In May, the Local Government Commission approved the Rural Healthcare Stabilization Program application from Randolph County for a loan of $12 million. A statement from the office of N.C. State Treasurer Dale Folwell, said the loan would act as a "linchpin" in the purchase offer from AHS. However, UNC Health, which had a lead role with the Rural Health Stabilization Loan Program committee, performed a separate evaluation of the purchase proposal and said it could not recommend the loan approval because the plan does not represent "a realistic and feasible path forward for Randolph Health." The funding was still approved and will be made available to AHS over several years now that the deal is complete. At this time, no funds have been dispersed, a Randolph Health spokesperson said.

A Sacramento, Calif.-based medical equipment manufacturer has filed for bankruptcy as it faces an $8.1 million legal judgment in a dispute over a device to treat diabetes, the Sacramento Business Journal reported. Bionica Inc. markets an insulin infusion pump that can be carried by patients in their pockets to regularly deliver insulin and can “rescue people who previously have had no chance for a normal life,” the company states on its website. Bionica operates out of a space in McClellan Park, and was incorporated in 2010, according to its filings with the California Secretary of State’s office. Bionica’s founder Gregory Gilbert and its sister company, Trina Health LLC, have been accused of false advertising of Bionica's diabetes products, in a lawsuit that the inventor of the company’s products, Dr. Thomas Aoki, filed in 2011. Amid the long legal battle, Bionica filed for chapter 11 bankruptcy in May. In its filing, the company stated that its assets were between $50,001 and $100,000 and that it faced between $1 million and $10 million in liabilities. Most of those liabilities are connected to an $8.1 million judgment that was handed down by a federal judge late last year, Gilbert told the Business Journal. In the judgment handed down in November 2020, U.S. District Judge Troy Nunley found Gilbert liable for patent infringement and falsely advertising diabetes treatments that were invented by Aoki.

Atlanta real estate developer Scott Leventhal has filed for chapter 11 bankruptcy reorganization, the Atlanta Business Chronicle reported. Leventhal has been CEO of The Trillist Companies Inc., a real estate developer and property management firm. Trillist, which is not a party to the bankruptcy filing, developed a 245-unit apartment project called Yoo on the Park, located on 13th Street near Piedmont Park. At the beginning of 2020, the company proposed a 46-story, 544-foot tower on a small parking lot between Peachtree Street and Crescent Avenue. In his July 5 filing in U.S. Bankruptcy Court in Atlanta, Leventhal lists assets and liabilities of between $1 million and $10 million. According to the filing, unsecured claims pending on Leventhal include $69.5 million to CIM RE Lending Sub LLC of Dallas; $9.3 million owed to AFF III Crescent LLC; $4,445,722 owed to Angel Oak Commercial Bridge; and $1,857,070 owed to Choate Construction Co. Leventhal has been entangled since February in a vicious legal battle in federal court in Miami with his business partner at Trillist, Joseph Kavana. Both are 50% owners of Trillist. Kavana served as the company's chairman, according to a court filing. Leventhal first sued Kavana, and then Kavana sued Leventhal. Kavana sought "to remove Leventhal as the Operating Officer of Trillist on account of his acts of fraud and gross misconduct and his myriad breaches of the parties’ Shareholders’ Agreement," Kavana's attorneys claimed in a court filing. Leventhal's attorney described the litigation as "basically a dispute between two partners."

A sex-abuse compensation program unveiled by the Boy Scouts of America would pay victims based not only on the severity of abuse they endured but also where it happened, taking into account the states where victims have had the opportunity to sue abusers regardless of when their abuse occurred, WSJ Pro Bankruptcy reported. The proposal outlines a range of possible payments, from $3,500 for sexual abuse that involved no touching, to as much as $2.7 million for sexual penetration by an adult perpetrator and other aggravating circumstances, according to court papers filed Thursday in the U.S. Bankruptcy Court in Wilmington, Del. The longer the abuse went on and the more severe it was, the higher the payments under the Boy Scouts’ settlement plan. Other criteria that will determine payouts includes whether an abuser has been accused by multiple victims, or was named in confidential internal files the Boy Scouts kept on suspected abuse, according to court records. Victims whose claim would have a better chance of succeeding outside of bankruptcy will get more than those on weaker legal ground. The compensation proposal is the culmination of negotiations between the Boy Scouts and representatives for most of the roughly 84,000 men who have filed claims against the youth group over childhood abuse. The settlement program requires the approval of the bankruptcy judge overseeing the Boy Scouts’ chapter 11 case and could undergo changes in coming weeks. The $850 million offer by the Boy Scouts represents the largest settlement of childhood sexual abuse claims in U.S. history, said Ken Rothweiler, a lawyer whose firm represents 16,000 claimants. The Boy Scouts also have proposed signing over their insurance rights and those of hundreds of affiliated local councils for the benefit of victims. The proposal, however, doesn’t have support from insurance carriers that are potentially on the hook for victim claims under policies they sold the Boy Scouts decades ago, when most of the alleged abuse occurred. Insurers have criticized the proposal, saying the youth group “turned over the pen” to victims’ lawyers to set the terms under which abuse claims will be valued and paid.