%1

After more than a year of high-stakes negotiations with billions of dollars on the line, a bankruptcy plan for Purdue Pharma, the maker of OxyContin, cleared a major hurdle late Wednesday, NPR reported. Bankruptcy Judge Robert Drain in White Plains, N.Y., moved the controversial deal forward despite objections from dozens of state attorneys general, setting the stage for a final vote by the company's creditors expected this summer. The drugmaker filed for chapter 11 protection in 2019 facing an avalanche of lawsuits tied to its aggressive opioid sales practices. Public health experts and many government officials say the introduction of OxyContin fueled the nation's deadly opioid epidemic. This development brings members of the Sackler family, some of whom own Purdue Pharma and served on the company's board of directors, a step closer to winning immunity from future opioid lawsuits. According to legal documents filed as part of the case, that immunity would extend to dozens of family members, more than 160 financial trusts, and at least 170 companies, consultants and other entities associated with the Sacklers.

Latam Airlines Group SA Chief Executive Roberto Alvo, seeking to stave off an overture from rival Azul SA, said the bankrupt air carrier’s Brazilian operations aren’t for sale, Bloomberg News reported. Santiago-based Latam, which has now been in U.S. bankruptcy for more than a year, has its sights set on a strong chapter 11 exit — not a piecemeal sale of the business, Alvo said in an interview Wednesday. The carrier’s shares briefly slumped last week after it denied reports that Azul SA planned to buy Latam’s Brazilian subsidiary. While Alvo said he is “absolutely not” selling the Sao Paulo-based unit to the low cost competitor, Azul is now waiting to evaluate Latam’s bankruptcy exit plan and may propose the acquisition offer directly to Latam creditors. Azul has unsuccessfully floated to Latam executives the idea of carving out the domestic Brazil network, according to the person. Under the proposal, Latam, the largest airline in Latin America, would have been left to focus on business elsewhere in the region while maintaining links to the route network in Brazil.

Heights Hospital in Houston filed for chapter 11 protection on June 1, according to court documents, Becker's Hospital Review reported. The hospital listed assets of $100 million to $500 million and liabilities ranging from $10 million to $50 million. The bankruptcy filing comes after the hospital closed suddenly and locked out staff in January over unpaid rent. Heights Hospital was once an acute care hospital but lately provided outpatient and specialty care. The hospital was purchased by AMD Global, a Houston-based real estate developer, in 2017, which created two companies to manage the medical center: 1917 Ashland Venture and 1917 Heights Hospital. The bankruptcy case was filed in the U.S. Bankruptcy Court for the Southern District of Texas.

U.S. District Court Chief Judge Frances Tydingco-Gatewood reduced the professional fees approved for the Archdiocese of Agana's accounting firm and special immigration counsel in the church's bankruptcy case, for not complying with court orders and laws that require all bankruptcy-related billings and payments to be submitted to the court for approval, the Guam Daily Post reported. Davis & Davis PC and Deloitte & Touche LLP requested and received direct payment from the archdiocese, despite the court's issuance of "several orders dealing with the proper procedure to seek compensation," the judge said. Assistant U.S. Trustee Curtis Ching noticed the direct payments and asked the court to reduce the compensation to these firms because of violations of court orders, the Bankruptcy Code and the Bankruptcy Rules of Procedure. "These requirements are intended to protect against the 'unfairness of allowing the debtor to deplete the estate by pursuing its interests to the detriment of the creditors'," the judge wrote in her order. The creditors in the archdiocese's chapter 11 bankruptcy case include mostly clergy sex abuse claimants, who have yet to receive any compensation from the archdiocese. 

A federal judge said Tuesday he is worried that customers of a Southern California power authority that filed for bankruptcy last week could see their electric bills go up as the cities it serves brace for summer, WSJ Pro Bankruptcy reported. “It gets hot out here,” Judge Scott Yun of the U.S. Bankruptcy Court in Riverside, Calif., said during the first hearing in Western Community Energy’s municipal bankruptcy case. How the bankruptcy might impact WCE customers will be among the most critical factors Judge Yun said he would consider as the power provider’s chapter 9 bankruptcy moves forward. Residents of California’s Inland Empire — a region east of Los Angeles where WCE’s roughly 100,000 customers live — routinely pay between $300 and $600 a month for utilities during the summer months when temperatures regularly surpass 100 degrees Fahrenheit, Judge Yun said. WCE’s board moved earlier this year to raise rates and as a result customers will see their summer billing increase by an estimated $10 to $15 a month on average. “It is impossible to live and have your kids indoors and do anything without turning on your utilities,” Judge Yun said. WCE began providing power to its roughly 100,000 customers last year in the early months of the COVID-19 pandemic, which stressed the authority’s finances to the breaking point during its first year of operation. WCE was created through California’s community choice aggregation program, which allows municipalities to jointly negotiate to purchase energy in bulk.

Mercy Hospital and Medical Center’s new owner will invest $50 million in the next two years as it works to rebuild a facility once slated for shutdown, Bloomberg News reported. Insight, which took over June 1, will create a “comprehensive plan to increase services and meet community need,” a representative said in an email Wednesday. It will also appoint three independent community board members within 90 days and restore a full emergency department. Insight last week said it also intends to revive Mercy’s status as a teaching hospital as part of a plan to operate Mercy as a full-service hospital “through 2029 and beyond.” The survival of Chicago’s oldest hospital was by no means assured. Its troubles, including a poorer, sicker population that lacked private insurance, predated the pandemic. The higher costs and halting of more profitable elective procedures due to COVID-19 further strained U.S. hospitals and heightened the disparity between those struggling to stay solvent and larger and more affluent systems.

In the 85 years since its maiden voyage, the RMS Queen Mary has survived rogue waves, transatlantic crossings and even a world war. For the last five decades, it’s enjoyed a second life docked in Long Beach, riding waves of popularity and tough times as a tourist attraction. But the historic ship is now facing its most challenging voyage yet. After years of neglect by a string of operators, the Queen Mary is so creaky and leaky that it needs $23 million in immediate repairs, according to a trove of court documents and inspection reports released last month, the Los Angeles Times reported. There is growing concern that if something is not done soon, the ship could fall into critical disrepair and be in danger of sinking. The Queen Mary has long struggled as a tourist attraction, in part because of the inherent costs that come with maintaining such a large vessel. Its struggles led to a variety of failed proposals that would have sent it to Canada, New Zealand and even back to England. The Queen Mary’s current state of disrepair is extensive: Structural steel is corroded, the bilge system is aging, the hull is compromised and leaks and safety hazards abound, according to an April 28 inspection by city-hired marine engineering firm Elliott Bay Design Group.

Avadim Health Inc., which makes topical foams, sprays and towelettes under Theraworx, Phuel and Combat One brands, filed for bankruptcy protection with secured lenders led by Hayfin Capital Management LLP positioned as the lead bidders in a sale process, WSJ Pro Bankruptcy reported. The Asheville, N.C.-based business filed for chapter 11 Monday in the U.S. Bankruptcy Court in Wilmington, Del., to sell itself after a planned public offering in early 2020 was called off. Despite quadrupling sales in recent years, Avadim never turned a profit, owes secured lenders and bondholders nearly $102 million and faces a “severe liquidity crisis,” court papers said. The leading bid from lenders would put them in control of the business in exchange for roughly $70 million in debt forgiveness. Privately held Avadim was founded in 2007 by Stephen Woody, the company’s chief executive officer and one of the largest of its 1,300 shareholders. The business does its own research and development, and makes its key products in-house in Asheville. Avadim has been trying to restructure its secured debt and to raise capital, but losses widened to $53.6 million in 2020, from $34.8 million the year before, Chief Restructuring Officer Keith Daniels said in a court filing.

Boy Scouts of America, which filed for bankruptcy protection a year ago to guard against a flood of sexual-abuse lawsuits, now faces a new problem in Michigan: potential criminal charges, the Detroit Free Press reported. The state police and attorney general announced Tuesday the two law enforcement groups have launched a joint investigation targeting accusations of sex abuse in the Boy Scouts and are asking for tips that may lead to prosecutions. In the announcement, Michigan Attorney General Dana Nessel said that the investigation was prompted by "allegations that came to light during recent civil litigation." But Nessel did not say whether they were looking for just past incidents or those that might be ongoing. She was unspecific about how large the team was, other than to say it "will include prosecutors, special agents and victim advocates," and she did not say why she was pursing the investigation now. In the past few years, the public has heightened sensitivity to sex abuse, especially after the sex abuse scandal surrounding former USA Gymnastics team doctor and MSU professor Larry Nassar.

Houston-based oil field equipment and service provider OFS International LLC has filed for bankruptcy and is suing a Cyprus-registered steel company to recover $10 million it paid to buy back shares in 2019, WSJ Pro Bankruptcy reported. OFSI said in a lawsuit filed on Monday in the U.S. Bankruptcy Court in Houston that the company was likely insolvent when management struck a deal in 2019 to acquire a 49% stake in its corporate parent owned at the time by TMK Steel Holding Ltd. OFSI said that it got nothing of value in return for a $10 million payment it made to TMK Steel because the shares were likely worthless when it bought them. The company is now seeking to use chapter 11 powers to unwind the transaction, saying that creditors were owed money when the deal was struck and remain unpaid. The total value of the deal was $15 million, but OFSI said it didn’t make a $4.5 million payment that was due in June 2020. An initial $500,000 payment was made at closing by OFSI President and CEO Konstantin Semerikov, who following the deal was the sole shareholder of the parent company OFSI Holding LLC.