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After years of litigation to hold the pharmaceutical industry accountable for the deadly abuse of prescription painkillers, payments from what could amount to more than $50 billion in court settlements have started to flow to states and communities to address the nation’s continuing opioid crisis. But though the payments come with stacks of guidance outlining core strategies for drug prevention and addiction treatment, the first wave of awards is setting off heated debates over the best use of the money, including the role that law enforcement should play in grappling with a public health disaster, the New York Times reported. States and local governments are designating millions of dollars for overdose reversal drugs, addiction treatment medication, and wound care vans for people with infections from injecting drugs. But law enforcement departments are receiving opioid settlement money for policing resources like new cruisers, overtime pay for narcotics investigators, phone-hacking equipment, body scanners to detect drugs on inmates and restraint devices. “I have a great deal of ambivalence towards the use of the opioid money for that purpose,” said Chester Cedars, chairman of Louisiana’s advisory opioid task force and president of St. Martin Parish. The state’s directives say only “law enforcement expenditures related to the opioid epidemic,” added Mr. Cedars, a retired prosecutor. “That is wide open as to what that exactly means.” On Monday, 133 addiction medicine specialists, legal aid groups, street outreach groups and other organizations released a list of suggested priorities for the funds. Their recommendations include housing for people in recovery and expanding access to syringe exchange programs, personal use testing strips for fentanyl and xylazine, and medication that treats addiction. Groups that monitor opioid settlements use various criteria to estimate the total payout. But even employing the most conservative tabulation, the final amount could be well north of $50 billion when pending lawsuits are resolved, notably the multibillion-dollar Purdue bankruptcy plan, which the Supreme Court temporarily paused last week. At first glance, that looks like a trove of money. In reality, it will be parceled out over 18 years and is already dwarfed by the behemoth dimensions of the opioid crisis, now dominated by illicit fentanyl and other drugs.

Two big opioid cases suggest the U.S. bankruptcy process is unjustly providing relief for some while inflicting pain unnecessarily on others, according to a Reuters commentary. The first involves Mallinckrodt Pharmaceuticals, which may be headed for insolvency a second time. Between 2006 and 2014, it manufactured roughly 30 billion opioid pills. When states, Native American tribal governments and thousands of localities started suing all involved in the addictive medicine’s supply chain, from Johnson & Johnson to CVS Health, creditors decided the drugmaker would be better off resuscitated than sold off for parts. It emerged from chapter 11 in June 2022, agreeing to pay plaintiffs some $1.7 billion over eight years and warrants equal to a 20% stake in the company while sheltering executives including former CEO Mark Trudeau from legal liability. More notoriously, as recounted in multiple media outlets, books and TV series, closely held Purdue Pharma became a leader in the opioid market. Its attempt to climb out of bankruptcy has been stalled multiple times, most recently on Thursday by the U.S. Supreme Court. It agreed to let the Department of Justice make its case against attempts to grant protections to members of the Sackler family, who owned the company. As a result, the $6 billion they are contributing to a settlement is on hold.
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*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Diamond Sports Group, the bankrupt owner of local sports channels, is racing to formulate a chapter 11 exit plan before professional basketball and hockey resumes so it can reassure the leagues, teams and fans that it’s ready to broadcast upcoming games, Bloomberg News reported. Diamond intends to broadcast the upcoming slate of National Basketball Association and National Hockey League games. But it needs to reach a resolution on its path through bankruptcy quickly to show the leagues that it’s prepared to do so, Diamond lawyer Brian Hermann said during a Friday court hearing. “I don’t think anybody has to remind us of the clock,” Hermann said. “The management team and board are very well aware of it and it’s what is animating their every action, every day.” The broadcaster, which owns the Bally Sports brand of television channels, brokered a deal with senior lenders and creditors before the hearing that extends the company’s exclusive right to submit a bankruptcy exit plan to Sept. 30. The NHL has been having constructive discussions with Diamond on what its business relationship with the broadcaster will be going forward, said Shana Elberg, a lawyer for the league. There’s a risk that an agreement may not come together and it’s critical the NHL has certainty with Diamond before the start of the 2023-2024 season, she said. The league’s pre-season starts on Sept. 23 and regular season starts on Oct. 10.

Global regulators spent more than a decade trying to ensure that a large bank could fail without any government support. Despite this year’s bank failures, they are still working on it, the Wall Street Journal reported. Global regulators are reviewing the March failures, including Credit Suisse’s collapse and Swiss officials’ decision to push UBS to acquire its rival in a deal with billions of public money, people familiar with the probe said. Swiss officials chose to sidestep the postcrisis plan for global megabanks, under which Credit Suisse would have been wound down by regulators or restructured into a new entity. In the U.S., regulators are considering new rules as soon as this month that would force midsize banks to add to their financial cushions in case of insolvency. The March failures of Silicon Valley Bank and another midsize bank prompted officials to take extraordinary steps to promise depositors they could access their money. The tumult was far less severe than the financial crisis of 2007-09, when hundreds of banks went under and Washington injected hundreds of billions of taxpayer dollars to keep the system afloat. Still, the bank failures in the U.S. and in Switzerland have exposed gaps in the regulatory regime built up after the 2008 bailouts, some officials say.

Cyxtera Technologies Inc., the bankrupt data-center operator, has drawn interest for its assets from multiple parties including Brookfield Infrastructure Partners and Digital Realty Trust Inc., Bloomberg News reported. Cyxtera has been looking at a dual-track process as it seeks to wrap up its chapter 11 case. That includes weighing a sale of its business or a debt recapitalization in which lenders would take control of the firm. The company said in a news release last week that it has received multiple qualified bids, and final offers are due Aug. 18. Deliberations are fluid and there is no certainty that the parties will proceed with a final bid. Brookfield Infrastructure has been on a buying spree in the industry, with recent acquisitions of European data center firm Data4 and Compass Datacenters LLC. It also owns distressed data center Dawn Acquisitions LLC, which does business as Evoque Data Center Solutions. Prior to its June bankruptcy, the struggling data-center operator had entered into negotiations with lenders on how to tackle nearly $870 million of debt due next year. Cyxtera was formed in 2017 after CenturyLink’s data center and co-location business was combined with Medina Capital’s security and data analytics operations.

By Oct. 5, the public should know whether Lordstown Motors Corp. has a new owner. U.S. Bankruptcy Judge Mary F. Walrath on Aug. 8 approved a timetable of bidding and auction procedures related to the sale of the electrical-vehicle manufacturer’s assets, BusinessJournalDaily.com reported. Judge Walrath, of the U.S. Bankruptcy Court for the District of Delaware, has set an Oct. 5 deadline for a final sales hearing. Earlier this month, attorneys for Lordstown Motors told the court that the company has received “expressions of interest” from 13 entities that could potentially buy all or part of its assets or liquidate them. “Some of these proposals have big issues, and some are more promising,” Thomas E. Lauria, lead attorney for Lordstown Motors, told the court during a hearing Aug. 3. Judge Walrath also ordered a stalking-horse bid to be delivered no later than the close of business Aug. 24. Any party objecting to the bid would need to respond within five business days after the notice is filed.

Manhattan federal district court Judge Lewis Kaplan revoked the bail of FTX founder Sam Bankman-Fried just months before his scheduled trial, a decision that placed the former crypto exchange executive in handcuffs on Friday, YahooFinance.com reported. Federal prosecutors had alleged Bankman-Fried violated his bail agreement by communicating with a New York Times reporter about his former girlfriend and primary witness for the prosecution, Caroline Ellison. A gag order is not “a workable solution longer term particularly with someone who has shown a willingness and a desire to risk crossing the line in an effort to get right up to it no matter where the line is,” Judge Kaplan said. Ellison previously served as CEO of Alameda Research, an FTX-affiliated hedge fund, which prosecutors claim Bankman-Fried used to misappropriate FTX customer funds. Ellison has plead guilty to multiple fraud charges and entered a plea deal to testify against Bankman-Fried. "Mr. Bankman-Fried’s contact with the New York Times reporter was not an attempt to intimidate Ms. Ellison or taint the jury pool," the fallen crypto executive's lawyers wrote in a letter to Judge Kaplan. "It was a proper exercise of his rights to make fair comment on an article already in progress, for which the reporter already had alternate sources."

A local sporting goods company, which was among Louisville's fastest-growing companies last year, has filed for bankruptcy, the Louisville Business First reported. Guardian Baseball filed for chapter 11 protection with the U.S. Bankruptcy Court for the Western District of Kentucky on Aug. 3. According to the filing, the e-commerce baseball and softball equipment retailer has between $500,000 and $1 million in assets, and liabilities between $1 million and $10 million. Its largest creditors are Elan-Polo ($256,947), American Express ($155,696), Capital One ($139,784), Stinger Bat ($130,460) and Amer Sports ($119,585). Guardian Baseball, founded by Zev Bernard, president and Matt Kubancik, CEO, was No. 4 on Louisville Business First's Fast 50 list in 2022. It reported nearly 1,000% three-year revenue growth, growing from $455,000 in revenue in 2019 to $5 million in 2021.

The Supreme Court will examine Purdue Pharma’s $6 billion settlement of opioid lawsuits against its Sackler family owners, agreeing to hear the Justice Department’s claim that the drugmaker’s bankruptcy plan improperly wipes out potential liability to additional parties for allegedly fueling the opioid addiction crisis, WSJ Pro Bankruptcy reported. The justices, by taking up the case and preventing Purdue from carrying out the settlement during the appeal, ensured that a sizable chunk of tens of billions of dollars pledged by the pharmaceutical industry to combat the opioid crisis will be delayed — or not paid at all. But the move eventually could open the door for parties who balked at the deal to win additional compensation. The court’s review also will extend the litigation alleging that drug manufacturers, distributors and pharmacies oversupplied painkillers as opioid addiction grew into an epidemic. The legal uncertainty also will continue for the Sacklers, who sought to use Purdue’s chapter 11 proceedings to resolve opioid lawsuits aimed at holding them responsible for the costs of addiction and clawing back distributions they received from the closely held manufacturer before its bankruptcy. The case hinges on whether the nation’s bankruptcy courts have the jurisdiction to approve settlements between a bankrupt company’s creditors and third parties, such as insiders like Purdue’s owners, who wouldn’t otherwise be protected from liability. The court’s decision on the proposed deal, which Purdue needs to leave bankruptcy, is expected before July 2024. Read more.

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Barry Silbert and Digital Currency Group asked a U.S. court to throw out a lawsuit by the Winklevoss twins’ crypto exchange Gemini Trust Inc. that accuses the company and its leader of fraud, Bloomberg News reported. DCG and Silbert filed a motion to dismiss in Manhattan federal court Thursday, claiming Gemini fails to properly claim fraud and accusing the company and founders Cameron and Tyler Winklevoss of engaging in a “character assassination campaign” against DCG and Silbert. Gemini sued DCG and Silbert last month in New York, alleging they engaged in “fraud and deception.” The dispute stems from DCG crypto lending unit Genesis Global Holdco’s decision in November to freeze withdrawals, which left hundreds of millions of dollars worth of Gemini customer assets trapped. Through the Gemini Earn program, its clients could earn interest on their crypto deposits by lending them out through Genesis Global. When Genesis filed for bankruptcy in January, Gemini became one of its biggest creditors. After months of trying to negotiate a settlement with Genesis and DCG, Gemini filed its lawsuit in state court in July. The case has since been moved to federal court.