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Mallinckrodt Plc, a maker of opioids and other drugs, is nearing a deal to hand majority ownership to its unsecured bondholders as part of a bankruptcy filing, Bloomberg reported. The bonds would be traded for most of Mallinckrodt’s equity and some new debt, and the debt of higher-ranked lenders would be reinstated or replaced by new securities that fully cover their claims. The lenders and opioid claimants would be included in the agreement. Debtwire reported earlier on that there were negotiations to give the bondholders equity and new debt. Most of the company’s unsecured debt trades at about a quarter of its original value. Mallinckrodt would become the third major opioid producer to file for bankruptcy, amid an addiction crisis that kills more than 100 Americans daily. The companies are facing off against thousands of plaintiffs from states, cities and counties that blame drug makers and distributors for the epidemic of overdose deaths.

Victims of the opioid crisis are calling on a bankruptcy judge to lift a protective shield that is keeping them from suing members of the Sackler family who own Purdue Pharma LP, WSJ Pro Bankruptcy reported. The demand comes as Purdue, after a year in bankruptcy, prepares to file a chapter 11 plan that will offer billions of dollars to states, tribes and others with claims against the company and its owners over allegedly improper marketing of OxyContin, a powerful opioid. Terms of the chapter 11 plan are being worked on behind closed doors and are slated to include provisions that permanently immunize the Sacklers from lawsuits, according to papers filed in the U.S. Bankruptcy Court in White Plains, N.Y., by a coalition of opioid victims known as the accountability committee. Purdue’s September 2019 bankruptcy filing stopped action against the drugmaker in thousands of lawsuits over its marketing of OxyContin, blamed for a significant portion of the epidemic of addiction. Hundreds of the cases also name as defendants some members of the Sackler family. Unlike Purdue, the Sackler defendants didn’t file for bankruptcy protection. Still, U.S. Bankruptcy Judge Robert Drain in White Plains ordered a stay of legal challenges against Purdue’s owners. Purdue, based in Stamford, Conn., wants to extend that stay until March. The personal-injury claimants say the Sackler defendants need to face a public reckoning sooner. The Sackler defendants have denied any blame for the alleged improper sales of OxyContin, though they have offered to add $3 billion in cash to a proposed Purdue settlement. The drugmaker and about half the states that have sued have agreed to that deal, but other states, including New York, have turned it down.

South Charleston, W.Va.-based Thomas Health has emerged from bankruptcy, about eight months after entering the chapter 11 restructuring process, according to Becker's Hospital CFO Report. Thomas Health filed for bankruptcy in January. The health system cited many financial challenges, including issues that affected healthcare delivery in the state, reduced reimbursements and the shift to outpatient care. The plan to emerge from bankruptcy was approved by a judge In August. Under the plan, Rosemawr Management, New York-based investment adviser helped Thomas Health pay $145 million in debt at a discounted rate.

Mallinckrodt PLC is preparing to file for bankruptcy within weeks, setting up a potential battle with state and local governments over the drugmaker’s alleged role in fueling opioid addiction in the U.S., WSJ Pro Bankruptcy reported. The Ireland-based company is negotiating with key creditors over a restructuring proposal covering more than $5 billion in debt. The framework for restructuring that debt isn’t supported by the states and U.S. territories that have sued Mallinckrodt and other pharmaceutical companies over the opioid crisis. Most state attorneys general reached a settlement with Mallinckrodt in February for $1.6 billion in payments over eight years, plus a minority stake in the business. But in March, Mallinckrodt’s capacity to fulfill its end of the settlement was damaged after the company suffered an adverse court ruling: A federal judge ordered it to pay $640 million for retroactive rebates related to its multiple-sclerosis treatment Acthar. Mallinckrodt has appealed the ruling, but the bill is close to coming due, prompting the drugmaker to pursue a chapter 11 bankruptcy filing that would give it financial breathing room.

Springfield Hospital and its associated Springfield Medical Care Systems submitted a plan for a bankruptcy bailout funded by the state of Vermont that would have them move forward as separate organizations, the Associated Press reported. The hospital and clinics, which employ around 600 people, proposed in a filing in a Burlington court on Friday to separate from each other but cooperate in coming out of bankruptcy. The plan relies on $6 million in “exit funding” from Vermont’s budget and writing off $4.65 million in unpaid taxes. The funding is included in the budget that the state legislature will vote on this week. Springfield Hospital and Springfield Medical Care Systems, a network of clinics in Springfield, Londonderry, Ludlow, Chester, Rockingham and in Charlestown, N.H., filed for bankruptcy in June 2019 with some $20 million in debt. 

Hospitals across the country are charging private insurance companies 2.5 times what they get from Medicare for the same care, according to a new RAND Corporation study of hospital prices released today, the New York Times reported. In a half-dozen of 49 states in the survey, including West Virginia and Florida, private insurers paid three or more times what Medicare did for overnight inpatient stays and outpatient care. While the pandemic caused losses for many hospitals, many of these big systems are sitting on large profit reserves, while also receiving some of the $175 billion in aid Congress allocated to make up for their costs and lost revenue. Employers provide health insurance coverage for more than 153 million Americans. The companies and insurers in the study paid nearly $20 billion more than Medicare would have for the same care from 2016 through 2018, according to the RAND researchers.

A Chicago-area rabbi, who formerly owned a nursing home chain at the heart of the biggest default in the history of a federal mortgage-guarantee program, has been indicted by federal authorities on charges he bilked millions of dollars from investors, the New York Times reported. The indictment against Zvi Feiner and a business partner, Erez Baver, is the latest chapter in the yearslong saga involving the Rosewood Care Centers chain of nursing homes, which are mainly in the Chicago suburbs. The $146 million default in 2018 was the worst ever for a program that insures mortgages on roughly 15 percent of the nation’s nursing homes. In the aftermath, the Department of Housing and Urban Development, which administers the mortgage guarantee program, tightened some of its underwriting and review processes. The Rosewood chain — which has been renamed by the new owners — was part of a network of nursing homes that Feiner, 50, and Baver bought after raising money from investors in the Orthodox Jewish communities around Chicago and New York. Federal authorities said that the two men had misled investors about the financial health of the nursing homes and had run them as a Ponzi scheme, using money from new investors to pay earlier ones and skim cash for themselves. The accusations are similar to those in a fraud lawsuit filed last year by the Securities and Exchange Commission and in investor lawsuits previously reported by the Times. In addition to the wire fraud charges, federal authorities seek to recoup $13.56 million from Feiner and $3.76 million from Baver.

Senate Republicans are proposing to beef up a “skinny” coronavirus relief package by more than 100 pages, including an enhanced deduction for charitable giving, $20 billion for farmers and ranchers and money for child care and stockpiling medical supplies, Roll Call reported. A vote on the package, which isn’t expected to advance over Democratic opposition, could come on Thursday, according to Senate Majority Leader Mitch McConnell. The Kentucky Republican said yesterday before introducing the revised bill that it would be “targeted” to the “very most urgent” needs facing Americans dealing with the continued pandemic fallout. "Senators will not be voting on whether this targeted package satisfies every one of their legislative hopes and dreams," McConnell said in floor remarks later on Tuesday. "We vote on whether to make laws, whether to forge a compromise, whether to do a lot of good for the country and keep arguing over the remaining differences later." McConnell also yesterday filed a motion to end debate on the underlying legislative vehicle, a measure which has already become law separately. Using a "shell" that has already passed both chambers enables the Senate to skip a procedural step and vote on cloture Thursday. An official price tag wasn’t available, but the new measure appears to contain more than $500 billion in assistance, which while larger than an earlier draft circulated last month would still be substantially shy of the $1 trillion July rollout that landed with a thud among Senate Republicans. Read more. 

In related news, a fresh U.S. Senate Republican coronavirus spending package introduced yesterday does not include new government assistance for U.S. airlines or airports, a text of the proposal showed, as the sector races to save jobs before October, Reuters reported. More than 35,000 workers at two of the largest U.S. carriers alone — American Airlines and United Airlines — are set to lose their jobs once an initial $25 billion in payroll support from the government expires this month. That has fueled a furious push by unions for a six-month extension of the aid, with flight attendants and other aviation workers planning to march outside the U.S. Capitol today. Last month a group of Senate Republicans backed extending $25 billion in payroll assistance for airlines, an idea Democrats also support. That proposal was excluded from the latest Senate measure, which was reviewed by Reuters and is expected to be voted on Thursday, but it is an opening salvo for talks that are expected to intensify once the U.S. House returns from recess next week. The Senate proposal also excludes $10 billion in assistance for airports that was part of an earlier Senate bill. Read more.