%1

Almost three-and-one-half years after the Catholic Diocese of Camden, New Jersey filed for bankruptcy citing financial effects from the pandemic and sexual abuse settlements, its chapter 11 reorganization plan has been approved, according to the Insurance Journal. The final plan, the ninth amended proposal, establishes an $87.5 million trust to compensate about 324 survivors of sexual abuse within the diocese. The trust will be funded with $87.5 million from the diocese and related Catholic entities. Insurance policies turned over to the diocese will contribute $30 million. Bankruptcy Judge Jerrold N. Poslusny, Jr., in Camden, approved the plan that allows the diocese to pay into the trust over five years and keep operating so it can pay creditors. The settlement also requires the church to maintain and enhance protocols for the protection of children that were first implemented in 2002.

The Roman Catholic Diocese of Sacramento, which announced in December that it planned to file for bankruptcy protection because of a crush of sexual abuse lawsuits, will file with the bankruptcy court on April 1, The Sacramento Bee reported. “The faithful of the diocese are being notified of the filing date at this weekend’s Masses,” diocese spokesman Frank Lienert wrote Saturday in an email to The Bee. Bishop Jaime Soto announced in December that the diocese would follow the same path as some other ecclesiastical districts in California, including the Diocese of San Francisco, Diocese of Oakland, Diocese of Stockton and Diocese of Santa Rosa. Soto said in a statement in December that “it is now clear to me that this is the only way available to me to resolve these claims as fairly as possible.” “There are many victim-survivors awaiting compensation for the reprehensible sins committed against them,” the bishop wrote in the statement. “The diocese faces more than 250 lawsuits alleging sexual abuse by clergy or other church staff. The reorganization process will allow me to equitably respond to the large number of those who are victim-survivors of abuse.” The diocese originally said it expected to file in March, but has now pinpointed April 1 as the date court papers will be filed. The crush of lawsuits stems from a measure signed into law in California in 2019 that extended the statute of limitations for such cases. Other states have passed similar laws. The Sacramento diocese has published a list of 46 “credibly accused clergy” who served in the Diocese of Sacramento from 1933 through 2018. Many of them are now deceased, and some are listed as being fugitives from justice.

Bankruptcy Judge Jerrold Poslusny yesterday approved the Diocese of Camden's chapter 11 bankruptcy plan, allowing the New Jersey diocese to move ahead with a $87.5 million settlement of sex abuse lawsuits, Reuters reported. The diocese initially had agreed to settle with about 300 sex abuse victims in April 2022, but the deal had been held up in bankruptcy court over objections raised by the diocese's insurers. Judge Poslusny said at hearing yesterday that recent changes to the deal had resolved all of the insurance-related issues. The bankruptcy settlement was supported by more than 97% of the abuse claimants who voted on it. Bishop Dennis Sullivan said yesterday that the approval would allow the diocese to move on from a "painful" three-year bankruptcy restructuring and "provide substantial reparations to survivors harmed by sinful priests dating back more than six decades." Insurers had argued that the bankruptcy plan would create a settlement trust that was "biased" against insurers and could allow for the payment of inflated, invalid or fraudulent claims, in addition to excessive attorneys' fees. Judge Poslusny initially agreed with the insurers and rejected an earlier version of the settlement. But he said that the revised plan gave insurers the ability to defend themselves in court if the settlement trust tried to sue them for coverage without fulfilling its obligations under the diocese's insurance policies. Those obligations may include payment of the initial legal defense costs before insurance coverage kicks in, as well as requirements to cooperate with insurers to defend against claims, Judge Poslusny said.

The Diocese of Buffalo in New York has announced the sale of its headquarters in downtown Buffalo nearly four years after it declared bankruptcy amid hundreds of sexual abuse lawsuits filed against it, CatholicNewsAgency.com reported. The diocese announced in Western New York Catholic this week that “​​the Catholic Center, the diocesan central office building since 1986, has been listed for sale” for $9.8 million. In 2020, the diocese formally filed for chapter 11 protection. At the time the diocese said it was acting to provide the most compensation for victims of clergy sex abuse while continuing the day-to-day work of its Catholic mission. Diocesan officials announced in October of last year that the diocese would be putting forth $100 million to settle the numerous abuse claims lodged against it.

Bayer AG is weighing whether to use a controversial legal maneuver known as the Texas Two-Step to try to resolve tens of thousands of U.S. lawsuits claiming its Roundup weedkiller causes cancer, Bloomberg News reported. Faced with a recent string of costly jury verdicts over the herbicide, Bayer executives are consulting with law firms and advisers about how to prompt a bankruptcy judge to halt further trials scheduled for this year. The object is to wrangle a settlement of more than 50,000 cases. Bayer is looking for breathing room after it was hammered over the last four months with Roundup jury verdicts totaling about $4 billion. While the company has won more recent trials than it has lost, its latest courtroom defeat was its biggest yet, with a Pennsylvania jury awarding $2.25 billion to a man who blamed his cancer on long-term exposure to Roundup. Bayer maintains the product is safe. “Given the recent rulings on Texas Two-Step bankruptcies, I’m pretty sure Bayer knows this is a long-shot bid for a settlement,” said Prof. Bruce Markell, a former federal bankruptcy judge who now teaches law at Northwestern University. “But they may feel like they don’t have any other choice.”

A Texas bankruptcy judge denied the Justice Department’s motion seeking to dismiss or transfer the Sorrento Therapeutics chapter 11 case, ruling a bank account and mailbox the company’s lawyers established justified its bankruptcy petition in Houston days later, WSJ Pro Bankruptcy reported. Judge Christopher Lopez of the U.S. Bankruptcy Court in Houston on Monday said the motion filed by the U.S. trustee for the Southern District of Texas last month and a similar motion filed by a shareholder weren’t timely, as the case had already been pending for more than a year. Sorrento’s bankrupt subsidiary Scintilla Pharmaceuticals’ representation about the mailbox being its principal place of business had been public ever since it filed the petition last February, the judge said. The judge also said that if the case was transferred to a different state, it would take a long time for another judge to get up to speed on it, and he didn’t think that was in the best interest of the administration of justice. The U.S. trustee, which serves as a bankruptcy watchdog on behalf of the Justice Department, submitted a motion before Monday’s court hearing, arguing that Sorrento was a “case of forum shopping and venue manipulation taken to a new and unprecedented extreme.”

Endo International’s restructuring plan offers creditors a choice to continue legal battles against the opioid maker and related parties, an option not available in other recent bankruptcy plans that have faced legal challenges for taking away the right to sue, WSJ Pro Bankruptcy reported. Endo’s plan, which aims to resolve a multitude of personal-injury claims stemming from the impact of the opioid maker’s painkillers and other products, would pay more to creditors who agree to relinquish litigation rights. But those who want to continue fighting for more money in court would be allowed to do so if they accept a smaller upfront payment. This two-tiered payout option was added to Endo’s chapter 11 plan after a creditors committee rejected an earlier offer to pay only those who agreed to sign legal releases, and as bankruptcy plans granting such broad releases to companies — and to related third parties not in bankruptcy — have faced scrutiny. Malvern, Pa.-based Endo filed for bankruptcy in 2022 under the weight of thousands of lawsuits from individuals, state and local governments, and private institutions that alleged the company’s Opana ER painkiller helped fuel the nation’s opioid epidemic. Unlike most chapter 11 plans addressing similar personal-injury litigation that have been approved, Endo’s plan won’t provide blanket releases to third parties such as company executives and lenders that aren’t in bankruptcy themselves, lawyers involved in the case said. Instead, Endo’s restructuring plan contains a provision that allows its creditors, including thousands of people who suffered the effects of the opioid epidemic, to continue to litigate against the company, its executives and the lenders who would become the new owners of the restructured company after bankruptcy. The creditors would receive higher monetary awards if they choose to sign away their right to sue.

While rivals Walmart Inc., CVS Health Corp. and Walgreens Boots Alliance Inc. agreed to pay more than $13 billion combined to settle opioid lawsuits, Rite Aid never reached a similar accord before its bankruptcy filing put litigation on hold, Bloomberg News reported. The company told opioid plaintiff lawyers it didn't have the funds. And unlike drugmakers that have gone bankrupt, the retailer doesn’t expect it will wind up with any money to pay opioid victims. “Bankruptcy is perceived as a strategic tool that provides enormous leverage in negotiations with injured people,” said Melissa Jacoby, a law professor at University of North Carolina Chapel Hill. "It’s a real problem that bankruptcy is being used this way, even when a company has other financial problems.” Rite Aid’s restructuring talks have focused on how much it can afford to repay its secured creditors before either selling itself or reorganizing into a new company, immune from future opioid lawsuits. Last year, Rite Aid filed for Chapter 11 bankruptcy, listing debts of $8.6 billion, close to $1 billion more than the value of its assets at the time. The company got a new $200 million loan in Chapter 11 and continued access to an existing credit line from a group of its secured lenders after it agreed to bump up more than $3 billion of their old debt in the repayment line. Rite Aid is still trying to sell its retail business. But its back-up plan involves shedding a lot of debt, shutting down more than 600 stores and giving the remaining pharmacy business a fresh start. Mediated talks with the committee of mass tort claimants are ongoing, so their outcome could change if a deal is struck. But Rite Aid said in court papers as recently as Feb. 20 it doesn’t expect for there to be any money left for opioid plaintiffs after paying higher-ranking debts.

Yellowstone Capital, a pioneer in a form of high-risk lending called merchant cash advance, was sued by New York’s attorney general for $1.4 billion for allegedly making illegal loans to small businesses, Bloomberg News reported. For years, Yellowstone lent money at rates that exceeded usury limits — sometimes more than 800% annualized, according to the lawsuit filed in New York state court in Manhattan Tuesday. Like other cash-advance companies, Yellowstone claimed those rules didn’t apply because the transactions were “advances” on businesses’ future revenue rather than loans. They “pretended to offer a helping hand, but instead provided only illegal, ultra-high-interest loans,” Attorney General Letitia James said in a statement. Yellowstone, founded in 2009 by Yitzhak Stern and David Glass, a former stock trader who pleaded guilty to insider trading charges, was one of the biggest players in the industry, which took off after the financial crisis. Yellowstone advanced more than $500 million in 2017 alone. Originally based in New York’s financial district, then Jersey City, New Jersey, its salesmen worked the phones to pitch cash advances to florists, pizzerias, truckers and other small businesses. New York is suing dozens of companies and people related to Yellowstone, which it called a “fraudulent operation” and a “predatory lending scheme.” The state is seeking the recovery of $1.4 billion in interest and fees and a lifetime ban from the industry for Glass. Five people associated with Yellowstone have already agreed to settlements totaling $3.4 million, the attorney general said.