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Town Sports International Holdings, the operator of New York Sports Clubs, had its bankruptcy plan approved after settling objections from two states over its billing of members while its gyms were closed during the COVID-19 pandemic, Bloomberg News reported. Bankruptcy Judge Christopher Sontchi approved the company’s chapter 11 plan on Friday in a court filing. His decision was delayed earlier this week by attorneys general from Massachusetts and the District of Columbia, who objected that club members had been unfairly charged dues when the gyms were shut. Town Sports operated Washington Sports Clubs, Boston Sports Clubs as well as the Lucille Roberts and Total Woman chains. A group of lenders that includes Tacit Capital agreed to exchange about $80 million in Town Sports debt for control of the gym chain. As for the dispute over dues, the order said Town Sports “will reasonably cooperate with the offices of the Massachusetts and Washington D.C. Attorneys General to resolve consumer complaints.” Gym chains have been hit hard by the COVID-19 outbreak amid on-again, off-again shutdowns ordered by governments, and the reluctance of members to come because of fears they’ll be infected. Among those that have filed for bankruptcy are 24 Hour Fitness Worldwide, Gold’s Gym International and, earlier this week, In-Shape Health Clubs. The Washington attorney general’s office claimed NYSC failed to abide by the promises it made to gym members while its facilities were closed and estimated the district is entitled to civil penalties and fees over $5 million. Massachusetts said it received over 2,000 complaints from consumers about billing and cancellation practices. Lawyers for the company and the states said at a hearing Thursday that they were close to settling the matter. The judge’s order establishes a process for gym members to email the company at TSIClaims@hcg.com to resolve billing issues.

Two members of the wealthy Sackler family who own OxyContin-maker Purdue Pharma LP offered apologies yesterday for the role the prescription painkiller has played in the deadly U.S. opioid epidemic, but sought to deflect personal responsibility in response to withering criticism from lawmakers, Reuters reported. Testifying remotely during a hearing before the U.S. House of Representatives Oversight Committee, David and Kathe Sackler, both of whom previously served on Purdue’s board, insisted they were assured by management that the company was meeting regulatory and legal requirements as the opioid crisis unfolded. The two, among several Sackler family members with ownership interests in Purdue, agreed to testify only after the committee’s chairwoman, Democratic Representative Carolyn Maloney, threatened subpoenas. Under a settlement with the Justice Department, Purdue pleaded guilty in November to criminal charges for misconduct with its opioids and agreed to more than $8 billion in penalties that will mostly go unpaid. Sackler family members agreed to pay $225 million to settle civil claims they disputed. Neither they, nor other individuals, were criminally charged.

The former operator of New York Sports Clubs and Lucille Roberts is nearing approval of its chapter 11 plan of liquidation despite complaints from several state attorneys about alleged mistreatment of gym members, WSJ Pro Bankruptcy reported. Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., said during a hearing yesterday that he wanted to confirm the liquidation plan of Town Sports International LLC in a way that preserves due process rights for the various attorneys general to pursue litigation over alleged consumer violations and misconduct. Under the proposed plan, Town Sports won’t be in business after selling nearly all of its assets last month in a deal valued at about $85 million to a group of lenders and an affiliate of investment banking firm Lepercq de Neuflize & Co. “We are a shell entity with limited proceeds to address administrative claims,” Mark McKane, a lawyer representing Town Sports, said during the hearing, held by phone and video. The judge directed Town Sports and representatives of the attorneys general of Washington, D.C., and Massachusetts to work together to agree on language to be included in the proposed confirmation order before he would give his official approval of the liquidation plan. If that cannot be done, the confirmation hearing would continue today. “This will be the last continuance,” Judge Sontchi said about the plan confirmation hearing that began on Monday. The delay arises from customers and multiple attorneys general claiming that Town Sports improperly billed membership fees to customers despite pandemic-related closures and charged dues to customers who submitted cancellation requests when their main gyms remained closed.

Mallinckrodt PLC shareholders are pressing for a seat at the bankruptcy bargaining table, where the future of the drugmaker will be determined, WSJ Pro Bankruptcy reported. Targeted in most of the opioid litigation that has driven other drugmakers to bankruptcy and hit with damages over pricing of a non-opioid product, Mallinckrodt filed for chapter 11 protection in October with a partial deal on a way out. In broad strokes, the drugmaker wants to swap out debt for equity, and settle with the states, local governments, Native American tribes and others claiming damages for Mallinckrodt’s alleged wrongful marketing of painkillers. Company shareholders, left behind under Mallinckrodt’s proposed bankruptcy scenario, are asking the court to appoint an official committee to speak for them in the chapter 11 negotiations. Most companies that file for chapter 11 bankruptcy protection sacrifice shareholders to pay creditors. Mallinckrodt, still profitable, could be an exception, shareholders said in court papers. Stephen Welch, chief transformation officer for Mallinckrodt, said that the debt-for-equity swap proposal was the best the company could do as it is confronted with billions of dollars in potential damages.

Two Sackler family members who previously served on OxyContin maker Purdue Pharma LP’s board have agreed under pressure to testify this week before a U.S. House of Representatives panel examining the nationwide opioid epidemic, avoiding subpoenas threatened by the committee’s chairwoman, Reuters reported. David and Kathe Sackler reached an agreement in recent days with the House Oversight Committee to appear at a hearing set for Thursday, according to a memo yesterday from Democratic Chairwoman Carolyn Maloney to members of the panel. The two are among the Sackler family members who own Purdue. Purdue Chief Executive Craig Landau is also slated to testify at the hearing, the memo said. Landau was not at any point threatened with a subpoena. The opioid epidemic has claimed the lives of roughly 450,000 people in the United States since 1999 due to overdoses from prescription painkillers and illegal substances such as heroin and fentanyl, constituting an enduring public health crisis. Purdue reaped more than $30 billion from opioid sales over the years that enriched Sackler family members, and it funneled illegal kickbacks to doctors and pharmacies, investigations have found. Purdue in November pleaded guilty to criminal charges over its handling of OxyContin, which included defrauding the U.S. Drug Enforcement Administration and paying illegal kickbacks to doctors and a healthcare records vendor, all to help keep opioid prescriptions flowing. The plea deal was part of a broader settlement allowing the company to effectively sidestep paying billions of dollars in penalties. Sackler family members agreed to pay $225 million to resolve Justice Department civil claims that they disputed. They were not criminally charged. The Justice Department contends that the settlement, which foregoes most of a $2 billion forfeiture on the condition Purdue receives court approval for its bankruptcy plan, allows more money to flow to U.S. communities suffering from the opioid epidemic.

Purdue Pharma LP creditors pressing for confidential documents have provided “no evidence” that members of the billionaire Sackler family committed crimes or fraud while managing the opioid maker, lawyers for the family argue in court papers, Bloomberg News reported. States suing Purdue say that the privileged documents could help show that billions of dollars transferred out of the firm in recent years should belong to creditors. The family has denied allegations of wrongdoing and is fighting to keep the documents confidential. The ongoing battle took a turn in October when Purdue agreed to plead guilty to three felonies related to its handling of OxyContin. Members of the Sackler family that own and previously helped manage the company agreed to a separate $225 million civil settlement, without admitting wrongdoing. In papers filed alongside the civil settlement, the U.S. Department of Justice alleges that despite knowing in 2012 that the legitimate market for opioids had contracted, members of the Sackler family “requested that Purdue executives recapture lost sales and increase Purdue’s share of the opioid market,” resulting in the approval of an “aggressive marketing program” that led to the over-prescribing of the drugs. Creditors cited that deal and Purdue’s plea agreement as evidence of wrongdoing by the Sacklers, but lawyers for the family members point to their continued denial of any misconduct — neither deal included an admission of wrongdoing from the family members. The settlements will provide “substantial funding to communities in need, rather than to years of legal proceedings,” members of the family said in an October statement.

The mortgage-loan servicer Nationstar Mortgage LLC agreed to pay more than $74 million to settle complaints of deceptive practices brought by the U.S. government and a coalition of all 50 state attorneys general, Bloomberg News reported. In lawsuits filed in federal court in Washington, D.C., yesterday, the Consumer Financial Protection Bureau and the states said that Nationstar, owned by Mr. Cooper Group Inc., failed to properly oversee third-party vendors or respond to borrowers’ complaints, among other offenses. The CFPB said in a press release that Nationstar had agreed to pay about $73 million to more than 40,000 harmed borrowers and a $1.5 million penalty. The combined CFPB and state settlements will yield almost $85 million in recoveries for consumers and more than $6 million in fees and penalties, according to the statement. In a separate statement Monday, the U.S. Justice Department said that Nationstar and two other mortgage servicers, U.S. Bank National Association and PNC Bank, had agreed to pay more than $74 million to redress “servicing errors” that hurt borrowers in bankruptcy.

Less than six months after the Diocese of St. Cloud, Minn., filed its chapter 11 bankruptcy petition, a bankruptcy court has approved a plan for reorganization jointly submitted by the diocese and the creditors’ committee of clergy abuse survivors, Catholic News Service reported. This reorganization plan, approved on Dec. 3, “represents the culmination of several years of respectful negotiations among all the parties involved,” St. Cloud Bishop Donald J. Kettler said in a statement. The plan provides for a $22.5 million trust to compensate survivors of clergy sexual abuse. The funds will be made up of insurance coverage settlements, $14 million; property sales, including the St. Cloud Children’s Home, $5.25 million; and contributions from parishes and a line of credit, $3.25 million. The plan also includes non-monetary protocols for the protection of children. The Diocese of St. Cloud filed a voluntary petition June 15 for relief under chapter 11 of the bankruptcy code after the diocese and abuse survivors reached agreement in May on a framework for a resolution of all clergy sexual abuse claims against the diocese and area parishes.

The century-old, shuttered St. Patrick’s Catholic Church in downtown Raton, N.M. is up for sale. And what a “great value,” a real estate listing touts, with an asking price of $199,500. A dispute over St. Patrick’s and hundreds of other church properties is at the crux of three new lawsuits pending as the archdiocese’s chapter 11 bankruptcy reorganization enters its third year without a settlement, the Albuquerque Journal reported. The lawsuits allege that more than an estimated $245 million in property owned by the archdiocese was fraudulently transferred to its parishes or their trusts and should be available to help pay claims filed by nearly 380 victims of clergy sexual abuse. Lawyers for the archdiocese and its 94 parishes deny any fraud and argue in one court filing that the litigation is intended to strip parishes of assets that have “always been beneficially or legally owned by the Parishes.” A hearing set for today could decide whether the lawsuits, filed by attorneys for the victims, should be halted pending an appeal to the 10th Circuit Court of Appeals. One of the victims’ lawsuits lists the St. Patrick’s parcel in Raton as among more than 400 properties purportedly held by the archdiocese for the “beneficial interest” of its parishes. But the lawsuit says that the parishes’ interests weren’t recorded in title or county real estate records and that the $59 million worth of property should be part of the archdiocese bankruptcy estate. Lawyers for the parishes say the properties are held in trust “under canon law.”