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New York Attorney General Letitia James sued the New York Sports Club and Lucille Roberts gym chains for charging dues to members for facilities that remain closed due to the coronavirus pandemic and failing to honor cancellation requests, Bloomberg News reported. James filed suit yesterday in state court in Manhattan against Town Sports International Holdings Inc., which owns both chains. The attorney general is seeking a court order blocking the company for charging for shuttered facilities or canceled memberships. The gym chains came under fire from James earlier this year for charging April dues despite being shut down by Governor Andrew Cuomo in March. They agreed to stop billing members while they were closed, give credits to those who were charged and allow customers to cancel their memberships. But James said they resumed charging members Sept. 1 even though some gyms remain closed. They have also not offered the promised credits for the dues that were charged in March and April, according to the New York suit. Town Sports filed for chapter 11 bankruptcy protection earlier this month, saying that it was unable to keep up with debt payments after it was forced to shut its gyms for months. The company is seeking to close certain locations permanently, depending on the outcome of talks with landlords, and has support from its lenders to pursue a sale of its business. 

A bankruptcy judge has extended until next year a shield that protects Purdue Pharma LP’s owners from litigation, saying the buffer is needed to facilitate negotiations with states on a potential multibillion-dollar settlement over the opioid crisis, WSJ Pro Bankruptcy reported. A committee of opioid victims recently had sought to lift the injunction and allow lawsuits to proceed against members of the Sackler family who own Purdue, maker of the powerful opioid OxyContin. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., yesterday granted Purdue’s request to extend the injunction until March. The injunction covers the company as well as its owners. “The parties have an incredible opportunity at this moment to move forward quickly, to end these cases and get the money out to abate the opioid crisis,” Judge Drain said. “They should do it, and anything that distracts them from that process is not worth the candle.” Thousands of lawsuits accusing Purdue of helping fuel the opioid crisis were paused when the company filed for bankruptcy in September 2019.

A diocese on Long Island is filing for bankruptcy protection to deal with legal expenses that stemmed from multiple sexual abuse lawsuits, NBCNewYork.com reported. The Diocese of Rockville Centre says that it needs chapter 11 protection to restructure and to help facilitate settlements to dozens of sexual abuse victims who filed sexual misconduct lawsuits under the state's Child Victims Act. “We believe that this process offers the only way to ensure a fair and equitable outcome for everyone involved, including abuse survivors whose compensation settlements will be resolved by the courts,” Bishop Barres said in a statement. Last year, the diocese filed a legal challenge arguing that the Child Victims Act, which loosened statutes of limitations on molestation cases, violates the New York state constitution. Back in 2018, the diocese agreed to pay claims to more than 200 sex abuse victims, before the Child Victims Act was passed and even more lawsuits were filed. Rockville Centre is not the first to seek bankruptcy protection under the weight of sexual misconduct lawsuits. The Roman Catholic Diocese of Rochester was the first to do so in New York. 

A Democratic Senator wants information about a decision by the maker of OxyContin to file for bankruptcy in a New York City suburb known as a popular landing spot for large corporate restructurings because of the single judge overseeing chapter 11 cases there, the Wall Street Journal reported. Sen. Tammy Baldwin (D-Wis.) yesterday asked Purdue Pharma LP’s board to turn over any emails and other information documenting the company’s decision to change its New York address for receiving legal documents from Albany to White Plains about six months before filing for chapter 11 last year. Judge Robert Drain is the only bankruptcy judge sitting in White Plains, meaning that cases filed there were until recently assigned exclusively to him. That sets White Plains apart from other popular bankruptcy venues such as Delaware, where cases are randomly assigned to one of several judges. Purdue changed an address it has registered with the New York Department of State shortly before Chief Executive Craig Landau said in an interview published in the Washington Post that the business was considering filing for chapter 11 protection, according to the letter Sen. Baldwin sent Purdue. She and other Democratic lawmakers previously urged Judge Drain not to grant Purdue’s request to pay Landau a bonus that could be worth millions of dollars. Purdue is using bankruptcy to try to implement a multibillion-dollar settlement of thousands of lawsuits brought by states, local governments and Native American tribes accusing the company of contributing to widespread opioid addiction. The settlement proposal, which requires court approval, would cede control of Purdue to creditors and includes a roughly $3 billion payment from the Sackler family members that own the company. Based in Stamford, Conn., Purdue changed registered agents to one that has a White Plains address in March 2019, according to filings with the New York Department of State.

Remington Outdoor Co. won court approval of a series of sales that will bring in more than $156 million to its coffers in bankruptcy court amid concerns that the deals will endanger what could be more than $100 million of insurance that could compensate gun victims, WSJ Pro Bankruptcy reported. Judge Clifton Jessup signed off on the sales at a hearing in the U.S. Bankruptcy Court in Decatur, Ala., where the iconic weapons maker filed for chapter 11 protection in July. Deals with buyers including Vista Outdoor Inc. will keep Remington’s weapons and ammunition in production, leaving cash, real estate and insurance in a chapter 11 shell company that will pay off creditors. Whitebox Advisors LLC and Franklin Advisers Inc., two of the company’s largest lenders, are at the front of the line to be paid from the sale of Remington’s businesses. Nine families affected by the 2012 Sandy Hook Elementary School shooting fear they will be too far back in the line to recover damages. The Sandy Hook families have been suing Remington since 2015, accusing the company of running afoul of a Connecticut law punishing improper marketing.

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.

The long-standing taxation issue between King Mountain Tobacco Co. Inc. and the federal government took a sudden turn late last week when the company filed for chapter 11 protection, the Yakima (Wash.) Herald reported. The Yakama cigarette maker said that it was forced to file after the federal Alcohol and Tobacco Tax and Trade Bureau sent a final notice to King Mountain on Aug. 25, demanding repayment of $75 million in outstanding excise taxes, interest and late fees. In that notice, the bureau threatened to levy against the company’s assets if payment was not made within 30 days. With the company unable to make the entire payment on short notice, filing bankruptcy was the only means to prevent closure and the loss of 66 jobs, King Mountain CEO Jay Thompson said yesterday. It would be devastating to the Yakama Nation, which has had to contend with poverty and high unemployment, he said. According to a declaration filed by Thompson in U.S. Bankruptcy Court, the company employs 63 full-time and three part-time employees. King Mountain has maintained that the tribal-owned enterprise should be exempt from federal excise taxes because it operates on tribal land held in federal trust, and taxation is barred under the 1855 Yakama Treaty. However, in 2014, the U.S. District Court ruled in favor of the federal government and said King Mountain must pay $58 million in federal excise taxes and fees dating back to 2009. The court ruled that cigarettes are a manufactured product, not derived directly from the land, and therefore subject to taxes. That ruling was upheld by the Ninth Circuit Court of Appeals. In 2019, the U.S. Supreme Court denied King Mountain’s request to review the case further.

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.

Remington Outdoor Co., the 200-year-old gun maker that filed for bankruptcy again in July, has been auctioned off in court, Bloomberg News reported. Seven bidders will each purchase a portion of the company’s businesses, according to a filing in the northern district of Alabama. The development caps a hunt for buyers to bring in funds to pay off creditors. Cerberus Capital Management had acquired Remington in 2007, and the firearms and ammunition giant accumulated nearly $1 billion in debt. The company said previously that it had $437.5 million in sales last year, about half the business it did in 2016. Here are the details on the successful bidders and the Remington businesses they are buying: Vista Outdoor Inc. for its Lonoke ammunitions business and certain IP assets; Roundhill Group LLC for its non-Marlin firearms businessSierra Bullets LLC for its Barnes ammunitions business; Sturm, Ruger, & Co. for its Marlin firearms business; JJE Capital Holdings LLC for DPMS, H&R, Stormlake, AAC and Parker brands; Franklin Armory Holdings Inc. for Bushmaster brand and some related assets; and Sportsman’s Warehouse Inc. for Tapco brands. 

U.S. businesses with COVID-19 outbreaks are facing an emerging legal threat from claims that workers brought coronavirus home and infected relatives, which one risk analysis firm said could cost employers billions of dollars, Reuters reported. The daughter of Esperanza Ugalde of Illinois filed in August what lawyers believe is the first wrongful death “take home” lawsuit, alleging her mother died of COVID-19 that her father contracted at Aurora Packing Co.’s meat processing plant. The cases borrow elements from “take home” asbestos litigation and avoid caps on liability for workplace injuries, exposing business to costly pain and suffering damages, even though the plaintiff never set foot on their premises. “Businesses should be very concerned about these cases,” said labor and employment attorney Tom Gies of Crowell & Moring, which defends employers. The lawsuit against Aurora alleges that Ricardo Ugalde worked “shoulder to shoulder” on the company’s processing line in April when Aurora knew it had a coronavirus outbreak at its facility and failed to warn employees or adopt any infection prevention measures. Between 7 percent and 9 percent of the roughly 200,000 U.S. COVID-19 deaths so far are believed to stem from take-home infections and the lawsuits could cost businesses up to $21 billion if the number of Americans fatalities reaches 300,000, according to Praedicat, a firm that evaluates risks for insurers.