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Lawyers for victims of California wildfires sparked by PG&E Corp. are demanding modifications to their $13.5 billion settlement with the company because of concerns that the deal may no longer deliver the expected amount, the Wall Street Journal reported. Attorneys for the fire victims said in a court filing yesterday that the value of the settlement, which is supposed to pay victims in equal parts cash and company shares, was no longer guaranteed because the shares could now be worth less than anticipated owing to the selloff in stock markets triggered by the coronavirus pandemic. They also criticized the giant California utility for making last-minute changes to its bankruptcy restructuring plan that could further affect the value of the equity. As a result, they argued, PG&E was now in breach of the settlement terms and needed to adjust some of them to ensure that fire victims received $13.5 billion.

Victims of wildfires caused by PG&E Corp. are seeking to upend its deal to exit bankruptcy, the Wall Street Journal reported. Two members of the claimants’ committee that represents fire victims in the giant California utility’s chapter 11 case resigned late last month and said they would campaign to defeat the exit plan. They cited concerns that it pays victims half a $13.5 billion settlement in PG&E shares, exposing them to greater risks than other creditors. At least two-thirds of the roughly 70,000 people and businesses who filed claims against PG&E have to approve the exit plan. If the dissenters are able to influence enough of them, it could create a serious roadblock for the company, which cleared a major hurdle on its path to get out of bankruptcy last month by securing the support of California Gov. Gavin Newsom (D). If fire victims reject their settlement, PG&E would have to reopen negotiations with them or ask U.S. Bankruptcy Judge Dennis Montali to approve the plan without their backing as the fairest possible compensation for fire victims. Judge Montali has signaled that he would be disinclined to approve the plan without fire victims’ support.

California power regulators are weighing a recommendation to back off plans to fine Pacific Gas and Electric an additional $462 million over a series of deadly Northern California wildfires rather than risk that the harsher punishment might scuttle the utility's plan to get out of bankruptcy, the Associated Press reported. The state's Public Utilities Commission is mulling whether to pare the penalties faced by PG&E as the result of a proposed revision floated by one of the agency's five commissioners, Clifford Rechtschaffen. A document detailing the proposal was made public on Monday. In another development, PG&E announced that it took steps to ensure it will not have to tap into a $13.5 billion fund set up for wildfire victims to pay a separate $4 million fine that will be imposed for the company's guilty plea to 84 felony counts of involuntary manslaughter stemming from a 2018 inferno triggered by its outdated electrical grid. Last week, PG&E disclosed its bankruptcy plan required that financial penalties for the crimes would come from the victims' fund.

A Delaware bankruptcy judge has granted a request by the Boy Scouts of America to halt lawsuits against local Scout councils as the BSA works on its bankruptcy plan to set up a compensation fund for thousands of men who were molested as boys by Scout leaders, the Associated Press reported. The judge yesterday approved a proposed consent order that had been agreed to by the BSA and official bankruptcy committees representing abuse survivors and other unsecured creditors. In doing so, the judge overruled a lone objection by attorneys for one abuse survivor who wanted to pursue their lawsuit against the Greater Niagara Frontier Council in New York and former scout master Douglas Nail. Nail, who was sentenced to 10 years in prison after pleading guilty to possession of child pornography in 2004, is accused of molesting a former Boy Scout over a period of several years in the 1980s. Judge Laurie Selber Silverstein’s ruling puts the lawsuit against the Greater Niagara council on hold while allowing litigation to proceed against Nail. The Boy Scouts initially sought to halt all litigation against local councils for six months from the date of its Feb. 18 bankruptcy filing. The agreement forged with the creditors committees calls for the lawsuits to be put on hold through May 18, with the possibility of an extension.

General Motors Co. agreed to a $120 million settlement over faulty ignition switches that allegedly caused cars to stall and air bags to deploy, in some cases triggering fatal accidents, Bloomberg News reported. The deal, which must be approved by a judge, would resolve hundreds of lawsuits filed before the automaker sought bankruptcy protection in 2009.Under the settlement, which was filed on Friday in federal court in Manhattan, GM will contribute as much as $70 million to drivers and in some cases their survivors. A trust formed in connection with its bankruptcy will contribute $50 million, according to the settlement. GM also agreed to pay as much as $34.5 million to the lawyers who represented drivers in the court case. GM denies any wrongdoing.

A highly anticipated hearing on USA Gymnastics proposed $217 million settlement with sexual abuse survivors has been put on hold because of the COVID-19 pandemic, the Orange County (Calif.) Register reported. Judge Robyn L. Moberly of the U.S. Bankruptcy Court Southern District Indiana issued an indefinite continuance for the hearing originally scheduled for March 31. Judge Moberly also extended the period in which USA Gymnastics can file its chapter 11 reorganization plan to June 2 and the period it can solicit approval of that plan to July 28. “It is currently unknown when in-person testimony and argument will be safely heard in the courtroom,” Judge Moberly wrote. The hearing was on the 77-page disclosure statement USA Gymnastics filed with the court last month that outlined the organization’s widely criticized settlement proposal.

The biggest utility bankruptcy in U.S. history appears to be drawing to a close after PG&E Corp. reached a deal with California Governor Gavin Newsom over the company’s restructuring plan, Bloomberg News reported. The agreement calls for PG&E to put itself up for sale if the bankruptcy court doesn’t approve its plan by June 30 or if the company fails to emerge from chapter 11 by the end of the year, according to a statement on Friday. The deal also requires the embattled utility to overhaul its board and submit to additional state oversight. PG&E has struggled for months to craft a reorganization proposal that would satisfy both creditors and state officials after filing for chapter 11 last year facing $30 billion in damages from wildfires blamed on its power lines. The consent from Newsom, who objected to earlier versions of PG&E’s turnaround plan, greatly boosts the odds the utility will exit bankruptcy by a state deadline of June 30.

Mallinckrodt Plc failed to line up funding for a loan deal designed to ease its debt load and help settle massive legal claims tied to its alleged role in the nation’s opioid crisis, Bloomberg Law reported. Lenders chose not to participate in a new term loan, and Mallinckrodt doesn’t expect that its existing credit agreement will be amended, the company said in a regulatory filing yesterday. Mallinckrodt is still looking to engage in discussions with debt holders about “refinancing alternatives.” The collapse casts doubt on Mallinckrodt’s plan to restructure the generic drug part of its business in bankruptcy. The goal was to keep the rest of the company operating normally by easing its debt load, and enable Mallinckrodt to handle costs of the opioid crisis. State and local lawsuits could cost more than $1.6 billion. It’s also facing about $650 million of rebates to the government tied to its flagship Acthar gel, which is used to treat multiple sclerosis. Mallinckrodt is disputing the rebates.

The judge overseeing Purdue Pharma LP’s bankruptcy shielded the OxyContin maker’s owners for another six months from lawsuits over the U.S. opioid crisis, saying that forcing them to defend themselves would disrupt settlement talks, the Wall Street Journal reported. Yesterday’s ruling by Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., extended the shield against litigation through October, against the wishes of state attorneys general who were seeking permission to resume lawsuits targeting members of Purdue’s controlling family, the Sacklers. Their lawsuits have been on hold since October, when Judge Drain extended to the Sacklers the shield against litigation that Purdue received when it filed for chapter 11 protection. Purdue has proposed a settlement of thousands of lawsuits from states, local governments and Native American tribes that blame the company and the Sacklers for helping fuel drug addiction through the powerful painkiller OxyContin. Two dozen state attorneys general aren’t on board with the proposed deal, under which the Sacklers would relinquish the company and pay another $3 billion. While the Sacklers haven’t declared bankruptcy themselves, Purdue has said they are more likely to come to terms with the holdout states if they are negotiating rather than fighting in court. With an initial standstill period set to expire, holdout states objected last week when Purdue sought another 180-day extension. They said that shielding the Sacklers from having to defend themselves in other jurisdictions would send a message that wealthy individuals can avoid having to answer for alleged wrongdoing. Purdue and the Sacklers have broadly denied they acted improperly regarding the company’s marketing and sale of OxyContin and said the bankruptcy process is the best way to reach a deal that would free up money for fighting opioid addiction.