Bankruptcy Judge Robert Drain in White Plains, N.Y., on Friday granted a brief legal reprieve to the Sackler family, owners of Purdue Pharma LP, shielding them from answering in court for their alleged role in feeding the nationwide opioid crisis, WSJ Pro Bankruptcy reported. Judge Drain didn’t grant Purdue’s request for a six-month stay of litigation that would bar the pursuit of the Sacklers for allegedly profiting from misleading sales of the opioid OxyContin. He pushed the drugmaker and protesting states to agree to stand down from court fights until Nov. 6, and talk instead. In the coming weeks, Purdue will try to build support for a 180-day litigation standstill among states and other government bodies that are pursuing the Sacklers in court. In exchange for an extended litigation stay, the Sacklers have agreed not to hide assets, and to hand over more information in Purdue’s bankruptcy.
PG&E Corp. rejected a $2.5 billion offer from San Francisco to buy the bankrupt Californian company's power lines and other infrastructure within the city, calling the offer inadequate, Reuters reported. The offer significantly undervalued the assets and a deal would not be in the best interest of the company's customers, PG&E's chief executive officer, Bill Johnson, wrote in a letter to San Francisco Mayor London Breed and City Attorney Dennis Herrera. The company's financing strategy to emerge from bankruptcy did not include selling off company assets, Johnson said in the letter, which was dated Oct. 7. "Although we cannot accept your offer, we want to clearly communicate that PG&E intends to continue working with the City to best serve the citizens and businesses of San Francisco," Johnson wrote. San Francisco had made the offer in September, eight months after the utility sought chapter 11 protection. Breed and Herrera responded on Friday by saying that San Francisco would continue to pursue the acquisition of PG&E's electrical assets. They said in a statement that arguments made by the company on the proposal were "inconsistent" with the comprehensive analysis done by the city and its financial advisers.
California is giving childhood victims of sexual abuse more time to decide whether to file lawsuits, joining several states in expanding the statute of limitations for victims over warnings from school districts that the new rules could bankrupt them, the Associated Press reported. The law signed on Sunday by Gov. Gavin Newsom (D) gives victims of childhood sexual abuse until age 40, or five years from discovery of the abuse, to file civil lawsuits. The previous limit had been 26, or within three years from discovery of the abuse.
It also suspends the statute of limitations for three years — beginning Jan. 1 — giving victims of all ages time to bring lawsuits if they wish. California is at least the third state this year to take this step. Earlier this year, New York and New Jersey raised their statutes of limitations to age 55. New York also suspended its statute of limitations for one year, leading to hundreds of lawsuits against hospitals, schools, the Roman Catholic Church and the late financier Jeffrey Epstein.
OxyContin maker Purdue Pharma LP will ask a bankruptcy judge today to pause litigation against the company and its owners over the objections of U.S. states that allege the company is trying to protect the controlling Sackler family, Reuters reported. Purdue’s request promises to be one of the most contentious of the company’s chapter 11 case, which was filed in September to try to implement a settlement proposal it values at more than $10 billion. Privately held Purdue said last month it needed to pause more than 2,600 lawsuits so the company can reduce legal costs and try to win over more plaintiffs to its proposed deal. The lawsuits accuse Purdue and the Sacklers of fueling a public health crisis by aggressively marketing opioids while downplaying their overdose risks, contributing to some 400,000 deaths from 1999 to 2017, according to U.S. statistics. The company said that it has the support of a majority of the local governments that brought the bulk of the lawsuits, although at least 24 states oppose the deal. Read more.
In related news, Bankruptcy Judge Robert Drain yesterday urged parties that will benefit from a proposed settlement with OxyContin maker Purdue Pharma LP to focus on addressing the opioid addiction crisis and avoid battling over the deal’s billions of dollars, Reuters reported. The outline of a proposed settlement that Purdue values at more than $10 billion was filed in the U.S. Bankruptcy Court in White Plains, N.Y., on Tuesday. The deal aims to resolve more than 2,600 lawsuits by states, local governments and other plaintiffs against Purdue and its Sackler family owners. The lawsuits accuse them of fueling a public health crisis by aggressively marketing opioids while downplaying their overdose risks, contributing to some 400,000 deaths from 1999 to 2017, according to U.S. statistics. “No one can ignore the individual people affected by this crisis,” Judge Drain said at a hearing yesterday. “So I hope that you all will be able to work together to use the money as wisely as possible.” Judge Drain urged the parties to consider ways to distribute settlement funds quickly, rather than follow the usual bankruptcy practice of evaluating each creditor claim before making payments. Read more.
alifornia Governor Gavin Newsom (D) called a widespread electricity shutdown triggered by a power company to prevent wildfires “unacceptable,” as gale-force winds and dry weather posed a critical fire threat to the north of the state, Reuters reported. Pacific Gas and Electric Co (PG&E) has imposed unprecedented shut-offs that left more than 730,000 homes and workplaces in northern California without power on the second day of planned outages. But as of late yesterday, power was restored to more than half of those who had lost it, PG&E officials said in a release. About 312,000 electric customers remained without power as of 10 p.m., officials said. Some of the state’s most devastating wildfires were sparked in recent years by damage to electrical transmission lines from high winds, with flames then spreading through tinder-dry vegetation to populated areas. Newsom said that he did not fault the utility for shutting off electricity as a safety measure, but he described the outage as too broad and said it resulted from years of mismanagement by the utility. “We’re seeing a scale and scope of something that no state in the 21st century should experience,” Newsom said. “What’s happened is unacceptable and it’s happened because of neglect.”
The judge overseeing the bankruptcy of PG&E Corp. yesterday issued an order opening the door to a group of noteholders and wildfire victims to file their own reorganization plan for the California power provider, Reuters reported. Bankruptcy Judge Dennis Montali said in his order that he favored allowing the noteholders to file their plan because it has the support of the committee representing victims of the massive California wildfires in 2017 and 2018 that pushed PG&E to seek chapter 11 protection in January. Allowing the noteholders, which include Apollo Capital Management and Elliott Management Corp among others, to file while PG&E advances its own plan may help force the sides to negotiate a settlement of the case, Judge Montali added. The rival plan offers more money to wildfire victims and would give debt holders control of PG&E after it emerges from bankruptcy. Noteholders propose putting $29.2 billion in new money into the San Francisco-based power provider in exchange for new debt and a controlling equity stake. PG&E’s plan, backed by current major shareholders, would use $34 billion in new debt and $14 billion in equity commitments to reorganize. Judge Montali said that he wants the noteholders to file their plan by Oct. 17. The wildfire victims committee backs the noteholders’ plan because it expects the proposal to provide more than the $8.4 billion in compensation PG&E has proposed for the victims.
Arizona, an initial backer of Purdue Pharma LP’s proposed settlement of opioid-related claims from state and local governments, took aim at aspects of the deal, which has divided state attorneys general nationwide, WSJ Pro Bankruptcy reported. Arizona said on Monday that it opposed Purdue’s request to halt thousands of lawsuits targeting the company and its owners, reversing the state’s prior commitment to cease legal hostilities while the drugmaker’s bankruptcy proceedings played out. The state initially supported Purdue’s settlement proposal, which would resolve wide-ranging claims seeking to hold the company and its controlling family, the Sacklers, liable for fueling opioid addiction. Arizona didn’t explicitly withdraw its support Monday but said those lawsuits shouldn’t be stayed by Purdue’s bankruptcy filing. The state also said in its filing, without elaborating, that Purdue had undermined “material terms” of the proposal “at nearly every turn.”
The deadline for wildfire victims to file claims against PG&E as part of its bankruptcy proceeding is Oct. 21, but the terms of the case are still being contested by both victims and PG&E bondholders, according to a San Francisco Chronicle editorial. The two groups have asked Bankruptcy Judge Dennis Montali to break PG&E’s control over the proceedings and allow them to advance their own proposal that would include a $14.5 billion trust for victims. PG&E wants to resolve the case with $8.4 billion for victim claims instead. Asked for comment, PG&E said, in a statement: “PG&E believes the Chapter 11 process will support the orderly, fair and expeditious resolution of claims, including wildfire claims. Our goal is to ensure that all parties — including wildfire victims — receive proper notice of the bar date (the last day to file proof of claims) and the requirements for filing a proof of claim.” It’s certainly in PG&E’s best interest to have a rigid and fast-approaching restriction on claim filing: The fewer victims who file claims, the less the company has to pay out, according to the editorial. That’s why it’s alarming that only about 30,000 victims have filed claims so far, with the help of lawyers, while an additional 1,500 have filed on their own. That leaves an estimated 70,000 people who are eligible for compensation yet may not file before the deadline.
Hundreds of thousands of California homes and businesses started to lose electric power today as part of an unprecedented effort by Pacific Gas and Electric Co. to prevent wildfires, Reuters reported. Nearly 800,000 northern and central California homes and businesses can expect to lose electricity for up to several days, starting today, PG&E said. State investigators determined in May that PG&E transmission lines had caused last year’s Camp Fire. That fire killed 85 people, making it the deadliest in California’s history. The company had already filed for bankruptcy protection by then, citing potential liabilities of more than $30 billion from the Camp Fire and the 2017 North Bay Fires. Conditions before the fires were about the same then as they are now in the region. Gale-force winds are expected to last through midday Thursday, with gusts up to 70 miles per hour, PG&E said. Humidity is low, leaving the air extremely dry.
A lawyer for the committee representing wildfire victims in the bankruptcy of PG&E Corp. said at a hearing yesterday that the committee sees $13.5 billion as the cost to the power provider for paying claims of the victims, Reuters reported. Cecily Dumas of BakerHostetler was comparing that expectation with the maximum of $8.4 billion PG&E has proposed for paying victims of the wildfires in 2017 and 2018 in Northern California that forced it to file for chapter 11 protection in January. At the time, PG&E said that it expected wildfire-related liabilities topping $30 billion. The utility has already struck settlements worth a combined $12 billion to resolve claims of a group of public entities hit hard by the blazes and insurers who had made payments for wildfire-related claims.
