The bankruptcy trustee seeking a settlement for ITT Technical Institute’s students is suing its parent company’s former CEO and eight former directors for $250 million, the Associated Press reported. Trustee Deborah Caruso filed suit last week in southern Indiana’s U.S. Bankruptcy Court alleging former ITT Educational Services CEO Kevin Modany and directors breached their fiduciary duty to ITT and its stakeholders, leading to the bankruptcy. Carmel-based ITT Educational closed all 130 ITT campuses in 38 states in September 2016. The lawsuit says ITT Educational shut down “without an orderly plan for winding down its operations or even providing for a teach-out of its 40,000 active students.”
A group of six women who have accused Harvey Weinstein of sexual assault and misconduct will be allowed to continue with their proposed class action lawsuit against the film and television studio he co-founded while it prepares to liquidate in chapter 11, a judge ruled yesterday, the Wall Street Journal reported. Bankruptcy Judge Mary Walrath granted a request by lawyers representing these women to allow the proposed class action against Weinstein Co. to proceed. The complaint, filed in December in New York federal court, accuses the studio of covering up Weinstein’s alleged sexual misconduct. A federal judge is considering motions to dismiss the lawsuit, one of several legal actions pending against Weinstein Co. that were put on hold when the company sought chapter 11 protection in March.
The Archdiocese of St. Paul and Minneapolis has reached a settlement in its bankruptcy case with more than 400 people who said they were sexually abused by clergy, an attorney said yesterday, the Associated Press reported. Victims' attorney Jeff Anderson said in a statement that a "consensual bankruptcy reorganization plan" had been reached, but he didn't release a dollar amount ahead of a public announcement. A spokesman for the archdiocese confirmed a settlement was reached. The Minnesota Legislature in 2013 opened a three-year window in the statute of limitations that allowed people who had been sexually abused in the past to sue for damages. That resulted in hundreds of claims being filed against the archdiocese and led it to file for bankruptcy in 2015. The bankruptcy case proceeded slowly as attorneys argued over how much money the archdiocese should have to pay. The archdiocese reported its net worth was $45 million. But attorneys for the victims maintained that the archdiocese's true worth was over $1 billion, counting assets of its 187 Roman Catholic parishes, as well as schools, cemeteries and other church-related entities. Victims' attorneys said those assets should be used to make more money available for victims. Last month, a federal appeals court affirmed a 2016 decision by U.S. Bankruptcy Judge Robert Kressel that the parishes and other nonprofit entities were independent, meaning their assets could not be tapped in the bankruptcy case. Last December, Judge Kressel rejected competing reorganization plans filed by the archdiocese and a creditors' committee led by Anderson and ordered both sides back into mediation.
A Tampa-based air conditioning and heating services company which recently filed for bankruptcy appears to have allegedly left several customers in the lurch for services, the Tampa Bay Times reported. CM HVAC Holdings, parent company of CGM Services, filed for chapter 11 protection in mid-April. However, Google currently lists the business as "permanently closed." The only contact number listed on its site kicks directly to a full voicemail box. And several of its customers have taken to social media to say that they haven’t heard from the company for weeks. According to bankruptcy documents, the company owes about $6.8 million in unsecured claims to a variety of creditors. CM HVAC is disputing five of the debts.
Harvey Weinstein turned himself in to police today to face the first criminal charges to be filed against him after months of sexual abuse allegations from scores of women that set off a national reckoning known as the #MeToo movement, CNBC.com reported. Weinstein was expected to be charged at least with a criminal sexual act, a crime that carries up to 25 years in prison, officials said. More than 75 women have accused Weinstein of wrongdoing around the globe. Several actresses and models accused him of criminal sexual assaults, but many of the encounters happened too long ago for any prosecution. A bankruptcy court earlier this month approved the sale of The Weinstein Company’s assets to Lantern Capital, marking the final chapter for the film and television studio that plunged into crisis following the damaging revelations.
U.S. weapons manufacturer Remington Outdoor Co Inc. said yesterday that it had emerged from chapter 11 bankruptcy with less debt and more stable financing that may help it ride out a slowing market for firearms, Reuters reported. Remington, America’s oldest gunmaker, filed for bankruptcy protection in March, weeks after a shooting at a high school in Parkland, Florida killed 17 people and triggered intensified campaigns for gun control by activists. Under the reorganization plan, inked two days before the Feb. 14 Parkland shooting, creditors including JPMorgan Chase & Co. and Franklin Advisors will take ownership stakes in the company in exchange for forgiving more than $775 million of debt. Remington also received a $193 million new lending package funded by seven banks, including Bank of America Corp.
A push to reveal litigation funding has spread to the U.S. Senate, where new legislation has drawn a mixture of praise and criticism from plaintiff and defense attorneys, the National Law Journal. U.S. Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa), along with Sens. John Cornyn (R-Texas) and Thom Tillis (R-N.C.), introduced the "Litigation Funding Transparency Act of 2018" on May 10. The bill would require disclosure of third-party litigation funding in class actions and multidistrict litigation within 10 days of a case filing, or 10 days after a funding deal. It would also require disclosure of financing that provides cash to plaintiffs. It’s more expansive than a bill passed out of the U.S. House of Representatives last year calling for disclosures only in class actions, and more limiting than legislation enacted in Wisconsin requiring disclosure of third-party financing in all types of state court cases there. The bill comes as a federal rules advisory committee considers such disclosures in multi-district litigation. Read more.
Remington Outdoor, one of the country’s oldest and largest gun makers, is getting ready to emerge from bankruptcy. The question is whether somebody — anybody — will buy the company, especially at such a politically and emotionally polarized time for the gun industry, according to a New York Times commentary. The usual suspects of potential buyers are circling, including rival gun manufacturers like Sturm, Ruger & Company and some small financiers willing to accept whatever criticism would come from buying Remington. What if the big banks that have provided financing to Remington during its bankruptcy were to back — and partner with — one or more of the big private equity firms in an effort to transform the company into the most advanced and responsible gun manufacturer in the country, the commentary asks.
Bank of America said yesterday that it was standing by its pledge to stop financing civilian assault weapons and suggested it may be preparing to exit a loan for gun-maker Remington Outdoor Corp. that sparked criticism of the lender, Reuters reported. The statement by Vice Chairman Anne Finucane follows a Reuters report on Sunday that the lender was participating in a $193 million credit facility that will help stabilize Remington’s business when it emerges from bankruptcy this month. After the report, activists including student gun control activist David Hogg were critical of the bank and took to Twitter using the #BoycottBankofAmerica hashtag. Hogg was a student at the high school in Parkland, Fla., where a February shooting helped touch off a renewed push for stricter U.S. gun control. “Let me be clear: We are not changing our policy to end financing of the manufacture of these military-style firearms,” said Finucane, who emphasized that the policy change was on a go-forward basis. She said the Remington financing was in the works for months before the firearms policy was announced on April 10.
