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McKinsey & Co. is beefing up its ethics department after a series of high-profile controversies, including helping Purdue Pharma LP “turbocharge” opioid sales, Bloomberg News reported. The management consulting giant is hiring for a newly created position with its global “ethics allegations management team.” The “specialist” will be responsible for “intake and triage of matters” that could present a risk to the firm. McKinsey is also looking to replace its ethics director, a position that helps “ensure we uphold a distinctive culture of integrity and ethical behavior across our firm,” according to the job description, with a salary that ranges from US$235,000 to $314,000. “We are continually improving these processes and capabilities, which includes these ethics roles,” said Neil Grace, a McKinsey spokesperson. The company has more than more than quintupled internal risk, legal, ethics and compliance staff over the last eight years, he said. A lack of oversight at McKinsey has previously resulted in some well-publicized unsavory entanglements. The consulting firm has paid out $641 million to resolve ongoing lawsuits over its opioid work. Its South African branch has been ensnared in a corruption scandal and the company received sharp criticism for moving too slowly to cut ties with Russia after its invasion of Ukraine.

Koch Industries’ Georgia-Pacific can use a corporate affiliate’s bankruptcy case to shield itself against asbestos-related litigation, a federal appeals court said yesterday, WSJ Pro Bankruptcy reported. The U.S. Court of Appeals for the Fourth Circuit upheld an injunction in the chapter 11 case of Georgia-Pacific affiliate Bestwall that has prevented some 64,000 asbestos-related injury claims from proceeding against the pulp and paper manufacturer. Yesterday’s ruling backed the use of chapter 11 to resolve mass lawsuits through an emerging corporate restructuring strategy that has offered solvent corporations including Georgia-Pacific, Johnson & Johnson and France’s Compagnie de Saint-Gobain some of the protections of bankruptcy. They shifted legal liabilities to new subsidiaries before filing them for chapter 11, shifting more than a quarter-million injury lawsuits to bankruptcy court for resolution without the parent companies needing to enter chapter 11 themselves. Courts have taken varying views of the bankruptcy strategy, known in legal circles as the Texas Two-Step. Plaintiffs’ attorneys and other critics have argued the companies are misusing the chapter 11 system to sidestep jury trials and pressure injury victims into a favorable settlement for the firms.

The wind-up of crypto exchange FTX is set to be “very expensive by any measure” with professional fees already amounting to over $200 million, a court-appointed examiner said in a filing made on yesterday, CoinDesk.com reported. Katherine Stadler, a bankruptcy attorney appointed in March to check fees, said lawyers and other professionals had already racked up nearly 35,000 billable hours, equivalent to four solid person-years of work, by the end of January. “These proceedings appear on track to be very expensive by any measure,” said Stadler, citing costs that already amount to 2% of estate assets and 10% of reported cash, with 46 of the 242 attorneys assigned to the case charged over $2,000 an hour. "What makes these cases extraordinary… is the largely unregulated financial system in which the Debtors (and other similar financial technology companies) operate,” she said, citing the “nonexistence of even the most basic corporate governance” at Sam Bankman-Fried’s exchange, a description which echoes criticism leveled by new CEO John J Ray III.

For more than a century, 3M introduced thousands of products ranging from water-resistant sandpaper to Scotch tape. Today, the company’s business also includes contending with tens of billions of dollars in potential liability costs, the Wall Street Journal reported. 3M is contesting thousands of lawsuits alleging that long-lasting chemicals known as PFAS developed by the company decades ago have contaminated soil and drinking water and contributed to illnesses. The company also is a defendant in what has become the largest civil injury case in U.S. history, with about 250,000 veterans alleging that 3M’s foam earplugs failed to protect them from service-related hearing loss. 3M is in talks to settle the earplugs case, as well as a major part of the PFAS litigation dealing with contamination of municipal drinking water from firefighting foam produced by the company. Fighting the cases at trials would take years. Settling the litigation will come with a steep price tag that would potentially reshape the company. (Subscription required.)

Mallinckrodt Plc struck a deal to delay a $200 million opioid settlement payment originally due Friday as it continues evaluating options to restructure its balance sheet, Bloomberg News reported. The company got an extension to June 23 from representatives of the opioid trust administering settlement proceeds, according to a Friday regulatory filing. Mallinckrodt said it is continuing to evaluate its capital needs given its obligations under the opioid settlement and its long-term debt. Mallinckrodt is negotiating a 30-day waiver with its secured lenders to avoid a default tied to skipping the settlement payment, said the people, who asked not to be identified because the negotiations are private. The company and some of its lenders are discussing a potential restructuring of its settlement obligations, they added. The company agreed to a $1.7 billion opioid settlement as part of its exit from bankruptcy last year. Since then, its sales have missed projects, tipping the company back into financial distress. The payment due Friday was scheduled to be its second after an initial $450 million contribution last year. Mallinckrodt had been negotiating with lenders about its options ahead of the payment, with some of them urging the company to skip or delay the payment as it looks to renegotiate the settlement. The company has said it’s considering options including a second chapter 11 filing to address its financial woes and “there can be no assurance of the outcome of this process.”

Drugmaker Mallinckrodt is seeking to postpone or not pay in full the $200 million payment due today to an opioid-victims compensation trust, according to people familiar with the company’s planning, WSJ Pro Bankruptcy reported. Mallinckrodt has indicated that it might not make the opioid payment and is in discussions with financial creditors to seek waivers from potential defaults arising from nonpayment, the people said. Friday’s scheduled payment is Mallinckrodt’s second under a $1.7 billion settlement with state and local governments and private plaintiffs who alleged that it played a role in fueling the opioid crisis. The drugmaker has struggled since exiting chapter 11 last year and is now considering a repeat bankruptcy filing to revamp its balance sheet a second time. Mallinckrodt owes $1.25 billion of remaining payments under the opioid plan, which included liability releases for the company and its executives. No final decision on Friday’s payment has been made. Earlier Thursday, the company said in a securities filing it has decided not to pay $56 million in interest payments owed to its secured bondholders. It said it continues to engage with creditors on restructuring proposals they submitted that could be completed in or out of bankruptcy court.

The bankruptcy of a Prime Trust subsidiary is yet another indication that ‘crypto winter’ is a long, long way from thawing, CoinGeek.com reported. On Tuesday, Nevada-based crypto-friendly payment processor Banq Inc filed for chapter 11 bankruptcy protection, citing the “unauthorized” transfers of $17.5 million worth of assets to non-fungible token (NFT) projects set up by a trio of former Banq executives, including its founder and former CEO Scott Purcell. In May 2022, Banq filed a civil suit in federal court against its former execs for having stolen its technology and “significant other value of Banq’s” and used the ill-gotten gains to launch Fortress NFT and Planet NFT. Banq accused the execs of violating non-disclosure agreements and the Nevada Uniform Trade Secrets Act. Banq claimed that in May 2021, then-CEO Purcell abruptly informed Banq shareholders that he was “suspending all sales and marketing efforts … just as [Banq] was beginning to generate revenue.” Purcell said he’d decided to ‘redirect’ Banq’s focus toward NFT wallet technology. In July 2021, Purcell had Banq take out a $3 million loan from Delaware-registered N9 Advisors LLC to further this reorientation.

Cryptocurrency trading platform Bittrex is expected to resume customer withdrawals on June 15 following an order from a judge in the U.S. Bankruptcy Court for the District of Delaware, Cointelegraph.com reported. The decision does not settle the question of the subordination of U.S. government claims, which had led to objections against its plan. “Objections (if any) to the Motion having been withdrawn, resolved or overruled on the merits,” Judge Brendan Shannon’s June 13 order read. It went on to stipulate that nothing in the motion or the order constituted a finding on whether crypto assets or transactions with them are securities. The order also specified that it does not determine the priority of creditors or prohibit the U.S. from clawing back assets from customers if it is not paid in full. Bittrex’s largest creditor is the U.S. Treasury’s Office of Foreign Assets Control (OFAC), to which it owes $24 million.

Federal prosecutors investigating the collapse of the FTX cryptocurrency exchange said late Wednesday that, at least for now, they would withdraw several of the charges facing the company’s founder, Sam Bankman-Fried, the New York Times reported. In a court filing, the prosecutors said they would proceed to a trial in October without pursuing five of the 13 charges against Mr. Bankman-Fried — a set of accusations that the government added to the crypto mogul’s indictment in the months after he was extradited from the Bahamas in December. Among those charges was a bank fraud count, as well as an allegation that Mr. Bankman-Fried bribed a foreign government. The withdrawal of those counts was a victory for Mr. Bankman-Fried, who has argued that prosecutors should not have been allowed to charge him with additional crimes after his extradition. But the win came with a major caveat: The prosecutors asked the judge overseeing the case, Lewis A. Kaplan of Federal District Court in Manhattan, to schedule a second trial in early 2024 on those five counts. The prosecutors said that the delay was a procedural necessity. This week, Mr. Bankman-Fried won a ruling in the Bahamas, where FTX was based, granting him the ability to argue in court there that the Bahamian government should not consent to the additional charges. That legal dispute could take months to unfold.

A Berkshire Hathaway Inc. energy unit’s woes worsened with a jury’s decision to impose punitive damages over PacifiCorp’s failure to prevent four wildfires that blazed a destructive path in Oregon in 2020, Bloomberg News reported. The addition of punitive damages Wednesday could push the utility’s tab for the Labor Day fires that burned about 2,500 properties to well above $1 billion after jurors in state court in Portland on Monday awarded 17 representatives in the class-action case more than $70 million to compensate for their physical losses and emotional suffering. But the exact amounts to be paid out to all the individual home and business owners will be determined in a later proceeding — and appeals that the company has vowed to pursue may take years to resolve. The jury determined Wednesday that the amount of punitive damages should be one-quarter of whatever is eventually awarded for compensation damages. There was no immediate movement in Berkshire’s stock in after-hours trading.