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3M has started paying out its $6 billion settlement to U.S. service members who say they experienced hearing loss or other serious injuries after using faulty earplugs made by the company, the Associated Press reported. The chemical and consumer product manufacturer made a $250 million payment to the qualified settlement fund on Dec. 26, expected to result in 25,000 to 30,000 claimants dismissing associated litigation. And on Monday, 3M said it was accelerating another payment of $253 million to settle “wave” cases by Jan. 31. “All the remaining ‘wave’ plaintiffs, whose claims were being prepared for trial prior to the settlement agreement, have now agreed to participate in the settlement and release their claims,” 3M wrote Monday, noting that company amended existing settlement timing as a result of this “strong support.” Saint Paul, Minn.-based 3M reached the $6 billion settlement agreement back in August — after over a quarter million veterans and current service members sued the company and Aearo Technologies, which 3M acquired in 2008, over their Combat Arms Earplugs. Throughout years-long litigation, service members alleged that a defective design allowed the products to loosen slightly and possibly cause hearing damage, according to Aylstock, Witkin, Kreis, & Overholtz PLLC, one of the law firms representing plaintiffs. At the time of announcing August's agreement, 3M maintained that the settlement — which consists of $5 billion in cash and $1 billion in stock — was not an admission of liability. Payments were set to run from 2023 through 2029. It's unclear out each claimant will be notified and receive settlement checks.

Some former customers of the bankrupt crypto firm FTX Trading Ltd. are pushing a U.S. judge to change how they will be repaid, arguing that proposed rules unfairly leave them out of a yearlong rise in the price of Bitcoin and other digital currencies, Bloomberg News reported. More than 80 individual customers have filed letters attacking a plan to peg the value of their digital assets to the date FTX filed bankruptcy — Nov. 11, 2022 — and pay claims in U.S. dollars instead of returning the crypto coins. The customers had some form of crypto trapped on the FTX platform when company founder Sam Bankman-Fried stepped down amid fraud allegations. Nearly a year later, he was convicted of orchestrating a massive fraud that led to the collapse of his FTX exchange. Since the collapse, a team of bankruptcy experts, lead by chief restructuring officer John J. Ray III, has been trying to recover as much cash and as many crypto assets as possible. The team won court approval to sell crypto held on the platform in order to create a pool of billions of dollars that can be returned to customers. The size of each customer’s claim will be based on the price of the crypto coin they held on the FTX platform when the company filed its chapter 11 petition in Wilmington, Delaware. For Bitcoin holders, that means they will be owed $16,871 for each of their former coins, according to court records. The current price surged past $49,000 at one point on Thursday after trading began on the first U.S. exchange-traded funds that invest directly in the biggest cryptocurrency.

Drug manufacturer Endo International Plc won bankruptcy court permission to poll its creditors on a plan that would hand control of the business to lenders and settle opioid liabilities in deals valued at more than $600 million, Bloomberg News reported. Judge James L. Garrity Jr. said during a court hearing yesterday in New York that he’ll allow Endo creditors to vote on its restructuring plan weeks after the company announced opioid-related settlements. The judge’s approval keeps Endo on pace to emerge from chapter 11 protection in the second quarter of 2024. Endo filed for bankruptcy in August 2022 to deal with more than $8 billion in long-term debt and lawsuits alleging the company helped fuel the nation’s addiction crisis. Opioid lawsuits also drove fellow drugmakers Mallinckrodt Plc and OxyContin maker Purdue Pharma LP into chapter 11. Endo’s restructuring plan includes settlements with state and federal authorities, and is expected to pay individual opioid victims between $89.7 million and $119.7 million, according to court documents. The company has also agreed to pay $273 million to more than 40 states and as much as $365 million to the U.S. Justice Department. The exact amount of the payments depends on whether Endo opts to pay some settlements in full when the company leaves bankruptcy or over time, the documents show.

Johnson & Johnson has tentatively agreed to pay about $700 million to resolve an investigation by more than 40 U.S. states into claims that it wrongfully marketed its talc-based baby powder by not warning about possible health risks, Bloomberg News reported. The settlement would avert potential lawsuits alleging that J&J hid any links between the talc in its powder and various cancers, according to the people, who asked not to be named because the pact isn’t yet public. They said J&J and representatives for state attorneys general are still hammering out the specific terms of the accord but have reached an agreement on the approximate total amount. The settlement is part of J&J’s strategy to corral a growing number of suits accusing it of concealing baby powder’s health risks after two failed attempts to use the bankruptcy courts to impose a settlement on former users. The decade-long litigation, plus the prospect of potential future cancer suits, has limited J&J’s stock price, analysts have said. The New Brunswick, New Jersey-based company had offered to settle all current and future baby powder claims for $9 billion in the bankruptcy filing of one of its units. As part of that offer, it said last year it set aside $400 million to resolve U.S. states’ consumer protection claims. The company agreed to increase the payout after both sides met with a mediator in December.

Mass tort exposure has created a proliferation of bankruptcies, affecting organizations from Johnson & Johnson (talcum powder) to the Boy Scouts (sexual abuse), according to a Wall Street Journal commentary. Congress could come up with systemic solutions to the claims-proliferation problem, but that seems unlikely given political gridlock and trial lawyers’ clout, according to the commentary. The Judicial Conference of the U.S., which prescribes the official rules and forms governing bankruptcy practice and procedure, is a more viable avenue for reform. The Judicial Conference could quickly change the claim forms to require greater upfront disclosures—including requiring submission of a specific diagnosis linking the claim to the alleged tort, as well as disclosure of any relationship between the doctor giving the diagnosis and the lawyers—and heightened certification requirements for lawyers and others who help file claims on behalf of tort claimants. Bankruptcy judges could also appoint claims examiners in cases where large numbers of claims are brought into the proceedings to review how claims were generated and to advise judges on their findings, prior to those claims being allowed.
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*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

The U.S. Supreme Court review of Purdue Pharma’s $6 billion opioid settlement could open the door for Canada’s municipalities and indigenous First Nations — the only two groups not made up of individual claimants that have opposed the deal — to seek compensation they say has been denied them, WSJ Pro Bankruptcy reported. Purdue’s bankruptcy plan would compensate thousands of individuals, healthcare providers, and U.S. state and local governments accusing the maker of the OxyContin painkiller of helping to fuel the opioid epidemic. But Canadian cities and First Nations don’t have access to the settlement money promised by the Sackler family owners. The bankruptcy plan is being challenged by the U.S. Justice Department, which contests the lifetime immunity the settlement would grant Purdue’s Sackler family owners from opioid-related lawsuits. The Supreme Court heard arguments on the challenge last month. If the Supreme Court rejects the plan, lawsuits that Canadian municipalities and First Nations have filed against Purdue and the Sacklers in Canada and New York could move forward, giving them a new opportunity to litigate their cases for compensation.

FTX is on the hunt for billions of dollars that the cryptocurrency exchange says it is owed. Since filing for bankruptcy in November 2022, the company — through a dozen or so lawsuits — has been trying to claw back the money. FTX is expected to file more such lawsuits in 2024, WSJ Pro Bankruptcy reported. “There are many more actions coming as a result of our comprehensive investigation,” an FTX spokesperson said. In a September presentation to creditors, FTX said it had identified $16.6 billion in such potential actions. “We are highly confident there will be significant recoveries for creditors from these new actions,” as well as from pending cases and other investigative efforts, the FTX spokesperson said. The company faces 36,075 customer claims for a total of $16 billion. FTX has said customers would get as much as 90% of whatever is recovered during the bankruptcy. Roughly $9 billion of customer deposits remain unaccounted for.

Berkshire Hathaway Energy Co.’s PacifiCorp is selling US investment-grade bonds to help fund settlement claims related to wildfires in Oregon, Bloomberg News reported. The electric utility is issuing debt in four parts, with the longest portion — a long 30-year fixed-rate note — being floated to investors at around 200 basis points over comparable Treasuries, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. PacifiCorp’s sale comes amid a flurry of primary-market activity in the first days of the new year, with 10 bondsellers announcing high-grade sales on Wednesday. The announcement also comes just weeks after PacifiCorp said it would pay $299 million to settle claims linked to wildfires that burned homes in southwest Oregon, averting another jury trial. Investors approached the firm’s existing debt with a sense of cautiousness on Wednesday. The spread on the company’s 5.5% notes due May 2054 increased 3.6 basis points to 167 basis points, according to Trace bond trading data.