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Sandy Hook victims’ families asked a court to remove Alex Jones and his bankrupt company that runs conspiracy website Infowars from controlling its operations and chapter 11 proceedings, arguing that the right-wing radio host improperly seized millions of dollars in assets, Bloomberg Law reported. “There are no honest debtors here,” the victims’ families said in a filing Thursday at the US Bankruptcy Court for the Southern District of Texas. “Since the Sandy Hook Families filed their lawsuits, the Debtor has systematically transferred millions of dollars to Alex Jones and his relatives and insider entities.” Free Speech Systems LLC, the Jones-controlled company that operates Infowars, should be removed as “debtor in possession” of its bankruptcy case, the families said. That would leave an independent trustee in charge of the case filed under the small business section of chapter 11, known as subchapter V. Free Speech Systems filed for bankruptcy in July, after some victims’ families won judgments in their defamation lawsuits against the company and Jones for his lies that the 2012 school shooting was a hoax. In one recent case, a jury awarded parents of a child killed in the shooting nearly $50 million in damages. Jones himself took between $18 million and $62 million from Free Speech since the families filed suit—even though the company was allegedly insolvent—according to the Thursday filing.

Sandy Hook victims’ families asked a federal bankruptcy court on Thursday to order the Infowars conspiracy broadcaster Alex Jones to relinquish control over his company, saying he has “systematically transferred millions of dollars” to himself and his relatives while claiming to be broke, the New York Times reported. In a filing in the bankruptcy court in Houston, the families of nine Sandy Hook victims said they sought to have a bankruptcy trustee who is already monitoring the case take control of Free Speech Systems, the parent company of Mr. Jones’s misinformation-peddling media outlet. The families are also seeking a court-appointed oversight committee to restrict Jones’s ability to control Infowars’s finances. Jones’s claimed insolvency is at the heart of his efforts to avoid paying for the damage done by his Sandy Hook lies. Earlier this month, a Texas jury ordered him to pay the parents of a child killed in the 2012 Sandy Hook school shooting nearly $50 million in compensatory and punitive damages for spreading the falsehood that they helped stage the massacre. “Alex Jones is not financially bankrupt; he is morally bankrupt, which is becoming more and more clear as we discover his plots to hide money and evade responsibility,” said Kyle Farrar, a lawyer for the Sandy Hook families. “He used lies to amass a fortune, and now he is using lies and fictions to shield his money.” The families said in their filing that Mr. Jones had siphoned nearly $62 million from his business into financial vehicles benefiting himself and his family beginning in 2018, when the Sandy Hook families first filed suit. At the core of his bankruptcy claim is Jones’s assertion that Free Speech Systems owes $54 million to PQPR Holdings, a company owned and operated directly and indirectly by Jones and his parents. The debt is fictional, the families’ lawyers said in Thursday’s filing, and “a centerpiece of Jones’s plan to avoid compensating the Sandy Hook families.”

3M’s attempt to block jury trials of more than 230,000 lawsuits accusing it of harming U.S. soldiers faces a key test this week in front of a federal judge in Indianapolis, Bloomberg News reported. Bankruptcy Judge Jeffrey Graham is set to consider a temporary halt to the lawsuits so that 3M and its bankrupt subsidiary, Aearo Technologies, can try to settle the claims, most of which have been filed by veterans who say the combat arms earplugs left them with hearing damage. Judge Graham’s decision will echo across the offices of other firms facing massive numbers of product liability lawsuits, said Prof. Jared Ellias of Harvard Law School. The Aearo case uses an increasingly popular strategy in which profitable companies use insolvency proceedings to force settlement talks with victims of allegedly harmful products. Johnson & Johnson and lumber giant Georgia-Pacific have also put units into bankruptcy with the same goal of ending their litigation woes in one place instead of fighting thousands of trials around the country. Fighting each case in front of different juries around the country is impossible, the bankrupt units of J&J and 3M have argued in court. Critics of the mass tort system agree. “Mass torts are legal terrorism because, even if a company has no liability for 80% of the claims made against it, the defense costs will kill it,” said bankruptcy attorney Martin Bienenstock. On July 26, the company put Aearo Technologies into bankruptcy in Indianapolis. Under chapter 11 rules, Aearo is automatically entitled to freeze the lawsuits it faces, but because 3M itself didn’t file bankruptcy a judge must agree to give the industrial conglomerate the same protection.

A creditor group that holds roughly $3.2 billion in Endo International PLC debt said it is weighing a rival bid to purchase the pharmaceutical company’s assets out of chapter 11, WSJ Pro Bankruptcy reported. The group, comprising more than a dozen institutions that own a cross section of Endo’s bank and bond debt, is a potential challenger to a stalking-horse bid, which sets a minimum for others to beat, that the company announced when it filed for bankruptcy this week under the weight of opioid litigation. The first-lien creditors behind the stalking-horse bid have agreed to acquire the business out of chapter 11 in exchange for forgiving $6 billion in company debt. The cross-holding group includes J.P. Morgan Investment Management Inc., Citadel Equity Fund and funds managed by Franklin Advisers Inc. and Oaktree Capital Management LP, according to papers filed on Thursday in the U.S. Bankruptcy Court in New York. Andrew Rosenberg, a lawyer representing the group, said during Endo’s debut bankruptcy hearing Thursday that his clients don’t believe “the keys to this company” should be turned over to the stalking-horse bidders. The leading bid, he said, provides a starting point for a sale of the business and nothing more. The creditor group formed in April 2021 and negotiated for months on a potential restructuring, but talks with Endo cooled off in the weeks leading up to the bankruptcy filing because the price of the drugmaker’s debt had fallen, Mr. Rosenberg said. But the price of Endo’s first-lien debt rebounded after the company released information showing it “vastly outperformed” negative first-quarter guidance, Mr. Rosenberg said, adding the drugmaker’s second-lien debt has also experienced a similar rebound. “We definitely are considering a bid but we’re not promising what we’ll do in these cases yet,” Mr. Rosenberg said.

Lawyers representing 3M Co.’s bankrupt Aearo Technologies LLC subsidiary defended its request to a bankruptcy judge to extend a litigation stay to the parent company to resolve mass earplug lawsuits, saying such a move would be in line with other court rulings, WSJ Pro Bankruptcy reported. Aearo Technologies lawyer Chad Husnick on Wednesday said before Judge Jeffrey Graham of the U.S. Bankruptcy Court in Indianapolis that even though 3M itself didn’t file for bankruptcy, it also should be shielded from the 230,000 pending lawsuits that alleged 3M’s military earplugs were defective. Without the protection, Mr. Husnick said, mass lawsuits would continue against 3M in the U.S. District Court in Pensacola, Fla., and would complicate earplug unit Aearo’s restructuring. “Without this requested relief, we will have continued chaos with no focus,” Mr. Husnick said, referring to multiple motions filed with the district court by personal-injury lawyers suing 3M since Aearo’s bankruptcy filing last month. Those lawyers wanted the district judge to stop 3M’s plan to shift the pending earplug lawsuits to the bankruptcy court, but the judge rejected their requests and instead will allow a bankruptcy court to decide whether to shield 3M from ongoing litigation. Mr. Husnick said Aearo’s request to extend a litigation stay to its parent company was in line with recent rulings, including the one by Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., that has allowed an automatic-stay extension to Johnson & Johnson in its subsidiary LTL Management LLC’s chapter 11 to resolve talc-related mass lawsuits against J&J. Mr. Husnick said that Aearo’s request was even more legitimate because the 3M subsidiary is an “organic structure” that has been in existence for many years, while in some earlier cases, companies used a controversial merger strategy known as the Texas Two-Step.

A group of Boy Scouts of America insurers will likely appeal the youth group's $2.3 billion sexual abuse settlement after it is approved in bankruptcy court, their attorneys said yesterday, Reuters reported. The insurers, including AIG and Liberty Mutual, had objected to the settlement, saying the Boy Scouts colluded with men who claimed they were abused by troop leaders as children to push liability onto the insurers. The insurers' attorneys said at a Thursday hearing in Delaware bankruptcy court that they continued to object despite U.S. Bankruptcy Judge Laurie Selber Silverstein's partial approval of the deal and recent revisions made to it by the Boy Scouts. The Boy Scouts will seek court approval next month for its revised bankruptcy plan, which would provide at least $2.3 billion to compensate more than 80,000 men who have made abuse claims. The biggest change in the amended plan was the removal of a $250 million settlement payment from the Church of Jesus Christ of Latter-day Saints, which Judge Silverstein refused to approve. Judge Silverstein approved many parts of the plan in a July 29 opinion, and the Boy Scouts' latest revisions were meant to address the parts that Silverstein did not sign off on. Judge Silverstein's July 29 opinion scaled back some of the Boy Scouts' proposals related to insurance coverage for sexual abuse. The insurers' attorneys did not discuss in court which portions of the opinion they intend to appeal. Two of the Boy Scouts’ primary insurers, affiliates of Hartford Financial Services Group and Chubb Ltd, support the settlement and are not part of the group that is considering an appeal. The Boy Scouts filed for bankruptcy in February 2020 after being hit by a flood of sexual abuse lawsuits when several U.S. states passed laws allowing accusers to sue over allegations dating back decades.

A federal judge ordered three of the country’s largest pharmacy chains to pay $650.6 million to two Ohio counties that they were found to have flooded with prescription painkillers. The court said Wednesday in a landmark judgment that CVS, Walgreens and Walmart must bear some of the cost that the opioid epidemic has wrought on Lake and Trumbull counties, outside Cleveland, the Washington Post reported. The award comes after a first-of-its-kind federal trial targeting the three major retailers, which have some of the deepest pockets left in the legal battle over the epidemic. Many other major drug distributors and makers have settled or filed for bankruptcy. A jury ruled last year that the pharmacies played a significant role in the crisis faced by the two counties. U.S. District Judge Dan A. Polster in Cleveland wrote this week that the pharmacy chains had dispensed the drugs “without effective controls and procedures” to prevent the pills from being abused and resold and are thus partially responsible for the damage the epidemic has caused in the two communities. The retailers will also be required to train personnel on the dispensing of controlled substances, create a hotline through which patients and employees can report inappropriate sales of painkillers, and appoint a controlled-substance compliance officer to review prescription-validation processes. The order is expected to be a bellwether for thousands of other communities trying to hold pharmacies responsible for their role in the opioid epidemic, which has killed half a million Americans since 1999, according to the Centers for Disease Control and Prevention. Earlier this month, a federal judge in San Francisco ruled that Walgreens fueled that city’s opioid epidemic by shipping and dispensing the addictive drugs without proper due diligence.

Endo International Plc filed for bankruptcy yesterday after reaching a $6 billion deal with some of its creditors, as the U.S. drugmaker seeks to settle thousands of lawsuits over its alleged role in the country's opioid epidemic, Reuters reported. The pharmaceutical company is the latest to file for chapter 11 to address opioid claims. Purdue Pharma, the maker of OxyContin, filed in September 2019, while Mallinckrodt Plc, a generic opioid manufacturer, recently emerged from bankruptcy. "By definitively addressing the more than $8 billion of debt that has burdened our balance sheet and establishing a pathway to closure with respect to the thousands of opioid-related and other lawsuits that the company has been defending at an unsustainable cost, we will be able to move forward...," Endo's Chief Executive Officer Blaise Coleman said in a statement. The company's chapter 11 bankruptcy filing in the Southern District of New York showed assets and liabilities in the range of $1 billion to $10 billion. The creditors, who will also assume some of the company's liabilities, will substantially control all of its assets, Endo said. The company also reached a deal with U.S. state attorneys general to provide $450 million over a period of 10 years, resolving allegations that the company boosted opioid sales using deceptive marketing, and bans the marketing of its opioids forever, according to the office of Massachusetts AG.

A Johnson & Johnson subsidiary urged a federal appeals court to uphold the controversial legal strategy it used to move to bankruptcy roughly 38,000 lawsuits linking its talc-based products to cancer, WSJ Pro Bankruptcy reported. The subsidiary, LTL Management LLC, said in court papers filed on Monday that chapter 11 is the only option for compensating all claimants relatively quickly. LTL, which J&J created last year to move mass talc litigation to bankruptcy, laid-out a defense of its strategy in its filing in the Third U.S. Circuit Court of Appeals, which is considering a request by injury claimants to have the subsidiary’s chapter 11 bankruptcy thrown out of court. The outcome of the appeal could dictate whether J&J’s restructuring strategy catches on more widely among companies facing costly litigation over allegedly dangerous or defective products. Appeals judges are expected to scrutinize a type of corporate restructuring in which companies facing mass litigation create a new subsidiary with minimal business operations and under Texas law assign it responsibility for tort liabilities before placing it in chapter 11.

A federal judge criticized 3M Co.’s attempt to use the protections of chapter 11 to resolve mass injury claims by U.S. military veterans, but will allow a bankruptcy court to decide whether to shield the company from ongoing litigation, WSJ Pro Bankruptcy reported. Judge M. Casey Rodgers in the U.S. District Court in Pensacola, Fla., declined on Sunday to prohibit 3M from contesting its full liability for injury claims alleging that earplugs manufactured by the company’s Aearo Technologies LLC unit were defective. Aearo filed for chapter 11 protection last month, shortly after assuming liability for roughly 230,000 pending claims against the business and its publicly traded parent company, 3M. Aearo wound up in dire financial straits after that voluntary assumption of liability, which put it on the hook for the largest multidistrict litigation in U.S. history, according to the judge’s ruling. Plaintiffs’ lawyers had requested that 3M be prohibited from contesting its full liability for the alleged earplug injuries, saying it was attempting to re-litigate that issue in bankruptcy court after proceeding in the tort litigation as if it alone bore responsibility. A 3M spokesman said the company’s court filings show the chapter 11 process “offers a more efficient, equitable, and expeditious means to resolve this litigation. Claimants determined to be entitled to compensation will be paid sooner, and 3M and Aearo will be able to better focus on making products people depend on.” In her ruling, Judge Rodgers said 3M’s move to unload injury liabilities onto Aearo was devised to escape the multidistrict litigation for good because 3M was “displeased with the rulings of this court” and several jury verdicts against the company. Judge Rodgers said that 3M had never indicated in more than three years of litigation “that any entity other than itself was responsible” for the service members’ claims. The judge said she was “deeply concerned” about 3M’s “sudden, bankruptcy eve about-face regarding the entity responsible,” but said it wasn’t her place to prohibit 3M from mounting such a potential defense.