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Bankruptcy Judge Robert Drain in White Plains, N.Y., approved Purdue Pharma’s $6 billion opioid settlement funded by its Sackler family owners, overruling objections from the Department of Justice and 20 states that opposed the deal, Reuters reported. Under the settlement, the Sacklers would pay between $5.5 billion and $6 billion to a trust that will be used to pay the claims of states, victims of addiction, hospitals and others who have argued that the Purdue painkiller OxyContin played a central role in the U.S. opioid epidemic. The revised settlement must still be written into a new reorganization plan before getting final approval in bankruptcy court. Members of the Sackler family have denied wrongdoing. They said last week in a statement that they “sincerely regret” that OxyContin “unexpectedly became part of an opioid crisis.” The Justice Department’s Office of the U.S. Trustee, which oversees bankruptcy administration, said that the bankruptcy court does not have authority to approve the settlement because an appeals court must first decide whether the Sacklers can receive sweeping legal immunity in exchange for the payment. The Sacklers’ payment is contingent on ending their exposure to opioid lawsuits. But a U.S. District judge ruled in December that the protections they seek fall outside the bankruptcy court’s authority. Purdue is appealing that decision in the U.S. Court of Appeals for the Second Circuit. The new agreement replaces an earlier $4.3 billion settlement, which was upended after nine attorneys general and others argued that the Sacklers should not receive such sweeping legal protections. After agreeing to the prior deal, 20 states objected to the new settlement because it includes a $277 million payment exclusively to states that negotiated the $6 billion deal. Some have said that it would unfairly reduce the percentage of funds dedicated to addressing the opioid crisis in their own states. The states still have time to negotiate, Judge Drain said, and may be forced to accept terms they do not like rather than inviting the “dog eat dog” litigation that would result if the settlement fails. Purdue said last week that the settlement would provide additional funding for opioid abatement programs, overdose rescue medicines and for victims, while putting the company on track to resolve its bankruptcy case on “an expedited schedule.” Today, victims of the opioid epidemic will address members of the Sackler family in a hearing overseen by Drain. The hearing will be conducted by Zoom due to COVID-19 restrictions and the Sacklers will not be able to respond.

A bankruptcy judge authorized Jones Day to continue representing Johnson & Johnson’s talc subsidiary in chapter 11, rejecting arguments that the law firm can’t be trusted to look out for the interests of cancer victims because it designed the strategy to limit J&J’s liability, the Wall Street Journal reported. Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., said on Tuesday that Jones Day’s past work for J&J on a transaction that sent its talc-related liabilities into chapter 11 doesn’t mean the firm has a disqualifying conflict of interest, as injury lawyers allege. Judge Kaplan said that Jones Day’s work for J&J, which ended two days before the recently-formed talc subsidiary filed chapter 11 in October, doesn’t mean the law firm will favor the interests of the parent company over its bankrupt unit, LTL Management LLC. Instead, the judge said evidence shows that LTL and J&J have a shared interest in settling the talc liability in chapter 11. That fact ensures that neither Jones Day nor LTL could give priority to a competing interest favoring J&J that could influence the bankruptcy case, Judge Kaplan said.

Members of the Sackler family that own Purdue Pharma struck a new settlement last week with a group of eight states and the District of Columbia to resolve widespread litigation accusing the OxyContin maker of fueling the U.S. opioid epidemic. Under the new settlement, the Sacklers will pay between $5.5 and $6 billion to a trust that will be used to pay the claims of opioid creditors, including states, victims of addiction, hospitals, and municipalities, Reuters reported. The Sacklers have denied wrongdoing, but expressed "regret" that OxyContin played a role in the opioid crisis. U.S. Bankruptcy Judge Robert Drain must approve the settlement and will consider the matter at a hearing on Wednesday. The deal replaces a previous $4.3 billion agreement, which was upended on appeal after nine attorneys general argued that the Sacklers should not receive sweeping protection from current and future opioid lawsuits as part of the deal. The Sacklers have said in court testimony and filings that a settlement is predicated on them being shielded from opioid-related lawsuits. But these sweeping legal protections must first be written into a chapter 11 plan of reorganization and approved by a bankruptcy judge. To do this, Purdue must overcome the December ruling concluding that the bankruptcy court did not have the authority to release non-bankrupt parties, like the Sacklers, from litigation. Purdue is appealing that decision to the U.S. 2nd Circuit Court of Appeals, and will make oral arguments in that court on April 25. Purdue filed its briefs on Feb. 11, and opposing papers are due on March 11.

A mediator in Purdue Pharma's bankruptcy case on Wednesday indicated an agreement was being drafted between the company's owners and U.S. states pressing for more money to resolve allegations that the OxyContin maker fueled the opioid epidemic, Reuters reported. Members of the wealthy Sackler family, who own Purdue Pharma, have been trying to reach an agreement with eight states and the District of Columbia, after they had blocked a previous settlement that included a $4.3 billion cash payment. The Sacklers had proposed a settlement worth up to $6 billion in mediation, and most of the states had agreed to settle on those terms, according to a report filed in February by mediator Judge Shelley Chapman. Judge Chapman reported yesterday that she was unilaterally extending talks, which U.S. Bankruptcy Judge Robert Drain had allowed if she is actively involved in drafting terms. While neither Purdue nor the mediator offered any details during a Wednesday court hearing, Drain said he believed the mediation was proceeding as hoped after "reading between the lines" of the latest report. To allow the mediation to progress, Judge Drain extended a litigation shield that protects the Sacklers from being sued for their alleged role in the opioid crisis until March 23. The shield would have expired on March 3 if it was not extended.

U.S. lawmakers are planning legislation to outlaw the controversial bankruptcy maneuver called the “Texas two-step” to prevent large companies from abusing the chapter 11 process, the chair of the Senate judiciary committee has said, the Financial Times reported. Dick Durbin, who is also Democratic whip in the Senate, said negotiations were under way within the committee on a draft bill that would remove what he described as a “get out of jail free card” being deployed by some of the wealthiest companies. His comments follow the failure on Friday by lawyers representing almost 40,000 cancer sufferers to prevent Johnson & Johnson from deploying the bankruptcy scheme to help it settle billions of dollars of claims that its baby talc was tainted with asbestos and caused their illnesses. “When you have massively profitable companies using this bankruptcy maneuver to avoid accountability to dying cancer victims, it’s clear that corrective action is needed,” Durbin told the Financial Times. “It is our goal to pursue bipartisan legislation in committee that curbs corporate bankruptcy abuses like the Texas two-step.” A U.S. bankruptcy judge on threw out a motion by talc claimants to dismiss the bankruptcy of J&J subsidiary LTL management in a ruling that critics warn could open the floodgates for other companies to use the bankruptcy courts to manage personal injury and other tort claims.

A bankruptcy judge allowed Johnson & Johnson to use chapter 11 to drive a settlement of litigation linking its baby powder to cancer, backing a controversial tactic that has helped profitable companies freeze roughly a quarter of a million injury lawsuits, WSJ Pro Bankruptcy reported. Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., ruled Friday against personal-injury lawyers who asked to throw out the chapter 11 filing of a J&J subsidiary created last year to move into bankruptcy about 38,000 pending lawsuits over allegedly dangerous talc-based products. Judge Kaplan ruled the subsidiary, LTL Management LLC, didn’t file for chapter 11 in bad faith to gain an unfair edge over personal-injury claimants, as they had alleged, but for the legitimate purpose of resolving mass litigation. Instead he sided with J&J, which argued chapter 11 provides cancer victims with a fairer and more efficient forum to receive compensation than the civil jury system. “This chapter 11 is being used, not to escape liability, but to bring about accountability and certainty,” Judge Kaplan said.

Handing a key legal victory to survivors of clergy sexual abuse, U.S. District Court Chief Judge Frances Tydingco-Gatewood on Saturday ruled the assets of Catholic parishes and schools belong to the Archdiocese of Agana as a whole — and could therefore be used to help pay abuse claimants, the Guam Daily Post reported. The judge's ruling capped a three-year-old request from hundreds of survivors, represented by Leo Tudela. Millions of dollars worth of buildings, parking lots, vehicles, cemeteries, bank accounts and other parish and school property are now part of the archdiocese's bankruptcy estate, which could be liquidated. But the judge and the creditors committee, along with the archdiocese, said the end goal is to justly compensate the abuse survivors while keeping the parishes, schools and ministries open.

The U.S. government’s bankruptcy watchdog said the Boy Scouts of America need to explain why it would charge an “excessive and burdensome” $20,000 fee for sexual abuse survivors to get an independent review of their compensation claims, WSJ Pro Bankruptcy reported. The youth group has proposed setting up a roughly $2.7 billion trust to settle abuse claims that drove it into bankruptcy, and survivors may stick with traditional trust distribution procedures at no additional cost. But under an option added earlier this month in a settlement with the official abuse victims committee, claimants who believe their abuse was particularly severe and merits additional compensation may ask for an independent review. Obtaining a review requires individual claimants to pay the settlement trust a $10,000 administrative fee up front, followed by an additional $10,000 immediately before the review begins. After the $20,000 fee generated immediate criticism, including from the Justice Department’s Office of the U.S. Trustee, the Boy Scouts said some of the fee could be waived in certain circumstances. Still, government lawyers said on Friday in court papers the review option is “illusory” and poses a “significant cost barrier.” In an objection filed in U.S. Bankruptcy Court in Wilmington, Del., the U.S. Trustee said the overseer of the settlement fund may reject the recommendation of the outside reviewer. The objection also said claimants could pay the $20,000 and get an estimate of additional compensation, only to have the settlement trustee reject the higher claim amount.

PG&E Corp. estimates it will cost about $10.5 billion to bury nearly 3,600 miles (5,794 kilometers) of power lines over the next five years as part of an ambitious project to prevent equipment from sparking catastrophic wildfires, Bloomberg News reported. The California utility giant said Friday it aims to speed up its pace of putting lines underground, with a target of at least 175 miles this year at a cost of $3.75 million per mile, or about $656 million, according to a regulatory filing made Friday with the state. PG&E plans to ratchet up that annual pace to a goal of burying 1,200 miles in 2026 at a reduced cost per mile, the filing said. PG&E’s disclosure offers for the first time details on how much the utility estimates it will need to spend on what it has said will be the largest anti-fire effort of its kind in the nation. The company said some of the undergrounding expenses will be offset by reducing the need to send crews out to trim trees around exposed overhead lines. PG&E Chief Executive Officer Patti Poppe unveiled a plan last year to eventually bury 10,000 miles in high fire risk areas, shortly after the start of the massive Dixie Fire that was sparked by a PG&E line that had been slated to be buried.