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Johnson & Johnson should know by the end of next month whether its controversial use of bankruptcy to try to resolve billions of dollars in cancer claims can proceed, or if the consumer products giant must fight roughly 38,000 lawsuits individually, Bloomberg News reported. Bankruptcy Judge Michael B. Kaplan said in court on Friday that he will rule by Feb. 28 on a demand to throw out the bankruptcy case filed by a J&J unit responsible for paying claims related to allegations that its baby powder causes certain cancers. J&J created a unit called LTL Management and put it in bankruptcy to resolve all current and future baby powder lawsuits. All of the lawsuits are temporarily on hold while the bankruptcy case continues. Kaplan will hold a multiday trial starting on Feb. 14 to decide whether the bankruptcy should be thrown out. Should Judge Kaplan allow the bankruptcy to continue, LTL would be able to set up a trust funded by J&J that would pay current and future baby powder claims. The company has proposed put at least $2 billion into such a trust. Lawyers for baby powder claimants say they want to proceed with the lawsuits instead of negotiating about the size of a trust fund in bankruptcy.

A judge overseeing the bankruptcy of the largest electric co-op in Texas on Wednesday shut down certain arguments that the state's electric grid operator was looking to make in a legal brawl with the co-op over a nearly $2 billion bill stemming from a historic winter storm last year, Reuters reported. Bankruptcy Judge David Jones in Houston issued his ruling ahead of a February trial over the $1.9 billion claim the Electric Reliability Council of Texas filed in Brazos Electric Power Cooperative Inc's chapter 11 case. The judge held that some of the arguments ERCOT tried to raise to defend its claim weren't relevant to the immediate issue. Brazos filed for bankruptcy in March 2021 after being hit with the energy bill from ERCOT. The bill for the seven-day storm is nearly three times the co-op’s total power cost from 2020, which was $774 million, according to Brazos. For several days during the storm, ERCOT set electricity prices at $9,000 per megawatt hour, around 500 times the usual rate. In August, the co-op filed a lawsuit as part of its bankruptcy objecting to ERCOT’s $1.9 billion claim and aiming to substantially reduce the amount, arguing that the charges are "exorbitant and excessive." ERCOT, in response, said Brazos purchased energy it knew it couldn’t afford and failed to comply with agreements under their market participation contract. Additionally, ERCOT said Brazos was partly at fault for not properly preparing its facilities for severe winter weather. But Judge Jones held that those issues “have nothing to do with the proceeding." A trial on the dispute is set to begin on Feb. 21.

A New Jersey federal judge on Tuesday said a dispute over Johnson & Johnson’s legal protections against talc-related litigation must be decided by a bankruptcy judge, Reuters reported. Chief U.S. District Judge Freda Wolfson, who oversees a large chunk of the talc-related litigation against J&J, denied a request from people who have sued J&J alleging that its talc products cause cancer to decide whether the pharmaceutical giant is entitled to protection against such lawsuits while its subsidiary, LTL Management LLC, goes through bankruptcy. J&J, which maintains that its talc products are safe, shifted its talc liabilities to LTL and then placed the subsidiary into bankruptcy in October. It plans to use the LTL bankruptcy to negotiate a potential deal to resolve about 38,000 talc-related claims. U.S. Bankruptcy Judge Michael Kaplan, who oversees the LTL bankruptcy issued a temporary order shielding J&J from litigation, which expires on Jan. 28. A committee that represents individuals who say J&J’s talc products cause ovarian cancer and mesothelioma asked that Judge Wolfson decide whether J&J is entitled to longer-term protection. The committee argued in court papers that since she oversees the multidistrict litigation where many of the talc cases are consolidated, she would be better suited to say whether J&J should be allowed to put all of those lawsuits on hold in light of her familiarity with the talc claims. J&J disagreed, saying that the underlying tort claims are not relevant to whether the litigation should be paused during the bankruptcy. Judge Wolfson did not say why she declined to decide the matter, but said she would issue a decision with her reasons in the next 20 days. Judge Kaplan will hear arguments on the matter on Jan. 21.

The Boy Scouts of America said it now expected it will likely be able to pay in full on the sex-abuse claims that drove it to bankruptcy based on new and lower estimates of how much it owes abuse victims, the Wall Street Journal reported. The youth group yesterday said that it now projected the total value of claims eligible for payouts to be roughly $3 billion, the midpoint in a range of $2.4 billion to $3.6 billion. The Boy Scouts’s trust for settling with 82,200 abuse victims grew recently to at least $2.69 billion with contributions from the youth group, its insurers, local councils and others. The Irving, Texas-based youth group said the trust could grow further and would cover all the eligible claims in full. “Survivors of abuse will be paid in full” with the chapter 11 reorganization plan, the Boy Scouts said in a filing Tuesday in the U.S. Bankruptcy Court in Wilmington, Del. Facing a slew of sexual-abuse lawsuits, the Boy Scouts filed for bankruptcy in February 2020. The youth group, which has apologized to the victims, says new calculations showed its liability wasn’t nearly as bad as it thought. Critics remained skeptical about the proposed reorganization, which will be debated at a hearing scheduled to begin in late February.

The 3-year-old bankruptcy reorganization of the Archdiocese of Santa Fe, N.M., entered a critical phase yesterday, with insurance companies and clergy sex abuse claimants meeting in a confidential mediation with attorneys for the church, the Albuquerque Journal reported. At issue is how to resolve the impasse in reaching a universal settlement in the case, particularly how much the archdiocese’s insurance companies will contribute to a payout for nearly 400 people who have filed claims alleging they were sexually abused as children by priests and other clergy in the archdiocese. The mediation includes for the first time a nationally recognized mediator who was brought in during the recently settled chapter 11 bankruptcy reorganization filed by USA Gymnastics. The organization agreed last year to pay $380 million in the wake of revelations about former team doctor Larry Nassar, who was convicted in 2018 of sexually assaulting hundreds of girls and women. U.S. Bankruptcy Judge David T. Thuma appointed Austin-based mediator Paul Van Osselaer at the request of the Archdiocese of Santa Fe. Van Osselaer’s specialty is mediation and arbitration of insurance coverage issues, according to his website. The archdiocese and the nearly 400 sexual abuse survivors who filed claims last year tentatively agreed on a payout figure representing the archdiocese’s portion of any settlement, but that amount is confidential. Meanwhile, the archdiocese has been selling off what is considered “non-mission essential” property and other assets in Albuquerque, Santa Fe, and around northern New Mexico for months. Local parishes also have been asked to contribute up to $100,000 each.

Owners of Famous Anthony’s filed bankruptcy yesterday at two of their Roanoke, Va., locations after a hepatitis A outbreak originating from one of their employees killed four people and hospitalized more than 30, the Roanoke Times reported. In 90 days, the company will submit a plan outlining a payment schedule for the people who have claims against the restaurant. Seattle food law attorney Bill Marler currently represents more than two dozen people who were sickened from or died in the Famous Anthony’s outbreak last fall. An employee who worked at three locations — Grandin Road Extension, Williamson Road and Crystal Spring Avenue — tested positive for the virus. Throughout September and October, more than 50 cases were confirmed to be connected to the outbreak. The Crystal Spring location closed and the owners have filed bankruptcy on the remaining two restaurants involved.

A federal judge authorized Purdue Pharma LP and its Sackler family owners to appeal a ruling that threw out their $4.5 billion settlement of thousands of lawsuits linked to the bankrupt company’s OxyContin painkiller and its role in the opioid crisis, WSJ Pro Bankruptcy reported. Purdue has until Jan. 17 to apply to the Second U.S. Circuit Court of Appeals for an expedited appeal, U.S. District Judge Colleen McMahon of the Southern District of New York ruled. The Second Circuit can choose whether to accept Purdue’s appeal, which aims to revive a chapter 11 plan to resolve an onslaught of lawsuits alleging that the company and its family owners contributed to opioid addiction. Most U.S. state and local governments backed the settlement with the Sacklers, who received broad releases from opioid-related liability under the bankruptcy plan in exchange. Attorneys general from California, Connecticut and a handful of other states have held out, unsatisfied with the deal terms. Last month, Judge McMahon struck down the chapter 11 plan, saying it went too far by releasing those states’ claims against the Sacklers. On Friday, Judge McMahon allowed Purdue’s appeal to move forward, ruling against the objecting states. The judge acknowledged that allowing the appeal might change states’ negotiating positions with Purdue, but said she didn’t believe it would delay final resolution of the litigation. She said the states were objecting because they were “flush with victory on their appeal and determined to use it to their negotiating advantage.”

The judge overseeing the reorganization of opioid maker Mallinckrodt Plc questioned the fairness of a plan to protect company executives and others from future lawsuits, Bloomberg News reported. Under the company’s $5.45 billion bankruptcy exit plan, company officers and directors could not, in most cases, be sued for their alleged role in America’s opioid epidemic. During a virtual court hearing yesterday on the proposal, U.S. Bankruptcy Judge John Dorsey asked how the legal protections would affect creditors who may want to keep suing Mallinckrodt. The company has argued that the provisions should be approved because the reorganization plan would fall apart without the protections, known as third-party releases. A federal judge in New York rejected similar provisions in Purdue Pharma’s reorganization, a legal finding that, if not overturned on appeal, would blow up the drug maker’s plan to end its multi-billion dollar bankruptcy. “It’s not just an issue of necessity, it’s a question of fairness,” Judge Dorsey said in the Mallinckrodt case. “How is it fair to them? What does it give to them?” The company and critics spent three days in a virtual courtroom this week arguing about whether Dorsey should approve the reorganization plan. The judge, based in Wilmington, Delaware, said he would rule as soon as possible. Most creditors have backed the company’s reorganization plan, including the legal releases. A handful have attacked Mallinckrodt’s proposal, in part because it would strip creditors of the right to sue certain people and entities that are not in bankruptcy, but had a role in Mallinckrodt’s operations. Like Purdue, Mallinckrodt has proposed a trust fund to compensate public agencies and others who claim they were harmed by the addictive painkillers that flooded America and caused a spike in overdose deaths. Mallinckrodt disputes those accusations, but filed bankruptcy in part to find a way to resolve the claims, company attorney Christopher Harris said in court on Thursday.

An Iowa nursing home chain repeatedly accused of providing substandard care for hundreds of seniors has filed for bankruptcy protection, the Iowa Capital Dispatch reported. QHC Facilities, based in Clive, Iowa, operates eight skilled nursing facilities in Tama, Madison, Humboldt, Jackson, Linn, Webster and Polk counties, as well as two assisted living centers. Collectively, the facilities have a maximum capacity of more than 700 residents. The company employs roughly 300 full-time and part-time workers. The company filed for bankruptcy last week, claiming $1 million in assets and $26.3 million in liabilities. In recent years, QHC and its affiliates have been hit with some of the largest federal fines ever imposed against an Iowa nursing home chain, with inspectors stating the company had placed residents in immediate jeopardy due to substandard care. At the same time, however, the company has sued its elderly residents for failure to pay for that care, and has neglected to pay more than $700,000 in fines.

The Boy Scouts of America fell short of winning the level of support it sought from sex-abuse victims for the nearly $2.7 billion settlement plan that would lift the organization out of bankruptcy, according to a preliminary vote count released Tuesday, WSJ Pro Bankrptcy reported. The proposed settlement of 82,200 claims of childhood sexual abuse earned the support of just over 73% of those who cast votes, falling just shy of the 75% support the Boy Scouts were targeting. The youth group has said it believes that level of acceptance would ease court approval of its chapter 11 plan, while anything less makes it more vulnerable to challenges from the minority of abuse victims who reject it. Nearly 54,000 survivors cast ballots, according to the Tuesday court filing. “Today, the Boy Scouts of America (BSA) announced the plan of reorganization that it has been pursuing failed to garner the required votes to proceed to a confirmation hearing in February,” Pfau Cochran Vertetis Amala PLLC, one of the law firms opposing the settlement said Tuesday. The bankruptcy plan includes compensation from the Boy Scouts, hundreds of affiliated local councils, its biggest insurers and some troop-sponsoring churches, which struck deals with the law firms representing the bulk of the abuse claimants. The current tally isn’t final, and marks the first of several steps along a possible path out of bankruptcy for the Boy Scouts, which has been dogged for years by allegations of widespread childhood abuse. The youth group has apologized for past failures to protect children and said bankruptcy is the fairest way to resolve its liabilities and compensate survivors. While bankruptcy law generally requires two-thirds approval from creditors for a proposed deal, chapter 11 cases involving mass injury and tort liabilities typically have to garner greater support. The youth group is under intense financial pressure to resolve the bankruptcy case and leave chapter 11. But there is still time for the Boy Scouts to try to flip votes to yes from no and potentially clear the 75% threshold ahead of a trial on the settlement plan scheduled for next month. The judge presiding over the chapter 11 case in the U.S. Bankruptcy Court in Wilmington, Del., is likely to view the settlement plan more favorably the more support it garners.