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A bankruptcy judge agreed to take up a challenge by Brazos Electric Power Cooperative Inc. seeking to reduce the nearly $1.9 billion it was billed by Texas’ power-grid operator during a freak winter storm in February, sweeping aside opposition by state power regulators, WSJ Pro Bankruptcy reported. Bankruptcy Judge David Jones in Houston said that he would consider the dispute, which pits the largest power cooperative in the state against the grid operator, the Electric Reliability Council of Texas (ERCOT). The judge said at a hearing yesterday that bankruptcy court, not the state-court system, was the appropriate venue to decide how much Brazos owes. Lawyers representing Ercot’s regulator, the Public Utility Commission of Texas, had urged the judge not to hear the lawsuit. Brazos filed for bankruptcy in March after receiving billions of dollars in bills from ERCOT for a week in February when winter storm Uri knocked power plants offline and left millions of customers without electricity for days. The bills were that high because ERCOT’s electricity rates had risen to the maximum of $9,000 per megawatt hour during the storm, compared with an average of roughly $22 per megawatt hour last year.

Brazos Electric Power Cooperative Inc. yesterday largely defeated an effort by the Texas electric operator to dodge a lawsuit over a $2 billion energy bill stemming from the state's historic February storm that knocked out power for millions, Reuters reported. Bankruptcy Judge David Jones in Houston rejected arguments from the Electric Reliability Council of Texas (ERCOT) and Public Utilities Commission of Texas (PUCT) that the dispute should not be handled in bankruptcy court and that allowing it to continue would infringe upon the state’s sovereignty. ERCOT said in a response to a request for comment that it does not comment on pending litigation. Brazos, the largest and oldest electric co-op in Texas, filed for chapter 11 protection in March after it was hit with the massive bill. The bill for the seven days the storm lasted is nearly three times the co-op’s total power cost from 2020, which was $774 million, according to court papers. For several days during the storm, ERCOT set electricity prices at $9,000 per megawatt hour. In August, the co-op filed a complaint within its bankruptcy aiming to reject ERCOT's claim for the payment of the bill and substantially reduce the amount. It argues that the charges are constructively fraudulent and excessive. The Public Utilities Commission of Texas says Brazos is trying to re-price the market. Ruling in favor of the coop, Texas Assistant Attorney General Jason Binford argued at yesterday's hearing, could create a precedent that would lead to other electric providers seeking bankruptcy to offload their energy bills as well. Additionally, Binford said, Texas has a specific procedure for resolving this type of dispute. Handling the bill in bankruptcy court infringes upon the state’s sovereign immunity, he argued.

Only two companies in the world can pay their bills so reliably that they wield perfect credit ratings from both S&P and Moody’s. But one of them, Johnson & Johnson, just turned to bankruptcy court to deal with customers who argue the company’s products gave them cancer, Bloomberg News reported. The consumer products giant put a unit into bankruptcy on Thursday because it owes at least $2 billion to people who say they got sick from J&J baby powder tainted with asbestos. J&J is far from the usual user of chapter 11 protection. It’s got about $25 billion of cash and a $10 billion line of credit — easily enough to set up the proposed victims’ trust fund. Yet, J&J isn’t the first solvent company facing asbestos claims to take this route. At least three others — Georgia Pacific, Trane Technologies and Saint-Gobain Corp. — are all trying the same strategy. In a move known in legal circles as the “Texas Two-Step,” bankruptcy judges have allowed companies facing major litigation claims to scramble their corporate org charts and set up special units to house their asbestos liabilities using a business-friendly Texas law. A company first moves its corporate charter to Texas, then splits in two: one part holds its healthy assets and businesses, while the other has the asbestos claims.

Johnson & Johnson placed into bankruptcy its liabilities for tens of thousands of lawsuits linking talc-based products to cancer, betting the move will help drive a settlement of personal-injury claims that are expected to grow for decades to come, WSJ Pro Bankruptcy reported. J&J said yesterday that a corporate affiliate holding talc-related liabilities had filed for chapter 11 protection in the U.S. Bankruptcy Court in Charlotte, N.C., shifting the landscape of a yearslong legal fight over whether Johnson’s Baby Powder caused ovarian cancer, asbestos poisoning and other illnesses. The company has maintained that the powder, which it stopped selling last year, is safe and doesn’t contain asbestos. While J&J itself didn’t file for bankruptcy, it is the latest business to use chapter 11 as a mechanism to settle large numbers of lawsuits over defective products or other alleged harms and underscores the financial risks to the company from the litigation, which as of July totaled roughly 34,600 lawsuits. J&J’s defense costs have totaled nearly $1 billion in the last five years, and settlements and verdicts were another $3.5 billion, court papers show. The bankruptcy filing means J&J will now get a breathing spell from further trials, plus the chance to put both current and future talc claims behind it for good through a bankruptcy settlement. Yesterday’s filing also confirms the fears of personal-injury lawyers, who had voiced worries that J&J would put talc claims into chapter 11 to stop jury verdicts, protect assets and pressure plaintiffs to accept settlements.

Generic drugmaker Teligent Inc. filed for bankruptcy protection after the Food and Drug Administration flagged problems at the company’s manufacturing plant in Buena, N.J., that led to a recall and production halt, WSJ Pro Bankruptcy reported. The chapter 11 filing comes days after the resignations of Chief Executive Tim Sawyer and legal chief Philip Yachmetz. Teligent said Thursday that they had left the company, effective Oct. 8, without specifying a reason for their departures. Based in Iselin, N.J., the company filed for chapter 11 protection on Wednesday in the U.S. Bankruptcy Court in Wilmington, Del., with plans to sell its assets. Teligent received a warning letter from the FDA in November 2019 and worked to fix problems at the plant, but failed to get a green light from the regulator following an inspection in July and August, Chief Restructuring Officer Vladimir Kasparov said in a court filing. The company is still working to address issues raised by the FDA, he said. Mr. Kasparov said the company’s finances grew strained as it devoted resources to resolving issues raised in FDA inspections. The COVID-19 pandemic also reduced demand for Teligent’s prescription skin products as elective visits to doctors’ offices slowed, he said. Teligent was previously a contract manufacturer, producing goods for other businesses, but in 2010 it shifted to focus on making generic drugs, according to Mr. Kasparov. The company makes injectable and topical medicines, including those prescribed to treat conditions such as dermatitis, psoriasis and eczema. The company has lined up $12 million in fresh financing in the form of two bankruptcy loans from senior and junior lenders, while rolling up over $15 million in existing loans into the loan facility. Ares Capital Corp. will act as one of the agents on the bankruptcy loans, court records show.

A federal judge said that appeals of a $4.5 billion bankruptcy settlement shielding Purdue Pharma LP’s family owners from civil opioid lawsuits would hinge on whether the agreement is permitted under bankruptcy law and the U.S. Constitution, WSJ Pro Bankruptcy reported. “There’s never been a case like this before,” Judge Colleen McMahon of the U.S. District Court in Manhattan said during a Tuesday hearing over pending appeals arising from Purdue’s chapter 11 proceedings. The Justice Department’s bankruptcy watchdog and a handful of state attorneys general are appealing the drugmaker’s chapter 11 plan and its settlement with members of the Sackler family. Judge McMahon said yesterday that she intends to rule this week on the government authorities’ request to pause enactment of the Sackler settlement and Purdue’s broader reorganization plan, pending the resolution of legal challenges arising out of the bankruptcy. She said that the bankruptcy presents a unique set of facts compared with earlier cases reviewed by the U.S. Court of Appeals for the Second Circuit dealing with the type of legal releases the Sacklers will be provided under the settlement. The U.S. Trustee, the Justice Department unit monitoring bankruptcy cases, and authorities from states including California, Connecticut and Washington have raised concerns about a doctrine called equitable mootness, which they argue could defeat their challenge before higher courts get a chance to consider the legality of the Purdue settlement.

A New York judge said that she will likely issue an order pausing the implementation of Purdue Pharma’s reorganization plan to allow the U.S. Department of Justice's bankruptcy watchdog and a handful of states time to appeal the deal, Reuters reported. U.S. District Judge Colleen McMahon in Manhattan issued a temporary restraining order on Sunday, putting the plan and underlying opioid litigation settlement on hold until Tuesday afternoon, when she will hear arguments on a motion for a longer-term stay. The OxyContin maker secured bankruptcy court approval of its plan and settlement in September, with support from around 40 states and a wide range of municipalities, Native American tribes, hospitals, and personal injury claimants, among others. The deal includes legal protections for the members of the Sackler family that owned Purdue, who are contributing approximately $4.5 billion to the settlement, against opioid-related civil lawsuits in the future. Court documents show that overall approximately $5.75 billion will be placed into trusts that will funnel money to opioid abatement programs and personal injury claimants. DOJ's bankruptcy watchdog, the U.S. Trustee, and a handful of states have appealed the September order, specifically taking issue with the protections for the Sacklers.

The U.S. Supreme Court yesterday cleared the way for New York to collect a $200 million surcharge imposed on opioid manufacturers and distributors to defray the state’s costs arising from the deadly epidemic involving the powerful painkilling drugs, Reuters reported. The justices declined to hear an appeal by two trade groups representing drug distributors and generic drug makers and a unit of British-based pharmaceutical company Mallinckrodt Plc of a lower court’s decision upholding the surcharge. The law’s challengers included the Association for Accessible Medicines, whose members include drugmakers Teva Pharmaceutical Industries Plc and Mallinckrodt, and the Healthcare Distribution Alliance, which represents wholesale distributors. The alliance’s members include the three largest opioid distributors in the United States, McKesson Corp, AmerisourceBergen Corp and Cardinal Health. They proposed in July paying $21 billion to resolve lawsuits accusing them of fueling the epidemic. Mallinckrodt filed for bankruptcy protection in 2020 and has been seeking to finalize a similar, $1.7 billion settlement. The payments to New York were owed under the Opioid Stewardship Act, which Democratic former Governor Andrew Cuomo signed into law in 2018 to address the costs the epidemic imposed on the state.

Brazos Electric Power Cooperative Inc. has asked the judge overseeing its bankruptcy to determine that Texas’s electric operator applied the wrong pricing mechanism for electricity used during the state's historic winter storm that left millions without power, Reuters reported. In court papers filed on Wednesday, Brazos asked Chief U.S. Bankruptcy Judge David Jones in Houston to issue a partial summary judgment ruling on the matter, which it first raised in a lawsuit filed in August as part of its bankruptcy against the Electric Reliability Council of Texas Inc. (ERCOT) over a $2 billion bill it received after the February storm. Brazos says that deciding the pricing dispute quickly will narrow the scope of any further trial over the bill and help it develop a reorganization plan. Brazos, the largest and oldest electric co-op in Texas, filed for chapter 11 protection in March after it was hit with the massive bill. The bill for the seven days the storm lasted is nearly three times the co-op’s total power cost from 2020, which was $774 million, according to court papers. For several days during the storm, ERCOT set electricity prices at $9,000 per megawatt hour.