%1

Fourteen officials, pharmacists and technicians tied to the Massachusetts company involved in a meningitis outbreak that killed 64 people were indicted on charges including racketeering and second-degree murder, Bloomberg News reported yesterday. The New England Compounding Center’s tainted drugs, including a steroid administered by spinal injection to treat pain, infected 751 people in 20 states, U.S. officials have said. The 2012 outbreak was caused by sloppy clean-room practices, including routine failure to properly sterilize drugs, according to the indictment unsealed today in Boston. Barry Cadden, NECC’s former president and lead pharmacist, and Glenn Chin, a supervising pharmacist who was arrested at a Boston airport in September, are accused of second-degree murder over the deaths of dozens of people in states including Indiana, Maryland and Florida. The company, formerly New England Compounding Pharmacy Inc., suspended operations and filed for bankruptcy protection in December 2012 as a result of lawsuits by victims and families. The company and its insurers in August won court approval of a settlement of almost $100 million.

A former Freedom Industries Inc. president was charged for the second time this month in connection with a West Virginia chemical spill that contaminated water for 300,000 residents, this time in an indictment accusing him and three company officials with polluting the Elk River near Charleston, Bloomberg News reported yesterday. Federal prosecutors also announced separate charges today against two other people, a plant manager and environmental consultant, for violating the federal Clean Water Act. The leak from one of Freedom’s tanks sent about 7,500 gallons (28,400 liters) of a cleaning agent used in coal-mining operations into the river, contaminating drinking water in the state’s largest city and sending more than 100 residents to the hospital. Earlier this month, Gary Southern, Freedom’s former president, was accused by the government of lying in the company’s bankruptcy filing, which was triggered by lawsuits following the spill.

Unsecured noteholders who were at one point in line to be some of the biggest winners in Energy Future Holdings Corp.'s bankruptcy are now facing a lawsuit from units of the debt-laden Texas energy company, Dow Jones Daily Bankruptcy Review reported today. The suit asks a judge to rule that a group of investors including Avenue Capital Group, York Capital Management and GSO Capital Partners aren't entitled to a premium or post-petition interest when their debt is paid.

Bankrupt GT Advanced Technologies Inc. won approval of a settlement with Apple Inc., preventing costly litigation by granting the iPhone maker $439 million in claims against furnaces at a synthetic sapphire plant, Bloomberg News reported yesterday. Bankruptcy Judge Henry Boroff said at a hearing yesterday that he would sign an order approving a revised settlement agreement. During a break in the hearing, GT Advanced and Apple made changes addressing concerns the judge raised. Judge Boroff previously said yesterday that he was concerned about terms of the settlement giving Apple the immediate right to foreclose on Merrimack, N.H.-based GT Advanced’s assets in some circumstances. Under the revised accord, if GT Advanced is still in chapter 11, Apple will file a notice of non-payment and intent to foreclose with the court before acting.

The bankruptcy trustee winding down Lehman Brothers’ brokerage business on Monday said he would ask the U.S. Supreme Court to review a ruling that awarded billions of dollars in disputed assets to Barclays PLC, the Wall Street Journal reported today. Following Lehman’s 2008 bankruptcy filing, Barclays acquired Lehman’s brokerage business in a “no cash” transaction, Lehman says. A year later, a legal fight over the transaction ensued when Lehman sued Barclays, saying that the British bank negotiated a secret discount in the transaction. Judge James Peck, then Lehman’s bankruptcy judge, concluded that Barclays didn’t receive an improper “windfall” from the sale but wasn’t entitled to the so-called margin cash assets worth $4 billion. Later, however, a three-judge Court of Appeals panel said “ambiguities and loose ends were inevitable” in such a speedy sale and ruled that Barclays was entitled to these disputed assets. Lehman trustee James W. Giddens yesterday said that “while the bankruptcy Court rightly rejected Barclays’ claims to the margin cash assets, the decisions by the District and Appeals Courts reduced the amount available for the general estate by $4 billion, frustrated the purpose of the liquidation, and undermined the credibility of a sale hearing.”

Puerto Rico's electric power authority PREPA is expected to ask bondholders to extend a forbearance agreement set to expire at the end of next March, Reuters reported yesterday. A presentation to the bondholders in New York yesterday highlighted the extent of the problems facing PREPA and fell short of an expected business plan. A comprehensive plan to turn around PREPA's failing business will take longer to produce than originally expected, according to sources familiar with the negotiations.

Nortel Networks Corp. bondholders will soon know whether a $1 billion settlement with the failed company will pass muster in a U.S. bankruptcy court, Dow Jones Daily Bankruptcy Review reported today. Approval of the settlement, allotting bondholders $1 billion in interest on their investment in Nortel's distressed debt, will have a "direct and substantial" impact on the Canadian company and its creditors — including disabled and retired workers in Canada and Europe — are counting on it for payment, said Ken Coleman, a lawyer for Nortel's Canadian parent company. If the pact fails, it will be a blow to the hedge funds that snapped up Nortel's debt at a steep discount after the company collapsed in 2009. Bond prices indicate investors are expecting payment in full, with much interest.

Attorneys say they are one step closer to implementing a settlement negotiated between victims of the Freedom Industries chemical leak, the Charleston (W.Va.) Daily Mail reported on Saturday. Attorneys filed a modified settlement agreement with AIG Specialty Insurance Co. on Thursday. In a previous bankruptcy hearing, attorneys debated which section of Freedom’s insurance policy should cover claims resulting from the Elk River chemical leak. In July, three former Freedom executives, William Tis, Charles Herzing and Dennis Farrell, objected to the potential agreement because it didn’t provide payment of their legal fees. At a previous hearing, attorneys representing the former executives argued Freedom should be covered under a certain section, which would cover the loss and the cost of defending that claim.

The messy collapse of the mega-firm Dewey & LeBoeuf has claimed another casualty, and this time it’s one of the defunct law firm’s leading rainmakers, according to a New York Times analysis on Saturday. John J. Altorelli, now co-head of the U.S. finance practice at DLA Piper, the world’s largest firm measured by revenue, was among Dewey & LeBoeuf’s most important rainmakers, the term used to denote partners who land clients. At his peak, he was credited with generating more than $33 million in annual revenue for the firm. In 2011 alone, his compensation was $6 million. That same year, the firm was so eager to keep him as a partner that it offered a contract guaranteeing him $5 million a year for three years. His departure from Dewey & LeBoeuf in April 2012 was a precipitating factor in the firm’s collapse, which came soon after, in May 2012. Despite all these trappings of success, Altorelli, who is 57, filed for personal bankruptcy protection on Nov. 25 in Connecticut, where he owns a sprawling home currently on the market for $3.9 million. In a cautionary tale for any firm that may be contemplating a bankruptcy filing, the trustee overseeing Dewey & LeBoeuf’s bankruptcy is suing him for $12.9 million. He’s surrounded by lawyers and is personally responsible for his legal fees. He’s been grilled by prosecutors and cited as a potential witness in the pending criminal trial against Dewey & LeBoeuf’s former leaders. The Internal Revenue Service is also investigating him.

Seven underwriters of the failed MF Global Holdings Ltd. reached a partial settlement with investors, who had filed a lawsuit in 2011 seeking to hold them and some of the brokerage's executives, including its CEO, responsible for its collapse, Reuters reported today. The proposed settlement calls for the seven underwriters to pay the plaintiffs $74 million, according to court papers filed in a New York court yesterday. The underwriters cited in the settlement are Citigroup, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Pierce, Fenner & Smith, RBS Securities and Sandler O'Neill. Once run by former Goldman Sachs co-chairman and New Jersey Governor Jon Corzine, MF Global collapsed amid worries about Corzine's $6.3 billion bet on European sovereign debt and the use of customer money to cover liquidity shortfalls. Former stockholders and bondholders, led by the Virginia Retirement System and the province of Alberta, Canada, had accused MF Global of inflating its ability to manage risk, obscuring the risks of its big bet on European sovereign debt, and improperly accounting for deferred tax assets.