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Cities, States Denied Committee Seats in Opioid Maker’s Bankruptcy

Federal bankruptcy watchdogs turned a cold shoulder to states and cities battling the opioid epidemic, denying them seats on the official committee representing creditors of drugmaker Insys Therapeutics Inc., WSJ Pro Bankruptcy reported. Lawyers for states and towns across the U.S. were sent packing early Wednesday at a meeting in Wilmington, Del., where a bankruptcy overseer from the Justice Department was picking which creditors will have the loudest voice in the first chapter 11 filing stemming from the opioid crisis. “Obviously, we are very disappointed. We wanted to be on that committee,” said Wesley Duke, a Kentucky deputy attorney general. The states and cities will explore other options, he said, adding that the lack of a committee seat won’t stop Kentucky from protecting its interests. The committee will weigh in on legal questions that could sway future drug company decisions on whether to resort to bankruptcy. Court rulings that rein in government creditors could make chapter 11 a more attractive option for many. As corporate bankruptcies go, Insys is a midsize case with about $37 million in cash and a business that has been tarnished by multiple criminal convictions. The company is putting its assets up for sale while contending with an onslaught of claims from government bodies, individuals and insurers alleging it profited from fueling opioid addiction. The proceedings are being closely watched across the drug industry as a blueprint for a potential bankruptcy filing by Purdue Pharma LP, which is considering filing for chapter 11 to cope with lawsuits and investigations surrounding its OxyContin painkiller. “Insys is the test case for Purdue,“ said Nicholas Kajon, a lawyer representing health-insurance buyers who allege that Insys inflated health-care costs by pushing the opioid Subsys.

Commentary: Frackers Get Not One But Two Coal-Mine Canaries

Wyoming’s Powder River Basin has been generating some buzz in oil and gas circles as a potential source of new supply. On Wednesday, though, its real significance was as a strategic signpost, according to a Bloomberg commentary. The PRB, as it is known, is more famous for coal; and two of the biggest miners, Peabody Energy Corp. and Arch Coal Inc., are throwing their lot there together. A planned joint venture will combine five mines in Wyoming and Colorado into a single operation producing more than 60 percent of the basin’s coal. It will be roughly two-thirds owned by Peabody, with Arch taking the rest. The PRB produces a cheaper form of coal, with lower energy content, relative to what comes out of Appalachia — and its market is crumbling. Cheap shale gas, renewable energy and flat consumption have cut coal use in U.S. power plants by almost 40 percent over the past decade. Despite creative attempts by the White House to reverse that trend, the Energy Information Administration expects it to drop by another 19 percent through the end of next year. Cloud Peak Energy Inc., which operates several PRB mines, is currently in chapter 11 — from which both Peabody and Arch have only emerged themselves within the past few years. 

Gun Distributor’s Bankruptcy Highlights Firearms Industry Financing Debate

The bankruptcy of a South Carolina firearms distributor highlights the limits of Bank of America Corp.’s efforts to distance itself from the gun industry, WSJ Pro Bankruptcy reported. While the Charlotte, N.C.-based bank last year said it would stop making new loans to manufacturers of military-style firearms sold to civilians, the pledge doesn’t apply to retailers or distributors of guns. Now, as Bank of America is leading a $25 million financing package to help United Sporting Cos. sell off inventory in bulk and liquidate its operations in chapter 11, some advocates on both sides of the gun-control debate are questioning the bank’s decision to make a distinction between gun makers and retailers. Some gun-control groups say the bank hasn’t done enough to distance itself from the industry, while Second Amendment rights supporters say it already has gone too far. Bank of America was one of a number of companies that sought to distance themselves from the firearms industry in the wake of a school shooting in Parkland, Fla., that killed 17 people in February 2018. Since Bank of America’s pledge, mass shootings — at a Pittsburgh synagogue; at a Thousand Oaks, Calif., bar; and at a Virginia Beach, Va., municipal building — have continued across the U.S.

Ombudsman to Monitor Patient Care During Astria Health Bankruptcy

An Arizona attorney has been appointed to represent patients in the Astria Health bankruptcy case, the Yakima (Wash.) Herald-Republic reported. Susan Goodman of Mesch, Clark & Rothschild in Tucson, Ariz., will serve as a patient-care ombudsman in the case. Astria Health filed for chapter 11 protection on May 6, citing cash flow issues due to a vendor’s problems with billing and collecting payment for services. The organization is aiming to emerge from bankruptcy by year’s end. Goodman has served or is currently serving in the same role in nearly 30 health care bankruptcies across the country, including that of the Kennewick Public Hospital District in 2017, according to bankruptcy filings. Read more.

For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore. 

Ditech Finds Two Buyers For Its Mortgage Servicing and Originations Business

Ditech Holding Corp., which filed for bankruptcy in February, said on Tuesday that it reached two separate deals with buyers for its forward and reverse mortgage servicing and originations businesses, the Wall Street Journal reported. Publicly traded real-estate investment trust New Residential Investment Corp. will acquire assets of Ditech’s forward mortgage servicing and originations business Ditech Finance LLC, while Mortgage Assets Management LLC will buy the stock and assets of the company’s reverse mortgage business, Reverse Mortgage Solutions Inc. New Residential’s offer will be designated as a stalking-horse bid, and each of the two agreements are subject to higher and better offers. The deadline for submitting competing bids is July 8 and a confirmation hearing is scheduled for Aug. 7. The Fort Washington, Pa.-based company planned to sell its assets since the start of its chapter 11 proceeding, and the company has also negotiated a deal with lenders to forgive more than $800 million in debt.

Jennifer Lopez-Backed Fuse Media Prepares to Emerge from Chapter 11

Fuse Media, the multi-platform company backed by Jennifer Lopez that targets Latino and multicultural millennials and GenZ audiences, said it will emerge from chapter 11 protection on schedule in the coming weeks, Deadline.com reported. Along with that update on the bankruptcy filing last April, the company said that it has secured a distribution agreement with T-Mobile that will see its Fuse and FM (Fuse Music) linear networks carried on streaming hub TVision Home. The networks had been dropped by Verizon Fios and Comcast on Jan. 1, which led to a missed interest payment of $12.5 million and a host of related struggles. The goal of the pre-packaged bankruptcy was to reduce Fuse’s secured debt by about $200 million as well as lowering related interest expenses. A judge in Delaware bankruptcy court approved the company’s plan, clearing the way for Fuse to exit chapter 11. Despite the corporate and financial drama, Fuse has continued to operate, touting an audience that is 15 years younger than the cable TV average. It linked linear carriage and VOD deals with AT&T and DirecTV.
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