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By John Brooke 22 Feb, 2024

The Supreme Court cleared the way on Thursday for a $2.4 billion plan to settle sex abuse lawsuits against the Boy Scouts of America to go forward. The court’s brief, unsigned order gave no reasons, which is typical for emergency applications. There were no public dissents.

The Boy Scouts settlement involves more than 82,000 claims of childhood sexual abuse, with more than 86 percent of victims in the case backing the deal.

However, the group who asked the Supreme Court to intervene objected to the use of the mechanism, which protected from liability third parties like churches involved in scouting, local councils and insurers.

The outcome in the Boy Scouts case had been closely watched as a possible clue of where the justices might lean in the Purdue Pharma bankruptcy settlement. During oral arguments in December, the justices appeared divided, and a decision in that case is expected by the end of the court’s term, likely in late June.

The victims’ group, in asking the court to step in, argued that if the settlement were allowed to proceed, sexual abuse victims “will lose their right to pursue their claims independently of the bankruptcy settlement trust.”

The Boy Scouts had argued that the settlement should continue as planned, warning that if the justices blocked the deal, it would “threaten to throw the scouting program into chaos.”

The challengers represented “a tiny fraction” of the victims involved in the deal, the Boy Scouts said.

After Justice Samuel A. Alito Jr. temporarily paused the settlement earlier this month, the bankruptcy judge overseeing the case suspended work on the deal, which has already paid about $8 million to several thousand victims.

On Thursday, after the court announced its decision, the trust handling the settlement said it had “resumed all operations, including processing and paying claims.”


Article originally taken from NYT online. 


By John Brooke 21 Dec, 2023

Rudy Giuliani filed for bankruptcy in New York after being ordered to pay $148 million in damages to two Georgia election workers.

The former New York Mayor has also listed more than $500 million in debt while racking up millions in legal fees.

The attorney who led the effort to overturn the 2020 election has been swamped my mounting legal issues.

Last Friday, he was put on the precipice of financial ruin when a jury awarded $148 million in damages to Ruby Freeman and Shaye Moss for claiming they tried to rig the vote for Joe Biden.

In August he admitted having 'financial problems' as he battled multiple court cases and said he didn't have enough money to defend himself.

In the filing, Giuliani said he had between $100 million and $500 million in liabilities and $1 million to $10 million in assets.

Giuliani said he owed $148 million to Ruby Freeman and Wandrea Moss, the two former Georgia election workers.

The filing also listed President Joe Biden's son, Hunter Biden, as a creditor, without specifying the amount Giuliani owed him. Hunter Biden in September sued Giuliani for violating his privacy over data allegedly taken from his laptop.

Giuliani listed the Internal Revenue Service and New York State Department of Taxation and finance among his creditors.

By John Brooke 21 Dec, 2023
Rite Aid has filed for bankruptcy and plans to sell part of its business as it attempts to restructure while dealing with losses and opioid-related lawsuits. 

Rite Aid has filed for bankruptcy protection and plans to sell part of its business as it attempts to restructure while dealing with losses and opioid-related lawsuits.

The company said Rite Aid stores will continue to fill prescriptions, and customers will still be able to visit its locations or shop online while it goes through its voluntary Chapter 11 process. But that process also will allow it to speed up its plan to close underperforming stores.


Going through Chapter 11 will help “significantly reduce the company’s debt” while helping to “resolve litigation claims in an equitable manner,” Rite Aid late Sunday.

Rite Aid Corp. said in its federal bankruptcy filing that it runs more than 2,000 stores. Most of its locations are on the East and West Coasts.

The Philadelphia company, which is marking its 60th year in business, has posted annual losses for several years and has been cutting costs and closing stores as it dealt with long-standing financial challenges. It has said it expects a net loss of as much as $680 million in the current fiscal year, which will end next spring.


The company, like its rivals, also faces financial risk from lawsuits over opioid prescriptions. Rite Aid already has reached several settlements, including one announced last year with the state of West Virginia for up to $30 million.

In March, the U.S. Justice Department intervened in a whistleblower lawsuit brought by former employees under the False Claims Act. Federal officials said in a statement that the drugstore chain filled “at least hundreds of thousands” of illegal prescriptions for drugs including opioids.

Rite Aid called the government’s claims “hyperbolic” in a subsequent motion to dismiss. The company said facts alleged in the case actually showed it exceeded regulatory requirements for diversion control.

Drugstores also have been dealing with several issues that frustrate customers. They’ve handled prescription drug shortages, and they have struggled to fill their stores with enough pharmacists and technicians to run the pharmacies. Rivals CVS and Walgreens both have dealt with walkouts by pharmacy employees concerned about their growing workloads and lack of help.

The stores also have had to weather tight prescription reimbursement and waning COVID-19 vaccine and testing business in recent quarters. Plus online competitors like the retail giant Amazon have hurt sales of consumer goods found outside the pharmacy areas of their stores.

Rite Aid’s larger competitors like CVS and Walgreens, which each run several thousand more locations, have moved more aggressively into health care, opening clinics and adding other sources of revenue.

Deutsche Bank analyst George Hill said in an August note that Rite Aid operates on a much thinner profit margin than its competitors and while it can pay costs to service its debt, it won’t be able to cover principal payments “based on the current trajectory of the business.”

The company’s filing in U.S. Bankruptcy Court in New Jersey listed $8.6 billion in total debts and $7.6 billion in assets.

Rite Aid said Sunday that it had reached an agreement with some key creditors on a financial restructuring plan to cut its debt. The company also said it obtained $3.45 billion in fresh financing from some of its lenders, which will help support the company through the Chapter 11 process.

Rite Aid says it does not know yet which stores it will close, but it will transfer workers to other Rite Aid locations where possible.


Article credited by the Associated Press



By John Brooke 13 Oct, 2023

Bankman-Fried has also stepped down as CEO and has been succeeded by John J. Ray III, though the outgoing chief will stay on to assist with the transition.

Approximately 130 additional affiliated companies are part of the proceedings, including Alameda Research, Bankman-Fried’s crypto trading firm, and FTX.us, the company’s U.S. subsidiary.

In the 23-page bankruptcy filing obtained by CNBC, FTX indicates it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, as well as liabilities in the range of $10 billion to $50 billion. By comparison, Lehman had more than $600 billion in assets and Enron had $60 billion.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said the new FTX chief, Ray.

“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency,” continued Ray.

He added that stakeholders should understand that events have been fast moving, that the new team is engaged only recently and that they should review the materials filed on the docket of the proceedings over the coming days for more information.

It caps off a tumultuous week for one of the biggest names in the sector.

In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company. FTX founder Bankman-Fried admitted on Thursday that he “f---ed up.”

Anthony Scaramucci, founder of SkyBridge Capital and short-time Trump communications director, flew to the Bahamas this week to help Bankman-Fried as an investor and friend. When Scaramucci got there, he says, it appeared beyond the point of a simple liquidity rescue. He said he didn’t see evidence of this mishandling when he and other investors first screened FTX as a potential business partner.

“Duped I guess is the right word, but I am very disappointed because I do like Sam,” Scaramucci said Friday morning on CNBC’s “Squawk Box.” “I don’t know what happened because I was not an insider at FTX.”

An FTX spokesperson did not immediately respond to CNBC’s request for comment on this story, including on Scaramucci’s remarks.

In a short period of time, FTX expanded into non-crypto elements of life, such as pop culture. For example, in the past Super Bowl, it aired a commercial featuring comedian Larry David, in which David turned down an opportunity to invest in crypto. “Ehh, I don’t think so. And I’m never wrong about this stuff. Never.”


Article credited by CNBC.com

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