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Purdue Pharma begins Chapter 11 bankruptcy journey

By TOM MURPHY and ANNE D’INNOCENZIO

NEW YORK (AP) — Purdue Pharma gets its day in court Tuesday after the OxyContin maker filed for bankruptcy and negotiated a potential multi-billion dollar settlement to resolve thousands of lawsuits.

An initial hearing will be held in federal court in White Plains, New York, for the Chapter 11 bankruptcy case. Purdue filed for bankruptcy protection late Sunday, the first step in a plan it says would provide $10 billion to $12 billion to help reimburse state and local governments and clean up the damage done by powerful prescription painkillers and illegal opioids, including heroin.

These drugs have been blamed for more than 400,000 deaths in the U.S. in the past two decades.

Two dozen states have signed on to the settlement plan along with key lawyers who represent many of the 2,000-plus local governments suing Stamford, Connecticut-based Purdue Pharma. But other states have come out strongly against it.

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WHAT CAN WE EXPECT FROM THIS INITIAL COURT APPEARANCE?

These generally focus on housekeeping and ensuring that the company can keep paying the bills as an ongoing operation during its Chapter 11 bankruptcy.

According to the court docket, Judge Robert Drain will hear motions on authorizing payments of wages to employees, critical vendors, utilities and other key parties.

Fordham Law Professor Richard Squire said Drain will likely hear from lawyers objecting to the filing and describing it as a “bad faith claim.” Drain may table those arguments for another day.

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WHAT KEY ISSUES WILL THE JUDGE DECIDE?

Drain will eventually decide whether to approve or reject the settlement or seek modifications.

This is hardly a standard bankruptcy case. Because so many states objected to the settlement, it could complicate the process. Members of the Sackler family, which owns Purdue, are still trying to get more states to sign on.

Drain will preside over whether the suits against the Sacklers in state courts will be able to move forward, and what will happen to the company itself. Under the tentative settlement deal, it would continue to operate, but with profits used to pay for the settlement. Another alternative? Drain could order the company to be sold.

A single large settlement often is seen as the best way to resolve cases like these, bankruptcy attorney Jerry Reisman said. He noted that it would essentially put money in a giant pot to be divided fairly, and it would cut the costs of bringing separate cases through different courts.

“Everybody shares in some orderly manner,” he said.

Without a big settlement, all the claimants could wind up in a race to litigate in the other courts and get a judgment before the company runs out of money.

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WHO IS JUDGE DRAIN?

Drain is a former bankruptcy attorney with a Columbia University law degree. He serves as a U.S. Bankruptcy Judge for the Southern District of New York.

He has presided over some high-profile Chapter 11 cases involving companies like Hostess Brands and Sears. In the latter, Drain earlier this year gave hedge fund mogul Eddie Lampert a second chance to revive the iconic brand and save 45,000 jobs.

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HOW LONG WILL THE BANKRUPTCY PROCESS TAKE?

A complicated case like this could take up to a year but legal experts believe the parties involved want a fast settlement.

The longer a company remains in bankruptcy, the more is spent attorney fees and other costs. But a modification to the initial settlement to satisfy more cases could delay the case.

Purdue has said that finalizing the settlement could take at least six months.

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Murphy reported from Indianapolis.

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AP Reporter Geoff Mulvihill in Cherry Hill, New Jersey, contributed to this report.

High school volleyball

Monday night in high school volleyball, North Mahaska defeated BGM three sets to none, Lynnville-Sully swept HLV and Iowa Valley 3-0 over Keota.

Tuesday night (9/17), Oskaloosa’s volleyball team hosts Newton in a 7:00 game at the high school.  Other volleyball tonight has Ottumwa at Des Moines Hoover, Norwalk at Pella, Indianola at Pella Christian, Grinnell at Dallas Center-Grimes, Davis County at Knoxville and Clarke at Albia.

Oskaloosa Fire Chief Neff Retiring

Oskaloosa Fire Chief Mark Neff says he’s retiring.  Neff broke the news at Monday’s (9/16) Oskaloosa City Council meeting.  He says he’ll be taking a job with the State Fire Marshal’s Office.  Neff says it feels like the right time to make a change.

“I saw this opportunity and it’s like ‘I need to try this.  I need to step away from this.’  We’ve had a heck of a good run, but I think it’s time to let somebody else….there are some other projects that are big enough.  I’m not going to be here long enough.  I want them to take the reigns.”

Neff has been Oskaloosa’s fire chief since 2008 and has been with the fire department for 24 years. His last day as Oskaloosa fire chief will be October 17.

Ottumwa couple accused of child endangerment

A couple from Ottumwa is accused of leaving their three year old daughter unattended. Monday morning (9/16), Ottumwa Police got a call about a small child left alone in the 300 block of North Court Street. After being unable to find the girl’s parents, Police put her picture on social media. That led to relatives of the girl contacting Police. Officers determined the girl lives with her mother, 19-year-old Faith Knedler, an 18 month old half-brother and the half-brother’s father, 22-year-old Colby Rysdam. Knedler and Rysdam have both been charged with one count of child endangerment.

Sandy the Tabby Cat

Sandy, a 2 year old brown tabby cat, is our KBOE/KMZN Pet of the Week.  Sandy has been at the shelter since March and gave birth to a litter of kittens in April.  Now that she has raised her family she is ready to find her furever home!  Sandy’s a mellow girl and loves to just lay back and watch the action.  She would love to have her own bed and windowsill to watch the birds and squirrels.  $10 and an approved application will make Sandy all yours!  Call Stephen Memorial Animal Shelter at (641) 673-3991 for more information about Sandy or a wide variety of other loving and adoptable pets!

Statesmen football drop to 0-3

William Penn’s football team is still looking for its first win of the season.  MidAmerica Nazarene defeated the Statesmen 27-16 Saturday (9/14) in Oskaloosa.  Levi Taylor passed for three touchdowns for the Pioneers, while the Statesmen turned the ball over five times.  The Statesmen got touchdowns from Jordan Nunnery on a three yard run and Colton Horak on a 33 yard interception return.  Hunter Behm added a 27 yard field goal.  The 0-3 Statesmen play at Baker this coming Saturday (9/21).

No Deal: Auto workers strike against GM in contract dispute

By TOM KRISHER and MIKE HOUSEHOLDER

DETROIT (AP) — More than 49,000 members of the United Auto Workers walked off General Motors factory floors or set up picket lines early Monday as contract talks with the company deteriorated into a strike.

Workers shut down 33 manufacturing plants in nine states across the U.S., as well as 22 parts distribution warehouses.

Full Coverage: Strikes

It wasn’t clear how long the walkout would last, with the union saying GM has budged little in months of talks while GM said it made substantial offers including higher wages and factory investments.

It’s the first national strike by the union since a two-day walkout in 2007 that had little impact on the company.

Worker Patty Thomas said she wasn’t scheduled to picket, but came out to support her colleagues at the car plant, which GM wants to close.

She’s heard talk that GM may keep the factory open and start building electric pickup trucks there, but she’s skeptical.

“What are they going to take away?” she asked. “That’s the big issue.”

She said workers gave up cost-of-living pay raises to help GM get through bankruptcy, and workers want some of that back now that the company is making profits.

Striking GM employees were joined on the picket lines by workers from Ford and Fiat Chrysler, who are working under contract extensions.

Night shift workers at an aluminum castings factory in Bedford, Indiana, that makes transmission casings and other parts shut off their machines and headed for the exits, said Dave Green, a worker who transferred from the now-shuttered GM small-car factory in Lordstown, Ohio.

Green, a former local union president, said he agrees with the strike over wages, plant closures and other issues.

“If we don’t fight now, when are we going to fight?” he asked. “This is not about us. It’s about the future.”

UAW Vice President Terry Dittes, the union’s top GM negotiator, said a strike is the union’s last resort but is needed because both sides are far apart in negotiating a new four-year contract. The union, he said Saturday, does not take a strike lightly.

“We clearly understand the hardship that it may cause,” he said. “We are standing up for fair wages, we are standing up for affordable quality health care, we are standing up for our share of the profits.”

GM, however, said it offered pay raises and $7 billion worth of U.S. factory investments resulting in 5,400 new positions, a minority of which would be filled by existing employees. GM would not give a precise number. The company also said it offered higher profit sharing, “nationally leading” health benefits and an $8,000 payment to each worker upon ratification.

Because public statements from both sides conflict, it’s hard to tell how long the strike will last, said Kristin Dziczek, vice president of labor and industry at the Center for Automotive Research, an industry think tank. The length “depends on how far apart they really are and where the lines in the sand are drawn,” she said.

Talks were scheduled to resume at 10 a.m. EDT on Monday.

The union’s contract with GM expired Saturday night, but pacts with the company’s crosstown rivals, Ford and Fiat Chrysler, were extended indefinitely. The union has picked GM as its target company this year, and any deal it negotiates will be used as a template for the others. GM was picked because it’s the most profitable of the three, and because its plans to close four U.S. factories have angered union members.

On Sunday, about 200 plant-level leaders voted unanimously to strike against GM if no deal could be reached by Sunday night. Although talks were halted over the weekend, UAW spokesman Brian Rothenberg said there was still dialogue.

The automaker also offered to open an electric vehicle battery plant in Lordstown, Ohio, where it has a huge factory that has already stopped making cars and will be closed. The new factory would be in addition to a proposal to make electric vehicles for a company called Workhorse, the person said.

It’s unclear how many workers the two plants would employ. The closures, especially of the Ohio plant, have become issues in the 2020 presidential campaign. President Donald Trump has consistently criticized the company and demanded that Lordstown be reopened.

Rothenberg said UAW was striking for fair wages, affordable health care, profit sharing, job security and a path to permanent employment for temporary workers.

GM has factories in Michigan, Ohio, New York, Kentucky, Tennessee, Texas, Missouri, Indiana and Kansas.

A strike would bring to a halt GM’s U.S. vehicle and parts production, and would likely stop the company from making vehicles in Canada and Mexico as well. That would mean fewer vehicles for consumers to choose from on dealer lots, and it would make it impossible to build specially ordered cars and trucks.

Analysts at Cox Automotive said GM has enough vehicles on dealer lots to last about 77 days at the current sales pace. That’s well above the industry average of 61. But supplies of the Chevrolet Tahoe and Suburban large SUVs, which generate big money for the company, are well below the industry average.

The talks this year have been overshadowed by a growing federal corruption probe that snared a top union official on Thursday. Vance Pearson, head of a regional office based near St. Louis, was charged in an alleged scheme to embezzle union money and spend cash on premium booze, golf clubs, cigars and swanky stays in California. It’s the same region that UAW President Gary Jones led before taking the union’s top office last year. Jones himself has been touched by the investigation, leading some union members to call for him to step down, but he hasn’t been charged.

This year’s talks between the union and GM were tense from the start, largely because of GM’s plan to close four U.S. factories, including the one on the Detroit border with the enclave of Hamtramck, as well as Lordstown and factories in Warren, Michigan, and near Baltimore.

Here are the main areas of disagreement:

— GM is making big money, $8 billion last year alone, and workers want a bigger slice. The union wants annual pay raises to guard against an economic downturn, but the company wants to pay lump sums tied to earnings. Automakers don’t want higher fixed costs.

— The union also wants new products for the four factories slated to close. GM currently has too much U.S. factory capacity, especially to build slower-selling cars.

— The companies want to close the labor cost gap with workers at plants run by foreign automakers. GM pays $63 per hour in wages and benefits compared with $50 at the foreign-owned factories. GM’s gap is the largest at $13 per hour, according to figures from the Center for Automotive Research.

— Union members have great health insurance plans and workers pay about 4% of the cost. Employees at large firms nationwide pay about 34%, according to the Kaiser Family Foundation. Automakers would like to cut costs.

Plans for Oskaloosa early childhood center to be unveiled

Oskaloosa residents will get their first look at design plans for the new Early Childhood Education and Recreation Center at Monday night’s (9/16) Oskaloosa City Council meeting.  At last week’s Oskaloosa School Board meeting, it was revealed that the building will now be larger than first planned—and so will the price tag, up from $19 million to $29 million.  Monday’s Oskaloosa City Council meeting starts at 6 at City Hall.

PG&E reaches $11B deal with California wildfire insurers

SAN FRANCISCO (AP) — Pacific Gas & Electric and a group of insurers announced Friday they reached an $11 billion settlement to cover most of the claims from wildfires in California in 2017 and 2018.

The utility said in a statement the tentative agreement covers 85% of the insurance claims from fires that included the one that decimated the town of Paradise and killed 86 people.

A group of insurers said in a separate statement the settlement is well below the $20 billion the insurance companies had sought in bankruptcy court.

“While this proposed settlement does not fully satisfy the approximately $20 billion in group members’ unsecured claims, we hope that this compromise will pave the way for a plan of reorganization that allows PG&E to fairly compensate all victims and emerge from Chapter 11 by the June 2020 legislative deadline,” the insurers said.

The settlement still must be approved by a bankruptcy court.

“Today’s settlement is another step in doing what’s right for the communities, businesses, and individuals affected by the devastating wildfires,” PG&E CEO Bill Johnson said in a statement.

PG&E Corp. on Monday released a plan to offer nearly $18 billion to wildfire victims, insurance companies and cities and public entities in California that battled wildfires sparked by its electrical equipment.

The plan, which must be approved by state regulators, proposed setting aside two trusts totaling $16.9 billion to pay victims and insurance companies. Another $1 billion will go toward local governments affected by the wildfires.

The company also proposed an $8.4 billion trust to pay claims to uninsured victims.

The San Francisco-based company is under deadline pressure to emerge from bankruptcy by June 2020 to participate in a state wildfire fund to help California’s major utilities pay out future claims as climate change makes wildfires across the U.S. West more frequent and more destructive.

The utility sought bankruptcy protection in January because it said it could not afford an estimated $30 billion in potential damages from lawsuits stemming from recent wildfires.

Friday high school football schedule

Oskaloosa at Fairfield (coverage on KBOE-FM with pregame at 7:15 and kickoff at 7:30)

Sigourney-Keota is at Albia.  You can hear that game on KMZN AM and FM with coverage at 6:45 and kickoff at 7.

Ottumwa is at Newton, North Mahaska hosts BGM, Chariton at EBF, Norwalk at Pella, Grinnell at ADM, Colo-Nesco at Twin Cedars, Winfield-Mount Union at Montezuma, Pella Christian hosts Iowa City Regina, PCM at Roland-Story, Knoxville at Centerville and Lynnville-Sully hosts Highland.

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