Pillsbury Winthrop’s Andrew Troop Looks Back on Lessons of Purdue Pharma Case; Outlines Flashpoints Between Bankruptcy Law and Federal Healthcare Regulators

By Patrick Fitzgerald

With the Purdue Pharma bankruptcy case finally concluding on May 1, Andrew Troop, a partner at Pillsbury Winthrop’s insolvency and restructuring practice, reflected on the case and his firm’s involvement where it represented the nonconsenting states and the District of Columbia.

“My team and I learned a lot from our attorney general clients about the tensions that exist between arguably defensible economic bankruptcy resolutions, and the critical role that attorneys general play in looking to hold alleged wrongdoers accountable,” Troop told Octus. “Not simply to address their alleged misconduct but to deter future misconduct by others facing similar temptations, even in the face of a federal bankruptcy case.”

“Injunctive relief that limits future conduct or that provides access to data that can be studied to help craft systemic solutions are very important and are at least equally as important as economics for many states,” Troop said. “Accountability and access to information, thereafter, often are a significant focus.”

Troop also learned that the states are not monolithic, explaining that whether one thinks of a state as “Blue” or “Red,” each nonetheless evaluates a bankruptcy and options from its own perspective, and positions by states as groups usually will reflect many compromises reached before outward-facing discussions or negotiations even begin.

By comparison, while hedge funds or banks that bond together through a lending or investment vehicle also have their own perspectives and agendas and reach agreements before taking a group position, their disagreements often are more clearly economically driven while their documented arrangement governs how group decisions are made.

Troop said the firm has also represented individual states in healthcare cases where significant value has been taken from the debtor hospital system. In these cases, he said, states are focused on their local hospitals and healthcare delivery issues in contrast to a focus more on the enterprise in cases such as Purdue. As a result, in those cases states often want to see ownership transitions first, and then deal with claims against the debtors second. In this role, Troop explained, states are the regulators and they approach cases from that perspective.

“And, because states, even if they hold significant unsecured claims, are ineligible to serve on official committees of unsecured creditors according to the United States Trustee, we also have learned the benefit of showing up early in a chapter 11 case to articulate clearly the perspective of a state as the primary regulator as to the direction of the case with respect to services/hospitals located in their state,” Troop said.

“I think Judges appreciate knowing upfront a state’s regulatory perspective, regardless of how they ultimately rule on contested issues,” he added. “Retail has similar issues and concerns for States on behalf of their citizens; we do expect as retail businesses face continuing distress, states will get more involved as personally identifiable information increases a debtor’s value and presents many issues that arise if there is a sale of assets.”

Continuing on the topic of potential areas of further litigation in the broader healthcare sector, Troop said there are many potential flashpoints to consider between bankruptcy law and federal healthcare regulators.

“But, there is one that has been around for years that I think will ultimately have to be resolved by the Supreme Court – that is, whether [the Centers for Medicare & Medicaid Services] can ‘recoup’ unpaid claims to a healthcare provider against overpayments or fraud claims owed by the healthcare provider regardless of when the claims owed to and owed by the debtor arose,” Troop said. “In other words, are CMS provider agreements brand new contracts and transactions each year when they are renewed, or is the relationship a single contractual agreement or transaction that spans only a specific contract year?”

Healthcare providers’ need for liquidity, Troop stated, coupled with government payments that often do not cover the real costs of procedures, will put even more pressure on healthcare debtors to litigate this issue. In addition, in recent cases his firm has been involved with, Troop said it has found that CMS is willing to negotiate in a sale situation to limit exposure to the purchaser that otherwise would have been unlimited – there appears to be an understanding that unlimited “recoupment” will prevent the continued operation of a hospital.

“On a state regulatory level, I think that debtors will explore pushing against states that impose conditions on transactions or operations that may limit the value hospitals can realize in bankruptcy,” he said. “Although I think that the Bankruptcy Code clearly permits states to exercise the full scope of their regulatory authority in this situation, I have seen others argue that there is a tipping point where regulation becomes a restriction on alienation that the Bankruptcy Code otherwise permits Judges to void.”
 

RealTruck

RealTruck announced this week that it bought LEER for an undisclosed amount. LEER, a manufacturer and supplier of fiberglass and aluminum truck caps and tonneau covers, was owned by JB Poindexter & Co. The L Catterton-backed RealTruck in April secured $300 million of new money as part of an amend-and-exchange transaction. Octus’ coverage of RealTruck can be found HERE.

Oregon Tool

Privately held Oregon Tool disclosed second-quarter 2026 earnings to creditors, reporting that adjusted EBITDA dropped 25.7% year over year to $22 million. Revenue for the Platinum Equity-backed manufacturer of precision cutting tools and equipment also declined 3.3% to $156 million in the same comparison, the sources said. In early 2025, the company secured $156 million of new money and extended its debt maturities to 2029 through a liability management exercise. Octus’ coverage of Oregon Tool can be found HERE.

BFG Supply

BFG Supply, a privately held distributor to the green industry, including professional horticulture, lawn and garden, and controlled environment agriculture, is preparing to file for chapter 11 in the coming weeks. The company is working with Goodwin as legal advisor and Reflect Advisors and is expected to conduct a sales process in court with proceeds used to pay creditors including lender Ares Management. The Pamplona Capital Management-backed company is said to be laying off employees and declining new orders amid severe financial difficulties, sources said. Octus’ coverage of BFG Supply can be found HERE.

Asurion

Asurion’s second-quarter adjusted EBITDA declined 19% year over year to $514 million, while revenue declined 8% to $2.14 billion. The declines were driven by the loss of U.S. customers who switched to T-Mobile and restructured contracts in Japan last year. The provider of insurance for mobile phones and other electronic devices generated $282 million in free cash flow in the second quarter, up from $97 million a year earlier. Octus’ coverage of Asurion can be found HERE.

Jeld-Wen

Jeld-Wen and its creditors have entered into confidential talks over a potential new-money deal ahead of debt maturities in 2027 and 2028. The new money could come from term loan lenders who might be offered to uptier their existing debt with an extension, while unsecured noteholders can also uptier their holdings on a second lien basis. The global manufacturer of doors and windows has faced macroeconomic headwinds amid the weakening housing market affected by high interest rates. Octus’ coverage of Jeld-Wen can be found HERE.

Crash Champions

Crash Champions disclosed second-quarter earnings to creditors, reporting that adjusted EBITDA increased 37.8% year over year to $62 million from $45 million. Sales for the Clearlake Capital Group-backed provider of collision repair services rose 7.9% to $741 million from $687 million in the same comparison. The company finished the quarter with liquidity of $164 million. Octus’ coverage of Crash Champions can be found HERE.
 

Brightspeed

Two ad hoc groups of lenders to Brightspeed are working with advisors amid the company’s persistent cash burn – a challenge that could necessitate more negotiations and a potential debt restructuring. A set of first-out term loan lenders to the company is working with Gibson Dunn, while certain second-out lenders are represented by Davis Polk. The Apollo Global Management-backed broadband provider is working with PJT Partners as financial advisor as the company contends with cash burn and high financial leverage.

The company has about $8.5 billion in net debt and has been burning cash to build a major fiber optic network that would replace its legacy copper network in the United States. Octus’ coverage of Brightspeed Internet can be found HERE.
 

Hughes Satellite Systems Corp.

Hughes Satellite Systems Corp., which makes up the majority of EchoStar’s broadband and satellite segment, filed a freefall chapter 11 in the Southern District of Texas on Aug. 2 after unsuccessful restructuring negotiations with an ad hoc group holding more than 88% of the debtors’ $1.5 billion in senior notes, which matured Aug. 1. Hughes is the third EchoStar segment to file chapter 11 this summer, with the company’s DISH DBS pay-TV and legacy DISH Wireless business filing a combined prepackaged chapter 11 case in June.

At the first day hearing on Aug. 4, Judge Alfredo R. Perez granted the debtors interim approval to use cash collateral for four weeks, overruling the objections of the ad hoc noteholder group. The judge conditioned cash collateral use on the debtors escrowing one month’s interest on the senior secured notes in a segregated account to adequately protect the noteholders during the interim period.

The noteholder group threatens to seek standing to avoid four prepetition transactions between the debtors and parent EchoStar: an allegedly above-market Jupiter 3 satellite lease (and $185 million in prepayments on the lease); approximately $1 billion in dividends; approximately $196 million in income tax reimbursements; and referral of HughesNet subscribers to SpaceX in connection with EchoStar’s spectrum sale to SpaceX.

On Aug. 5, the group moved for the appointment of an examiner to probe these transactions, arguing that a “late investigation” by two “professional ‘independent’ directors” appointed shortly before filing is no substitute for a “genuinely independent” third party’s review. Octus’ Hughes coverage is HERE.
 

Voyager Digital

On Aug. 4, U.S. District Judge Laura Taylor Swain vacated the exculpation provisions in Judge Michael Wiles’ March 2023 decision confirming the Voyager Digital debtors’ chapter 11 plan, which went effective in May 2023. Judge Swain finds that the bankruptcy court lacked authority under the quasi-judicial immunity doctrine to grant prospective protection for liability in connection with cryptocurrency transactions under the plan, vacates the confirmation order to the extent it approved the exculpation and remands for further proceedings.

The plan’s exculpation clause – which protected parties against liability for engaging in transactions in furtherance of rebalancing transactions and the completion of distributions of cryptocurrencies to creditors under the plan – was stayed while the U.S. Trustee and U.S. government appealed, but the rest of the plan went effective after the debtors liquidated following the termination of a sale to Binance.US. Octus’ Voyager Digital coverage is HERE.

TPx Communications

Judge Alfredo R. Perez granted final approval of the TPx Communications debtors’ $73.5 million in DIP financing backstopped by the ad hoc lender group at an uncontested hearing on Aug. 3. DIP approval followed a July 31 announcement that the debtors reached a global settlement with the ad hoc group and the official committee of unsecured creditors resolving the UCC’s objections to the DIP, bid procedures, sale process and plan just three weeks after the UCC’s formation. Octus’ TPx coverage is HERE.

Goldenpeaks Poland LLC

At a hearing on Aug. 4, Judge Alfredo R. Perez approved the credit-bid sale of nine of the GoldenPeaks Poland debtors’ 14 silos to Brookfield Asset Management after the debtors, Brookfield and the official committee of unsecured creditors finalized a global settlement. The debtors and Brookfield also reached a settlement with Berenberg Alternative Assets, or BeGo, and Bayerische Landesbank resolving their sale objections and BeGo’s motion to dismiss the chapter 11 cases. Octus’ Goldenpeaks coverage is HERE.
 

Selecta Antitrust, LME Litigation

U.S. District Judge Andrew L. Carter of the Southern District of New York heard arguments on motions to dismiss filed by Selecta Group favored noteholders in the antitrust suit brought excluded lenders challenging the Swiss vending machine operator’s 2025 liability management exercise. Defendants’ counsel asserted that plaintiffs’ antitrust claims are barred by both the note indenture and antitrust precedent. Judge Carter took the motions under advisement and suggested that the parties initiate settlement discussions. Octus’ coverage of Selecta is available HERE.

FCC Removes National Broadcast Ownership Cap

The Federal Communications Commission voted 2-1 to eliminate the 39% national broadcast television ownership cap and establish a new “case-by-case” framework for reviewing whether broadcast mergers satisfy the agency’s public interest standard. The initiative could encourage more consolidation in the broadcast television industry. FCC Chairman Brendan Carr acknowledged that the decision would likely draw legal challenges. Octus’ coverage is HERE.