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Category Archives: Bankruptcy

Why farm bankruptcies have climbed, even with milk and cheese prices up 40% this year – MarketWatch

Posted: November 17, 2019 at 1:57 pm

Prices for milk and cheese are trading roughly 40% higher this year, with the holiday season likely to provide an added boost, after suffering significant declines over the past few years,

The rally, however, didnt come fast enough for dairy farmers, who have seen a spike in bankruptcy filings.

The low milk prices that dairy producers have received over the last three years has significantly reduced farm equity, says Rick Kment, a market analyst at commodity analysis provider DTN.

Farm equity the value of a farms assets excluding debt is forecast to rise by 1.8%, to $2.67 trillion, in 2019, but adjusted for inflation, it would be relatively unchanged from 2018s level, according to the U.S. Department of Agriculture.

The rally in the milk price through the last half of 2019 is too little, too late for some of these dairy farmers, adds Kment.

In the 12 months through September, there were 580 Chapter 12 farm bankruptcy filings, the most since 2011, up 24% from the prior years total, the American Farm Bureau Federation reports. Wisconsin, which was among the top five milk-producing states in 2018, had the highest number: 48.

The bankruptcies you are seeing have been a long time in the making, says Tim OLeary, an independent dairy trader.

Most notably, dairy giant Dean Foods Co. US:DF, the largest U.S. milk producer, recently filed for bankruptcy, citing growth in the popularity of dairy alternatives, such as oat milk and almond milk, and issues tied to debt and pensions.

In addition, the USDA reported that the number of dairy cows on farms in the 24 major states were at 8.8 million head as of September, 11,000 fewer than a year earlier. The change in cow numbers, though small, indicates a change in overall trend in herd size, says Kment, and its directly related to low profitability earlier in the year.

Also, securing operating capital continues to be a challenge for many farmers, he says, adding that this is expected to put financial pressure on many dairy producers.

In January 2018, futures prices for Class III milk DAF20, +0.45%, which is used to make most types of cheese, dropped to as low as $13.07 per hundredweight. That was the lowest since June 2016, according to FactSet. They settled at $20.19 on Thursday, for a year-to-date gain of about 41%. Futures prices for cash-settled cheese CSCZ19, +0.10% stood at $1.979 a pound, up around 43% for the year.

Read: The $39 trillion listed derivatives business is about to get tastier, as CME to launch block cheddar cheese futures

There is seasonal support building in the market, as dairy product prices traditionally move higher in the last quarter of the year ahead of holiday buying, Kment observes. He adds that theres also been increased global demand, particularly in Asia, where dairy products help supplement the amount of protein lost due to African swine fever cutting into the pork production and supply levels.

Milk production, meanwhile, is also starting to trend lower because of the reduction in the number of U.S. dairy cows, Kment observes. Looking ahead, dairy trader OLeary expects cheese, which has traded lower this month, to resume its rally as global output declines, while consumption climbs on the back of growing populations.

Kment expects strong underlying support to develop in cheese and milk prices through the end of 2019, though with the potential for prices to back away from current levels in the coming weeks, after holiday demand wraps up. Still, he predicts the firm market support is likely to hold during early 2020.

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Provo charter school files for bankruptcy but says it will not close – KSL.com

Posted: at 1:57 pm

SALT LAKE CITY Provos Treeside Charter School, a K-6 school based on the Waldorf education model, has filed for Chapter 11 bankruptcy, the school announced Wednesday.

The school, which opened in 2017, said that it does not intend to close and hopes the filing will help it resolve issues with creditors and with its landlord. Treeside director Dr. Benjamin Johnson told the Utah State Charter School Board on Thursday that the filing is an effort to stem and stop the shenanigans going on with our landlord.

So we are actually very excited about it, Johnson said.

He characterized the move as a reorganization and said the process has moved quickly. In a letter to the Treeside community posted on social media, the Treeside board said the school and what it stands for will be here for a long time.

Please know that everything at the school will operate as it does right now throughout this process, the letter says. The school remains committed to our students, teachers, and staff.

The Treeside website says the school is influenced by aspects of Waldorf education in alignment with our communitys needs. Treeside students practice yoga and integrate music, nature and the arts into the curriculum, according to the site.

The Utah State Charter School Board also discussed Ogdens Capstone Classical Academy during the Thursday meeting, saying the board has delayed the schools hearing on possible closure until Dec. 9. The decision from that hearing will be discussed during the Charter School Boards Dec. 12 meeting.

Charter School Board chair Kristin Elinkowski said the delay will give Capstone Classical Academy more time to address enrollment and financial viability issues.

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Provo charter school files for bankruptcy but says it will not close - KSL.com

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Farm Bankruptcies Are Way Up This Year – Modern Farmer

Posted: at 1:57 pm

Its no secret that the past few years have been disastrous for the American farming industry.

Freak weather, oversupply, trade wars, pesticide damageits been a perfect storm, on top of all the regular storms, for American farmers. The American Farm Bureau Federation, commonly just called the Farm Bureau, released a study examining the end result of all of that damage: bankruptcies.

The Farm Bureau, a lobbying group that typically leans to the corporate side of farming, analyzed statistical data from the US Courts concerning bankruptcy filings. For the year leading up to September 2019, American farm bankruptcies were up by a whopping 24 percent compared to the year before. During this mostly-2019 period, there were 580 Chapter 12 bankruptcy filings.

Chapter 12 is a form of bankruptcy filing that was first passed in 1986, specifically for farms or fishing operations. The restrictions are brutal, requiring millions of dollars of debt, so its even more concerning that so many farmers qualify.

The Farm Bureaus data analysis drills down further, finding that the highest number of bankruptcy filings were in Wisconsin, followed by Georgia, Nebraska, and Kansas. Wisconsins 48 bankruptcies in 2019 are likely high because of the dairy industry; an estimated 40 percent of dairy farms in the state nicknamed Americas Dairyland have gone out of business in the past decade, according to NPR.

The number of farm bankruptcies over the past few years is still not quite at the heights of the 1980s farm crisis, where a combination of a Soviet embargo, record supply, and an extreme drop in the value of farmland led directly to the creation of Chapter 12 bankruptcy in the first place. But the pattern is alarming, with the trade war continuing and a sudden brutally cold stretch of weather affecting harvests. The USDA is attempting to address these problems with bailout money, but uneven distribution and timing issues may mean that funding is too little and too late to save many farm businesses.

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‘I live on the street now’: how Americans fall into medical bankruptcy – The Guardian

Posted: at 1:57 pm

Its been over a dozen years since Susanne LeClair of West Palm Beach, Florida was first diagnosed with cancer and shes been fighting ever since. Now she, like many other Americans facing life-threatening illness, is bankrupt despite having health insurance.

Before her first cancer-related surgery, LeClair was told by the hospital they accepted her employer-based health insurance.

I paid my $300 copay. After the surgery, I started receiving all these invoices and came to find out the only thing covered was my bed because the hospital was out of network, said LeClair. My bills were hundreds of thousands of dollars, so I had no choice but to file bankruptcy.

LeClair is on the verge of having to file for bankruptcy a second time due to the mounting medical debt she has accrued for additional cancer-related surgeries, regular appointments, medications and supplies related to her recovery, despite having health insurance and paying as much as she can out of pocket for copays, deductibles and premiums to maintain insurance.

My medical bills are at $52,000. Ive done everything from credit cards to consolidation loans, I just keep simply paying one credit card with another interest-free one until I can pay the next one, LeClair added. Its the side of cancer most people dont understand or know about and its never-ending. It just keeps adding up and adding up and before you know it youre back in debt that you cant believe again.

Bankruptcy can also make it difficult to find employment given that many employers will disqualify a candidate with a bankruptcy filing found from a background check.

According to a study published in February 2019, about 530,000 bankruptcies filed annually are because of debt accrued due to a medical illness. The study found that even the Obama administrations landmark Affordable Care Act (known as Obamacare) has failed to change the proportion of bankruptcies caused by medical debts, with poor health insurance cited as one of the main culprits.

Republicans and Democrats are currently at loggerheads over Trump administration plans to further weaken Obamacare by making it easier for states to opt out of certain requirements and offer cheaper plans that could further exacerbate the situation. And health insurance has emerged as one of the signature issues of the 2020 election, and the fight for the Democratic presidential nomination with senators Bernie Sanders and Elizabeth Warren promising a total overhaul and Joe Biden and others pledging milder reforms. What all sides admit is that the current system is broken.

Health insurance that we have today is a defective product, said Dr David Himmelstein, distinguished professor of public health at City University of New Yorks Hunter College and a lecturer in medicine at Harvard Medical School.

A lot of people, a little over 60%, are filing bankruptcy at least in part because of medical bills. Most of them are insured. Its clear that despite health insurance, there are many, many people incurring costs not being covered by their insurance, said Himmelstein. Medical debt is incredibly common, its the main cause of calls from collection agencies, and the vast majority of people with it have insurance, said Himmelstein, lead author of the study Medical Bankruptcy: Still Common Despite the Affordable Care Act.

One out of every six Americans has an unpaid medical bill on their credit report, amounting to $81bn in debt nationwide, while about one in 12 Americans went without any medical insurance throughout 2018. Even as many Americans struggle to afford health insurance coverage in the first place, those that have it are not insulated from facing massive debt due to medical bills.

I have insurance through my job but it has a high premium and high deductible. I have to pay $450 a month. When you think about living paycheck to paycheck, $450 is a lot of money. Im barely making it. Some bills dont get paid every month, said Mary Cross of Detroit, Michigan, who has filed for bankruptcy twice since early 2013 when she was admitted to the hospital for pneumonia, required lung surgery and was diagnosed with sarcoidosis, an inflammatory disease.

Im currently struggling to stay afloat now due to having surgery this past January, added Cross, 51. Ive been getting constant calls from the billing department at the hospital where I had surgery.

In Savannah, Georgia, a 35-year-old man who requested to remain anonymous to avoid being associated with a bankruptcy, recently found himself homeless and jobless due to prolonged hospital stays and hundreds of thousands of dollars in medical debt.

A type 1 diabetic for years, he had to reduce his work hours for a cellular retail store when trouble regulating his blood sugar resulted in a toe amputation in April 2019.

I had to cut my work hours so bills were harder to pay. But in July 2019 I was admitted to the hospital again and I was fired from my job because I was in the hospital. I lost my insurance. They amputated my leg, which means I still cant work, he said.

When he lost his job due to the prolonged hospital stay and leg amputation, his employer offered Cobra, a health insurance program for employees who lose their job or have a reduction in work hours, but he couldnt afford it. He is currently working on trying to file bankruptcy to release the medical debt hes accrued from amputations this year and he lost his house in October 2019 as a result.

I have amassed over $400,000 in medical bills I need to pay, and still have at least six months before I get a disability hearing. So I owe over $400,000 in medical bills, have lost my house and I live on the street now, with no end in sight, he said.

Just outside of Chicago, Illinois, Jessica Hillman filed for bankruptcy in 2016 due to medical debt accrued from battling a seizure disorder, despite having health insurance coverage for the majority of her treatment.

I had thousands of dollars in various medical debt which made the majority of my claim. The last bill I got that really pushed me toward the bankruptcy was for a routine lab test that my insurance refused to approve because of a billing mistake. That bill was about a thousand dollars, Hillman said. I couldnt work and had no way to pay these.

At the time, Hillman was receiving several collection notices in the mail for past hospital stays and tests amounting to several thousand dollars, often having no knowledge of the bills that health insurance didnt cover until receiving the collection notices.

One of the biggest hurdles you face as a patient is just the sheer confusion of the process. You think you just show up and present your card, sometimes pay a copay, and thats it. You dont expect all these plan limitations and authorizations, Hillman added. What are you going to do if your authorization gets denied? You dont really have a choice to not go get care. All these processes that are in the finest of fine print. And sometimes it feels like you are literally paying for nothing.

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'I live on the street now': how Americans fall into medical bankruptcy - The Guardian

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For the record: Building permits and bankruptcies | Work & Money – Tulsa World

Posted: at 1:57 pm

BUILDING PERMITS

(Listed by owner, tenant or building. This weekly update lists new commercial construction, expansions and enlargements of more than $50,000. Information from initial applications is subject to change. Dollar amount for alterations is valuation provided by applicant.)

19-040043 Sheridan Express Car Wash, 4528 S. Sheridan Road, new, $1,393,405.82.

For those who care about business and this community, we have a deal for you. Start a digital subscription for only $0.99. Sign up now at tulsaworld.com/subscribe.

19-030415 South Tulsa Skilled Nursing Facility, 8720 S. 101st East Ave., new $15,535,240.

19-044007 Institute of Emerging Technologies, 6565 S. Yale Ave., alteration-priority, $127,466.

19-046420 Hero Practice, 602 S. Utica Ave., alteration-priority, $120,000.

19-044073 Bank of America, 15 W. Sixth St., alteration, $150,000.

19-029117 Raising Canes #488 Tulsa, 1019 W. 71st St., new, $1,500,000.

BUSINESS BANKRUPTCIES

(Filings classified as business in the U.S. Bankruptcy Court for the Northern District of Oklahoma, and which also list business as nature of debt on bankruptcy document.)

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For the record: Building permits and bankruptcies | Work & Money - Tulsa World

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PG&E bankruptcy hearing postponed as governor pressures utility to pay more – KRCRTV.COM

Posted: at 1:57 pm

PG&E bankruptcy hearing postponed as governor pressures utility to pay more  KRCRTV.COM

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ET Explains: How Essar Steel verdict changes the rules of the game for future bankruptcy cases – Economic Times

Posted: at 1:56 pm

In a landmark judgment, the Supreme Court has upheld the supremacy of the Committee of Creditors comprising the financial creditors of the bankrupt firms over the distribution of claims.

The order will finally pave the way for resolution of Essar Steel, one of the oldest cases in the IBC process. It was one of the original Dirty Dozen referred by the RBI to NCLT for Corporate Insolvency Resolution Process under the IBC Code.

Following this verdict, steel tycoon Lakshmi Mittal can now finally bring his global giant ArcelorMittal to India to set up shop here.

Deciphering the verdictThe Supreme Court quashed the earlier NCLAT order which brought parity between financial and operational creditors of Essar Steel in matters of distribution of proceeds.

Peeved with the NCLAT ruling, the financial creditors had approached the apex court saying that the NCLAT order exceeds the scope of the IBC. They also argued that secured creditors have the first right over funds, an argument that had been used to deny Standard Chartered the same treatment as other financial creditors. With the Supreme Court finally upholding CoC's primacy over distribution of funds, a major area of concern has been addressed.

A faster IBC resolutionThe delay in the resolution of bankrupt firms occurs due to litigation mostly on account of operational creditors expressing their unhappiness over the distribution of funds. Their stance is that they get a raw deal from the IBC process and have to take steep haircuts.

The Supreme Court's verdict will put those concerns to rest as it said that even though the Committee of Creditors will have a final say on apportioning the funds received, it has to take care of the interests of the operational creditors as well. This ruling is premised on the fact that no concern can function without 0perational creditors.

The 330-day deadlineThe Supreme Court has done away with the 330-day mandatory deadline for the resolution of insolvency and bankruptcy cases after which liquidation will be invoked.

The 330-day deadline was brought in through amendments by the government this year with the purpose of bringing down litigation time. The original window of 270 days had been breached in many cases on account of litigation. Courts treated the time spent in litigation as outside of the 270-day window, thereby causing major delays to the resolution process.

The 330-day deadline included time spent on litigation. The Supreme Court has given the adjudicating authority the powers to decide if it needs more time to decide on a specific case.

The Waterfall MechanismIBC follows a waterfall mechanism which essentially delineates the order in which the liquidation proceeds will be distributed among the different categories of creditors.

According to this formula, secured financial creditors hold the first right over the distribution of funds followed by unsecured financial creditors and operational creditors, in that order.

According to an ET report, the government which is considering a fixed proportion for operational creditors in order to cut down on frivolous litigations will have to factor in the waterfall mechanism because CoCs may favour liquidation in the event of them taking a more steeper haircut.

The Road ForwardThe IBC's biggest USP was its time-bound resolution of bankrupt firms and allowing them to remain as going concerns; companies are referred for liquidation only in extreme cases.

A faster IBC resolution is in the interest of all stakeholders as it will relieve the banking sector of the stress it is currently facing in terms of NPAs. This is important for improving India's business climate and ease of setting up new businesses.

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Saudi Arabia’s new bankruptcy law faces key test in the courts – Reuters

Posted: October 24, 2019 at 11:52 am

RIYADH (Reuters) - The merit of Saudi Arabias new bankruptcy law, part of efforts to help the kingdom attract investors, should become clearer in about a year after courts handle initial cases, a World Bank representative and senior government official told Reuters.

FILE PHOTO: Saudi Arabia's Crown Prince Mohammed bin Salman speaks during talks with Russian President Vladimir Putin in Riyadh, Saudi Arabia, October 14, 2019. Alexander Zemlianichenko/Pool via REUTERS/File Photo

A lack of modern bankruptcy regulations had created difficulties for struggling companies seeking to restructure debt with creditors since the 2009 global financial crisis and the more recent dip in oil prices.

Legislation introduced in 2018 is part of broader efforts to overhaul the economy of the worlds top oil exporter to entice foreign investment, create jobs for young Saudis and diversify into non-oil industries.

They have started on insolvency, said Simeon Djankov, World Bank senior research director and founder of the Doing Business report, which on Thursday ranked Saudi Arabias business climate the most improved over the previous year.

The law has been passed, secondary legislation was already passed. Now we need to see whether the courts actually understand how to implement it.

Djankov said only three cases had been settled and around a dozen others are currently in the courts. Several dozen more, expected to be resolved over the next year, should provide enough evidence to evaluate the laws success, he added.

The two main open cases involve conglomerates Saad Group, owned by indebted billionaire Maan al-Sanea, and Ahmad Hamad Algosaibi and Brothers (AHAB), which defaulted on about $22 billion in combined debt in 2009.

Resolving insolvency was an area of improvement for Saudi Arabia, climbing 30 places to 62nd in the World Bank report which showed sharp improvement in other Gulf countries and a lag in Latin America.

Eiman al-Mutairi, who heads Saudi Arabias National Competitiveness Center, said she expects further advances next year as the bankruptcy law and other reforms come fully on line, including a building code law and planned amendments to licensing regimes.

Are we there yet? No. Do we want to do more? Absolutely, said Mutairi, who is one of the highest-ranking women in the Saudi government. Hopefully this is only the beginning.

She attributed the jump in Saudi Arabias standing to authorities efforts to cater their reforms to the private sectors concerns.

Maybe weve worked with investors many years ago but sometimes we just dont listen to them, she said. Lets face it: we did not listen to the investor.

Reporting by Stephen Kalin, Editing by William Maclean

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One Family Built Forever 21, and Fueled Its Collapse – The New York Times

Posted: at 11:52 am

Yet even as its errors abroad became clear, Mr. Chang and his real estate counterparts bet on even more United States stores. An internal playbook from 2015 described the retailers plans for a new strip mall chain called F21 Red that would target mothers under 35. Its $1.80 camisoles and $7.80 jeans were meant to swipe at the Irish retailer Primark, which entered the United States that year.

The playbook showed that six stores were already open, and that Forever 21 planned to open 35 more that year, including in regular malls, which was a surprise to the employees who had planned F21 Red. By 2017, several new F21 Red stores were posting sales that were around 50 percent below company projections, internal sales reports show.

That year, Forever 21 also introduced a beauty chain, Riley Rose, that was viewed as the companys next wave of growth and sought to capitalize on the boom in Korean skin care products. It was created by Linda and Esther Chang and called ground-breaking in the bankruptcy filing, which grouped its sales with the slumping international division.

While former employees praised the sisters work ethic, they said that Riley Rose, which had 15 stores this year, was an expensive gamble in high-priced malls and struggled to maintain vendor relationships. The company told The Times last month that Riley Rose may end up as a store within Forever 21 locations. It has filed to reject leases for nine previously planned Riley Rose locations.

Mrs. Changs side of the business was also making errors with the sprawling store base. Merchandising was based on the previous years sales, and Forever 21 bought too little inventory in 2017, then too much in 2018, the filing said. It also duplicated merchandise by designing for styles like weekend or work looks, rather than categories like tops or dresses.

Forever 21 had about 6,400 full-time employees and 26,400 part-time employees when it filed, numbers that will likely shrink throughout the bankruptcy process. Forever 21 said that it would change how it merchandises, winnow its operations to the United States, Mexico and Latin America, aim to increase e-commerce sales to more than just 16 percent of the business and take other cost-cutting measures. When it filed, the company owed $347 million to its vendors.

And the Chang family will be listening to new voices. Its board of directors will grow from three members Mr. Chang, Linda Chang and Mr. Ok to six, including Forever 21s former head of real estate, a lawyer and the former chief executive of Things Remembered. It also said that it had added several new managers in recent months, including a new chief financial officer. Mr. Chang remains the chief executive.

Forever 21 has basically been a one-trick pony, Mr. Cohen said. The founder and his wife did remarkably well until the business got too big for them to continue to do remarkably well by themselves.

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The Bankruptcy Money From the Makers of Oxycontin Might Actually Save Lives – Vice News

Posted: at 11:52 am

High Wire is Maia Szalavitz's reported opinion column on drugs and drug policy.

The most important questions remaining in the many lawsuits against opioid manufacturers and distributors are not about how much the final payouts will beclearly, huge sums of money are coming. Instead, they center on who exactly will get the funds and whether they will be spent effectively. Many of the fiercest battles lie ahead.

Surprisingly, however, early signs from the bankruptcy case of Purdue Pharmathe manufacturer of Oxycontin and one of the key players in starting the overdose epidemicsuggest that at least the first multimillion-dollar payment might quickly go exactly where it is needed: to programs that work to preserve the lives and health of people with addiction, regardless of whether they're abstinent.

Boosting funding to such organizationsknown as harm reduction programscould kickstart a long-overdue revolution in the way we care for and treat addiction in the U.S.

The details are complicated, as you might expect in litigation with 2,600 states, cities, counties, and other localities all seeking a piece of multi-billion-dollar Big Pharma pie. Many of the plaintiffs argue that Purdue's filing for bankruptcy will deprive them of a just settlement. They would prefer that Purdues riches remain part of the spoils that will be divided in another case against opioid manufacturers and distributors, which is known as the opioid multi-district litigation (MDL) and may be settled this week.

Despite those objections, Judge Robert Drain of the United States Bankruptcy Court in White Plains, New York, accepted Purdues bankruptcy filing and has begun to forge a plan to distribute its billions. On October 11, he agreed to a stay in the bankruptcy case to give the parties time to work out major disagreements.

One advantage of distributing the money via bankruptcy, rather than through civil and criminal cases, is that stricter conditions can be set on spending. Bankruptcy has guardrails on it to make sure that how it plays out will be open, will be public, and will be as equitable as possible, said Lindsey Simon, assistant professor of law at the University of Georgia School of Law and an expert on bankruptcy.

The tobacco settlement of 1998 is an example of what can happen without such guardrails: $246 billion was expected to be paid out over 25 years to fight smoking but, for example, in the current fiscal year, less than 3 percent of the money went to prevention or treatment of tobacco addiction. That is not atypical. Most money just went into states general budgets, and some Southern states even used settlement funds to support tobacco marketing.

Via bankruptcy, Purdues money will become part of a trust. A recently appointed committee of nine membersincluding four people with personal or family experience of opioid addictionwill help determine how that money is spent, though the judge has to approve their decisions. In the case stipulation agreed upon by that committee and by Purdue, a plan was proposed to make a $200 million fund available within six months for harm reduction and addiction recovery groups.

If the terms are accepted by the other parties, like state and local governments, that $200 million would be the biggest amount ever spent to support programs that dont require people to be abstinent before they can receive helpa group far larger at any given time than those currently ready or able to completely quit. (According to Simon, the parties seem reasonably likely to agree to these terms because its a relatively small sum of money compared to almost-certain multi-billion-dollar settlements and, strategically, they know they have to pick their battles).

The impact of this money would be huge, said Daniel Raymond, deputy director of planning and policy at the Harm Reduction Coalition, whose group would help vet harm reduction agencies for funding, It would be the single largest infusion of resources into harm reduction that we've ever seen in this country.

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The stipulation directs the money to two specific types of groupsharm reduction centers and recovery community organizations (RCOs).

Harm reduction centers typically provide clean needles, access to the overdose reversal drug, naloxone, and, if they were to be legalized, many would operate overdose prevention sites, where people could use drugs under medical supervision to prevent overdose deaths. RCOs, meanwhile, are aimed at people who want to stop problematic drug use or sustain abstinence, but unlike traditional self-help groups, they dont prescribe one specific way to recover and dont reject people who aren't seeking abstinence. Neither of these types of services are widely available in the current treatment system. A grant application process will be devised to allow appropriate groups to get funded.

Importantly, the money wouldnt simply fund existing for-profit treatment programs, which rarely use evidence-based approaches, are too-frequently outright fraudulent, and often decry the use of medications like methadone and buprenorphine, which are the only treatments proven to cut the death rate by 50 percent or more.

All of the centers in question would offer referrals and ease connections to other services like healthcare and addiction treatment; some actually provide buprenorphine and other medical treatment themselves. Some provide housing or referrals to housing that doesn't require abstinence: the main idea being that people who use drugs deserve humane treatment and that treating people kindly often results in them treating themselves better.

Because harm reduction is often seen as controversialsome argue that it enables drug use, even though research shows that participants are more likely to recover than those who dont access these programssignificant funding would help boost its legitimacy and sustain groups that often run on a shoestring budget.

For decades, for example, federal funding of syringe service programs was banned and many states still restrict iteven though syringe programs have helped reverse HIV epidemics in many states and countries, including New York, which once had the worlds largest epidemic among people who inject drugs.

While noting that the money is only a drop in the bucket in terms of helping those harmed by the epidemic, former Obama administration drug czar and now executive director of the Grayken Center for Addiction at Boston Medical Center, Michael Botticelli said that the funding of harm reduction and recovery support could be an important sign of whats to come in the overall settlement.

Regina LaBelle, director of the addiction and public policy institute at Georgetown University and also a former senior Obama drug policy official, said that even though $200 million is not a lot in light of the overall settlement, Its going to make a difference. She notes that right now, many of the groups that would be eligible for this money are so small they need to have bake sales and other small-scale fundraisers just to be able to afford needles and other necessary supplies.

Typically, the recovery community organizations that stand to get funding have meetings for people with various goals, including 12-step groups and alternatives. They also provide and sometimes train peer coaches who can work one-on-one with folks who want that type of care. These coaches are taught to advocate for their clients when navigating the healthcare, addiction treatment, and other social-service bureaucraciesand to not impose their own ideas about what recovery should be. They may also provide naloxone or refer people to harm-reduction services. Generally, these groups are run by people in recovery themselves or family members.

Nothing is mandatory, said Dona Dmitrovic, executive director of the Foundation for Recovery in Las Vegas, which provided RCO services to 4,000 people last year. As in harm reduction, the idea is to meet people where they are and offer help accordingly.

If, for example, someone wants medication treatment, they work with doctors and programs that provide that. If someone needs shelter or mental health care, they help them access those services. To be eligible for this settlement funding, RCOs need to have been previously recognized by the U.S. Substance Abuse and Mental Health Services Administration (SAMHSA), which requires using evidence-based practices.

If these two kinds of groups do receive significant funding from the Purdue bankruptcy, it could help bring long-overdue change to the addiction treatment system, which is still overwhelmingly dominated by inpatient and outpatient rehab programs that are focused on getting people to accept the 12 steps of Alcoholics Anonymous (AA) and Narcotics Anonymous (NA) as the one way to recover.

This ideology has been especially problematic for people with opioid use disorder because NAs official policy is that people taking medication like bupe arent considered to be in recovery, which means they are not permitted to speak, even from the floor at many meetings. The group actually encourages ending medication usedespite the fact that continuing with buprenorphine or methadone doubles peoples chances of survival.

Harm reduction groups and RCOs offer a real alternative. And, as they become more and more visible, people with addiction and their families will be more likely to vote with their feet and choose treatment that isnt one-size-fits-all. That will pressure other programs to either change for the betteror fold.

While $200 million isnt much in the scheme of harm from the opioid epidemic, and more also needs to be done to help pain patients, in the hands of groups that have never received adequate funding, it could be a tremendous step forward. And one that could finally shift the system toward providing care that actually works.

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