Implant maker Exactech may conclude bankruptcy without TPG settlement

Reuters

6 days ago

May 28 (Reuters) - Attorneys for medical implant maker Exactech said at a Wednesday bankruptcy court hearing in Delaware that it is walking away from recent efforts to protect its owner TPG from lawsuits alleging that Exactech's knee implants were defective.
Exactech had planned to ask U.S. bankruptcy Judge Laurie Selber Silverstein in Wilmington to confirm a bankruptcy plan this week that would have stopped lawsuits against TPG in exchange for a contribution of about $10 million.
But creditors' resistance to that strategy pushed the company to change course and re-start talks on a different plan that will not resolve TPG's liability for allegedly defective medical devices sold by Exactech, Exactech attorney Ryan Dahl said at Wednesday's hearing.
Exactech filed for bankruptcy in October, seeking to sell its assets and resolve about 2,600 lawsuits over recalled knee, hip and shoulder implants. Many of the lawsuits alleged that a packaging defect had caused oxidation in some devices, shortening their lifespan and requiring patients to undergo "revision surgeries" to address flawed or failing implants.
Exactech has not yet reached a new agreement with creditors, including people who sued the company over the implants, but Exactech expects to have a new plan ready for court approval by late June, Dahl told Silverstein.
Eric Goodman, an attorney who represents creditors, said that the new plan would preserve legal claims against TPG for future litigation, which had been a "lightning rod issue" in Exactech's bankruptcy.
Silverstein agreed to adjourn Exactech's confirmation hearing to allow the talks to proceed.
TPG's attorney, Mark Premo-Hopkins, said his client was 'disappointed' with the delay and that its proposed settlement was reasonable. TPG, which acquired Exactech in 2018, has previously defeated claims that it was responsible for Exactech's allegedly defective products, he said.
"TPG stands ready to defend itself in any forum, confident that they will succeed again," Premo-Hopkins said at the hearing.
Recent court decisions have made it more difficult for wealthy corporate owners to resolve lawsuits by placing a company they own into bankruptcy without declaring bankruptcy themselves. The U.S. Supreme Court last year rejected a Purdue Pharma bankruptcy plan that would have shielded its Sackler family owners from opioid lawsuits, and Johnson & Johnson failed three times in its effort to use a corporate subsidiary to resolve lawsuits over its talc products.
Gainesville, Florida-based Exactech entered bankruptcy with $352 million in debt, saying litigation expenses threatened to derail an otherwise-strong business selling shoulder, hip, knee and ankle implants, as well as surgical imaging devices.
Most of Exactech's legal troubles stemmed from a 2021 recall of implant devices due to 'non-conforming packaging' which did not fully protect the devices from exposure to oxygen. The recall spurred a flood of lawsuits, most of which were centralized in a Brooklyn, New York federal court proceeding.
The case is In re: Exactech Inc., U.S. Bankruptcy Court for the District of Delaware, No. 24-12441
For Exactech: Ryan Dahl and Benjamin Rhode of Ropes & Gray
For the creditors committee: Eric Goodman, David Molton, Cameron Moxley of Brown Rudnick
For TPG: Mark Premo-Hopkins of Kirkland & Ellis
Read more:
Medical implant maker Exactech files for bankruptcy after recall litigation
Exactech orthopedic implant lawsuits sent to federal judge in Brooklyn