A bankruptcy judge has granted the motions of creditors to attach $21.1 million in assets of four insiders of a company linked to a deadly fungal meningitis outbreak.
On January 28, Bankruptcy Judge Henry Boroff of the District of Massachusetts issued four orders affecting the four shareholders and directors of New England Compounding Center, in response to motions brought by the committee of unsecured creditors.
Injectable steroids from three recalled lots of New England Compounding’s preservative-free methylprednisolone acetate have been linked to a multistate meningitis outbreak and other infections. According to the Centers for Disease Control and Prevention, 44 deaths and 678 cases are associated with the meningitis outbreak.
All of the orders concern four individuals: Barry Cadden, Lisa Conigliaro Cadden, Gregory Conigliaro and Carla Conigliaro. Cadden was, until recently an owner, president, head pharmacist and director of pharmacy at the company.
One of the orders, a temporary restraining order, bars the four from depleting their assets, except for “ordinary living or legal-representation expenses.”
Another order forbids related companies from making payments owed to the four or that will be owed to them in the near future. Those companies are Ameridose LLC and Medical Sales Management, as well as Gregory Conigliaro’s real estate entity, GDC Properties Management LLC.
Earlier this month, the company disclosed payments of nearly $21.2 million in salaries to key executives and credit card reimbursements since December 2011. As a result, a third order approved an attachment of up to $21.1 million in bank accounts held by any of the four. A fourth order approved an attachment of real estate holdings in the name of each of the four parties up to a value of $21.1 million.
Boroff also scheduled a hearing for February 28 to determine whether the temporary restraining order should continue as a preliminary injunction.
Aside from the bankruptcy, the company faces dozens of lawsuits about the effects of the medicine. The judicial panel on multidistrict litigation (MDL) has scheduled a hearing for January 31 to decide whether to consolidate 131 cases in its docket.
In a press release, David Molton, a partner at Brown Rudnick who represents the official committee of unsecured creditors in the bankruptcy, said, “The victims and other creditors of the company should be pleased that, only one week after the Creditors Committee was appointed, real progress has been made to protect their interests.”
New England Compounding’s lead lawyer on the bankruptcy case, Daniel Cohn, a partner at Murtha Cullina, did not respond to a request for comment. ??
Although only certain claims can go before the bankruptcy court, the MDL has all the claims and all of the parties before it, said Anne Andrews of Andrews & Thornton in Irvine, Calif., a co-chairwoman of the creditors committee.
“They have to work in concert,” Andrews said.
Sheri Qualters can be contacted at firstname.lastname@example.org.