Judge accepts plan for Canada’s troubled Red Cross

TORONTO (AP) — A judge approved on Monday a form of bankruptcy protection for Canada’s Red Cross so it can reorganize while deferring payments to creditors and claimants, including victims of a tainted blood scandal.
The agency faces more than $5 billion — $3.5 billion U.S. dollars — in liabilities from three class-action lawsuits.
Last week, the agency said it had reached an agreement with provincial governments to transfer its blood services to two new organizations. To keep solvent while it works out the transfer, the Red Cross Monday asked the court for protection from any actions against it for 30 days.
The Red Cross will receive about $133 million — about $93 million U.S. dollars — for the sale of its blood operation assets. Once its debts are paid off, it will create a fund to assist tainted-blood victims.
The Red Cross plans to put the net proceeds from the sale of its blood assets into a trust fund to deal with claims from hepatitis C victims, who will be compensated after banks and creditors are paid.
Federal and provincial governments have agreed to a $1.1 billion –$770 million U.S. dollars — compensation package for an estimated 22,000 people who contracted hepatitis C from 1986 to 1990.
About 1,000 hemophiliacs contracted the AIDS virus through blood or blood products collected or distributed by the agency. Tens of thousands of Canadians became infected with hepatitis C through the blood system.
The restructuring plan will enable the Red Cross to hold on to its humanitarian activities and field operations, including emergency services, disaster relief systems and first aid services and training.