The Vyaire Medical lawsuit landscape following the ventilator maker’s June 2024 Chapter 11 filing includes an active adversary proceeding by Covington & Burling and Reed Smith over unpaid contingency fees, a Ninth Circuit employee bonus case, and product-liability exposure tied to Class I FDA recalls that the FDA linked to two deaths. The company liquidated rather than reorganized, and most of its subsidiary bankruptcy cases closed in January 2025, but the lead case remains open to handle the litigation still in play.
The Covington and Reed Smith Fee Lawsuit
On November 3, 2025, Covington & Burling LLP and Reed Smith LLP filed an adversary complaint in Delaware bankruptcy court against Vyaire Medical, Vyaire Holding Co., plan administrator David M. Barse, and a “John Doe Liquidating Trust.”1Omni Agent Solutions. Vyaire Medical Adversary Proceeding Documents It is docketed as Adversary Proceeding No. 25-52381.
Both firms had represented Vyaire in an insurance coverage dispute arising from a product recall, working under contingency fee agreements entitling them to at least 35% of any gross settlement.2Omni Agent Solutions. Covington and Reed Smith Adversary Complaint According to the complaint, after Vyaire entered bankruptcy, the plan administrator rejected the firms’ engagement letters and then settled the insurance dispute in June 2025 without telling either firm. The firms allege Vyaire kept the entire settlement and has refused to disclose even the total amount, leaving them unable to calculate what they are owed.3Bloomberg Law. Vyaire Medical Sued by Covington, Reed Smith Over Unpaid Legal Fees
The complaint asserts declaratory judgment, breach of contract, and conversion claims, arguing the firms hold a vested property right in the settlement funds under New York Judiciary Law § 475.2Omni Agent Solutions. Covington and Reed Smith Adversary Complaint Barse moved to dismiss in November 2025. In January 2026, the parties stipulated to consolidation, and in March 2026 the court ordered mediation and appointed Joseph J. Farnan, Jr. as mediator.1Omni Agent Solutions. Vyaire Medical Adversary Proceeding Documents As of mid-2026, discovery is ongoing, the mediator’s report is past due, and no resolution has been reported.
The Recalls Behind the Insurance Fight
The insurance dispute that the two firms were handling grew out of Vyaire’s product safety record. The company was the subject of two Class I recalls, the FDA’s most serious category.
In December 2023, Vyaire recalled more than 6.6 million AirLife manual resuscitator units manufactured in 2017 or earlier. A defective duckbill valve could fail and leave patients unable to breathe. The FDA reported 37 incidents, including two injuries and two deaths. Vyaire had corrected the faulty mold tooling in 2017, but affected units stayed in circulation for years, and a January 2024 urgent notification instructed customers to destroy them.4FDA. Vyaire Medical, Inc. Recalls AirLife Manual Resuscitators Due to Manufacturing Defect5FDA. AirLife Adult Manual Resuscitator Recall Details An earlier 2018 Class I recall covered roughly 16,670 AirLife humidification chamber and heated breathing circuit kits distributed between May and November 2017; a split chamber could allow excessive water into the airway of a ventilated patient.6FDA. Vyaire Medical MAUDE Report
According to the Covington and Reed Smith complaint, the manual resuscitator recall is the one the firms were pursuing insurance coverage for when the plan administrator settled without them.3Bloomberg Law. Vyaire Medical Sued by Covington, Reed Smith Over Unpaid Legal Fees
Abed v. Vyaire Medical: The Employee Bonus Case
Before the bankruptcy, former employee Jonathan Abed sued Vyaire over bonuses he said he was owed under two incentive plans that replaced an earlier program. The dispute turned on whether a “continued employment” requirement from the old plan carried over to the new ones.
A federal district court granted summary judgment for Abed, finding the new plans created enforceable contracts without the continued employment condition and that the condition was unconscionable. The Ninth Circuit affirmed in part, agreeing Vyaire owed the bonuses because its own communications rolling out the new plans never mentioned a continued employment requirement, so it was not part of the deal.7Midpage AI. Jonathan Abed v. Vyaire Medical, Inc. The appeals court declined to decide the unconscionability question.
The Ninth Circuit reversed on one point. It held that Vyaire’s nonpayment was not a “willful failure” under California Labor Code § 203(a), because a good-faith dispute existed over the plan terms. The case went back for recalculation of damages and fees.7Midpage AI. Jonathan Abed v. Vyaire Medical, Inc.
The Bankruptcy and What Creditors Recovered
Vyaire Medical, Inc. and 27 affiliates filed Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware on June 9, 2024, under lead case 24-11217.8Omni Agent Solutions. Vyaire Medical, Inc. Bankruptcy Case Assets were listed at $100 million to $500 million against liabilities of $500 million to $1 billion.9Bloomberg. Ventilator Maker Vyaire Goes Bankrupt as COVID-19 Demand Wanes CEO John Bibb pointed to the post-pandemic collapse in ventilator demand; filings noted Vyaire lost more than 10% of its sub-acute ventilation market share between 2021 and 2022 and could not refinance its debt.10Fierce Biotech. Ventilator Maker Vyaire Medical Files Bankruptcy
Vyaire liquidated rather than reorganized. ZOLL Medical won the auction for the ventilator business with a $37 million cash bid covering the bellavista, fabian, LTV, and 3100 HFOV lines; that sale closed October 14, 2024.11MedTech Dive. ZOLL Wins Auction for Vyaire Medical Ventilator Business12ZOLL Medical. ZOLL Announces Closing of Acquisition of Select Vyaire Ventilator Product Lines Judge Brendan L. Shannon confirmed the liquidation plan on November 14, 2024, with an effective date of November 27, 2024.8Omni Agent Solutions. Vyaire Medical, Inc. Bankruptcy Case
Most Class 6 general unsecured creditors received nothing. A limited “Residual GUC Recovery Pool” was created for certain scheduled, non-contingent, undisputed claims of $500,000 or less. Equity holders were wiped out. The Official Committee of Unsecured Creditors filed an emergency motion in October 2024 citing undisclosed material amendments to the ZOLL sale documents, and later negotiated a settlement including an administrative claims reserve of at least $3,054,577, though recoveries stayed minimal.13ElevenFlo. Vyaire Medical Bankruptcy
Who Is Running the Wind-Down
David M. Barse continues as plan administrator overseeing Vyaire’s remaining affairs, which include resolving outstanding claims, pursuing third-party discovery through subpoenas, and negotiating settlements.14Omni Agent Solutions. Vyaire Medical Plan Administrator Filings A final decree closed 27 of the 28 debtor cases on January 30, 2025, but the lead case for Vyaire Medical, Inc. itself stays open to administer the Covington and Reed Smith adversary proceeding and other wind-down work.15PACER Monitor. Vyaire Holding Company Bankruptcy Case