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Bankruptcy
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May 13, 2024
Kabbage Inks 2 FCA Deals With Feds Totaling $120M
Bankrupt online lender Kabbage Inc. has agreed to pay $120 million in two separate deals to resolve allegations it submitted thousands of false claims for loan forgiveness and operated without adequate fraud controls in place, the U.S. Department of Justice announced Monday.
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May 13, 2024
50 Cent, GC Accused Of Federal Wiretap Violations
A liquor business consultant has told a New York state court that Curtis "50 Cent" Jackson and the rapper's general counsel violated federal and New Jersey wiretap statutes, after the court dismissed an earlier counterclaim lodged under the Illinois Eavesdropping Act.
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May 13, 2024
Eletson Creditors Seek Over $1M Cut In Reed Smith Fees
Unsecured creditors of shipping company Eletson Holdings have asked a New York bankruptcy judge to cut more than $1 million from the fees being sought by Eletson counsel Reed Smith LLP, saying the firm overstaffed the case and wasted money on needless and meritless fights.
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May 13, 2024
Binance Says Sullivan & Cromwell, FRA To Serve As Monitors
Crypto exchange Binance said Monday that the federal government has selected a Sullivan & Cromwell LLP partner and a Forensic Risk Alliance founding partner to serve as independent third-party monitors overseeing its compliance with the terms of its $4.3 billion settlement and guilty plea over money laundering, bank fraud and sanctions violations.
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May 13, 2024
Kwok Trustee Seeks Expanded Role For BVI Law Firm
The Chapter 11 trustee in Chinese exile Ho Wan Kwok's bankruptcy case has asked a Connecticut judge for permission to hire Harney Westwood and Riegels LP as Cayman Islands counsel, a move that would expand the firm's reach beyond its current status as British Virgin Islands counsel to the estate.
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May 13, 2024
Jackson Walker Seeks Sanctions Over Judge Romance Suit
Jackson Walker LLP asked a Texas federal court Monday to sanction lawyers and their "disgruntled millionaire" client for leveling racketeering allegations in a lawsuit over a former bankruptcy judge's romantic relationship with a former firm lawyer, saying the claims are "frivolous" and "conclusory."
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May 13, 2024
Ga. Election Workers Ask Court To Stop Giuliani's Lies
Two Georgia poll workers have asked a New York federal bankruptcy judge to bar Rudy Giuliani from continuing to repeat the same "malicious" false claims that led a jury to award them $148 million last year because of the former New York City mayor's lies that the pair committed ballot fraud during the 2020 presidential election.
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May 13, 2024
Justices Won't Review Ch. 11 Stay In Asbestos Cases
The U.S. Supreme Court won't review lower courts' decisions allowing the paper-products company Georgia-Pacific to remain shielded from mass tort litigation by way of a subsidiary's Chapter 11 case.
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May 10, 2024
Full 4th Circ. Urged To Settle Key 'Texas Two-Step' Questions
A Fourth Circuit panel left critical issues open when it denied permission to an appeal challenging the so-called Texas two-step Chapter 11 of industrial equipment maker Aldrich Pump, asbestos claimants in two separate bankruptcy cases said, asking the full appeals court to reconsider hearing the case and settle questions that have plagued their own bankruptcies in the Western District of North Carolina.
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May 10, 2024
JLM Couture Nears Settlement With Bridal Dress Designer
Dressmaker JLM Couture told Delaware's bankruptcy court Friday it reached an agreement in principle with a bridal dress designer, who was sued by the company and had sought to convert its Chapter 11 case into a Chapter 7 liquidation.
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May 10, 2024
DC Tax Atty Can't Use Ch. 7 To Ditch Depo In $19M Theft Suit
A corporate D.C. tax attorney accused of bilking a former client out of $19 million via a captive insurance scam will be deposed, despite a stay in the Maryland federal case against him and his firm after both filed for bankruptcy.
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May 10, 2024
Sam Ash Music Can Tap $20M DIP That Trustee Opposed
Music store chain Sam Ash won a New Jersey bankruptcy court's blessing Friday to borrow $20 million in Chapter 11 financing, defeating an objection by the U.S. Trustee's Office to a mechanism that would let the funds be used to pay off existing debt held by the lender.
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May 10, 2024
Baker Donelson Adds Bankruptcy Pro Amid High Demand
Firms are still scouting bankruptcy talent throughout the U.S., with Baker Donelson Bearman Caldwell & Berkowitz PC announcing Thursday that it has added a former Lugenbuhl Wheaton Peck Rankin & Hubbard attorney focused on bankruptcy and workout law.
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May 10, 2024
Casa Systems Strikes Deal For Ch. 11 Cash Collateral
Casa Systems Inc. said Friday it was ready to submit a cash collateral order for the Delaware bankruptcy court's approval, after the debtor, its unsecured creditors committee and an ad hoc group of secured lenders reached a settlement to use that cash under terms acceptable to all three parties.
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May 10, 2024
Toymaker KidKraft Files Ch. 11 With Plan To Sell Assets
Dallas toy company KidKraft Inc. filed for Chapter 11 protection in a Texas bankruptcy court Friday with more than $100 million in debt, blaming economic headwinds and saying it has a prepackaged sale plan.
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May 09, 2024
V&E Defends Its Enviva Work From Trustee's Conflict Claim
Vinson & Elkins LLP urged a Virginia bankruptcy court on Thursday to reject "outrageous claims" by the U.S. Trustee's Office that the law firm shouldn't be allowed to represent Enviva in the wood-pellet maker's Chapter 11 because the firm also works for one of the debtor's major equity holders, arguing that there is no conflict of interest.
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May 09, 2024
Bally Sports Parent Seeks OK For Renewed DirecTV Deal
The parent company of sports network operator Bally Sports has asked a Texas bankruptcy judge to approve renewed multiyear contracts with DirecTV, saying the revenue from the deal is a "critical component" of its post-Chapter 11 business plan.
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May 09, 2024
Syracuse Diocese Creditors Urge Contempt On Insurer Leaks
Unsecured creditors of the bankrupt Roman Catholic Diocese of Syracuse have asked a New York judge to hold insurers Interstate and an affiliate of Allianz in contempt for sharing confidential sex abuse survivors' claim information with third parties and failing to inform the debtor or the court.
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May 09, 2024
Texas Court Urged To Keep Alive Judge Romance Suit
In a flurry of filings, a former shareholder in an engineering company has pushed a Texas federal court to reject bids to throw out his lawsuit over an ex-bankruptcy judge's secret relationship with a former Jackson Walker LLP attorney.
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May 09, 2024
Apnea Device Maker ProSomnus Gets OK For Ch. 11 Loan
A Delaware bankruptcy judge Thursday gave sleep apnea device maker ProSomnus interim permission to tap into $13 million in Chapter 11 financing to fund the company through what it says will be the end of its case in August.
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May 09, 2024
Sam Ash Music Hits Ch. 11, Plans To End 100-Year Retail Run
Sam Ash Music, a 100-year-old music instrument retailer, filed for Chapter 11 protection in New Jersey bankruptcy court with up to $500 million in debt and plans to close its 42 stores in the U.S., citing weakened sales as customers shifted to online shopping during the COVID-19 pandemic.
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May 08, 2024
NY AG Says $6M NRA Verdict Should Stand
A New York state court should not undo a jury's finding that the National Rifle Association allowed its officers to misappropriate $6.4 million of donor money, the state's attorney general has argued, saying trial evidence abundantly laid out evidence of misconduct and organizational failures.
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May 08, 2024
FTX Says Full Recovery Coming Based On 2022 Crypto Price
Bankrupt cryptocurrency exchange FTX Trading Ltd. has claimed its proposed Chapter 11 plan would be able to pay creditors in full with a $13 billion distribution that exceeds the estimated allowable $11.2 billion in claims, but the payout is based on the value of cryptocurrency in November 2022, when the exchange filed for bankruptcy protection.
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May 08, 2024
Bill To Undo SEC Crypto Accounting Bulletin Passes House
Lawmakers in the U.S. House of Representatives on Wednesday voted to overturn the U.S. Securities and Exchange Commission's controversial cryptocurrency accounting guidance despite protests from Democrats to take a more targeted approach to amend the directive and a White House pledge to veto the bill.
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May 08, 2024
99 Cents Beats Creditor Objection To Get OK On $61M DIP
A Delaware bankruptcy judge on Wednesday approved discount store 99 Cents Only's full $60.8 million Chapter 11 financing deal after rejecting a group of noteholders' objection to the relief, finding an intercreditor agreement barred the group from blocking debtor-in-possession funding.
Expert Analysis
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Series
Coaching High School Wrestling Makes Me A Better Lawyer
Coaching my son’s high school wrestling team has been great fun, but it’s also demonstrated how a legal career can benefit from certain experiences, such as embracing the unknown, studying the rules and engaging with new people, says Richard Davis at Maynard Nexsen.
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Debt Collector Compliance Takeaways From An FDCPA Appeal
A Consumer Financial Protection Bureau amicus brief last month in an ongoing First Circuit appeal focusing on an interpretation of the Fair Debt Collection Practices Act can serve as a reminder for debt collectors to understand how their technologies, like bankruptcy scrubs and letter logic, can prevent litigation, says Justin Bradley at Womble Bond.
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SG's Office Is Case Study To Help Close Legal Gender Gap
As women continue to be underrepresented in the upper echelons of the legal profession, law firms could learn from the example set by the Office of the Solicitor General, where culture and workplace policies have helped foster greater gender equality, say attorneys at Ocean Tomo.
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Crypto Issues To Watch Amid Evolving Legal Landscape
This year will likely be a momentous one for crypto in the U.S., but whether it is successful or disastrous will depend on the outcome of high-profile court decisions and key regulatory actions, say attorneys at Venable.
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Opinion
3rd-Party Financiers Have Power To Drive Mass Tort Cases
The abnormal recovery premium presented by modern mass tort cases coupled with their deemphasized role for attorneys creates an opportunity for third-party financiers to both create and control these cases, says Samir Parikh at Lewis & Clark Law School.
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Del. Dispatch: Clarification On Fiduciary Duties Of Controllers
The Delaware Chancery Court’s January opinion in a Sears Hometown and Outlet Stores' stockholder dispute — holding that a controlling stockholder owes the company and minority shareholders some fiduciary duties when selling shares or voting to change the status quo — suggests instances where investors opposing board decisions should tread carefully, say attorneys at Fried Frank.
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Stay Ruling Challenges Sovereign Debt Dynamics
The Southern District of New York’s recent ruling in Hamilton Reserve Bank v. Sri Lanka, which provides sovereigns with a de facto bankruptcy stay in restructuring scenarios, may create uncertain consequences for sovereign creditors and borrowers alike, says Jeff Newton at Omni Bridgeway.
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Reimagining Law Firm Culture To Break The Cycle Of Burnout
While attorney burnout remains a perennial issue in the legal profession, shifting post-pandemic expectations mean that law firms must adapt their office cultures to retain talent, say Kevin Henderson and Eric Pacifici at SMB Law Group.
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What Are The Pros And Cons Of Selling A Bankruptcy Claim?
As companies navigate financial uncertainties and market challenges, they should understand the advantages and disadvantages of selling a bankruptcy claim, so that they can monetize it with confidence and minimize the risk that amounts received in connection with a sale will be subject to potential disgorgement, says Evelyn Meltzer at Troutman Pepper.
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Series
Competing In Dressage Makes Me A Better Lawyer
My lifelong participation in the sport of dressage — often called ballet on horses — has proven that several skills developed through training and competition are transferable to legal work, especially the ability to harness focus, persistence and versatility when negotiating a deal, says Stephanie Coco at V&E.
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Ch. 11 Ruling Highlights 'Two-Step' Challenges In 4th Circ.
A North Carolina bankruptcy court’s recent ruling in Bestwall’s Chapter 11 case, and the decision's interpretation of Fourth Circuit law, suggests that, compared to other circuits, it may be more difficult to dismiss so-called Texas Two-Step bankruptcy cases within the Fourth Circuit, say Brittany Falabella and Kollin Bender at Hirschler Fleischer.
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3 Strategies For Aggressive Judgment Enforcement
As illustrated by the many creditors of Citgo Petroleum Corp. who may walk away empty-handed — despite the company's court-ordered sale — it is important to start investigating counterparty assets and planning for enforcement even before obtaining a judgment, says Brian Asher at Asher Research.
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Chancery's Sears Ruling Clarifies Stockholder Duties
In a recent landmark decision involving stockholders of Sears Hometown and Outlet Stores, the Delaware Chancery Court addressed for the first time what precise duties a controlling stockholder owes, highlighting that controller interference with board action is not per se invalid and that enhanced scrutiny is a reasonableness test, say Christopher Chuff and Taylor Bartholomew at Troutman Pepper.
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How Biotech Cos. Can Utilize Synthetic Royalty Financing
Synthetic royalty transactions have been on the rise as a funding structure for biotechnology companies, but questions have arisen surrounding how such transactions work, and structuring them correctly requires a nuanced understanding, say Todd Trattner and Ryan Murr at Gibson Dunn.
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The Legal Industry Needs A Cybersecurity Paradigm Shift
As law firms face ever-increasing risks of cyberattacks and ransomware incidents, the legal industry must implement robust cybersecurity measures and privacy-centric practices to preserve attorney-client privilege, safeguard client trust and uphold the profession’s integrity, says Ryan Paterson at Unplugged.