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A Texas bankruptcy judge on Tuesday appointed a new mediator for Tehum Care Services, a bankrupt affiliate of prison health provider YesCare, to revisit its $37 million settlement facilitated in August by former judge David R. Jones, who resigned from the bench last month following an ethics controversy, WSJ Pro Bankruptcy reported. Judge Jones’s resignation followed an official complaint filed by the chief judge of the Fifth Circuit Court of Appeals, stating probable cause existed to believe that Jones had committed misconduct surrounding his undisclosed romantic relationship with bankruptcy lawyer Elizabeth Freeman, whose then-employer Jackson Walker frequently appeared before Judge Jones. Freeman participated in the negotiation representing YesCare when Judge Jones — who served as a court-appointed mediator for the case — mediated the settlement, according to court papers. The Justice Department’s bankruptcy watchdog in its court filings earlier this month expressed concerns over the “propriety of the mediation that serves as the basis for the global settlement.” A few days after Jones’s resignation, Judge Christopher Lopez with the U.S. Bankruptcy Court in Houston, who has been overseeing the YesCare affiliate bankruptcy proceeding, declined to approve the framework of the company’s bankruptcy exit plan on an expedited basis and instructed the parties to “rethink” the proposal, which was built upon the global settlement. Judge Lopez at that time said he wasn’t questioning the integrity of the mediation, but the proposal didn’t provide enough information for him to approve it. Lawyers of the YesCare affiliate and other stakeholders recently petitioned Judge Lopez to appoint Christopher Sontchi, a retired Delaware bankruptcy judge, as a new mediator to look at the case “clean and fresh.”

At age 88, World War II veteran Robert Kroll moved to Friendship Village of Schaumburg, a retirement community where he would be taken care of until death, and so his children would get their inheritance after he died. He paid an entrance fee of $124,000, plus about $2,400 a month, to guarantee that he would always get housing and medical care even if he ran out of money, with the understanding that his family would get 90% of his remaining entrance fee after expenses upon his passing. Kroll died in 2019, but his family still hasn’t gotten their money back. In June, Friendship Village, citing problems caused by the COVID pandemic, filed for chapter 11 bankruptcy, in which officials say operations will continue as usual, but with some debts unpaid, the Chicago Tribune reported. A company has bid $115 million to buy the facility, but the bankruptcy proposal includes only $2 million to pay back families of former residents — about 10% of what is owed. The Kroll's dispute is over Friendship Village’s policy of only paying back entry fees upon the resale of a resident’s unit. The facility — the largest not-for-profit retirement community in Illinois, with 815 units — didn’t resell Kroll’s one-bedroom unit, so hadn’t paid his family back. Now that Friendship Village has entered bankruptcy, families of former residents are unlikely to ever receive full repayment, which Barnes and other families see as a betrayal of what they were promised. Friendship Village officials say that the contracts were clear about the arrangement, which had worked well for decades since the retirement community opened in 1977. “We never expected this to happen,” CEO Mike Flynn said.

Collapsed cryptocurrency exchange FTX, the biggest casualty of the “crypto winter” last year, just hit the first anniversary of its bankruptcy filing. Crypto lender Celsius Network, which collapsed in the summer of 2022, was cleared to exit bankruptcy last week. Their failures, along with those of crypto industry players like Voyager Digital and BlockFi, have tested a bankruptcy system with little experience with a decentralized and volatile sector with difficult to trace and value assets, WSJ Pro Bankruptcy reported. Many factors have led crypto bankruptcies like FTX’s to drag on as so-called free fall cases, or when companies file for bankruptcy protection without restructuring agreements with creditors in place. “The sheer fact that we are talking about this case a year later is different from what we’ve been seeing in the bankruptcy landscape,” said Timothy Graulich, head of international restructuring at Davis Polk & Wardwell. The law firm represents several large customers in FTX’s bankruptcy. Businesses often seek chapter 11 protection with prepackaged restructuring agreements and hope to reorganize quickly, so “It is really only free fall cases that last this long,” said Graulich.

A real estate investor facing scrutiny from lenders and investors is now the subject of a government inquiry into an offer to buy shares in WeWork Inc., Bloomberg News reported. The U.S. Securities and Exchange Commission has sent inquiries to Jonathan Larmore, the founder of Arciterra Cos., about a Nov. 3 press release in which an entity called Cole Capital Funds said it was seeking to buy shares in the coworking company at a significant premium, according to a person familiar with the matter who asked not to be named citing private information. The inquiry includes Larmore’s trading history in WeWork stock and options, the person said. A company filing links Larmore to Cole Capital Funds, which was registered in October with the Arizona Corporation Commission. The real estate investor was already facing an SEC inquiry about Arciterra, which had owned as many as 80 properties including strip malls. In an interview, Larmore said that he planned to make all of the required filings related to his purchase of WeWork shares and that he couldn’t comment further on the matter until he had done so. He declined to comment on the SEC inquiry, and said that he was working through lawsuits filed by private parties and was confident in their outcome. “Many of the lawsuits have been resolved and we will continue to resolve the rest,” he said.

FTX’s bankruptcy advisers sued crypto exchange Bybit Fintech Ltd and two corporate affiliates to recover cash and digital assets valued at roughly $953 million that was withdrawn from Sam Bankman-Fried’s crypto exchange before it filed chapter 11 a year ago, Bloomberg News reported. The lawsuit filed Friday in Delaware court alleges Bybit’s investment arm, Mirana Corp., had special “VIP” benefits, which most FTX customers didn’t have, and used those special privileges to get most of its assets off Bankman-Fried’s platform before it collapsed in November 2022. Mirana pressured FTX employees to fulfill its withdraw requests as regular customers of FTX.com waited hours trying to get money off the exchange as it collapsed, according to the complaint. The lawsuit seeks to recover assets worth roughly $953 million, a figure that includes more than $327 million Mirana allegedly withdrew from FTX between the early morning of Nov. 7 and Nov. 8 2022, when Bankman-Fried’s exchange paused withdraws. The bankruptcy lawsuit names Bybit Fintech Ltd., Mirana and an affiliated crypto trading firm named Time Research Ltd. The lawsuit also lists as defendants a senior Mirana executive at the time and Singaporean residents whom the complaint alleges either benefited or had a role in the FTX withdraws, which are subject to the bankruptcy suit.

A year after the bankruptcy of FTX, the cryptocurrency industry is irrevocably altered — while at the same time in many ways remarkably familiar, Bloomberg News reported. Mostly gone are the day traders and the abundant leverage that drove Bitcoin to its November 2021 high at close to $69,000. Same for celebrities and social-media influencers peddling nonfungible tokens and memecoins. Regulators determined not to get caught off guard again are tightening their grip. And large financial firms like BlackRock Inc. are moving in, drawn by the prospect of the U.S. Securities and Exchange Commission giving its first blessing for an ETF investing directly in Bitcoin. Perhaps the most tangible indicator that crypto has moved on: Bitcoin has recovered all its losses since the May 2022 implosion of stablecoin TerraUSD, which set in motion the wave of failures that ultimately helped bring down FTX. Some observers see an industry still afflicted by rampant speculation and insufficient safeguards. The Tether stablecoin, a pillar of the sector long dodged by speculation about the quality of assets backing it and allegations that it’s being used by criminals, has become more dominant in recent months. Binance, the biggest exchange, still operates without a formal headquarters.