%1

Bankrupt crypto companies FTX Trading Ltd. and Genesis Global Holdco LLC reached an in-principle agreement on resolving a dispute involving their chapter 11 cases, Bloomberg News reported. Collapsed exchange FTX had argued that it was owed as much as $3.9 billion by crypto lender Genesis, a contention that Genesis rejected. The sum was later reduced to up to $2 billion. Their legal representatives said in a Thursday letter to a bankruptcy judge that the two parties’ claims against each other would be settled by the agreement. They plan to file motions to bankruptcy courts for approval of the deal. The letter didn’t provide details about the settlement. The settlement would likely be a relief for many Genesis creditors, who expected the disagreement to delay bankruptcy proceedings and the eventual payout of claims.

A Florida doctor accused of taking kickbacks from Insys Therapeutics to prescribe its fentanyl spray should face a civil trial despite his recent bankruptcy, federal prosecutors are arguing, even as a judge delayed it from going forward, Reuters reported. In a filing Wednesday in Tampa federal court, lawyers for the Middle District of Florida U.S. Attorney's Office said their civil lawsuit against Edward Lubin stems from the government's "police or regulatory power," and so was not automatically paused like most legal claims against a newly bankrupt debtor. They noted that federal appeals courts in other cases have ruled that lawsuits brought by the government under the federal False Claims Act, like the one against Lubin, are examples of police or regulatory power. Lubin had notified the court of his chapter 11 bankruptcy earlier on Wednesday, saying it should halt the case. His lawyer did not immediately respond to a request for comment. U.S. District Judge Thomas Barber, who is presiding over the case, said in an order on Thursday that he would wait for the bankruptcy court to decide whether the trial can go forward. For now, he put the Aug. 2 trial date on hold.

Lordstown Motors’ efforts to sell itself during its bankruptcy have been delayed as a judge ruled that the electric-vehicle maker must first face a $900 million lawsuit alleging it stole trade secrets, WSJ Pro Bankruptcy reported. Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington, Del., is allowing the lawsuit to move forward in California. The plaintiff, Karma Automotive, which filed the lawsuit before the EV maker filed for bankruptcy in June, had argued that Lordstown might try to sell the intellectual property allegedly stolen from them. “It makes good sense to let the Karma case proceed in California before I decide the title issues that might be implicated by a sale process,” Judge Walrath said. “I agree with Karma that the debtor can’t sell something that the debtor cannot establish is the debtor’s property,” Judge Walrath said. “The appropriate thing is for the California court that has devoted three years to conducting discovery and addressing pretrial motions and is fully familiar with these facts should decide those issues.” “We should have a verdict sometime in September,” which isn’t far off from any Lordstown sale process, she said. Lordstown yesterday asked the judge to approve its bid procedures as well as to deny a request by Karma to allow it to continue with its 2020 lawsuit, saying that time is of the essence given the company’s cash burn and financial state.

The Roman Catholic Diocese of Syracuse and the Official Committee of Unsecured Creditors announced Thursday that they have reached a settlement agreement in the chapter 11 case filed in U.S. Bankruptcy Court in the Northern District of New York on June 19, 2020, CNYCentral.com reported. In 2020, there were more than 100 lawsuits filed against the diocese through the Child Victims Act, which allows victims to file civil lawsuits against abusers even if the statute of limitations has passed. The financial impact of the Child Victims Act and the economic downturn of the COVID-19 pandemic led to bankruptcy filing. The Diocese and the Committee believe that this settlement is an important first step in forming a plan that will lead to the Diocese's exit from bankruptcy. The settlement will provide payment in the amount of $100 million to all survivors of sexual abuse for acts perpetrated against them by clergy, religious, lay employees, and volunteers. Although the settlement amount remains subject to a creditor vote and court approval, the dollar figure of the settlement has been accepted by the Official Committee — comprised entirely of individuals who themselves survived sexual abuse when they were children by clergy members and employees within the Diocese of Syracuse.

Lighthouse Immersive Inc., the company behind an interactive Vincent van Gogh exhibition displayed across the U.S., has filed for bankruptcy, Bloomberg News reported. The Toronto-based company filed for chapter 15 bankruptcy in Delaware yesterday alongside affiliates, a move that protects its U.S. assets while insolvency proceedings play out in its home country. While the company is best known for its van Gogh exhibit, it has also launched displays that feature Disney animation, as well as works of Frida Kahlo and Claude Monet. The company has sold more than 7 million tickets, according to its website. The company has obtained financing to fund itself during bankruptcy, according to court papers. Additional details on the funding weren’t included in initial filings.

Surge Transportation, a digital freight brokerage founded in 2016 by Omar Singh and based in Jacksonville, Fla., has filed for chapter 11 bankruptcy protection, FreightWaves.com reported. Sixteen of its top 20 creditors are factoring companies that pay small carriers. Officials at Surge told FreightWaves.com that the company is working with a financial sponsor and hopes to get its bankruptcy plan approved at a hearing this week. Over the past seven years, Surge grew to a workforce of more than 100 people and earned gross revenues of approximately $150 million in 2022. The bootstrapped 3PL built automated load-matching and pricing technology similar to its venture-funded competitors Uber Freight and Convoy and offered a suite of direct integrations into transportation management systems. Since the beginning of last year, the freight market has experienced a significant downturn. The fading of pandemic-era stimulus programs cooled the goods economy, and when combined with the abundant capacity that had built up, sent transportation prices through the floor.

Bill Hwang, the founder of Archegos Capital Management, on Thursday asked a judge to let him subpoena documents from 10 banks, in an effort to shift blame as he defends against criminal fraud charges that the firm's collapse was his fault, Reuters reported. In a filing in Manhattan federal court, Hwang said the documents will show that Archegos' counterparties "played a pivotal role" in the March 2021 collapse of his once-$36 billion firm, and that his swaps trades were legal. Hwang's request came three days after UBS agreed to pay $388 million in fines to U.S. and British regulators over poor risk management at Credit Suisse, which lost $5.5 billion when Archegos met its demise. UBS bought Credit Suisse last month, under pressure from Swiss regulators. Other banks also lost money when Archegos collapsed, but less than Credit Suisse.

FTX founder Sam Bankman-Fried will no longer face a campaign finance charge at an October criminal trial, federal prosecutors say, citing a decision by Bahamian authorities to reject a count in the indictment that was not listed on the warrant against him when he was extradited to the U.S. in December, the Associated Press reported. Prosecutors told U.S. District Judge Lewis A. Kaplan in a letter that the government in the Bahamas notified it on Wednesday that authorities there did not consider the charge to be included in Bankman-Fried's extradition. Thus, prosecutors wrote, they would not pursue it at the trial, in keeping with U.S. treaty obligations to the Bahamas. Bankman-Fried, 31, has been confined to his parent's Palo Alto, Calif., home as part of a $250 million bail package that prosecutors on Wednesday asked a judge to revoke. Prosecutors say his extensive contact with the news media demonstrates an effort to affect the jury pool. His lawyers deny it. The judge has imposed a gag rule while he decides the issue.

A group of hedge funds is devising a plan to cut off about $1 billion meant to help victims of opioid addiction, opening the way to keep some of the money for themselves, the Wall Street Journal reported. Mallinckrodt, one of America’s largest manufacturers of opioids, last year agreed to pay $1.7 billion to resolve thousands of lawsuits brought by state and local governments and opioid-addicted individuals, who accused the company of helping cause a public-health crisis. The settlement funds, to be paid through 2030, were meant to help state health departments buy lifesaving overdose reversal drugs like Narcan and pay treatment costs for people who took prescription opioids. However, hedge funds that lent billions to Mallinckrodt are backing a plan for the company to get out of the deal with about $1.3 billion still unpaid. A group of hedge funds, including Greenwich, Conn.-based Silver Point Capital, is in negotiations with Mallinckrodt’s board to give them control of the business through a bankruptcy filing, according to people familiar with the discussions. Other hedge funds that hold the company’s debt, including Bracebridge Capital and Alta Fundamental Advisers, have been negotiating with Mallinckrodt over its potential plans to file for chapter 11, according to public filings.