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Cryptocurrency brokerage firm Voyager Digital Holdings Inc. secured approval to return $270 million in customer cash, settling one of the larger issues it faced after filing for bankruptcy, WSJ Pro Bankruptcy reported. Judge Michael Wiles of the U.S. Bankruptcy Court in New York, who is overseeing Voyager’s bankruptcy, ruled yesterday that the company provided “sufficient basis” to support its contention that customers should be allowed access to the custodial account held at Metropolitan Commercial Bank. Voyager had about $270 million in the account when it filed for bankruptcy, the bank has said. The chapter 11 filings of Voyager and nonbank lender Celsius Network LLC have tied up the holdings of their customers, who are realizing how little control they have over their funds and that they aren’t likely to recover in full through bankruptcy court. Voyager sought bankruptcy protection a month ago after facing a “run on the bank” as customers flooded the firm with requests to withdraw their deposits triggered by the sharp drops in cryptocurrency prices of recent months. In recent weeks, Voyager has asked for the bankruptcy court’s permission to honor customer withdrawal requests for cash funds held in custody at New York-based Metropolitan Commercial Bank, but it said the roughly $1.3 billion in digital assets on Voyager’s platform belongs to the bankruptcy estate that will be shared by all creditors, with the distribution to be decided through the bankruptcy proceeding.

A Texas jury Thursday ordered conspiracy theorist Alex Jones to pay more than $4 million — significantly less than the $150 million being sought — in compensatory damages to the parents of a 6-year-old boy killed in the Sandy Hook massacre, marking the first time the Infowars host has been held financially liable for repeatedly claiming the deadliest school shooting in U.S. history was a hoax, the Associated Press reported. The Austin jury must still decide how much the Infowars host should pay in punitive damages to Neil Heslin and Scarlett Lewis, whose son Jesse Lewis was among the 20 children and six educators who were killed in the 2012 attack in Newtown, Connecticut. The parents had sought at least $150 million in compensation for defamation and intentional infliction of emotional distress. Jones’ attorney asked the jury to limit damages to $8 — one dollar for each of the compensation charges they considered — and Jones himself said any award over $2 million “would sink us.” It likely won’t be the last judgment against Jones — who was not in the courtroom — over his claims that the attack was staged in the interests of increasing gun controls. A Connecticut judge has ruled against him in a similar lawsuit brought by other victims’ families and an FBI agent who worked on the case. He also faces another trial in Austin. Jones’ media company Free Speech Systems, which is Infowars’ parent company, filed for bankruptcy during the two-week trial.

The Roman Catholic Diocese of Harrisburg said yesterday that it has reached an agreement to settle any still-pending historic child sex abuse claims lodged against its priests or other church personnel as part of a plan to end the diocese’s chapter 11 reorganization under federal bankruptcy laws, PennLive.com reported. Final terms of the settlement were not immediately available Thursday night, including the total cost of all payments to creditors. But in a press release, the diocese said the proposed agreement with its creditors calls for creation of a $7.5 million Survivor Compensation Trust to provide financial restitution for survivors of clergy sexual abuse. The fund may also be enlarged through future settlements with diocesan insurance carriers, the church noted. The church said approximately 54 timely filed proofs of claim from clergy abuse survivors were received during the bankruptcy process. That appears to be in addition to 111 survivors separately paid in 2019 by the diocese’s independent Survivor Compensation Program, for a total financial commitment of $12,784,450. The average payout to those accepting the Harrisburg diocese’s offers in that program was about $114,000.

Insurers are fighting against sex-abuse victims’ demands for more compensation in the bankruptcies of several large Catholic dioceses, as both the number of claimants and the proposed payouts have grown, WSJ Pro Bankruptcy reported. The standoff is slowing the dioceses’ efforts to emerge from chapter 11. Historically, most settlements in such bankruptcies have received support from the diocese, its insurers and abuse victims, said lawyer Jason Amala, who has represented victims of childhood sex abuse in cases involving the Catholic Church and the Boy Scouts of America, among others. What is different now, lawyers involved in diocese cases said, is that many more victims have come forward after more than a dozen states in the past few years relaxed their statutes of limitations on sex-abuse claims, opening temporary look-back windows during which abuse victims could sue even if the abuse happened decades ago. In addition, victims are seeking bigger settlements than in earlier diocese bankruptcies, prompting insurers to fight harder against covering abuse liabilities at these higher levels, lawyers involved in diocese cases said. Sex-abuse lawsuits against the Catholic Church have tipped dozens of dioceses into bankruptcy over the past two decades as they sought to protect church assets from abuse claimants and resolve large numbers of individual claims at once through chapter 11 plans. New York and New Jersey both opened two-year look-back windows for sex-abuse victims in 2019, unleashing waves of abuse litigation in those states. Since then, four dioceses in New York have filed for bankruptcy — Buffalo, Rochester, Syracuse and Rockville Centre on Long Island — as has the diocese in Camden, N.J. Tensions between insurers and victims’ representatives have dominated most of these cases, driving up legal fees and prolonging the dioceses’ stints in bankruptcy, lawyers involved in the cases said.

Parents of children killed in the 2012 Sandy Hook school massacre urged a U.S. bankruptcy judge on Wednesday not to allow the parent company of far-right website InfoWars to send any money to its founder, conspiracy theorist Alex Jones, or his companies until they have an opportunity to get to the bottom of InfoWars' finances, Reuters. reported. As a jury deliberates in Austin, Texas, over how much Jones must pay two parents for his false claims that the deadly shooting was a hoax, families of Sandy Hook victims who have sued Jones for defamation in that trial and others who have sued in Connecticut warned a bankruptcy judge in Houston that Jones might continue to pull assets from InfoWars parent company Free Speech Systems LLC while using its bankruptcy case to avoid paying court judgments in the defamation cases. Marty Brimmage, an attorney for the Sandy Hook parents, told U.S. Bankruptcy Judge Christopher Lopez in Houston yesterday that Jones had told his audience that the bankruptcy would "tie up" any defamation judgment for years. Judges in the Texas and Connecticut cases have already found Jones liable for defamation. The parents in the Texas trial are seeking a judgment of $150 million. Jones testified Wednesday in Austin, admitting that the Sandy Hook shooting was real and that it was "crazy" of him to call it a hoax.

Another Florida insurance company declared bankruptcy, WFLA.com reported. Florida’s insurance commissioner has declared Weston Property & Casualty Insurance insolvent. This comes days after Demotech withdrew the company’s rating. Demotech on Monday also withdrew financial stability ratings for FedNat Insurance Co. and changed United Property & Casualty Insurance Co.’s rating from “A Exceptional” to “M Moderate,” the Associated Press reported. The move raises concerns for homeowners who could end up paying more for insurance amid the state’s ongoing homeowners insurance crisis. The Associated Press reported that the moves follow reports from last month that said Demotech planned to downgrade anywhere from 17 to 27 insurers from an “A” rating to ratings of either “S,” for substantial, or “M.”

Families of Sandy Hook victims who are suing Alex Jones for defamation accused the conspiracy theorist of siphoning significant amounts of money from Infowars’ parent company before he put the business into bankruptcy, the Wall Street Journal reported. Alinor Sterling, a lawyer representing nine Sandy Hook families, said Monday they are concerned Jones “has been systematically siphoning large amounts of money” out of Infowars’ parent company, Free Speech Systems LLC, since her clients sued him in 2018 for falsely claiming the 2012 school massacre was a hoax. FSS, which filed for chapter 11 last week, disclosed in a balance sheet submitted to the bankruptcy court that in 2021 and 2022 it paid more than $62 million in what it described as “member draws,” typically referring to money taken out by owners. FSS said in its bankruptcy petition that Mr. Jones is its sole owner. Lawyers representing Sandy Hook families in a separate fraudulent-transfer lawsuit also said Jones was the only member of FSS that they are aware of. Avi Moshenberg, a lawyer representing families in the fraudulent-transfer action, said Monday during a hearing in the U.S. Bankruptcy Court in Victoria, Texas, that they believe Jones and FSS have diverted assets to shell companies indirectly owned by Mr. Jones and his parents to make him and FSS “judgment-proof” in the defamation litigation.

Families of Sandy Hook school shooting victims have quickly raised the alarm over the latest legal maneuver from far-right radio show Infowars and its proprietor, Alex Jones, Bloomberg News reported. The ultimate parent of Infowars, Free Speech Systems LLC, filed for chapter 11 bankruptcy on Friday just months after three corporate entities linked to Jones did the same in a failed attempt to corral and settle defamation damages owed to Sandy Hook families. In an initial hearing Monday, lawyers for the families expressed concern about the structure of the latest move and its timing — smack in the middle of a two-week trial in Texas that will put a dollar figure on the damages. Free Speech Systems is seeking a special type of bankruptcy protection that allows small businesses to speed through insolvency with relatively little input from creditors. Companies are typically only allowed to utilize that kind of proceeding if they owe less than $7.5 million. The Infowars parent has more than $50 million of debt, much of it owed to an entity owned by founder Alex Jones, according to court papers. Free Speech Systems syndicates the Infowars radio show — in which Jones frequently spouts conspiracy theories — and sells dietary supplements. The company generated revenues of about $65 million in 2021, most of which came from the sale of supplements, to post a net loss of about $11 million, court papers show. A lawyer for the U.S. Trustee, an arm of the Justice Department that polices bankruptcy court, in the hearing said he would urge the judge overseeing the case to slow down the process. “Transparency is 100% crucial in this case,” the lawyer, Ha Minh Nguyen, said. A committee of people suing Jones and Infowars may need to be formed in the bankruptcy, Nguyen added.

The Boy Scouts of America has a pathway out of bankruptcy, but the group faces challenges in repairing its finances and reputation after resolving a legacy of sexual abuse, WSJ Pro Bankruptcy reported. A bankruptcy court last week approved most parts of a landmark compensation plan of at least $2.5 billion that would end the Boy Scouts’ chapter 11 case and resolve roughly 82,200 individual claims of sexual abuse. An exit from chapter 11 would shield the Boy Scouts from further sex-abuse lawsuits, while testing whether it can still appeal to families despite its past failures to protect children. The chapter 11 case was the largest and most complex bankruptcy case filed to resolve mass claims of sexual abuse. Adult survivors wrote hundreds of letters to the bankruptcy court, recounting lives twisted by childhood abuse and detailing their views of the proceedings. News of the courtroom battles between the Boy Scouts and abuse survivors filtered down to scouting communities and families, fueling doubts about the organization as it tried to hammer out settlements that would ensure its survival. Now the group is close to emerging from bankruptcy, low on cash but retaining much of its prized property holdings and adventure camps. The group is hoping for a chance to start fresh, but faces longer-term challenges from declining membership. “The Boy Scouts can earn back trust and respect over time, but this change won’t be easy and will likely need to be measured in decades,” said Michael Bellavia, chief executive of HelpGood, a Los Angeles marketing agency focused on social impact. The chapter 11 plan keeps the Boy Scouts’ roughly 250 affiliated local councils safe from future sex-abuse lawsuits, and protects recruiting pipelines from civil and religious partner groups. The organization’s national governing body based in Irving, Texas, and local councils across the country are together contributing roughly $800 million. Contributions from insurance companies and troop sponsors bring the total victim compensation to more than $2.5 billion. An earlier total was roughly $2.7 billion but Judge Laurie Selber Silverstein struck down a $250 million settlement with the Church of Jesus Christ of Latter-day Saints, declining to grant the institution the releases that would shield it from further sex-abuse lawsuits.