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Millions of customers of crypto platforms Voyager Digital Holdings Inc. and Celsius Network LLC have been thrust into a potentially long and painful battle in bankruptcy trying to retrieve their money, WSJ Pro Bankruptcy reported. The chapter 11 filings of crypto brokerage Voyager and nonbank lender Celsius 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. Jess Archer, a 45-year-old single mom to two children, deposited $70,000, a sizable portion of her savings, with Voyager in May and June. She was drawn by the firm’s offer of a 9% interest rate, hoping the profit could help her make a down payment on a new house. When Voyager filed for bankruptcy, “I spent two days crying and blaming myself,” said Archer. Voyager has said that recoveries for customers can include a combination of crypto, shares in the reorganized company and maybe some tokens. It has also made it clear that the account holders will be “impaired,” an outcome that could include not getting all of their money back. Archer said that she believes it is unlikely that she will get anything back even though Voyager has received court approval to pay employees and professionals. While she still thinks crypto is a viable alternative to fiat currency like the U.S. dollar, her experience has led her to believe that more government oversight is needed so history doesn’t repeat itself. Joshua Sussberg, a lawyer who represents both Voyager and Celsius, said while the decision to halt trading services and freeze withdrawals was difficult for the companies, “it was necessary to preserve investments and ensure equal treatment of all customers.” But now the focus is to work with customers, through officially appointed committees of customers, to maximize value for them, he said. “All is not lost. On the contrary, it is our job to get customers as much value back as quickly as we can,” Sussberg said. In recent weeks, Voyager has asked for a bankruptcy court’s permission to honor customer withdrawal requests for some $350 million in cash funds held in custody at the 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.

The parent of far-right conspiracy website InfoWars filed for U.S. bankruptcy protection on Friday as the company and its founder Alex Jones face up to $150 million in damages in a trial over longstanding falsehoods he perpetuated about the Sandy Hook elementary school massacre, Reuters reported. The bankruptcy filing by the InfoWars parent, Free Speech Systems LLC, would normally result in the trial and related litigation being halted. But Free Speech plans to ask a bankruptcy judge to allow the trial currently underway in Texas to continue and is seeking an emergency hearing on Monday, according to a court filing. Nevertheless, Jones and his company could later attempt to use the bankruptcy proceedings, commenced in another Texas court, to limit the size of any damages a jury awards. A bankruptcy filing by three other InfoWars entities in April proposed $10 million to resolve the litigation, far less than what the Sandy Hook families are seeking. The proposal contemplated legal releases shielding Jones and his company from the lawsuits in exchange for the payment. The entities that previously declared bankruptcy - InfoW, IW Health and Prison Planet - voluntarily ended their cases in June after the Sandy Hook families dropped them as defendants in the defamation litigation. Jones was found liable last year in lawsuits Sandy Hook families filed after he falsely claimed that the 2012 school massacre was a hoax. The unusual judgments occurred after Jones defied court orders to turn over documents in the litigation. The cases were then teed up for trials to determine damages, with the first one now underway in an Austin, Texas, courtroom.

A bankruptcy judge on Friday accepted most of the Boy Scouts of America’s $2.7 billion plan for compensating sex-abuse victims, setting the youth group on a path out of the largest chapter 11 case involving childhood abuse, WSJ Pro Bankruptcy reported. Judge Laurie Selber Silverstein in the U.S. Bankruptcy Court in Wilmington, Del., endorsed the key elements of the settlement plan, concluding that it would pay off in full roughly 82,200 individual claims of sexual abuse against the Boy Scouts. She stopped short of granting formal approval to the bankruptcy plan, rejecting some aspects and requiring more information on others. But she broadly endorsed the Boy Scouts’ plan for compensating abuse survivors by seeking contributions from the organization’s local councils, insurers and partner organizations, in return for grants of legal immunity from further abuse-related claims. “Many survivors have been waiting for thirty, forty or even fifty years to tell their stories and receive a meaningful recovery,” the judge said. “This plan makes that happen.” Pending final approval, the bankruptcy plan is expected to end more than two years in chapter 11 where the Boy Scouts dealt with the competing interests of abuse survivors, its liability insurers, and its affiliates and partner organizations. Under the chapter 11 plan, roughly 250 local Scouts councils and partner groups, the lifeblood of scouting activities, will gain legal immunity from related sex-abuse claims by contributing to a settlement fund, the largest ever created to pay sex-abuse victims. Abuse victims, many of whom had lived with the trauma of childhood abuse for decades before stepping forward to file claims in the bankruptcy case, could start to see money flowing within 12 months. Judge Silverstein said on Friday that some aspects of the bankruptcy plan don’t pass muster, and that the Boy Scouts have “decisions to make” about how to proceed.

Johnson & Johnson’s bankrupt subsidiary won court permission to set a price tag on mass litigation linking the company’s talc-based baby powder to cancer, the latest setback for injury claimants who argued the estimation would be “a road to nowhere,” WSJ Pro Bankruptcy reported. Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., said yesterday that he has retained an outside expert to conduct an independent valuation of the roughly 38,000 cancer lawsuits pending against J&J and its talc subsidiary, LTL Management LLC, as well as any additional injury claims that could be brought against the company. The expert, lawyer Kenneth Feinberg, has mediated some of the largest product-liability cases in U.S. history, including the $20 billion settlement related to the BP PLC oil spill. Feinberg is slated to issue a report before Judge Kaplan rules on how much talc-injury claimants are owed. LTL has said estimating the valuation of the lawsuits would move its chapter 11 case forward and foster settlement talks to help resolve the litigation. Judge Kaplan agreed, saying yesterday that Feinberg’s report would aid settlement discussions and rejecting injury claimants’ argument that an estimation proceeding would stall the case. Judge Kaplan said that he wouldn’t set a deadline for Mr. Feinberg to produce his report but that he anticipates he will receive the report “before the weather starts getting cold.”

The federal judge administering more than 230,000 lawsuits against 3M Co. questioned whether the industrial giant acted in good faith when it decided to try to shift the cases to bankruptcy court instead of facing separate jury trials around the U.S., Bloomberg News reported. U.S. District Court Judge M. Casey Rodgers of Pensacola, Fla., held a hearing Wednesday morning about 3M’s decision to put its Aearo Technologies unit into bankruptcy as a way to resolve the lawsuits, which accuse 3M of selling faulty combat earplugs that harmed U.S. soldiers, according to court records. During the discussion, Rodgers said she plans to hold a hearing on whether 3M was acting in good faith during mediation to resolve the lawsuits overseen by one federal court while also preparing to force the same claims into bankruptcy in another federal court, according to a transcript of the hearing. Lawyers for the veterans have attacked 3M’s decision to put Aearo into bankruptcy, saying it is a ploy to deny victims of a faulty product the chance to make their cases to juries. 3M has lost 13 of the 19 test cases that have gone to trial. 3M is not in bankruptcy, but argues it should be protected along with its Aearo subsidiary. 3M plans to funnel $1 billion to a trust that would pay people suing over the earplugs and has set aside $240 million to fund the bankruptcy itself. The strategy is similar to those proposed by other lawsuit-addled companies like Johnson & Johnson and Purdue Pharma LP. In a separate court hearing Wednesday afternoon, U.S. Bankruptcy Judge Jeffrey J. Graham in Indianapolis warned lawyers for Aearo that at least part of their argument for an emergency court order blocking the veterans’ claims is not persuasive.

Liquidators overseeing the wind-down of Three Arrows Capital may soon try to force founders Kyle Davies and Su Zhu to help clean up the mess left behind by the crypto hedge fund’s collapse, Bloomberg News reported. Zhu and Davies have so far provided “rather selective and piecemeal disclosures” about the fund’s assets, attorney Adam Goldberg said on behalf of the liquidators in a bankruptcy hearing Thursday. Without further cooperation, lawyers will try to compel the founders to turn over more information with assistance from Bankruptcy Judge Martin Glenn, he said. “The founders have not made themselves available for any discussions or interviews with the liquidators, whether formal or informal,” Goldberg told Judge Glenn in a hearing yesterday. “They do continue to conceal their whereabouts.” The liquidators -- appointed by a judge in the British Virgin Islands -- have so far gained control of more than $40 million of the fund’s assets. But that’s a drop in the bucket compared to what Three Arrows owes creditors -- more than $2.8 billion of claims are already on file, and the figure is expected to rise significantly. The liquidators expect to ask Glenn for help compelling Zhu and Davies to hand over information in the coming days, Goldberg said.

3M Co. placed its subsidiary that houses its military-grade earplug business into bankruptcy proceedings as it booked a $1.2 billion charge to resolve litigation over alleged defects that are the subject of lawsuits from thousands of military veterans, the Wall Street Journal reported. The move yesterday came as the maker of Scotch tape, Post-It notes and more reported a drop in second-quarter revenue and profit. It cut its full-year sales and earnings outlook as it grapples with a stronger dollar and an uncertain economic environment that impacts consumer spending patterns. The company also disclosed plans to spin out its health care business into a separate, publicly traded company. 3M, based in St. Paul, Minn., said that its Aearo Technologies unit and related business have started chapter 11 proceedings. It has committed $1 billion to fund a trust to pay out claimants during the proceedings and $240 million to fund expected expenses related to the case. 3M said it would provide more funding if required.

The Roman Catholic Diocese of Rochester, N.Y., on Friday objected to nearly 100 claims filed by sexual-abuse survivors in its ongoing chapter 11 bankruptcy, a move that could shave tens of millions off any payout it makes in the case, the Rochester Beacon reported. The objections come late in the nearly three-year-old case and long after the claims were first filed. They also come as tensions between survivors and the diocese build as both sides joust over a settlement offer that survivors scorn as too little, too late. In the offer, the diocese proposes to pay survivors a total of $145.75 million, with its insurance carriers covering $105 million of that amount. Scorning the claim objections as raised on legal technicalities and a contradiction of Rochester Diocese Bishop Salvatore Matano’s professed concern for survivors, an attorney representing survivors in the case vowed to vigorously fight the objections. Such objections in diocesan bankruptcies are “unheard of and a pretty big deal in my opinion,” said Leander James, an attorney representing 76 abuse survivors in the Rochester Diocese bankruptcy. In a statement, the diocese says that it does not question the veracity of survivors’ claims but maintains that it is not responsible for acts committed by parties not legally tied to the diocese, and thus needs to object to the claims as part of its “fiduciary responsibility.” As of July 22, the diocese had filed 97 claim objections. If all were to be disallowed, it would reduce the diocese payout by as much as $30 million.