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A Texas bankruptcy judge denied the Justice Department’s motion seeking to dismiss or transfer the Sorrento Therapeutics chapter 11 case, ruling a bank account and mailbox the company’s lawyers established justified its bankruptcy petition in Houston days later, WSJ Pro Bankruptcy reported. Judge Christopher Lopez of the U.S. Bankruptcy Court in Houston on Monday said the motion filed by the U.S. trustee for the Southern District of Texas last month and a similar motion filed by a shareholder weren’t timely, as the case had already been pending for more than a year. Sorrento’s bankrupt subsidiary Scintilla Pharmaceuticals’ representation about the mailbox being its principal place of business had been public ever since it filed the petition last February, the judge said. The judge also said that if the case was transferred to a different state, it would take a long time for another judge to get up to speed on it, and he didn’t think that was in the best interest of the administration of justice. The U.S. trustee, which serves as a bankruptcy watchdog on behalf of the Justice Department, submitted a motion before Monday’s court hearing, arguing that Sorrento was a “case of forum shopping and venue manipulation taken to a new and unprecedented extreme.”

Endo International’s restructuring plan offers creditors a choice to continue legal battles against the opioid maker and related parties, an option not available in other recent bankruptcy plans that have faced legal challenges for taking away the right to sue, WSJ Pro Bankruptcy reported. Endo’s plan, which aims to resolve a multitude of personal-injury claims stemming from the impact of the opioid maker’s painkillers and other products, would pay more to creditors who agree to relinquish litigation rights. But those who want to continue fighting for more money in court would be allowed to do so if they accept a smaller upfront payment. This two-tiered payout option was added to Endo’s chapter 11 plan after a creditors committee rejected an earlier offer to pay only those who agreed to sign legal releases, and as bankruptcy plans granting such broad releases to companies — and to related third parties not in bankruptcy — have faced scrutiny. Malvern, Pa.-based Endo filed for bankruptcy in 2022 under the weight of thousands of lawsuits from individuals, state and local governments, and private institutions that alleged the company’s Opana ER painkiller helped fuel the nation’s opioid epidemic. Unlike most chapter 11 plans addressing similar personal-injury litigation that have been approved, Endo’s plan won’t provide blanket releases to third parties such as company executives and lenders that aren’t in bankruptcy themselves, lawyers involved in the case said. Instead, Endo’s restructuring plan contains a provision that allows its creditors, including thousands of people who suffered the effects of the opioid epidemic, to continue to litigate against the company, its executives and the lenders who would become the new owners of the restructured company after bankruptcy. The creditors would receive higher monetary awards if they choose to sign away their right to sue.

A federal appeals court on Friday revived a lawsuit where investors accused Binance, the world's largest cryptocurrency exchange, of violating U.S. securities laws by selling unregistered tokens that lost much of their value, Reuters reported. In a 3-0 decision, the 2nd U.S. Circuit Court of Appeals in Manhattan said investors in the proposed class action plausibly alleged that domestic securities laws applied because their purchases of tokens had become irrevocable in the United States once they paid for them. Circuit Judge Alison Nathan said Binance's use of domestic Amazon computer servers to host its platform supported this outcome, given how Binance "notoriously denies the applicability of any other country's securities regulation regime." The appeals court also said investors could pursue claims arising from purchases made within the year before they sued. Friday's decision reversed a March 2022 ruling by U.S. District Judge Andrew Carter in Manhattan, and returned the case to him.

Rite Aid, the drugstore chain that filed for bankruptcy late last year to seek relief from mass opioid-related lawsuits, is delaying severance payments to employees who were laid off, WSJ Pro Bankruptcy reported. The email sent on Thursday said that Rite Aid has made “difficult decisions” over the course of its restructuring, including store closures and reductions in force, and that the company “must now take another difficult action to further preserve cash in the short-term.” The Philadelphia-based company said in a statement Friday that “we have resolved the matter and are resuming severance payments.” “Those who were impacted are being notified and can expect to receive their payments by the middle of next week,” the company said.

While rivals Walmart Inc., CVS Health Corp. and Walgreens Boots Alliance Inc. agreed to pay more than $13 billion combined to settle opioid lawsuits, Rite Aid never reached a similar accord before its bankruptcy filing put litigation on hold, Bloomberg News reported. The company told opioid plaintiff lawyers it didn't have the funds. And unlike drugmakers that have gone bankrupt, the retailer doesn’t expect it will wind up with any money to pay opioid victims. “Bankruptcy is perceived as a strategic tool that provides enormous leverage in negotiations with injured people,” said Melissa Jacoby, a law professor at University of North Carolina Chapel Hill. "It’s a real problem that bankruptcy is being used this way, even when a company has other financial problems.” Rite Aid’s restructuring talks have focused on how much it can afford to repay its secured creditors before either selling itself or reorganizing into a new company, immune from future opioid lawsuits. Last year, Rite Aid filed for Chapter 11 bankruptcy, listing debts of $8.6 billion, close to $1 billion more than the value of its assets at the time. The company got a new $200 million loan in Chapter 11 and continued access to an existing credit line from a group of its secured lenders after it agreed to bump up more than $3 billion of their old debt in the repayment line. Rite Aid is still trying to sell its retail business. But its back-up plan involves shedding a lot of debt, shutting down more than 600 stores and giving the remaining pharmacy business a fresh start. Mediated talks with the committee of mass tort claimants are ongoing, so their outcome could change if a deal is struck. But Rite Aid said in court papers as recently as Feb. 20 it doesn’t expect for there to be any money left for opioid plaintiffs after paying higher-ranking debts.

Wine enthusiasts shopped at the Underground Cellar online marketplace not only to build their collections but because it would store their purchases in a climate-controlled warehouse in California’s Napa Valley. When the San Francisco-based merchant abruptly shut down and filed for bankruptcy last year, half a million bottles of wine valued at roughly $11 million were trapped in the warehouse known as CloudCellar, touching off a monthslong battle to free the red, white and bubbly that about 25,000 customers had already paid for, WSJ Pro Bankruptcy reported. Launched in 2014, Underground Cellar cultivated followers across the U.S. through its gamelike online platform that provided shoppers with frequent upgrades to higher-priced wine, “blowout” deals and coupons. To boost sales, the startup stored the purchased wine free of charge. Clients could receive shipments from their collections at no cost if they put together a 12-bottle package. After a battle with one of the company’s top lenders, which laid claim to the inventory, customers are finally getting their hands on some of the bottles, but it has been a winding journey and, for some, there were thousands of dollars in unexpected fees and shipping costs. “I did not think I was going to get any wine back. I pretty much assumed it’s all gone,” said Bradley Coppella, who lives in Philadelphia and had about 180 bottles of wine in storage, including a couple of bottles of Barolo that had been aging in the cellar since 2015. Underground Cellar shut down in April 2023 and filed for chapter 7 liquidation on May 1. The company had taken out an $8 million loan in 2022 from TriplePoint Capital, a lender to venture capital-backed companies. TriplePoint said in a filing with the Wilmington, Del., bankruptcy court that Underground had defaulted on the loan.

Barry Silbert and his Digital Currency Group are seeking dismissal from New York state’s $3 billion civil lawsuit over a failed crypto lending program, saying their alleged role in the matter rests on a “thin web of baseless innuendo,” Bloomberg News reported. The suit, filed last year, accuses DCG and Silbert of misleading customers about the safety of the now-defunct program, called Gemini Earn, which was a venture between DCG’s Genesis Global Capital unit and crypto exchange Gemini Trust Co., founded by brothers Tyler Winklevoss and Cameron Winklevoss. In a filing Wednesday in Manhattan, DCG said it should be dismissed from the case, arguing that its only connection to the alleged fraud against Gemini Earn customers boils down to “vague” statements and a few “retweets” surrounding its effort to support Genesis during the 2022 crypto crisis. “If this case proceeds, the facts will show that DCG did nothing wrong, and that it acted properly, with the best of intentions, based on the sound, considered advice of accountants, investment bankers, consultants and other advisors from elite firms with the highest of reputations,” DCG said in the filing. A representative for New York Attorney General Letitia James, who filed the suit, referred on Wednesday to an earlier statement about the case, when the state said it had “pulled the curtain back” on DCG. The suit was initially filed in October seeking $1.1 billion. It was amended in February to seek another $2 billion in restitution after James said additional DCG investors had come forward to claim they were misled about the safety of their investments. The amended suit didn’t include new allegations against Gemini. The state accuses Gemini and Genesis of failing to disclose to investors the risks of Gemini Earn, which they started in 2021. In February, Genesis Global Holdco LLC, the holding company for the DCG unit, settled with the state, which claimed the bankrupt crypto lender had defrauded Gemini Earn customers.

The latest trial over claims that Johnson & Johnson's talc products cause cancer ended in a mistrial on Tuesday, as a Florida state court jury said it could not agree on a verdict, Reuters reported. The lawsuit was brought by Bob Sugarman, who said that J&J's talc-based baby powder led his wife to develop ovarian cancer and die from the disease. J&J said in a statement after the mistrial that its baby powder "is safe, does not contain asbestos and does not cause cancer." J&J faces more than 50,000 lawsuits over talc, most by women with ovarian cancer, with a minority of the cases involving people with mesothelioma. The cases were on hold for about two years as J&J unsuccessfully tried to resolve them through bankruptcy.

The founder of a small Florida hedge fund could be jailed for refusing to reveal where Indian tech firm Think & Learn Pvt allegedly hid $533 million that lenders are trying to recover, according to a federal judge, Bloomberg News reported. William C. Morton could be locked up for contempt of court if he can’t explain why he disobeyed a court order to provide details about the money, which was briefly placed with his hedge fund, Camshaft Capital Fund. Bankruptcy Judge John Dorsey scheduled a hearing for later this month in Delaware to decide what should happen to the founder for defying a court order. “I want to make sure it is absolutely clear to Mr. Morton that one of the possible remedies is civil confinement if he doesn’t comply,” said Judge Dorsey, referring to the federal rules that allow judges in non-criminal cases to jail people. Morton has recently hired criminal lawyers to represent him, Pieter Van Tol, one of his attorneys, told Judge Dorsey during a bankruptcy hearing Monday. Dorsey said he warned the hedge fund founder during a hearing last week that “it would be in his best interest” to attend today’s proceeding in Wilmington, Del. Instead, Morton left the country during the middle of last week’s hearing, Van Tol told Judge Dorsey. “We advised Mr. Morton that he should produce the information, that he should produce the documents and he declined,” Van Tol said during Monday’s hearing.

The lawyer responsible for guiding Alex Jones' media company through bankruptcy will ask a judge for permission to drop out of the case at a court hearing next week, saying that he has irreparable disagreements with the company's management, Reuters reported. Bankruptcy Judge Christopher Lopez in Houston, Texas, said on Friday that he would convene an emergency hearing on March 11 to consider a request by Ray Battaglia, who has been lead bankruptcy counsel for Infowars' parent company Free Speech Systems since 2022 after Battaglia said his relationship with the company's chief restructuring officer, Patrick Magill is "fundamentally broken." Magill, who is in charge of day-to-day operations at FSS, has withheld Battaglia's legal fees for January and February as "blatant retaliation" for a Jan. 25 disagreement about whether or not FSS should pursue litigation over a legal claim, Battaglia said in a Feb. 29 court filing. Battaglia did not describe the legal claim, but he said that pursuing it would be "ill advised." FSS and Jones filed for bankruptcy after being sued over Jones' repeated lies about the 2012 Sandy Hook elementary school massacre.
A judge has since ruled that Jones cannot use his personal bankruptcy to avoid paying at least $1.1 billion in defamation verdicts that the families have won against Jones in court cases in Connecticut and Texas. The families of the Sandy Hook shooting victims have voted for a bankruptcy plan that would liquidate Jones' assets, if approved in court.