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FTX founder Sam Bankman-Fried is expected to return to a New York courtroom Wednesday for a rare appearance since his November conviction over a multibillion-dollar fraud on cryptocurrency customers, Bloomberg News reported. Bankman-Fried is slated to answer questions from a federal judge as to whether he is aware of potential conflicts of interest for the lawyers he hired last month to represent him at sentencing on March 28. His new attorneys also represent another crypto mogul, former Celsius Network Ltd. Chief Executive Officer Alex Mashinsky. Earlier this month, prosecutors asked U.S. District Judge Lewis Kaplan to question Bankman-Fried about possible conflicts for attorneys Marc Mukasey and Torrey Young. The government wants to determine if Bankman-Fried is willing to waive his Sixth Amendment right to effective assistance of counsel, given the lawyers represent Mashinsky in a separate criminal case related to the collapse of Celsius. Bankman-Fried faces as long as 20 years in prison for the most serious charges for which he was convicted. Prosecutors noted Mashinsky has partially blamed Celsius’s bankruptcy on actions taken by Alameda Research, a hedge fund linked to Bankman-Fried’s FTX crypto exchange, and that the lawyers’ use of some records could be limited. When Celsius filed for bankruptcy in 2022, Alameda was among its top creditors, court filings show.

The families of Sandy Hook school shooting victims voted overwhelmingly in favor of a plan to wrap up Alex Jones’ bankruptcy proceedings by liquidating the right wing talk show host’s assets, Bloomberg Law reported. Jones’ general unsecured creditors — comprised mostly of Sandy Hook families holding about $1.5 billion in defamation judgments against the famed conspiracy theorist — voted 100% in favor of a chapter 11 plan that would methodically liquidate and redistribute his property and cash, while preserving potential legal actions against parties affiliated with Jones and his Infowars program. An official committee appointed to represent Jones’ unsecured creditors notified the U.S. Bankruptcy Court for the Southern District of Texas on Feb. 16 that of 23 liquidation plan ballots distributed to creditors, it received 21 back — all supporting the committee’s liquidation proposal. The vote indicates the creditors’ preference over a competing plan submitted by Jones that would allow him to reorganize by preserving parts of his media empire and paying the group at least $5.5 million a year over 10 years. His plan would provide additional creditor recoveries out of disposable income from Jones’ bankrupt Infowars parent company, portions of Jones’ personal income, and the proceeds from selling various personal assets.

The U.S. Justice Department’s bankruptcy watchdog accused Sorrento Therapeutics lawyers of submitting false paperwork to justify the company’s chapter 11 filing in Houston, saying that the mailbox location it cited as a principal place of business was created only hours ahead of its bankruptcy, WSJ Pro Bankruptcy reported. Kevin Epstein, the U.S. trustee for the Southern District of Texas, said that on Feb. 12, 2023, a lawyer for Sorrento rented a mailbox at a UPS in the Woodlands, a Houston suburb, on behalf of Scintilla Pharmaceuticals, a Sorrento subsidiary. Both Sorrento and Scintilla are based in San Diego. Scintilla wasn’t registered or licensed to do business in Texas, Epstein said. It had been dormant since about 2019, with no employees or business operations, and its only asset was a $60,000 bank balance that Sorrento had wired to it days before the bankruptcy filing, he said. Ten hours after establishing the mailbox, Scintilla filed its chapter 11 petition in the U.S. Bankruptcy Court in Houston stating that the mailbox was its principal place of business, while still listing its San Diego office as its mailing address, court records show. Sorrento, Scintilla’s parent company, then filed its own chapter 11 petition in Houston. The Scintilla petition was signed by Henry Ji, Sorrento’s chief executive, and Matthew Cavenaugh, a partner at the Texas law firm Jackson Walker. Veronica Polnick, another partner at Jackson Walker, rented the mailbox on behalf of Scintilla, Epstein said.

A bankruptcy judge has ruled that Rudy Giuliani, the once-respected former mayor of New York City, can appeal the $146 million verdict after he was found liable of defaming two Georgia elections workers — if he uses pre-approved donors to pay the legal expenses, NBCNews.com reported. In December, an eight-person jury awarded Ruby Freeman and her daughter, Wandrea "Shaye" Moss, the multimillion-dollar judgment after Giuliani was found to have defamed them, which the mother-daughter duo said had changed their lives forever and caused them to be flooded with a torrent of racist and violent threats. Giuliani baselessly accused them of trying to commit fraud in Georgia as part of a multifaceted effort to overturn Donald Trump's 2020 election defeat. Giuliani filed for bankruptcy in New York in December after the federal judge in his Washington case ordered him to start paying the Georgia election workers. On Tuesday, the bankruptcy judge assigned to Giuliani's case in New York said the former mayor must seek the judge's approval before any third-party payment of fees and expenses. Those fees cannot come from Giuliani's existing assets, the judge said. "Any fees and expenses incurred by the Debtor and his advisors in the Freeman Litigation in connection with any Post-Trial Filings and the Notice of Appeal shall not be paid by, and shall not result in a claim against, the Debtor or his estate," U.S. Bankruptcy Judge Sean Lane wrote. In a court filing last week, Freeman and Moss noted that Giuliani's son was president of Giuliani Defense, a legal defense fund, and said it was "essential to obtain clarity on how the Legal Defense Funds were themselves funded." On Monday, Giuliani declared that he had not directly or indirectly donated any money to either of his legal defense funds.

The Archdiocese of Santa Fe is being accused of reneging on a promise to publicly post the names of clergy who were accused of child sexual abuse in claims submitted during its long-running chapter 11 bankruptcy reorganization, the Albuquerque Journal reported. Lawyers for a woman who contends she was first abused as a child in 1957 by the Rev. Richard Spellman say church officials are violating the terms of the bankruptcy settlement agreement that ended the case in December 2022. The archdiocese agreed to pay $121 million to 400 or so sex abuse survivors who submitted claims in the case. But archdiocese attorneys have disputed the notion that the settlement also requires disclosure of alleged perpetrators whose names surfaced during the confidential claims process. They contend that the archdiocese is required by the agreement to list on its website the names of "all known past and present clergy perpetrators of ASF who have been determined by the Archbishop in consultation" with an independent review board to be credibly accused of sexual abuse. Levi Monagle, one of the attorneys representing Mela LaJeunesse, filed a motion Tuesday disputing that interpretation and asked the U.S. Bankruptcy Court in New Mexico to intervene.

Supreme Court Justice Samuel Alito on Friday temporarily halted the Boy Scouts of America's $2.46 billion settlement of decades of sex abuse claims, which is being appealed by a group of 144 abuse claimants, Reuters reported. Alito's brief order freezing the settlement gives the court more time to decide a Feb. 9 request by these abuse claimants to block the settlement from moving forward. They contend the deal unlawfully stops them from pursuing lawsuits against organizations that are not bankrupt, such as churches that ran scouting programs, local Boy Scouts councils and insurers that provided coverage to the Boy Scouts organization. Justice Alito stepped in to halt the settlement because he handles certain requests involving cases from a group of states including Delaware, where the Boy Scouts matter was decided. The settlement involves more than 82,000 men who have said they were abused as children by troop leaders while in the Boy Scouts. Doug Kennedy, an abuse survivor who co-led the official committee representing abuse claimants in the bankruptcy, called the delay a "horrible" result. Survivors have already waited for decades for their abuse to be addressed, and 86% of abuse survivors voted to support the Boy Scouts settlement in bankruptcy court, Kennedy said. The trustee in charge of administering the Boy Scouts settlement, retired bankruptcy judge Barbara Houser, said Alito's order will suspend all work on the settlement, including evaluating claims and mailing checks to abuse survivors. The settlement trust has already paid nearly $8 million to more than 3,000 men. The Boy Scouts of America noted that Alito's order was only a short-term measure and said that it hopes the Supreme Court will swiftly deny the request for a longer pause, which would "inflict severe harm on both the Scouting movement and Scouting-abuse survivors."

FTX investors sued Sullivan & Cromwell, accusing the law firm of aiding illicit schemes that helped advance a multi-billion dollar fraud before the crypto exchange’s collapse, Bloomberg News reported. Sullivan & Cromwell’s services “went well beyond those a law firm should and ordinarily provides,” the investor complaint said. “Lawyers were eager to craft not only creative but misleading strategies that furthered FTX’s misconduct.” The lawsuit filed on Friday on behalf of a proposed class of FTX customers adds to scrutiny of the elite Wall Street law firm that has acknowledged working on 20 legal matters for FTX and its founder Sam Bankman-Fried in the 16 months before the exchange’s 2022 implosion amid reports of a liquidity crisis. The Moskowitz Law Firm, which is behind actions against Tom Brady and other celebrity endorsers of FTX, brought the suit in Miami federal court. The firm “actively participated” in the FTX fraud through legal work that gave it deep insight into the exchange’s inner workings, investors allege. Firm lawyers knew where customer money was held and about the “untruthful and fraudulent conduct and misappropriation” of the money, the investors claim. The lawsuit makes Sullivan & Cromwell the second law firm to face an investor litigation over allegedly aiding and abetting the FTX fraud. Fenwick & West, a Silicon Valley law firm which worked as the crypto exchange’s main corporate counsel, is facing a separate action along with venture and private equity firms such as Sequoia Capital, Thoma Bravo and Paradigm. Bankman-Fried in November was convicted of fraud and conspiracy for siphoning customer money into an affiliated hedge fund for risky investments, political donations, and expensive real estate.

Liquidators of companies linked to the 1Malaysia Development Bhd scandal have filed for chapter 15 under the U.S. Bankruptcy Code, as they look to recover assets, Bloomberg News reported. A petition listing 1MDB Energy Holdings Ltd, Platinum Global Luxury Services Ltd, Aabar International Investments PJS Ltd, Blackrock Commodities (Global) Ltd, and Alsen Chance Holdings Ltd — all registered in the British Virgin Islands — was submitted in the Southern District of Florida court, dated Feb. 15. Liquidators said that the companies were subject to proceedings in the British Virgin Islands and made the U.S. petition because they hope to obtain information on the misappropriation of funds, according to the documents. Malaysia’s 1MDB investment fund became the center of a multibillion-dollar scandal that has spawned investigations around the world into deal-making, election spending and political patronage under former Prime Minister Najib Razak. The filing said that all five firms in question “acted as conduit for funds” from 1MDB to other entities and individuals.

The Boy Scouts of America asked the U.S. Supreme Court to reject a plea by some sex-abuse victims to put on hold a $2.4 billion settlement that allowed the youth organization to exit bankruptcy last year, WSJ Pro Bankruptcy reported. In a response filed late Thursday, lawyers for the Boy Scouts said that putting a stop to the distribution of funds to abuse victims that got under way last year would be unfair to the more than 99% of survivors who are not seeking to stay the Boy Scouts’ chapter 11 plan. A fraction of more than 82,000 survivors who filed sex-abuse claims against the organization asked the Supreme Court in recent weeks to suspend settlement payments while the court reviews a challenge to opioid maker Purdue Pharma’s bankruptcy plan. Lawyers pushing to pause the Boy Scouts settlement payments argued that a central feature of the Boy Scouts deal is similar to Purdue Pharma’s chapter 11 plan that is under an expedited review in the U.S. Supreme Court. Both restructuring plans would grant legal immunity to third parties who themselves didn’t file for bankruptcy but have close ties to the organizations. The Purdue settlement releases the company’s Sackler family owners from future liabilities related to opioid addiction in return for payments of up to $6 billion over time. Similarly, the Boy Scouts settlement shields the youth organization’s local councils and its partner organizations, which sponsor most scouting activities, from future sex-abuse claims.

Robertshaw U.S. Holding has filed for bankruptcy as the appliance parts maker seeks to cut debt by roughly $670 million and resolve lender litigation, WSJ Pro Bankruptcy reported. The company, owned by One Rock Capital Partners, has a proposed restructuring agreement to be acquired by a group that includes secured lenders Bain Capital, Eaton Vance and Canyon Partners, according to a Thursday filing in the U.S. Bankruptcy Court in Houston. Robertshaw also will consider other offers through a court-supervised sale process. The deal would need court approval to take effect. Robertshaw owes $833 million to secured lenders, as well as $37 million to vendors and services suppliers, the court paper shows. Besides “looming maturities and a challenging capital structure,” Robertshaw is still dealing with the enduring impact of pandemic-era product shortages and supply-chain disruptions, Chief Executive John Hewitt said in a sworn declaration. Also, a relocation of a major product line that was intended to reduce costs instead created inefficiencies, which actually increased costs, Hewitt said. Robertshaw hopes to resolve lawsuits filed last year by creditors left behind from financing deals the company made earlier 2023. Robertshaw said it is suing Guardian Life Insurance and Invesco during its bankruptcy proceedings, seeking a ruling that its 2023 transactions were valid.