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Creditors filed a lawsuit against Mexican multimedia conglomerate TV Azteca S.A.B. de C.V., controlled by business mogul Ricardo Salinas Pliego, after the company skipped out on payments to U.S. based investors for over a year while continuing to pay other debts in Mexico, WSJ Pro Bankruptcy reported. A trustee representing TV Azteca’s largest U.S.-based creditors, including Fidelity Investments Inc., Contrarian Capital Management LLC and Cyrus Capital Partners LP, asked for roughly $480 million in owed payments and additional damages after negotiations over a payment plan for the company’s foreign debts fell through. The trustee said in its complaint that it had demanded full repayment from the company earlier this year after it missed three interest payments, but TV Azteca hasn’t responded to its requests. In a statement, TV Azteca said that it has maintained dialogue with bondholders and “will continue to do our best to pursue a dialogue that allows all parties to reach a favorable agreement.” “Over the last years, we have carried out a disciplined and healthy financial strategy, thanks to which we have strengthened our capital structure and remained competitive in such complex and challenging times,” the company added. The case was filed in New York state court, which creditors say is the appropriate jurisdiction since their dollar-denominated debts are governed by New York law. Earlier this month, lenders to the multimedia company demanded full payment under a $400 million dollar-denominated bond following more than a year’s worth of missed payments. Fitch Ratings said the company had defaulted on its debt obligations in the spring of 2021, when it first stopped making payments on its foreign debts while continuing to pay local creditors.

Sandy Hook victims’ families asked a federal bankruptcy court on Thursday to order the Infowars conspiracy broadcaster Alex Jones to relinquish control over his company, saying he has “systematically transferred millions of dollars” to himself and his relatives while claiming to be broke, the New York Times reported. In a filing in the bankruptcy court in Houston, the families of nine Sandy Hook victims said they sought to have a bankruptcy trustee who is already monitoring the case take control of Free Speech Systems, the parent company of Mr. Jones’s misinformation-peddling media outlet. The families are also seeking a court-appointed oversight committee to restrict Jones’s ability to control Infowars’s finances. Jones’s claimed insolvency is at the heart of his efforts to avoid paying for the damage done by his Sandy Hook lies. Earlier this month, a Texas jury ordered him to pay the parents of a child killed in the 2012 Sandy Hook school shooting nearly $50 million in compensatory and punitive damages for spreading the falsehood that they helped stage the massacre. “Alex Jones is not financially bankrupt; he is morally bankrupt, which is becoming more and more clear as we discover his plots to hide money and evade responsibility,” said Kyle Farrar, a lawyer for the Sandy Hook families. “He used lies to amass a fortune, and now he is using lies and fictions to shield his money.” The families said in their filing that Mr. Jones had siphoned nearly $62 million from his business into financial vehicles benefiting himself and his family beginning in 2018, when the Sandy Hook families first filed suit. At the core of his bankruptcy claim is Jones’s assertion that Free Speech Systems owes $54 million to PQPR Holdings, a company owned and operated directly and indirectly by Jones and his parents. The debt is fictional, the families’ lawyers said in Thursday’s filing, and “a centerpiece of Jones’s plan to avoid compensating the Sandy Hook families.”

Days before the money-losing opioid drug firm Endo International filed for bankruptcy last week, the company paid chief executive Blaise Coleman an $11.85 million bonus, the Philadelphia Inquirer reported. It was, in fact, the latest installment of an eye-popping $55.5 million in pre-bankruptcy bonuses paid over 10 months to Coleman and three other top executives at the drug firm, which faces potentially huge legal liability for its part in the nation’s opioid epidemic. Endo manufactured and marketed hundreds of millions of branded Opana and generic opioid pain pills. Endo paid the first bonuses last November when it considered an earlier bankruptcy date. The firm drug paid a second round of bonuses right before the actual bankruptcy filing in Manhattan on Aug. 16, court and regulatory records show. Endo describes them as prepaid incentives and management retention. Pre-bankruptcy bonuses reward executives for failing enterprises, critics say. They aren’t scrutinized by the bankruptcy court or creditors, and they siphon money out of the funds available for the business, or settling debts.

Bankruptcy Judge David Jones declined to appoint an equity committee in Revlon Inc.'s bankruptcy, rejecting a minority shareholder demand for a greater say in the cosmetics company's restructuring, Reuters reported. Judge Jones said that shareholder interests were already represented in the bankruptcy by Revlon, majority shareholder MacAndrews & Forbes, and the minority shareholder group led by investment advisor Mittleman Brothers LLC, which is free to continue advocating for shareholders on an unofficial basis. Equity committees are only rarely appointed in bankruptcy cases, and Judge Jones ruled that the cost of appointing a committee outweighed its likely value. If an official equity committee were appointed, Revlon would have to pay its attorneys and professionals at a time when its resources are already stretched, Judge Jones said. The minority shareholders' attorney, Gregory Pesce, argued yesterday that an equity committee was the best way to give a voice to the "little guys," retail stockholders who had invested in Revlon's future. The minority shareholders group pointed to increases in Revlon's share price after the company filed for chapter 11, saying Revlon was more than a so-called meme stock fueled by irrational retail investors and social media buzz. Revlon had opposed the appointment of an equity committee, and its attorney Kyle Kimpler said the company's shareholders "cannot possibly" prove that they are entitled to a meaningful payout at this stage in the bankruptcy. The company must pay $3.5 billion in debt before shareholders are entitled to a recovery, Kimpler said. Revlon's lenders also opposed the minority shareholder request, saying that recent stock price fluctuations were "untethered from market realities."

Cineworld Group Plc equity holders are set to be left with nothing, a short seller warned after the cinema operator said this week that it was considering filing for U.S. bankruptcy, Bloomberg News reported. Argonaut Capital Partners LLP’s Barry Norris told Bloomberg Television that Cineworld’s pursuit of acquisitions that were funded by debt had left it with a “completely unsustainable” capital structure. A spokesman for Cineworld declined to comment on Argonaut’s position or interview but requested that Bloomberg highlight the firm’s Aug. 22 statement, in which it said it would “maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees.” The cinema chain racked up large debts from acquisitions, and has suffered from a weak box-office recovery following COVID-19 lockdowns that kept customers away from theaters. Following its 2018 acquisition of US chain Regal, Cineworld carries $4.84 billion in net debt, according to its latest annual report. It also faces nearly $1 billion in damages to Canada’s Cineplex Inc. over an aborted takeover bid.

The owner of a Bismarck, N.D.-based photography studio that closed abruptly last year and refused to refund clients has filed chapter 7 bankruptcy, listing more than $4 million owed to creditors and just more than $20,000 in personal assets, the Bismarck Tribune reported. Federal court documents show Glasser Images owner Jack Glasser owes 50 creditors $4.06 million. Attorney General Drew Wrigley in May filed a lawsuit against Glasser and partner Jace Schacher, asking the court to bar them from doing business, reimburse clients for images not received, and pay contractors who provided the photography services. The lawsuit alleges the two falsely blamed the business closure on the coronavirus pandemic and obtained loans to keep the business afloat, but at the same time lived a lifestyle “of high-end dining, travel, and luxury vehicles.” Customers filed complaints totaling more than $1.4 million after the business closed in October 2021. Glasser Images owed its landlord $25,000 in rent and late fees. A judge in November ordered the business to preserve its websites while the attorney general investigated possible fraud. Tim O’Keeffe, the attorney representing Glasser Images, said in May that Wrigley’s office “asserted their own opinions into the complaint, which is full of speculation and puffery.” The case is slated for trial starting Sept. 25.

A former money manager for Celsius Network LLC deceived the company about his investing abilities and lost or stole tens of millions of dollars in assets, the bankrupt crypto lender alleged in a lawsuit yesterday, Bloomberg News reported. Celsius, which filed for bankruptcy last month after freezing customer assets, alleges Keyfi Inc. and founder Jason Stone lied about his investing prowess and was incompetent in managing Celsius assets. The crypto lender also accused Stone of outright theft. Stone began managing money for Celsius in 2020, according to the complaint. Unhappy with Keyfi’s reporting practices, Celsius demanded the return of coins under Stone’s control just months after the arrangement began. Celsius was unable to recover all of the assets and found Keyfi was “extraordinarily inept” at crypto investing and failed to hedge against price swings, according to the lawsuit. “The Defendants’ liability to Celsius is staggering,” attorneys for Celsius wrote in the complaint. In addition to mismanagement and deception, the company claims Keyfi converted Celsius assets into non-fungible tokens and stole them, covering its tracks with a so-called crypto mixer recently banned by the U.S. Treasury Department. The allegations come after Stone sued Celsius last month, accusing the crypto lender of fraud and cheating him out of potentially hundreds of millions of dollars in pay.

3M’s attempt to block jury trials of more than 230,000 lawsuits accusing it of harming U.S. soldiers faces a key test this week in front of a federal judge in Indianapolis, Bloomberg News reported. Bankruptcy Judge Jeffrey Graham is set to consider a temporary halt to the lawsuits so that 3M and its bankrupt subsidiary, Aearo Technologies, can try to settle the claims, most of which have been filed by veterans who say the combat arms earplugs left them with hearing damage. Judge Graham’s decision will echo across the offices of other firms facing massive numbers of product liability lawsuits, said Prof. Jared Ellias of Harvard Law School. The Aearo case uses an increasingly popular strategy in which profitable companies use insolvency proceedings to force settlement talks with victims of allegedly harmful products. Johnson & Johnson and lumber giant Georgia-Pacific have also put units into bankruptcy with the same goal of ending their litigation woes in one place instead of fighting thousands of trials around the country. Fighting each case in front of different juries around the country is impossible, the bankrupt units of J&J and 3M have argued in court. Critics of the mass tort system agree. “Mass torts are legal terrorism because, even if a company has no liability for 80% of the claims made against it, the defense costs will kill it,” said bankruptcy attorney Martin Bienenstock. On July 26, the company put Aearo Technologies into bankruptcy in Indianapolis. Under chapter 11 rules, Aearo is automatically entitled to freeze the lawsuits it faces, but because 3M itself didn’t file bankruptcy a judge must agree to give the industrial conglomerate the same protection.

Pharmaceutical giant Bausch Health Cos. has retained advisers to help it map out its future after the company lost a major patent dispute and has drawn controversy over the recent spinoff of its eye-care business, WSJ Pro Bankruptcy reported. Canada-based Bausch said yesterday that it hired law firm White & Case LLP and investment bank Houlihan Lokey Inc. to advise on strategic alternatives. Last month Bausch lost a legal dispute over a patent it holds on gastrointestinal tract drug Xifaxan, known as rifaximin, to treat irritable bowel syndrome. Losing the patent battle means Bausch will likely face competition from generics manufactured by companies like Morristown, N.J.-based Alvogen Inc. Bausch has already launched an appeal to the decision. “We expect that generic competition will enter the market no later than year-end 2024 — much earlier than our previous base-case assumption of January 2028,” S&P Global Ratings analysts wrote in a recent report after the ruling. They also estimated that Xifaxan contributes to about 50% of Bausch’s total pretax earnings. The potential revenue drop from Xifaxan adds additional pressure on the company as it faces an uproar from its creditors over the spinoff of its eye-care business, Bausch + Lomb Corp., which saw a limited initial public offering of shares this spring. Bausch pursued the spinoff at the behest of activist investors Carl Icahn and Glenview Capital Management. Unsecured creditors have hired law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP to advise them on possible legal claims stemming from the spinoff, which they contend transferred value away from them, according to people familiar with the matter. They have already communicated their concerns about the spinoff to the company in writing. Secured creditors have separately brought on Gibson Dunn & Crutcher LLP for advice in relation to the spinoff. Without a patent for Xifaxan, losses may increase for holders of Bausch’s roughly $20 billion in debt. Franklin Templeton and JPMorgan Chase & Co. number among the company’s largest creditors, and the company carries $12 billion in unsecured bonds and $7.7 billion in secured debts, company filings show.