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WeWork hasn’t paid certain landlords January rent as part of its negotiation strategy, lawyers representing the creditor committee in bankruptcy said in a court filing on Tuesday, WSJ Pro Bankruptcy reported. The co-working company is withholding January rent payments of about $33 million “in an effort to strong-arm negotiations with certain landlords,” while receiving fees from its members that occupy the space, according to the bankruptcy court filing. The lawyers said in the filing that while they understand WeWork’s need to rationalize its lease portfolio as part of financial restructuring, the bankruptcy code clearly states that while in bankruptcy, rent payments for unrejected leases must be paid. In fact, WeWork’s budget recently approved by the court “expressly provided for the payment of January rent,” the lawyers said. The company in November filed for chapter 11 protection with the U.S. Bankruptcy Court in New Jersey. A WeWork spokesman said that the company’s temporary actions of nonpayment “are intended to expedite conversations to reach resolutions that are in the best interests of our entire ecosystem.” “We remain committed to finding mutually beneficial solutions that are better aligned with today’s market conditions, and that will enable us to successfully move forward in our restructuring process,” the spokesman said. Landlords that weren’t paid January rent include City Office REIT, which owns and operates office properties mostly in Sunbelt cities such as Dallas, Phoenix and Tampa, according to the court filings and the company’s website.

Sandy Hook conspiracy theorist Alex Jones could exit chapter 11 bankruptcy by late March or early April, his lawyer said on Wednesday after a judge decided families whom he owes $1.5 billion for lying about the 2012 school shooting can vote on competing plans to resolve their claims, Reuters reported. Bankruptcy Judge Christopher Lopez in Houston allowed Jones to solicit votes on a proposal that would pay at least $55 million to the relatives of 20 students and six staff members killed in the 2012 mass shooting at Sandy Hook Elementary School in Newtown, Conn. Jones, who hosts a radio show, claimed for years that the massacre was a hoax, staged with actors as part of a government plot to seize Americans’ guns. He has since acknowledged the shooting occurred, but the families, who said Jones cashed in for years off his lies, sued him for defamation. Courts in Connecticut and Texas have ruled that Jones intentionally defamed them and have ordered Jones to pay $1.5 billion in damages. Judge Lopez on Wednesday also allowed the family members, whose defamation judgments make them the main creditors in Jones' bankruptcy, to solicit votes on their own plan, which would liquidate Jones' assets and pursue litigation against his associates. The families previously estimated that they would receive at least $85 million from Jones under their plan. Judge Lopez said at a court hearing that both proposals contained enough information for creditors to make an informed vote. Lopez set a Feb. 12 deadline for votes.

Lucky Bucks’ bankruptcy trustee has sued the new management of the slot machine operator, seeking to revoke the bankruptcy plan, WSJ Pro Bankruptcy reported. According to a lawsuit filed Tuesday, the trustee for the remnants of Lucky Bucks still in bankruptcy said that the people running the business during the bankruptcy failed to disclose alleged fraud that has led to a multimillion-dollar lawsuit by new owners that were also secured lenders in the business. Earlier this month, the reorganized Arc Gaming and Technologies sued several former Lucky Bucks employees under Georgia’s Racketeer Influenced and Corrupt Organizations Act, seeking the return of more than $200 million in “illegal dividends” and accusing the former managers of defrauding the company, leading to its bankruptcy. The silence about alleged misdeeds before and during the bankruptcy means that millions of dollars that could have gone to other creditors could now be out of reach in state court, according to the Tuesday lawsuit against Arc Gaming. The chapter 7 trustee for the remnants of Lucky Bucks said none of the allegations of “looting Lucky” were disclosed during the bankruptcy. That is despite members of Lucky Bucks’ board, managers and employees being aware of the alleged fraud, said chapter 7 trustee Marc Abrams.

Johnson & Johnson’s agreement to settle litigation with multiple states over its talcum-based baby powder is putting the company on a new path to addressing mounting lawsuits against its former flagship product, according to a WSJ Pro Bankruptcy commentary. After two failed attempts to address them in bankruptcy through its subsidiary, the healthcare-products company has pivoted toward a new strategy to tackle mass lawsuits against its talc-based baby powder, focusing on aligning various litigating groups for settlements. With Tuesday’s proposal to pay roughly $700 million to more than 40 states over alleged false marketing of the talc powder, J&J has potentially snatched victory with one group of claimants. Now, it can focus on settling with its most significant group of claimants — ovarian and mesothelioma cancer patients that have filed more than 50,000 cases alleging harm from the asbestos content in the baby powder. J&J’s ability to settle these cases would be crucial for successfully addressing all talc-related liabilities either in or out of court. Settling with each group would allow injury claimants to receive distribution more quickly than trying each case in federal courts. Reaching settlements with various groups would also be helpful in securing bankruptcy court approval for its restructuring plan, if J&J decides to pursue another chapter 11 filing.

Strategic Materials, the Houston-based glass recycling giant, emerged from bankruptcy on Tuesday after it said it reduced its debt by more than $300 million during a comprehensive restructuring process, the Houston Chronicle reported. The company, which calls itself the largest supplier of recycled glass in North America, filed for bankruptcy protection on Dec. 4 in the Southern District of Texas. Its filing cited the compounding challenges of rising interest rates, inflation and increased competition. Chris Dods, Strategic Materials' chief executive, said in a statement that the company is now "investing in the business and positioning for growth." The release said it had also secured about $60 million in new capital that could be directed toward operations and strategic investments. The company, owned by private equity firm Littlejohn & Co., recycles more than 2 million tons of glass per year through 43 facilities, including three in Texas. Before seeking bankruptcy protection, it said long-term debt obligations of about $432 million would not be met, "absent a comprehensive financial restructuring or sale."

New Jersey's Supreme Court ruled Wednesday that an Atlantic City casino is not entitled to payouts from business interruption insurance for losses during the COVID-19 outbreak, determining that the presence of the virus did not constitute the kind of “direct physical loss or damage” required for such a payout, the Associated Press reported. The case involved the Ocean Casino Resort's claims against three insurance companies — AIG Specialty Insurance Co., American Guarantee & Liability Insurance Co. and Interstate Fire & Casualty Co. Those insurers largely denied payouts to the casino, saying it did not suffer direct physical loss or damage because of the virus. The casino sued and defeated an attempt by the insurers to dismiss the case. But that decision was reversed by an appellate court. The high court agreed to take the case in order to resolve the legal question of what constituted loss or damage. “Based on the plain terms of the policies, we conclude that in order to show a ‘direct physical loss’ of its property or ‘direct physical . . . damage’ to its property under the policy language at issue, (parent company AC Ocean Walk LLC) was required to demonstrate that its property was destroyed or altered in a manner that rendered it unusable or uninhabitable,” the court wrote in a unanimous decision. “At most, it has alleged that it sustained a loss of business during the COVID-19 government-mandated suspension of business operations because it was not permitted to use its property as it would otherwise have done,” the opinion read.

A Hamptons, N.Y., estate that once listed for $150 million before falling into bankruptcy was sold at auction Wednesday for $88.5 million, NBCNewYork.com reported. The four-acre estate in Southampton, New York, known as La Dune, was sold by Concierge Auctions at a starting bid of $66 million. The property was sold in two parts — one house sold for $40.5 million and the other for $38.5 million. The buyer premium brings the total sale to $88.5 million. The property, once the most expensive listing the Hamptons and famed for an appearance in the Woody Allen film "Interiors," had been on and off the market since 2016. It was most recently listed in 2022 at $150 million. Last year, the two properties on the compound were put into chapter 11 bankruptcy after a foreclosure judgement. The previous owner, Louise Blouin, purchased the property in the 1990s for $13.5 million. She spent millions building a second mansion on the property in 2001, adding to the existing mansion, which was built in the 1890s.

Senate Judiciary Committee Chair Dick Durbin (D-Ill.) and fellow Senate Judiciary Committee colleagues Sens. Sheldon Whitehouse (D-R.I.) and Josh Hawley (R-Mo.) submitted an amicus brief to the Supreme Court in Bestwall LLC v. Official Committee of Asbestos Claimants, supporting hundreds of thousands of victims of the company’s asbestos-linked products, according to a Senate Judiciary Committee press release. To avoid facing the legal claims of victims in court, Georgia-Pacific “moved” to Texas for less than five hours, offloaded its asbestos-related liabilities onto a shell company called Bestwall, put Bestwall into bankruptcy, and then claimed that Bestwall’s bankruptcy protected the entire Georgia-Pacific enterprise from accountability, according to the press release. The bipartisan trio of Senators urge the Court to overturn the Fourth Circuit’s decision to approve the stay of asbestos litigation against Georgia-Pacific, writing, “The bankruptcy system was not designed to provide solvent non-debtors with the option to simply decline to be held liable for alleged wrongdoing, but that is precisely what the Fourth Circuit’s decision countenances. That was not what Congress intended, and it is not a result that this Court should permit.” Read the press release.

Click here to read the full amicus brief.

Johnson & Johnson has tentatively agreed to pay about $700 million to settle an investigation brought by more than 40 states into the marketing of its talcum-based baby powder, a J&J executive said, the Wall Street Journal reported. The agreement in principle with attorney general offices in most U.S. states is an “important step” for the company, based in New Brunswick, N.J., as it tries to “reasonably put the matter behind us,” J&J Chief Financial Officer Joseph Wolk said yesterday. Johnson & Johnson has said in securities filings 42 states and Washington, D.C., had launched an investigation into its marketing of talc-based products. New Mexico and Mississippi have filed lawsuits against the company alleging violations of consumer-protection laws. The proposed settlement with states would only address a small portion of the litigation over the safety and marketing of J&J’s talcum powders. It doesn’t resolve the personal-injury lawsuits filed by more than 52,000 plaintiffs in various U.S. courts against J&J, alleging that use of the powders, primarily Johnson’s Baby Powder, caused cancer. J&J likely will have to spend billions more dollars to resolve the broader litigation. The company last year proposed paying at least $8.9 billion to resolve the personal-injury lawsuits in a bankruptcy plan filed by a subsidiary, but a bankruptcy judge rejected the plan. J&J is pursuing the consensual resolution of the personal-injury claims through another bankruptcy plan, and analysts have estimated the ultimate settlement cost could range from $10 billion to $15 billion.

Medical scrubs designer and distributor Careismatic Brands filed for bankruptcy to eliminate $833 million in debt, a restructuring prompted by falling demand and higher interest rates, WSJ Pro Bankruptcy reported. Two years after logging record revenue, the Santa Monica, Calif.-based company owned by private-equity firm Partners Group filed for chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court in Newark, N.J., listing both assets and liabilities exceeding $1 billion. Careismatic becomes one of the latest companies to fall into bankruptcy as COVID-19 worries lessen, causing plummeting demand for some products or blindsiding some companies that ramped up production for demand that never materialized. Kent Percy, Careismatic chief restructuring officer, said the pandemic led to sharp increases in medical apparel demand, leading to a record $687 million in revenue in 2021. That was up from $635 million in 2020 and $498 million in 2019. “While Careismatic expanded capacity to meet market demand, demand has normalized in 2022 and 2023,” he said in a sworn declaration filed with the court. Revenue last year dropped to $559 million. “Macroeconomic issues, including a rapid and dramatic rise in interest rates, persistent supply-chain disruptions, rising material costs and a challenging labor market” also weakened demand and hurt profit margins, he said. Founded in 1995, Careismatic has grown to 17 brands from basically one brand, Cherokee Medical Uniforms, which itself was bought out of bankruptcy. It also sells school uniforms and other medical apparel and devices. Partners Group bought the business in 2021. In September, it hired professionals to begin working on a restructuring.