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A federal judicial ethics probe into former U.S. Bankruptcy Judge David Jones's failure to disclose his romantic relationship with a lawyer whose firm regularly appeared before him has come to an end following the Houston judge's resignation, Reuters reported. The chief judge of the 5th U.S. Circuit Court of Appeals, Priscilla Richman, in an order on Wednesday said that further action was "unnecessary" after Jones last month submitted his resignation as a Southern District of Texas bankruptcy judge. Jones announced plans to resign on Oct. 15 after acknowledging to the Wall Street Journal that he had been in a years-long romantic relationship with bankruptcy attorney Elizabeth Freeman and shared a home with her. Freeman until recently worked at Jackson Walker, a local law firm that worked on many corporate bankruptcy cases in Jones' Houston courthouse. Jones's resignation came shortly after the 5th Circuit had launched an ethics inquiry and Judge Richman's filing on Oct. 13 of a misconduct complaint that found there was probable cause to believe Jones violated the codes of conduct that govern judges. Richman's complaint said Jones never recused himself from cases involving Jackson Walker or disclosed his relationship with Freeman. He also approved attorneys' fees sought by the firm for work on matters in which billing records showed Freeman performed "substantial" services, Judge Richman said.

A federal judge on Tuesday tentatively approved a portion of the newest plan to restructure $10 billion of debt owed by Puerto Rico’s power company amid heated negotiations between creditors and the U.S. territory’s government, the Associated Press reported. The overall debt restructuring plan has been amended four times this year by a federal control board that oversees Puerto Rico’s finances. A confirmation hearing is set for March 2024 as various bondholders continue to oppose the plan. The board did not have immediate comment on the judge’s decision regarding the plan’s disclosure statement, which requires modifications before bondholders vote on it. The decision was issued after an hours-long hearing that drew protesters to the courthouse who are opposed to electric bill increases outlined in the plan. The bankruptcy of Puerto Rico’s Electric Power Authority has dragged on for years amid intense debate on how to restructure its debt — the largest of any government agency in the U.S. territory. Numerous restructuring attempts have failed, with several creditors seeking to recuperate more money than what the plan currently offers. The plan was amended for a third time in August and a fourth time over the weekend. The newest proposal seeks to cut the power company’s debt by nearly 80%, to some $2.5 billion. If approved, it is expected to lead to increases in residential and commercial power bills that already are among the highest of any U.S. jurisdiction.

Right-wing conspiracy theorist Alex Jones has asked a court for permission to sell a cache of firearms, jewelry, cars, boats, and a cryogenic chamber to help pay for costs of his personal bankruptcy, Bloomberg Law reported. Jones is also looking to conduct part of the sales on his Infowars radio and video talk shows to increase the value of the items, according to a filing Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas. The talk show host filed for bankruptcy protection last year after he was ordered to pay more than $1 billion in judgments related to his lies that the 2012 Sandy Hook Elementary School shooting was a hoax. Promoting the sales on his shows could increase the items’ value “because supporters’ demand for items attributable to Debtor will increase value — much like memorabilia sales,” Jones said. Jones has previously disclosed that he has almost 50 firearms that include shotguns, rifles, pistols, and revolvers. He also previously said he’s holding a stash of guns for people who participated in the Jan. 6 attack at the U.S. Capitol. Other items Jones aims to sell include household goods, including furnishings, golf carts, and gym equipment, according to court papers. Jones has previously estimated his firearms are worth at least $72,000. Whatever money is left over at the end of his bankruptcy would be used for payments as part of a chapter 11 plan, Jones said. The request to sell some personal items comes amid criticisms by Sandy Hook victim families of Jones’ “opulent” spending habits during his bankruptcy. The sale request comes after Jones lost a key bankruptcy court ruling last month. Judge Christopher M. Lopez found that despite Jones’ bankruptcy, about $1.1 billion of the $1.4 billion in debt he owes from Connecticut and Texas defamation judgments can’t be discharged under the bankruptcy code. Judge Lopez said the debt can’t be tossed because the Texas and Connecticut state courts made findings that Jones’ conduct was intentional and malicious. Jones said that he intends to appeal.

Sinclair Inc. said its bankrupt local sports unit Diamond Sports Group will probably shut down after the end of Major League Baseball’s 2024 regular season under a new proposal between the subsidiary and its creditors, Bloomberg News reported. The liquidation of Diamond would represent the end of a relationship that has been fraught and short. Sinclair acquired Diamond from Walt Disney Co. in 2019. The deal, valued at around $10.6 billion according to court papers, was designed to turn Sinclair into a cable sports powerhouse. But revenues from cable television have plunged in recent years as more consumers rely on Internet-based services. Diamond, which has its own management, filed for bankruptcy in March, and sued Sinclair in July, accusing the company of siphoning off money, a claim its parent denies. Diamond is working to finalize what would be essentially one-year deals that would permit it to broadcast its full slate of National Basketball Association and National Hockey League games for the current season as well as next year’s regular season games for Major League Baseball. After that, Diamond’s deals with MLB, NBA and NHL would end, the the operator of the Bally Sports brand of local sports channels has said. Diamond may liquidate next year if it can’t find a way to keep the company operating beyond 2024, Andrew Parlen, a lawyer for the company, said on Wednesday. Sinclair, now operating independently of Diamond, sees that as the most likely outcome, lawyer David R. Seligman said separately.

WeWork’s chapter 11 filing last week marked at least the seventh large bankruptcy filed in New Jersey since last November, signaling the Garden State’s increasing popularity as a destination for companies seeking to restructure their debt, WSJ Pro Bankruptcy reported. Judges with many years on the bench have accumulated a stack of decisions, which helps bankruptcy advisers to pick a venue for their clients, said Prof. Robert Lawless, of the University of Illinois College of Law. The companies and their advisers are “obviously happy with the New Jersey court” in terms of how it rules, Lawless said. Historically, bankruptcy courts in Wilmington, Del., and New York attracted major corporate filings, but other venues also gained traction. For New Jersey, the most recent large filings began last November with cryptocurrency lender BlockFi, followed by four major cases in April: the second bankruptcy filing of Johnson & Johnson’s LTL Management, wedding-gown chain David’s Bridal, home-goods chain Bed Bath & Beyond and Berkshire Hathaway-owned former talcum powder supplier Whittaker, Clark & Daniels. Last month, Rite Aid, a Philadelphia-based drugstore chain, filed for bankruptcy in New Jersey to deal with hundreds of federal, state and private lawsuits alleging the company oversupplied prescription painkillers that helped fuel the nation’s opioid epidemic. While BlockFi, LTL Management and Bed Bath & Beyond listed New Jersey as their main addresses, the other four filers are based primarily outside of the state.

As Celsius Network LLC nears the end of its bankruptcy, it may find the US Securities and Exchange Commission eyeing a key business element of its restructuring plan similar to those the regulator has targeted at other companies, Bloomberg Law reported. Celsius recently secured court approval to emerge from Chapter 11 as Fahrenheit LLC, a public crypto mining company that would include a crypto “staking” division. But before it can implement the plan, it needs a green light from the SEC as well. Without the regulator’s blessing, Celsius says it may be forced to liquidate, which would hurt creditors’ recoveries. In crypto staking, holders of cryptocurrency give their assets to a company to hold, which in turn pays them some reward on the holding. The SEC has previously raised issues with staking-as-a-service businesses at Coinbase and Kraken. Celsius says the Fahrenheit entity intends to operate a self-staking business. Though the staking issue could prove problematic for the SEC down the road, multiple lawyers said they expected the agency to allow Celsius to emerge from bankruptcy. The full nature of Fahrenheit’s staking operation may emerge over time, Yuliya Guseva, a professor at Rutgers Law School, said. Celsius’ successful restructuring would be a major development in the crypto landscape, which cascaded into chaos late last year with a series of bankruptcies and criminal proceedings. BlockFi Inc. and Voyager Digital Holdings both liquidated, while FTX remains in Chapter 11 as its co-founder Sam Bankman-Fried faces life in prison for fraud. The SEC’s pending decision on Celsius comes as it seeks to get a hold on a young and complicated industry. The agency has said some staking operations function as unregistered securities exchanges. It also has a contentious past with Celsius itself, having accused its founder of fraud and settling related allegations against the company.

Drugmaker Mallinckrodt said yesterday that it has emerged from bankruptcy and reduced its total funded debt by about $1.9 billion, Reuters reported. Mallinckrodt, which won court approval for its bankruptcy plan last month, said it is moving ahead with ample liquidity to execute its strategic priorities. Pursuant to the bankruptcy plan, ownership of the company will now be handed over to its lenders and all its equity shares would cease to exist. Mallinckrodt, which makes branded and generic drugs, first filed for bankruptcy in 2020 to address its high debt load, litigation over its allegedly deceptive marketing of highly addictive generic opioids and drug pricing disputes. Despite the previous bankruptcy settlement that resolved those litigation threats and cut $1.5 billion in debt, the company quickly found itself in financial trouble again due to declining sales for its key branded drugs, including Acthar Gel. Mallinckrodt said on Tuesday it will continue operating its Specialty Generics under the oversight of an independent monitor and operate in compliance with other existing Acthar-related settlement conditions.

A Texas bankruptcy judge on Tuesday appointed a new mediator for Tehum Care Services, a bankrupt affiliate of prison health provider YesCare, to revisit its $37 million settlement facilitated in August by former judge David R. Jones, who resigned from the bench last month following an ethics controversy, WSJ Pro Bankruptcy reported. Judge Jones’s resignation followed an official complaint filed by the chief judge of the Fifth Circuit Court of Appeals, stating probable cause existed to believe that Jones had committed misconduct surrounding his undisclosed romantic relationship with bankruptcy lawyer Elizabeth Freeman, whose then-employer Jackson Walker frequently appeared before Judge Jones. Freeman participated in the negotiation representing YesCare when Judge Jones — who served as a court-appointed mediator for the case — mediated the settlement, according to court papers. The Justice Department’s bankruptcy watchdog in its court filings earlier this month expressed concerns over the “propriety of the mediation that serves as the basis for the global settlement.” A few days after Jones’s resignation, Judge Christopher Lopez with the U.S. Bankruptcy Court in Houston, who has been overseeing the YesCare affiliate bankruptcy proceeding, declined to approve the framework of the company’s bankruptcy exit plan on an expedited basis and instructed the parties to “rethink” the proposal, which was built upon the global settlement. Judge Lopez at that time said he wasn’t questioning the integrity of the mediation, but the proposal didn’t provide enough information for him to approve it. Lawyers of the YesCare affiliate and other stakeholders recently petitioned Judge Lopez to appoint Christopher Sontchi, a retired Delaware bankruptcy judge, as a new mediator to look at the case “clean and fresh.”

Starboard Group of Alabama LLC, a Wendy’s restaurant franchise operator in the southern US, filed for Chapter 11 in Florida, according to a court filing, Bloomberg News reported. The company listed both estimated assets and estimated liabilities in the range of $1 billion to $10 billion. By filing for bankruptcy, Starboard joins a string of companies battling a high debt load who’ve taken the step. Both pharmacy chain Rite Aid Corp. and WeWork Inc. have initiated chapter 11 proceedings in recent weeks. Starboard operates a string of fast-food and sandwich restaurants across Alabama, Florida, Illinois, Missouri, Louisiana, Wisconsin and Texas, including 73 Wendy’s outlets and 15 Subway shops, according to its website.

Bally and its ownership group, Diamond Sports Group, announced in a court filing that it had reached an agreement with creditors to resolve any remaining financial issues for the 2024 season. After that, Bally will be stepping away from broadcasting baseball completely, SI.com reported. As DSG and Bally are still in bankruptcy court, a judge needs to approve the deal to move forward. This means the Texas Rangers will get their broadcast rights back after the 2024 season and can begin pursuing a new broadcast deal for the 2025 season. One team — the Minnesota Twins — will reportedly get their rights back for 2024. The Twins’ contract with Bally and DSG was already up, so it’s not being renewed. The remaining teams that have contracts with Bally and DSG, besides the Rangers, are the Detroit Tigers, Miami Marlins, Cleveland Guardians, Kansas City Royals, St. Louis Cardinals, Cincinnati Reds, Los Angeles Angels, Atlanta Braves, Tampa Bay Rays and Milwaukee Brewers. If approved, it would bring to an end a year-long saga that saw the Rangers nearly get their broadcast rights back in June as DSG and Bally appeared unable to make their first rights fee installment after filing for chapter 11 bankruptcy. By August, DSG had paid the Rangers in full for 2023. The Rangers originally signed a 20-year, $3 billion deal in 2010 with Fox Sports Southwest, which was purchased by DSG and became Bally Sports Southwest in 2019. It is believed the Rangers were owed $111 million in 2023.