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FTX founder Sam Bankman-Fried's lawyer on Tuesday said the now-bankrupt cryptocurrency exchange's investments were not "reckless and frivolous," pushing back against testimony by former executive Nishad Singh portraying its spending on marketing and celebrity endorsements as excessive, Reuters reported. Singh, FTX's former engineering chief, testified for a second straight day at Bankman-Fried's fraud trial in Manhattan federal court. Under cross-examination, Singh told the jury that he thought FTX would be able to stay in business upon learning in September 2022 of a $13 billion shortfall in customer funds, potentially bolstering Bankman-Fried's argument that he believed the exchange's troubles were manageable. FTX declared bankruptcy on Nov. 11, 2022. Singh testified on Monday that the company's venture investments and $1.1 billion in planned marketing deals, including naming rights to the arena where the NBA's Miami Heat play and featuring NFL quarterback Tom Brady in commercials, "reeked of excess and flashiness." Defense lawyer Mark Cohen on Tuesday asked Singh, one of three former members of Bankman-Fried's inner circle who have pleaded guilty to fraud and agreed to cooperate with prosecutors, whether promoting FTX's brand could be useful. "I understood it had business benefits and costs," Singh said in testimony that defense lawyers could use to argue that Bankman-Fried was making what he believed to be good-faith business decisions in shelling out funds for marketing and investments even if others disagreed.

The U.S. unit of cryptocurrency exchange Binance has halted withdrawal of dollars by its clients from the platform, its updated terms showed on Monday, Reuters reported. In early June, Binance.US had halted dollar deposits, after the U.S. Securities and Exchange Commission (SEC) asked a court to freeze its assets. "In the event that customers wish to withdraw U.S. dollar funds from their account, they may do so by converting U.S. dollar funds to stablecoin or other digital assets, which can subsequently be withdrawn," the terms page said. The SEC had sued Binance, its CEO and founder Changpeng Zhao, and Binance.US's operation in June, alleging in 13 charges that Binance had engaged in a "web of deception," artificially inflated trading volumes and diverted customer funds.

Z Gallerie, the Los Angeles-based contemporary furniture retailer, has filed for chapter 11, citing liabilities between $50 million and $100 million, HomeAccentsToday.com reported. The retailer, which is owned by CSC Generation Holdings Inc. and does business as part of DirectBuy Home Improvement Inc., filed for protection in the U.S. Bankruptcy Court in the District of New Jersey. According to the filing, which was reported on Bankruptcycompanynews.com, ZGallerie has 21 locations in nine states. CSC bought DirectBuy/Z Gallerie out of bankruptcy in July 2019 for $20.3 million. In the filing, according to the report, Robert Fetterman, chief financial officer and interim CEO, said the debtor planned to retain Stump & Co. as its investment banker to market the debtor’s assets. “Additionally, the debtor also intends to file a motion proposing an efficient, public and flexible auction process in connection with its sales efforts. If the debtor is unable to implement a going-concern transaction, the debtor will turn to an orderly liquidation of its remaining assets, close its stores in the coming months.

Prima Wawona, the largest producer of stone fruit, has filed for chapter 11 bankruptcy protection with hopes of selling the business, KMPH.com reported. The company says that it is currently looking into a third-party sale or conversion of existing lender debt into equity ownership. Prima Wawona has also filed for court approval to continue operations, including payment of wages and benefits for more than 8,000 employees. The company says it also intends to pay vendors for the goods and services provided on or after the filing date.

Rite Aid appears to be pursuing a novel strategy to handle a huge number of opioid-related lawsuits by sidestepping plaintiffs until after filing for bankruptcy, WSJ Pro Bankruptcy reported. The drugstore chain on Sunday became the first large company facing mass opioid liabilities to file chapter 11 without any agreement with opioid plaintiffs, who may end up getting very little from Rite Aid. Other companies facing opioid litigation, including drugmakers Purdue Pharma, Mallinckrodt, Endo and Insys Therapeutics, had all lined up settlements with at least some opioid plaintiffs before filing for bankruptcy. Rite Aid said that it intends to use bankruptcy to cut billions of dollars in financial debt and reduce its store count. It has a proposed deal with bondholders to hand them full equity control. The retailer said it also intends to address various litigation facing the company, including the more than 1,600 opioid lawsuits that have been a drain on its resources. “It’s unusual that there’s no explicit settlement with [opioid] victims, which was the case in most of the other opioid bankruptcy cases,” said Edward Neiger, a lawyer who has represented opioid plaintiffs in other chapter 11 proceedings. The Supreme Court is currently examining Purdue Pharma’s use of chapter 11 to resolve opioid lawsuits and bankruptcy courts’ practice of granting releases from liability for affiliates and other parties tied to a bankrupt company. If the Supreme Court rules against Purdue, the decision could outlaw third-party releases as a tool to forge settlements of opioid lawsuits and other mass torts. That possibility may give Rite Aid and other companies pause before reaching similar deals, Neiger said.

There are few bankruptcy courts in America busier than the one in Houston. The top judge there, David R. Jones, has handled more than 1,000 corporate insolvencies in his time on the bench and routinely oversees the nastiest debt fights that come out of Wall Street. So when Jones resigned following revelations that he has dated and lived with a top Houston bankruptcy lawyer since 2017, it rocked the insolvency world, Bloomberg News reported. Beyond the shock felt by those who have come to know him as a towering figure in restructuring, the move has cast a pall over cases he was overseeing — like that of Platinum Equity-backed Incora — and ones he ruled on in the past. At a minimum, Jones’ departure will delay by weeks or months decisions about how much creditors can recover from the companies under his purview. It also makes way for challenges to past rulings in some of the world’s most contentious bankruptcy disputes and may cause big firms to take their restructurings elsewhere. “This is a nightmare for the bankruptcy bench there,” said Nancy Rapoport, a law professor at the University of Nevada, Las Vegas. “At best, the judges are divvying up all those cases now. At worst, there are going to be more inquiries.” Jones came under fire for failing to disclose that his girlfriend, Elizabeth Freeman, was a high-ranking bankruptcy attorney at a prominent Texas law firm with frequent business before his court. He approved fees in dozens of cases for her firm, Jackson Walker, which she left in late 2022. His resignation ended a formal judicial inquiry into the matter. But the fallout has only just begun. The court is working to redistribute cases and come up with a plan until it can appoint a replacement, which it hopes to do quickly, according to Chief U.S. District Judge Randy Crane. Not only did Judge Jones oversee around 1,100 corporate bankruptcies, but he also presided over 3,000 cases for individuals — what amounts to a Herculean case load.

Another former member of Sam Bankman-Fried’s inner circle at FTX told a jury Monday that he committed crimes alongside the 31-year-old crypto entrepreneur, saying he was aware FTX customer money had been routed to Bankman-Fried’s crypto trading firm, YahooFinance.com reported. "I defrauded customers, investors," said Nishad Singh, the former director of engineering at the now-bankrupt cryptocurrency exchange, who first met Bankman-Fried while he was in high school. Singh pleaded guilty in February to wire fraud and conspiring to violate U.S. campaign finance laws. He is one of three close colleagues of Bankman-Fried to plead guilty and testify against the former FTX founder. The others — Caroline Ellison and Gary Wang — appeared during the first two weeks of the trial. Still another high-ranking FTX insider, software developer Adam Yedidia, testified against Bankman-Fried last week. Prosecutors are arguing that Bankman-Fried committed wire fraud and six other crimes by embezzling billions in FTX customer funds and lying to investors and lenders.

Owners of the Tattered Cover Book Store have filed for chapter 11 reorganization — part of which includes closing three stores and eliminating employee positions. The bookstore chain currently owns seven stores and employs 103 people, the Denver Business Journal reported. Bended Page LLC, the owners and operators of the Tattered Cover, made the announcement through a press release after filing in the U.S. Bankruptcy Court for the District of Colorado. The three stores that will be impacted are in Denver’s McGregor Square, Westminster and Colorado Springs. Closure of these locations is expected to begin Oct. 23, and be completed by early November. The McGregor Square location opened in June 2021, the Westminster location opened in January 2022 and the Colorado Springs location opened in June 2022. At least 27 staff positions will be affected by the closures, the company said in a statement. Some impacted employees may fill temporary seasonal positions at the remaining stores during the holiday season. The company is working to develop severance packages for eligible employees affected by the closures. Earlier this year, the Tattered Cover went through a leadership change when bankruptcy attorney Brad Dempsey was appointed as CEO of the business. At that time, Dempsey told the Denver Business Journal he was tasked with addressing immediate financial issues of the company and putting it back on its feet.

Bankruptcy Judge David R. Jones resigned from the bench while under a misconduct investigation by a federal appeals court over his failure to disclose his yearslong romantic relationship with a bankruptcy lawyer who had business before his court, WSJ Pro Bankruptcy reported. Judge Jones’s resignation from the U.S. Bankruptcy Court in Houston comes after the appellate court that appointed him found probable cause that he committed misconduct by failing to disclose his romantic relationship with bankruptcy lawyer Elizabeth Freeman. Jones told the Wall Street Journal earlier this month that he and Freeman have been in a relationship for years and live together at a home in the Houston area. Neither Judge Jones nor Freeman had previously disclosed their relationship in court while Freeman worked on major corporate reorganizations that he oversaw. “I have always said that the bankruptcy process should be about the participants and the preservation of jobs,” Jones said on Sunday. “I have become a distraction to the good work that the court does. To end that distraction and hopefully return focus, I have resigned.” The bankruptcies that Freeman worked on and that Judge Jones oversaw included some of the largest chapter 11 cases of recent years, such as retailers JCPenney and Neiman Marcus and oil-and-gas driller Chesapeake Energy. In each of those cases and others, Freeman, then a partner at the Texas law firm Jackson Walker, billed hours along with her colleagues for their work representing the companies in bankruptcy, according to chapter 11 records. Judge Jones approved more than $1 million in legal fees billed by Freeman over 16 corporate bankruptcy cases from 2018 to 2021 when they shared an address. Judge Jones had said in a Friday court hearing that he would step down from overseeing large corporate reorganizations, though didn’t say at the time that he was resigning from the bench. Judge Jones faces an ethics investigation by the U.S. Court of Appeals for the Fifth Circuit, which appointed him to the bench in 2011. On Friday, the chief justice of the Fifth Circuit U.S. Court of Appeals filed a complaint against Jones, finding that there was probable cause he had committed misconduct by failing to disclose his relationship with Freeman.

The U.S. Supreme Court agreed to hear a case in which an insurance company is challenging a bankruptcy reorganization plan that it says doesn’t protect it against fraudulent claims tied to asbestos exposure, WSJ Pro Bankruptcy reported. Truck Insurance Exchange is seeking to overturn a ruling by a U.S. appeals court that rejected the insurer’s challenge and allowed the bankruptcy reorganization plan of defunct cement maker Kaiser Gypsum to go forward. The insurer’s opposition centered on arguments that the Kaiser Gypsum bankruptcy plan would allow asbestos injury plaintiffs to pursue fraudulent claims against its policies. Insurance companies have made similar arguments in bankruptcy cases of the Boy Scouts of America and some Catholic dioceses involving sexual-abuse claims. Insurers have appealed the Boy Scouts of America’s bankruptcy settlement, and are challenging the plan put forward by the Diocese of Camden in New Jersey over similar issues.