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In In re The Hacienda Company, LLC, No. 2:22-bk-15163, the U.S. Bankruptcy Court for the Central District of California (Judge Neil W. Bason) denied a motion to dismiss the chapter 11 bankruptcy case despite finding that the marijuana-industry debtor was engaged in an ongoing, post-petition violation of the federal Controlled Substances Act (CSA), according to a Reuters analysis. The Hacienda court's refusal to dismiss this marijuana industry case — on two separate occasions — and instead to confirm the chapter 11 plan, represents a departure from the vast majority of bankruptcy court decisions, which reached the opposite result: dismissing bankruptcy cases based on perceived violations of federal drug laws alone. See, e.g., In re: Way to Grow, Inc., 610 B.R. 338 (D. Colo. 2019); Burton v. Maney (In re Burton), 610 B.R. 633 (9th Cir. BAP 2020). Pre-petition, the Debtor was in the business of wholesale manufacturing, packaging, and distribution of cannabis products to dispensaries in California under the brand name Lowell Herb Co. The debtor ceased its operations and transferred its assets to Lowell Farms, Inc. (Lowell Farms), a Canadian entity, whose sole business was cannabis growth and sales. In return, the debtor received approximately 9.4% of Lowell Farms' shares, valued at approximately $35 million at the time of sale.

Four surgical centers in Connecticut will emerge from bankruptcy under new ownership, according to an application with the Office of Health Strategy, the Hartford Business Journal reported. Wilton Surgery Center, Bloomfield Eye Surgery Center, Connecticut Eye Surgery Center South in Milford and Eastern Connecticut Endoscopy Center in Norwich have filed separate Certificate of Need applications seeking OHS approval of a proposed indirect change in ownership. Nashville, Tenn.-based Envision Healthcare Corp. currently owns the four surgical centers through an affiliate, AmSurg LLC. In May, Envision filed for chapter 11 bankruptcy in the Bankruptcy Court for the Southern District of Texas. As part of the bankruptcy, a creditor — Pacific Investment Management Co. LLC — will take ownership through a subsidiary, according to the application. The court is expected to approve the deal during the fourth quarter of 2023. The facilities will continue to operate under their existing licenses and will provide the same services, according to the application. AmSurg owns more than 250 surgical centers in 34 states. Pacific Investment Management Co., also known as PIMCO, is based in Newport Beach, California.

Bond investors with Preston Hollow Community Capital were the highest bidders in Mercy Iowa City's bankruptcy auction. Preston Hollow Community Capital is a Dallas-based company worth billions of dollars, KWWL.com reported. Operations at the facility will be managed by American Healthcare Systems, which officials say has experience in rehabilitating clinics across the United States. Ownership of the hospital will be organized as a not-for-profit group. Chairman and CEO of Preston Hollow Community Capital Jim Thompson said, "Since making a major financial investment in Mercy Iowa City in 2018, Preston Hollow Community Capital has been committed to ensuring that Johnson County residents can continue accessing critical health care services through a community-based hospital.… The Preston Hollow team is pleased that this critical goal will be met for many years to come now that our bid to acquire the hospital has been approved.” Preston Hollow Community Capital will make "significant" capital investments in order to stabilize the hospital's operations.

Caroline Ellison, a top adviser to the cryptocurrency mogul Sam Bankman-Fried, testified on Wednesday that she had lied over and over at his request, misleading the public about his businesses and circulating “dishonest” financial documents to crypto lenders, the New York Times reported. By the time Mr. Bankman-Fried’s two companies — FTX, a digital currency exchange, and Alameda Research, a hedge fund — collapsed in November, the lies had become too much to bear, Ms. Ellison said, and the implosions were almost cathartic. “Overall it was the worst week of my life,” said Ms. Ellison, 28, fighting back tears as she recounted the frantic week when the companies failed. “I felt this sense of relief that I didn’t have to lie anymore, and that I could start taking responsibility even though I felt indescribably bad.” Ms. Ellison’s testimony, in her second day on the witness stand, was the most emotional moment so far of Mr. Bankman-Fried’s fraud trial. She was widely considered the government’s star witness, partly because she dated Mr. Bankman-Fried on and off for years, giving her unique access to the FTX founder as his crypto empire grew. His trial in federal court in Manhattan has become a referendum on high-risk practices across the crypto industry that led to billions of dollars in losses last year.

A bankruptcy judge ordered the founder of Bang Energy to pay $63,517 for his Instagram posts that disparaged company advisers who sold the energy drink brand to rival Monster Beverage Corp., Bloomberg News reported. Judge Peter Russin said in a court filing yesterday that the since-deleted social media posts by Bang founder Jack Owoc “could best be described as a rant” and risked harming Bang’s business because they potentially questioned the integrity of the bankruptcy sale process. Owoc, who was fired as Bang chief executive officer in March, made the comments under posts from a @BangEnergy.CEO Instagram account that had 1 million followers. At the time, he was fighting company lawyers over ownership of Bang-affiliated social media accounts. Owoc deleted the disparaging comments after Judge Russin warned him that he could be fined $25,000 a day until the posts were removed, Bloomberg reported in April. Judge Russin said that Owoc’s posts violated a temporary restraining order he and his wife, Megan Owoc, had agreed to abide by. The judge said the Owocs also violated the restraining order because they failed to turn over passwords for TikTok, Twitter and Instagram accounts in question by a March deadline.

Mallinckrodt, one of the largest manufacturers of prescription opioids in the U.S., received court approval for a plan that wipes out more than $1 billion of payments meant for addicts while handing control of the pharmaceutical company to its lenders, WSJ Pro Bankruptcy reported. The U.S. Bankruptcy Court for the District of Delaware yesterday approved the plan that would pave the way for the company to exit from bankruptcy, less than a couple of months after it filed for chapter 11 protection. Mallinckrodt executives have said the company reached a restructuring deal after extensive outreach from its creditors, who, the executives said, believed the drugmaker carried too much debt and needed to right-size its finances to stay in business. This is a setback to governments and individual addicts who filed lawsuits seeking compensation from drugmakers for their role in the opioid crisis. The legal fight stretches back nearly a decade, when more than 3,000 lawsuits from states, Native American tribes and counties alleged the drugmakers, pharmacies and distributors played down the risks of the painkillers and didn’t stem their flow. A few opioid manufacturers that lacked the funds to settle those thousands of lawsuits turned to bankruptcy to try to resolve them. Dublin-based Mallinckrodt, for instance, agreed to pay $1.7 billion into a trust for addicts over eight years to resolve thousands of lawsuits over its alleged role in fueling the opioid crisis. As part of that deal, negotiated during Mallinckrodt’s first bankruptcy filed in 2020, addicts permanently surrendered their legal rights to pursue opioid-related litigation against the company, and the drugmaker was allowed to keep manufacturing the drugs. Mallinckrodt this August filed for bankruptcy again to restructure its debts and outstanding obligations, including more than $1 billion still owed to the opioid victims’ trust.

Three days into Sam Bankman-Fried’s criminal trial in Federal District Court in Manhattan, Judge Lewis A. Kaplan’s warnings to the defense had become unmistakable, the New York Times reported. Judge Kaplan, who is presiding over the high-profile white-collar fraud case, repeatedly told Mr. Bankman-Fried’s lawyers to stop repeating themselves. Over and over, he directed them to rephrase their questions. And with his frequent interruptions of their cross-examinations, Judge Kaplan kept Mr. Bankman-Fried’s legal team off balance, putting it on the defensive. “I just want to express my growing concern about the extent of the entirely unnecessary repetition, and I’ve given you a lot of latitude,” Judge Kaplan told one of Mr. Bankman-Fried’s lawyers, Christian Everdell, during a brief break on Thursday when the jury was not in the courtroom. “You’re wearing out the welcome on the repetition.” Judge Kaplan is a veteran jurist with a history of presiding over prominent trials like that of Bankman-Fried, who is charged with orchestrating a scheme to misappropriate as much as $10 billion that customers deposited with his crypto exchange, FTX. While he is known for his no-nonsense attitude in the courtroom, legal experts say that Judge Kaplan is keeping the defense on an unusually short leash. Bankman-Fried’s trial resumed on Tuesday, with two crucial witnesses. Defense lawyers continued cross-examining Gary Wang, one of FTX’s top executives, who testified last week that Bankman-Fried had instructed him to insert a secret backdoor into the company’s code that enabled the theft of customer funds. There were fewer interruptions, with Everdell pointing out some inconsistencies in Mr. Wang’s initial statements to FBI agents and his testimony at trial last week. Prosecutors then called Caroline Ellison, Bankman-Fried’s former girlfriend, who ran a crypto trading firm that the government says tapped into FTX customer deposits. Wang and Ellison have pleaded guilty and are cooperating with the authorities. Bankman-Fried has pleaded not guilty to seven counts of wire fraud and conspiracy.

A U.S. bankruptcy court judge granted SAS AB’s request to speed the process of paying $3 million to advisers of the Scandinavian airline’s investor group, keeping its restructuring on track over opposition from creditor Apollo Global Management Inc., Bloomberg News reported. Judge Michael E. Wiles set an Oct. 12 hearing on a motion to expedite reimbursement to advisers to the group led by Air France-KLM and Castlelake LP, who are set to take control of SAS as it exits from chapter 11 protection. SAS’s request appeared to be “in the best interests of the debtors, their estates, their creditors, and all parties in interest,” the judge said in a court filing on Tuesday. Apollo had objected to the expedited hearing, arguing that the move would make it harder to prevail on its plan to object to the payment. It added that it won’t have enough time to review and respond to the reimbursement motion. Apollo provided a $700 million debtor-in-possession term loan to SAS as it went through chapter 11 reorganization. While the U.S. equity firm reportedly sought to buy a majority stake, SAS last week chose rival Air France-KLM group, which also includes the Danish state and Lind Invest ApS.

Deutsche Bank AG squared off against the U.S. parent company of Lehman Brothers in a London court this week, hoping to squeeze more money from obscure notes issued by the long-dead bank’s U.K. arm, Bloomberg News reported. The German lender argued that it should be paid money recovered from the U.K. unit ahead of the company’s U.S. parent. Deutsche Bank is leading the case as a holder of a certain type of junior security issued from Lehman’s European unit. It’s the second trial over the ranking of those subordinated notes, after first handing Deutsche Bank and other holders a big win at the U.K. Court of Appeal. While some investors discarded the Enhanced Capital Advantaged Preferred Securities (ECAPS) for nothing in the years following the U.S. lender’s collapse, so much has been generated by the insolvency of Lehman’s U.K. arm that there is now a fight over the interest on the ECAPS claim. “Maybe interest was a golden possibility that no one had thought of at the time,” Judge Robert Hildyard said while questioning the barrister representing Deutsche Bank.

Montgomery Realty Group, the developer behind a planned 18-story hotel in San Francisco, has filed for chapter 7 bankruptcy, The Real Deal reported. The petition comes just a day before a scheduled foreclosure auction of the site from the firm’s lenders. The site, located at 447 Battery Street in the Financial District, contains the remnants of the Jones-Thierbach Coffee Company. In May 2022, the three-story, 27,000-square-foot commercial property was designated a city landmark owing to “its association with the San Francisco coffee industry and with reconstruction of downtown San Francisco following the 1906 earthquake and fires,” according to Planning Department records. Montgomery first submitted development proposals for the property in 2017. Initial plans called for a 19-story building with 182 hotel rooms, eight condos and a 4,700-square-foot restaurant. The proposal for the site later changed into an 18-story property with 198 hotel rooms, nine residential units and two restaurant spaces totaling nearly 7,500 square feet. Montgomery, headed by Rajendra Maniar, filed its bankruptcy petition on Oct. 4, according to records from California’s Northern District court. The firm estimated its liabilities between $10 million and $50 million.