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A New York bankruptcy judge on Tuesday transferred the bankruptcy of Prehired LLC to Delaware, ruling that the software sales training company did not have sufficient business ties to New York to file for bankruptcy in the state, Reuters reported. U.S. Bankruptcy Judge Philip Bentley granted the transfer at the request of Delaware's attorney general, one of several state AGs investigating Prehired for its attempts to collect on payment agreements that allowed students to defer fees for career training. Prehired filed for chapter 11 protection in New York in September, citing students' failure to pay for sales training and state attorney general investigations into its attempt to collect money from former students. Prehired requires its students to pay $30,000 in $500 monthly installments after they land a job in the field of software sales. Delaware Deputy Attorney General Katherine Devanney argued that Prehired's bankruptcy case should be heard in Delaware, where the company is incorporated and where it sued 289 former students who did not make payments after completing Prehired's training. Prehired's attorney Christopher Warren argued that the bankruptcy case should remain in New York because its principal assets are contracts based on New York law. The assets are mostly made up of the Income Share Agreements (ISAs) signed by students, and various claims related to those agreements, according to Prehired.

A federal appeals court upheld the chapter 11 restructuring of Windstream Holdings Inc., finding bondholder complaints about the debt-cutting plan moot because reversing it would mean unwinding transactions that have already taken place, WSJ Pro Bankruptcy reported. The U.S. Court of Appeals for the Second Circuit in New York backed the telecommunications company’s 2020 restructuring, which put Elliott Management Corp. and other senior creditors in control of the business while wiping out junior bondholders owed roughly $2.4 billion. The appeals court found bondholders’ appeal to be equitably moot because they didn’t do enough to prevent the bankruptcy plan from taking effect. Equitable mootness is a judge-made doctrine that protects chapter 11 plans from being unwound if doing so would affect innocent market participants that relied on it. The bondholder trustee, U.S. Bank NA, used its appeal to argue for limiting the doctrine of equitable mootness, saying it contravenes federal courts’ obligation to exercise jurisdiction over disputes stemming from corporate bankruptcy plans. But the trustee “has not suggested any principled rule by which we should limit the doctrine or determine when its application is overbroad,” the Second Circuit said. “U.S. Bank appears instead to invite us to carve out the facts of this case ad hoc. We must decline this invitation.”

The Buffalo Diocese in its settlement Tuesday with the State Attorney General’s Office made no admissions about covering up for priests who had molested children, but agreed to implement enhanced measures to prevent future sex abuse in parishes and schools, the Buffalo News reported. The settlement, filed in U.S. District Court for the Southern District of New York, bans two retired bishops linked to a cover-up of sex abuses from serving in any charitable fiduciary roles in New York, and requires the diocese to follow through for five years on such measures as a program to monitor offending priests. The diocese did not admit to any wrongdoing in the stipulated final order issued by U.S. District Court Judge Ronnie Abrams. The 2020 lawsuit accused diocese leaders of protecting more than two dozen priests accused of child sex abuse by not referring their cases to the Vatican for potential removal from the priesthood. It also accused Bishop Richard J. Malone and Auxiliary Bishop Edward M. Grosz of misusing charitable assets by supporting priests who they knew had likely sexually abused minors. Malone retired in 2019 under intense criticism over his handling of abuse allegations. Grosz retired a few months later in 2020. Bishop Michael W. Fisher, who succeeded Malone, expressed “deep regret” and acknowledged Tuesday that “those who presented themselves as ministers of God” had defiled their vows and “committed crimes against the most vulnerable.” Fisher also said that survivors of clergy sex abuse were not to blame for the abuse. Abuse survivors expressed skepticism about how much the settlement holds diocese officials accountable.

One fallout from the unexpected bankruptcy of a prominent construction contractor in August has been delays on a long in the works West Village neighborhood redevelopment in Detroit, Crain's Detroit Business reported. In a lawsuit filed on Friday in U.S. Eastern District of Michigan Bankruptcy Court, an affiliate of developer Michael Higgins (more on another case in a hot minute) claims a construction lien that the now defunct Bloomfield Hills-based T.H. Marsh Construction Co. filed this summer seeking $267,000 for alleged unpaid work is hindering financing on his mixed-use redevelopment proposal for the northwest corner of Jefferson Avenue and Van Dyke Street. For several years, Higgins has floated reimagining that Jefferson/Van Dyke corner as 42 apartments — 36 across four stories atop a new parking structure, six in a redeveloped carriage house — renting for 50 percent to 120 percent of the Area Median Income, plus about 17,000 square feet of commercial/retail space. Even though some removal of underground storage tanks took place over the summer, the July 27 lien is causing a lender to not authorize construction draw. The lien came less than a month before T.H. Marsh filed for Chapter 7 bankruptcy liquidation on Aug. 22, claiming $50,001-$100,000 in assets and $1,000,001-$10 million in liabilities to 100-199 creditors. A trustee, Mark Shapiro, has been appointed. And the lien, the lawsuit says, was filed long after T.H. Marsh did any sort of work on the project. The lawsuit also says that pre-construction liens are prohibited under state law, and that it was filed well after was legally required.

PhaseBio Pharmaceuticals Inc., a publicly traded heart-disease drug developer, filed for chapter 11 bankruptcy protection weeks after being sued for breach of contract by a Blackstone Inc. portfolio company, WSJ Pro Bankruptcy reported. The chapter 11 filing follows the breakdown in a three-year partnership between PhaseBio and Blackstone’s SFJ Pharmaceuticals X Ltd. to develop Bentracimab, which helps prevent major bleeding for patients on a blood thinner. PhaseBio said in March there was substantial doubt it could continue as a going concern. After PhaseBio failed to improve on its cash position within six months, SFJ sued two weeks ago, accusing the Malvern, Pa., company of breaching the co-development agreement, according to a filing with the U.S. District Court of Eastern District of Pennsylvania. PhaseBio filed for chapter 11 on Sunday, pressured by the lawsuit. It said in its filings it secured $15 million in loans from JMB Capital Partners to see it through bankruptcy and that it has lined up a strategic buyer to acquire its lead program.

Bankruptcy Judge Martin Glenn dealt a blow to Celsius Network’s stockholders yesterday, ruling against their motion to form an official committee of equityholders as they seek to stake a claim to the crypto lender’s most valuable assets, Bloomberg News reported. The ruling means holders of Celsius’s preferred equity will have to pay for their own lawyers and advisers during the bankruptcy. Venture capital firm WestCap Management LLC and pension fund Caisse de Depot et Placement du Quebec (CDPQ) are among the company’s stockholders. Some Celsius stockholders are arguing that they, rather than the company’s customers, are entitled to the value from the crypto lender’s mining business and loan book because of Celsius’s corporate structure. Lawyers for Celsius creditors -- which are overwhelmingly its customers -- disagree. In a written decision issued yesterday, Judge Glenn said the stockholders hadn’t met the legal standard needed to have their advisers’ bills paid for by Celsius. The investors are already adequately represented and haven’t shown that they’ll probably recover money during the bankruptcy, he said.

Sandy Hook families said a Connecticut judge should impose “the highest possible punitive damages” for Alex Jones, suggesting by one calculation that could be as high as $2.75 trillion, Bloomberg News reported. The families said that additional damages are warranted on top of a nearly $1 billion jury award because Jones broke a state law barring the sale of products using false statements. They reached the trillion-dollar sum by multiplying the state law’s up-to $5,000 per-violation fine by the 550 million social media exposures Jones’s audience received on his Facebook, YouTube and Twitter accounts in the three years following a school shooting that claimed the lives of 20 first graders and six educators in 2012. It was the largest of several damage calculation options the families offered the judge for assessing further penalties. “The only appropriate punitive damages award in this case is the largest award within the court’s power,” the families’ lawyers said in the filing. “The defendants have acted willfully, maliciously, and evilly, in full knowledge of the harm they are causing people who had no means to fight back, except to bring this case.”

Bitcoin miner Core Scientific Inc. accused bankrupt crypto lender Celsius Network LLC of refusing to pay its bills since filing for chapter 11, threatening the data-hosting company’s own financial health, WSJ Pro Bankruptcy reported. The brewing dispute could have a material impact on Core Scientific, one of the largest publicly traded crypto miners, as the massive data centers that host bitcoin mining operations struggle to weather the cryptomarket downturn that dragged Celsius and other crypto firms into bankruptcy. Celsius, which filed for chapter 11 in July, has said in court filings that Core broke its service contract by delaying the deployment of mining rigs delivered to Core and supplying less power to those rigs than required under their contract. Celsius has asked for a court order holding Core in contempt and to compel the hosting services provider to perform. Core in response has asked the court to compel Celsius to pay past-due bills to Core or else allow it to sever its contract with Celsius. "Celsius either needs to adhere to the contract, or Core and Celsius must terminate their relationship before Celsius causes yet another business partner to enter insolvency proceedings,” Core Scientific said in bankruptcy court papers filed on Wednesday. Core and other crypto miners have faced major financial challenges this year as power prices surged, crypto prices crashed and major crypto projects and companies have been wiped out. Core shares have tumbled from over $10 per share at the start of the year to just over $1. In court papers filed on Wednesday, Core said Celsius is attempting to “foist millions of dollars in increased power costs on to Core’s balance sheet.” Core also argued that its contract requires Celsius to cover the higher tariffs currently being charged by utilities.

Crypto service provider Prime Trust agreed yesterday to return $17 million from crypto lending platform Celsius that was allegedly withheld just as digital currencies hit their first bottom last year, CNBC.com reported. Prime Trust, which offers custodial services for digital assets, held $119 million of Celsius’s assets when the two terminated their contract in June 2021, according to the lawsuit Celsius filed against Prime Trust in August. Prime Trust “refused to fulfill its obligation” by transferring the $17 million in crypto assets when the contract was dissolved, Celsius said. Bitcoin seesawed last year, hitting a record in April 2021 of $63,000 before losing almost half of its value by July. It resurged to a fresh record of over $64,000 in November and is now trading at around $19,000. Celsius filed for chapter 11 protection in July. Prime Trust agreed at a hearing at the U.S. Bankruptcy Court for the Southern District of New York yesterday to return the crypto assets to settle the lawsuit. Those assets will be held in a separate account until the court figures out how to distribute Celsius’s assets.