%1

Another Florida insurance company declared bankruptcy, WFLA.com reported. Florida’s insurance commissioner has declared Weston Property & Casualty Insurance insolvent. This comes days after Demotech withdrew the company’s rating. Demotech on Monday also withdrew financial stability ratings for FedNat Insurance Co. and changed United Property & Casualty Insurance Co.’s rating from “A Exceptional” to “M Moderate,” the Associated Press reported. The move raises concerns for homeowners who could end up paying more for insurance amid the state’s ongoing homeowners insurance crisis. The Associated Press reported that the moves follow reports from last month that said Demotech planned to downgrade anywhere from 17 to 27 insurers from an “A” rating to ratings of either “S,” for substantial, or “M.”

Families of Sandy Hook victims who are suing Alex Jones for defamation accused the conspiracy theorist of siphoning significant amounts of money from Infowars’ parent company before he put the business into bankruptcy, the Wall Street Journal reported. Alinor Sterling, a lawyer representing nine Sandy Hook families, said Monday they are concerned Jones “has been systematically siphoning large amounts of money” out of Infowars’ parent company, Free Speech Systems LLC, since her clients sued him in 2018 for falsely claiming the 2012 school massacre was a hoax. FSS, which filed for chapter 11 last week, disclosed in a balance sheet submitted to the bankruptcy court that in 2021 and 2022 it paid more than $62 million in what it described as “member draws,” typically referring to money taken out by owners. FSS said in its bankruptcy petition that Mr. Jones is its sole owner. Lawyers representing Sandy Hook families in a separate fraudulent-transfer lawsuit also said Jones was the only member of FSS that they are aware of. Avi Moshenberg, a lawyer representing families in the fraudulent-transfer action, said Monday during a hearing in the U.S. Bankruptcy Court in Victoria, Texas, that they believe Jones and FSS have diverted assets to shell companies indirectly owned by Mr. Jones and his parents to make him and FSS “judgment-proof” in the defamation litigation.

Shares of beauty-products maker Revlon Inc. have more than doubled since it won court approval to take out $1.4 billion in financing to carry itself through bankruptcy, WSJ Pro Bankruptcy reported. Revlon stock reached $10.74 a share in early trading yesterday before closing at $8.89, indicating market faith that the company’s equity still has value despite its latest borrowing. Shareholders typically walk away empty-handed in bankruptcies, but a run-up in Revlon shares after its bankruptcy filing in June has some wondering if it could be the next Hertz Global Holdings Inc., which paid out roughly $1 billion in equity value through its chapter 11 case last year. Tuesday’s rally, which lifted the stock from around $5 last week, followed a decision by Judge David Jones of the U.S. Bankruptcy Court in New York to grant final approval for a loan package designed to keep Revlon afloat while it looks at restructuring options. The rally seemed to ignore that Revlon’s new loan puts additional debt on the company that must be repaid ahead of equity. Revlon watchers said the run-up could reflect positive market sentiment that the restructuring process is moving forward.

Families of Sandy Hook school shooting victims have quickly raised the alarm over the latest legal maneuver from far-right radio show Infowars and its proprietor, Alex Jones, Bloomberg News reported. The ultimate parent of Infowars, Free Speech Systems LLC, filed for chapter 11 bankruptcy on Friday just months after three corporate entities linked to Jones did the same in a failed attempt to corral and settle defamation damages owed to Sandy Hook families. In an initial hearing Monday, lawyers for the families expressed concern about the structure of the latest move and its timing — smack in the middle of a two-week trial in Texas that will put a dollar figure on the damages. Free Speech Systems is seeking a special type of bankruptcy protection that allows small businesses to speed through insolvency with relatively little input from creditors. Companies are typically only allowed to utilize that kind of proceeding if they owe less than $7.5 million. The Infowars parent has more than $50 million of debt, much of it owed to an entity owned by founder Alex Jones, according to court papers. Free Speech Systems syndicates the Infowars radio show — in which Jones frequently spouts conspiracy theories — and sells dietary supplements. The company generated revenues of about $65 million in 2021, most of which came from the sale of supplements, to post a net loss of about $11 million, court papers show. A lawyer for the U.S. Trustee, an arm of the Justice Department that polices bankruptcy court, in the hearing said he would urge the judge overseeing the case to slow down the process. “Transparency is 100% crucial in this case,” the lawyer, Ha Minh Nguyen, said. A committee of people suing Jones and Infowars may need to be formed in the bankruptcy, Nguyen added.

The Boy Scouts of America has a pathway out of bankruptcy, but the group faces challenges in repairing its finances and reputation after resolving a legacy of sexual abuse, WSJ Pro Bankruptcy reported. A bankruptcy court last week approved most parts of a landmark compensation plan of at least $2.5 billion that would end the Boy Scouts’ chapter 11 case and resolve roughly 82,200 individual claims of sexual abuse. An exit from chapter 11 would shield the Boy Scouts from further sex-abuse lawsuits, while testing whether it can still appeal to families despite its past failures to protect children. The chapter 11 case was the largest and most complex bankruptcy case filed to resolve mass claims of sexual abuse. Adult survivors wrote hundreds of letters to the bankruptcy court, recounting lives twisted by childhood abuse and detailing their views of the proceedings. News of the courtroom battles between the Boy Scouts and abuse survivors filtered down to scouting communities and families, fueling doubts about the organization as it tried to hammer out settlements that would ensure its survival. Now the group is close to emerging from bankruptcy, low on cash but retaining much of its prized property holdings and adventure camps. The group is hoping for a chance to start fresh, but faces longer-term challenges from declining membership. “The Boy Scouts can earn back trust and respect over time, but this change won’t be easy and will likely need to be measured in decades,” said Michael Bellavia, chief executive of HelpGood, a Los Angeles marketing agency focused on social impact. The chapter 11 plan keeps the Boy Scouts’ roughly 250 affiliated local councils safe from future sex-abuse lawsuits, and protects recruiting pipelines from civil and religious partner groups. The organization’s national governing body based in Irving, Texas, and local councils across the country are together contributing roughly $800 million. Contributions from insurance companies and troop sponsors bring the total victim compensation to more than $2.5 billion. An earlier total was roughly $2.7 billion but Judge Laurie Selber Silverstein struck down a $250 million settlement with the Church of Jesus Christ of Latter-day Saints, declining to grant the institution the releases that would shield it from further sex-abuse lawsuits.

Revlon Inc. received a U.S. bankruptcy judge's permission yesterday to proceed with a $1.4 billion loan, over an objection by junior creditors who argued that its onerous terms could block their chance to recover anything from the cosmetic company's bankruptcy, Reuters reported. U.S. Bankruptcy Judge David Jones in Manhattan ordered modifications to the loan in response to the junior creditors' concerns, but said Revlon must be allowed to borrow the cash it needs to continue its operations in bankruptcy. Revlon filed for chapter 11 in June, saying its $3.5 billion debt load left it too cash-poor to make timely payments to critical vendors in its cosmetics supply chain. To shore up its supply chain and fund its bankruptcy court case, Revlon sought additional financing from a coalition known as the BrandCo Lenders, which had loaned Revlon $1.88 billion in the years before it filed for bankruptcy. Judge Jones allowed Revlon to borrow $375 million at the start of the bankruptcy. Friday's unlocks between $200 million and $1.05 billion in additional funds, some of which would be used to pay Revlon's existing debts to BrandCo lenders. The judge's approval also commits Revlon to non-financial conditions, including a schedule for exiting bankruptcy by April 2023 on terms favorable to the lenders. Judge Jones ordered some changes to the loan agreement, giving Revlon more time to propose a restructuring plan and giving junior creditors more authority to bring lawsuits on Revlon's behalf.

Millions of customers of crypto platforms Voyager Digital Holdings Inc. and Celsius Network LLC have been thrust into a potentially long and painful battle in bankruptcy trying to retrieve their money, WSJ Pro Bankruptcy reported. The chapter 11 filings of crypto brokerage Voyager and nonbank lender Celsius have tied up the holdings of their customers, who are realizing how little control they have over their funds and that they aren’t likely to recover in full through bankruptcy court. Jess Archer, a 45-year-old single mom to two children, deposited $70,000, a sizable portion of her savings, with Voyager in May and June. She was drawn by the firm’s offer of a 9% interest rate, hoping the profit could help her make a down payment on a new house. When Voyager filed for bankruptcy, “I spent two days crying and blaming myself,” said Archer. Voyager has said that recoveries for customers can include a combination of crypto, shares in the reorganized company and maybe some tokens. It has also made it clear that the account holders will be “impaired,” an outcome that could include not getting all of their money back. Archer said that she believes it is unlikely that she will get anything back even though Voyager has received court approval to pay employees and professionals. While she still thinks crypto is a viable alternative to fiat currency like the U.S. dollar, her experience has led her to believe that more government oversight is needed so history doesn’t repeat itself. Joshua Sussberg, a lawyer who represents both Voyager and Celsius, said while the decision to halt trading services and freeze withdrawals was difficult for the companies, “it was necessary to preserve investments and ensure equal treatment of all customers.” But now the focus is to work with customers, through officially appointed committees of customers, to maximize value for them, he said. “All is not lost. On the contrary, it is our job to get customers as much value back as quickly as we can,” Sussberg said. In recent weeks, Voyager has asked for a bankruptcy court’s permission to honor customer withdrawal requests for some $350 million in cash funds held in custody at the Metropolitan Commercial Bank, but it said the roughly $1.3 billion in digital assets on Voyager’s platform belongs to the bankruptcy estate that will be shared by all creditors, with the distribution to be decided through the bankruptcy proceeding.

The parent of far-right conspiracy website InfoWars filed for U.S. bankruptcy protection on Friday as the company and its founder Alex Jones face up to $150 million in damages in a trial over longstanding falsehoods he perpetuated about the Sandy Hook elementary school massacre, Reuters reported. The bankruptcy filing by the InfoWars parent, Free Speech Systems LLC, would normally result in the trial and related litigation being halted. But Free Speech plans to ask a bankruptcy judge to allow the trial currently underway in Texas to continue and is seeking an emergency hearing on Monday, according to a court filing. Nevertheless, Jones and his company could later attempt to use the bankruptcy proceedings, commenced in another Texas court, to limit the size of any damages a jury awards. A bankruptcy filing by three other InfoWars entities in April proposed $10 million to resolve the litigation, far less than what the Sandy Hook families are seeking. The proposal contemplated legal releases shielding Jones and his company from the lawsuits in exchange for the payment. The entities that previously declared bankruptcy - InfoW, IW Health and Prison Planet - voluntarily ended their cases in June after the Sandy Hook families dropped them as defendants in the defamation litigation. Jones was found liable last year in lawsuits Sandy Hook families filed after he falsely claimed that the 2012 school massacre was a hoax. The unusual judgments occurred after Jones defied court orders to turn over documents in the litigation. The cases were then teed up for trials to determine damages, with the first one now underway in an Austin, Texas, courtroom.