%1

Lawyers for InfoWars defended the far-right wing website’s decision to seek bankruptcy protection under a provision of the law that is for small and family-owned businesses, noting that founder Alex Jones’ parents have been involved in his endeavors, Reuters reported. Their statements came in court papers filed on Monday in response to questions U.S. Bankruptcy Judge Christopher Lopez, who is overseeing the case, raised at a hearing last week surrounding two of the three Jones-related entities, InfoW LLC and Prison Planet TV LLC, that were placed into bankruptcy in Victoria, Texas on April 17. InfoWars filed for bankruptcy following recent court judgments that found Jones and his media businesses liable in multiple defamation lawsuits after he falsely claimed that the 2012 Sandy Hook Elementary School shooting in Newtown, Connecticut that left 20 children and six school employees dead was a hoax. Lawyers for InfoWars have said the bankruptcy is necessary to preserve the means to eventually pay damages in the cases. The U.S. Department of Justice’s bankruptcy watchdog and families of the Sandy Hook victims have questioned the legitimacy of the bankruptcy filing, with some saying Jones and his businesses are using the legal protection afforded under chapter 11 to avoid trials that will determine the amount of damages owed. One trial in Texas was set to start this week but was halted as a result of the bankruptcy. Lopez specifically had asked InfoWars attorney Kyung Lee of Parkins Lee & Rubio how InfoW and Prison Planet qualify for bankruptcy protection under subchapter V of chapter 11 designed to aid small businesses. Lopez noted that both entities exist solely to hold intellectual property and don’t have operations. To qualify for subchapter V protection, a debtor must be “engaged in commercial or business activities.” Subchapter V, which was enacted in 2019, is popular for family-owned businesses. The company’s lawyers said in Monday’s filing that until very recently, the bankrupt entities were single-member owned LLCs that “operated within a family-owned structure, which include Mr. Jones’ father and mother.” The brief did not provide further details of their involvement.

A California bankruptcy judge questioned American Apparel founder Dov Charney’s motive for filing for chapter 11, saying the fashion entrepreneur wanted to thwart litigation against him by a hedge-fund manager that backed his failed bid to be reinstated as the company’s chief executive, WSJ Pro Bankruptcy reported. Judge Vincent Zurzolo of the U.S. Bankruptcy Court in Los Angeles said Mr. Charney’s bankruptcy was a legal tactic meant to hinder or delay collection efforts by hedge-fund manager Standard General LP to enforce about $30 million in judgments. “Clearly, these were strategic efforts to delay and thwart creditor action, rather than a legitimate and reasonable effort to reorganize,” Judge Zurzolo said from the bench. Charney is still protected by the automatic bankruptcy stay that has paused the Standard General litigation. On Tuesday, Judge Zurzolo didn’t consider a request by Standard General to lift the bankruptcy stay, which Charney has opposed. Standard General has accused Charney of attempting to evade judgments against him and said its litigation against him belongs in state court, rather than in his personal bankruptcy case.

An Illinois-based trucking company has filed for chapter 11 protection, citing a jury award of $10 million in December after a 2019 fatal truck crash involving one of its drivers, Freight Waves reported. Joseph Keller, president of Marvin Keller Trucking, headquartered in Sullivan, Ill., filed the first of several emergency motions in the U.S. Bankruptcy Court for the Central District of Illinois on Friday, stating the bankruptcy filing is necessary to “avoid irreparable and immediate harm” to the carrier’s operations. In the filing, Keller wrote that the “substantial money judgment” against the trucking company, stemming from the jury verdict is the “main event” for the family-owned trucking company, founded by his father, Marvin Keller in 1965, to file chapter 11. “With an agreed forbearance on collection of the judgment about to expire, and the debtor [MKT] unable to pay the judgment amount, the debtor filed a voluntary petition under chapter 11 to maximize the potential recovery to its creditors and for the benefit of the other parties in interest including its employees,” according to the trucking company’s emergency motion. A hearing on Marvin Keller’s emergency motions is set for Wednesday.

Architecture and design firm EYP Inc filed for bankruptcy on Sunday to sell its assets in the midst of litigation involving former shareholders and employees and after years of attempting to revamp its complicated debt obligations, Reuters reported. The Albany, N.Y.-based company sought chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware with $149 million in debt. EYP has lined up a lead bid from private equity firm Ault Alliance Inc, its senior lender, to buy its assets for $67.7 million. “EYP is a good candidate to use the protections that a Chapter 11 process provides,” interim CEO Kefalari Mason said in a statement. EYP has offices in 11 cities across the U.S. and projects in approximately 100 countries. Its clients include public and private colleges, the federal government and medical centers, among others. The company said that its business remained healthy during the COVID-19 pandemic. Mason said in a written declaration that the company’s recent financial trouble stems from complex debt obligations owed to several groups of creditors and lawsuits brought by former employees over EYP’s prior debt transactions and restructuring efforts. One of the lawsuits accused a prior shareholder, Long Point Capital Inc, of duping employees into selling their equity in the company to an employee stock ownership plan in exchange for worthless notes. Though EYP itself is not a defendant in the case, it is on the hook for “significant” indemnification obligations to former directors, who were also defendants in the lawsuit, and Long Point. The company has received millions of dollars in indemnification demands, most of which it has not been able to pay because it needs the money it has to continue business operations, Mason said in the declaration. Additionally, EYP spent years trying to restructure its debt without filing for bankruptcy, to no avail.

Officials from 24 states want coin dealer Lear Capital Inc.’s chapter 11 case thrown out, alleging the business filed for bankruptcy to evade government investigations into its business practices, not for a legitimate purpose, WSJ Pro Bankruptcy reported. Attorneys general and financial regulators said in court papers Monday that Lear Capital’s bankruptcy case wasn’t tied to any financial distress but was filed “solely to gain a tactical advantage” in pending investigations of the company. Lear, which sells gold and silver coins at a markup to individual investors over the phone, filed for chapter 11 last month to resolve legal claims that might be asserted against it after it resolved probes into its business practices by the Los Angeles City Attorney’s Office and New York Attorney General. The company paid a combined $8.73 million to Los Angeles and New York last year without admitting wrongdoing to settle lawsuits alleging it misled its customers and charged hidden fees. But there are dozens more state investigations of Lear and its management pending around the country, according to Monday’s court filing. State officials said the bankruptcy had more to do with Lear’s desire to bring those probes to a head in its chosen forum than with any real financial distress.

Advisers for bankrupt companies tied to far-right radio host Alex Jones shed light on the conspiracy theorist’s business operations in bankruptcy court Friday while promising transparency — and cash — to families of Sandy Hook shooting victims suing him for defamation, Bloomberg News reported. Three corporate entities linked to Jones, and his website Infowars, filed for chapter 11 bankruptcy this week in an attempt to corral yet-unquantified damages owed to Sandy Hook families who successfully sued him for calling the 2012 massacre a hoax. Jones himself didn’t go bankrupt, though, and neither did the most lucrative corner of his business, prompting one plaintiff’s attorney to call the maneuver a “ridiculous trick.” In the first hearing in the bankruptcy case Friday, advisers for the Infowars entities said their goal is to pay the families through a fair process free from the influence of Jones. The radio host gave up his control in the holding companies prior the bankruptcy and has agreed to fund a settlement trust to pay claimants and resolve the long-running defamation battle.

A restructuring officer for conspiracy site Infowars said Friday that representatives for its founder Alex Jones worried the radio-host would damage his brand and his ability to sell merchandise if he also joined his media assets in filing for bankruptcy, WSJ Pro Bankruptcy reported. W. Mark Schwartz, an accountant tapped to serve as Infowars’ chief restructuring officer, said Friday in the U.S. Bankruptcy Court in Victoria, Texas, that Mr. Jones is a prominent figure in the conspiracy theorist community and people working on the bankruptcy case worried that putting him in chapter 11 personally would hinder “his value to us in generating cash flow.” Those involved in preparing the chapter 11 filings were concerned that a bankruptcy filing by Mr. Jones could harm his name “and his ability to generate funds, sell merchandise to these people,” Mr. Shwartz said. Instead, only the properties that own the trademark and web-domain rights for Infowars were put in bankruptcy, which has already delayed a coming trial to establish damages against Mr. Jones for falsely claiming the 2012 Sandy Hook shooting was a hoax.

Asset manager GWG Holdings Inc. won court approval late Thursday to tap $10 million in financing even after a bankruptcy judge questioned the loan mechanics and suggested it had a better offer on the table, WSJ Pro Bankruptcy reported. Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston allowed GWG to borrow the emergency loan from National Founders LP after the lender agreed to sweeten some terms. GWG, known for selling life-insurance bonds to individual investors, said in court papers that it needed the lifeline to avoid an imminent liquidation after filing for bankruptcy earlier this week. GWG owes roughly $1.6 billion in financial instruments known as L bonds, which pooled money from bond investors to purchase life-insurance policies on the secondary market, aiming to use the policy payouts when people die to repay those debts. L bonds were largely marketed to individual investors, who bought them after hearing a sales pitch from regional broker-dealers selling the securities on GWG’s behalf. GWG is subject to a continuing Securities and Exchange Commission probe into the company’s accounting and its issuance of L bonds. There are roughly 27,000 bondholders with an average $45,000 investment, according to the company. Scott Alberino, a lawyer for bond trustee Bank of Utah, said in Thursday’s court hearing that GWG’s bankruptcy had left these retail bondholders “in the lurch” and complained about a lack of engagement from the company. The trustee wasn’t notified in advance of the chapter 11 filing despite being the largest creditor of the bankruptcy case, he said.

The judge presiding over the Boy Scouts of America bankruptcy has approved the organization's request to sell its warehouse and distribution center in North Carolina for roughly $13.5 million and lease back the property from the buyer, the Associated Press reported. The BSA wants to use some of the proceeds from the sale approved by the court Friday as part of its contribution to a proposed $2.6 billion fund to compensate tens of thousands of men who claim they were sexually abused as children while involved in Scouting. After a monthlong trial, Judge Laurie Selber Silverstein continues to weigh whether to approve the Boy Scouts’ reorganization plan. The Boy Scouts of America sought bankruptcy protection in February 2020 to stave off a flood of lawsuits alleging child sexual abuse by Scout leaders and volunteers over several decades. At the time, the BSA was facing about 275 filed lawsuits and was aware of roughly another 1,400 pending claims. But more than 82,200 abuse claims have been submitted in the bankruptcy. Attorneys for BSA insurers, including those that have since reached settlements and now support the plan, have said the sheer volume of claims is an indication of fraud and the result of aggressive client solicitation by attorneys and for-profit claims aggregators.