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Shareholders of Western Global Airlines (WGA) have requested the U.S. Bankruptcy Court in Delaware to dismiss or reduce to zero, claims arising from a class action suit claiming prohibited financial transactions relating to the company's employee stock ownership plan (ESOP), CH-Aviation.com reported. The U.S. Department of Labor (DOL) is also investigating the circumstances of the ESOP transactions. The Neff family shareholders are seeking a court order subordinating the ESOP claims to those of general unsecured creditors to be reduced to zero or disallowed entirely. On October 17, WGA and its debtor subsidiaries in chapter 11 protection filed their objection to the class action, arguing the ESOP claims be disallowed for purposes of voting on the airline's restructuring plan. A court hearing has been scheduled for November 13 before Judge Karen B. Owens, but the court may grant the order without further notice or hearing if no responses to the shareholders' objection are filed.

Mutual funds that purchased $280 million of municipal debt to finance a 320-acre youth-sports complex near Phoenix would be virtually wiped out under a preliminary deal struck in the bankruptcy case, Bloomberg News reported. Miami-based Burke Operating Partners agreed in principal to purchase Legacy Park for $25.5 million, with most of the proceeds going to building contractors for unpaid work. Bondholders would receive $2.2 million in cash and 11% of preferred equity in a new company that would own the facility according to an agreement outlined in a bankruptcy court hearing late Tuesday. It would need to be approved in the bankruptcy process to take effect. Legacy Park has enough cash to remain open while the parties work to close the deal by the end of the November, said Keith Bierman, the complex’s chief restructuring officer. Legacy Cares filed for bankruptcy in May, saying construction setbacks, labor shortages and supply-chain delays amid the pandemic led to the park’s delayed opening and resulted in lost revenue. Mutual funds including the Vanguard Group and AllianceBernstein Holdings LP hold the $280 million of Legacy Cares bonds issued by an Arizona agency. The bonds last traded on Aug. 23 for 10 cents on the dollar. In addition to labor shortages, Legacy Park was also plagued by poor execution of restaurant and concession operations. In all, Legacy Park brought in just $27.7 million in 2022, far short of its nearly $100 million projection. It was losing more than $1 million a month on operations alone.

The Buffalo (N.Y.) Diocese is offering up to $100 million to settle child sex abuse claims in its federal bankruptcy case, the Buffalo News reported. As much as half of that would come from parishes, schools and other Catholic entities, while the diocese would also need to sell its Catholic Center on Main Street, the former Christ the King Seminary campus in the Town of Aurora and other properties. Those details were revealed in court papers filed late Monday in which diocese lawyers sought a preliminary injunction to keep all sex abuse lawsuits against parishes and schools grounded while mediated negotiations in the diocese bankruptcy case continue. Court papers said that the $100 million does not include insurance funds, while suggesting that insurance companies additionally could contribute “perhaps even hundreds of millions of dollars” to a settlement. Ilan D. Scharf, lead attorney for the unsecured creditors' committee that represents about 850 abuse claimants in the Buffalo Diocese bankruptcy case, declined to comment Tuesday on the numbers unveiled by the diocese lawyers. But some plaintiffs' lawyers on Tuesday accused the diocese of trying to "silence survivors" in its motion to halt the lawsuits. The Buffalo Diocese settlement offer appears to be very similar to the pending chapter 11 reorganization plan the Syracuse Diocese announced in July. Syracuse Bishop Douglas J. Lucia at the time said that the diocese had reached a deal with its creditors committee in which it would pay $50 million to a settlement trust, while its parishes would contribute $45 million, and $5 million would come from other Catholic entities. The full plan could be filed in court as early as next month.

BlockFi emerged from bankruptcy on Tuesday, nearly 11 months after it was swept away by the turbulence in the cryptocurrency industry following the collapse of FTX, Reuters reported. In its bankruptcy filing in November last year, BlockFi had cited its loans to FTX's sister firm Alameda as one of the reasons for the crisis it was facing. On Tuesday, the company said that it would officially begin enacting the actions detailed in its bankruptcy plan, like recovering assets it believes are owed to it by FTX, Three Arrows Capital and others. Any attempts to recover assets from those companies, however, will likely be contentious as both are themselves waddling through their respective bankruptcy processes. Separately, FTX co-founder Sam Bankman-Fried is undergoing a trial for fraud. BlockFi said that withdrawals are currently available to nearly all of its Wallet customers. Those with BlockFi Interest Accounts and Retail Loans will be repaid over the coming months, but the amounts they receive could vary based on the outcome of the FTX bankruptcy, BlockFi said.

Crypto lender Genesis Global said yesterday that a New York civil fraud lawsuit could lead to a bankruptcy liquidation that does not resolve its claims against parent company Digital Currency Group (DCG), Reuters reported. New York Attorney General Letitia James sued cryptocurrency firms Genesis Global, its parent company DCG, and former partner Gemini Trust Co on Oct. 19, alleging that they defrauded investors of more than $1 billion through a jointly run investment program called Gemini Earn. The lawsuit seeks to ban all three cryptocurrency firms from the financial investment industry in New York, which would imperil their efforts to reach a longer-term settlement. Rather than await the outcome of the lawsuit, Genesis intends to propose a "no deal" bankruptcy plan to distribute available crypto assets to customers and set up a process to preserve litigation claims against DCG and others, Genesis attorney Sean O'Neal said at a court hearing in New York. "It's not an easy decision, but it is an obvious decision," he told U.S. Bankruptcy Judge Sean Lane. "That was forced upon us by the New York Attorney General's complaint." Genesis believes creditors would be better off under a bankruptcy plan that includes a DCG settlement, but the company is running out of time to finalize a plan and send it to creditors for a vote, O'Neal said. DCG will continue to engage in settlement talks in hopes of reaching a better outcome for Genesis creditors, but it is "fully prepared to defend and win" if forced to litigate Genesis's claims, a DCG spokesperson said by email.

FTX Trading Ltd. is considering proposals from three bidders to restart trading on what had been one of the world’s biggest crypto exchanges before the company sank into bankruptcy amid fraud allegations, Bloomberg News reported. The company will make a decision about how to proceed by mid-December, the company’s investment banker, Kevin M. Cofsky of Perella Weinberg Partners, said Tuesday during a court hearing in Wilmington, Delaware. FTX is negotiating details of potentially binding offers with investors, Cofsky said. Options include selling the entire exchange, including a valuable list of more than 9 million customers, or bringing in a partner to help restart the exchange, Cofsky told US Bankruptcy Judge John Dorsey. FTX is also mulling a reboot of the trading platform on its own, he said. “We are engaging with multiple parties every day,” Cofsky said, without disclosing the names of the bidders. Since filing for bankruptcy last year, FTX has been trying to raise money to repay creditors. FTX’s administrators have so far recovered about $7 billion in assets, including $3.4 billion of crypto, according to court documents.

A senior-living company filed for bankruptcy this week after it exhausted an emergency loan, the latest to falter because of COVID-19, Bloomberg News reported. Nashville Senior Care LLC’s plight illustrates the pressures bearing down on the senior-living sector. Higher staff and supply costs on top of tepid demand for such facilities have caused defaults to outpace the rest of the municipal bond market this year. About 8% of the $43 billion in outstanding senior-living bonds is in default, compared with less than 1% of the total municipal bond market, according to data compiled by Bloomberg. At Nashville Senior Care, the pandemic shutdown lowered the number of residents “precipitously,” while expenses rose “dramatically,” leaving the facilities without the means to make needed investments, executive director Thomas Johnson said in a court filing. “This difficult combination of rising costs and a lower census, coupled with a high debt load from their financing, led to the Debtors’ default under their bond documents,” added Johnson, founder of the nonprofit Trousdale Foundation, which owns the facilities. The operator of five senior living facilities and one home health company in Tennessee, Florida and Ohio listed assets of $50 million to $100 million and liabilities of $100 million to $500 million, including about $213 million in municipal bond debt. Its bonds have been hit hard by the pandemic. A bond, issued by Highlands County Health Facilities Authority, due in 2038 with a 6% coupon traded at 12 cents in June.

Bankrupt Cyxtera Technologies Inc. is in advanced talks to sell a large swath of its data centers to Brookfield Infrastructure Partners, Bloomberg News reported. As part of its chapter 11 filing, Cyxtera has been looking at two possible tracks, either recapitalizing itself, with lenders taking control of the firm, or selling itself. Cxytera’s and Brookfield Infrastructure Partners’s negotiations are continuing and could still fall apart. Brookfield Infrastructure Partners has been building its data center holdings, with recent acquisitions of European firm Data4 and Compass Datacenters LLC. It also owns Dawn Acquisitions LLC, which does business as Evoque Data Center Solutions. Digital Realty Trust Inc. has also shown interest in some of Cxytera’s assets, Bloomberg previously reported. Prior to its June bankruptcy, Cyxtera had entered negotiations with lenders on how to tackle nearly $870 million of debt due next year. The company was formed in 2017 after CenturyLink’s data center and co-location business was combined with Medina Capital’s security and data analytics operations. In 2021, Cyxtera combined with a black-check firm in a deal valuing the combined company at about $3.4 billion on an enterprise basis.

Hello Bello, the environmentally-friendly diaper and baby products startup founded by two TV stars, filed for bankruptcy with a plan to sell its business after its pandemic-fueled expansion faltered due to rising shipping costs and inflation, WSJ Pro Bankruptcy reported. Unconditional Love, the company behind Hello Bello, founded in 2019 by actors Kristen Bell and Dax Shepard, quickly gained popularity to become the biggest direct-to-consumer diaper brand by 2021. The company’s net sales reached $200 million by 2021 when it signed up 130,000 subscribers, according to court papers filed by Chief Executive Erica Buxton. Shepard and Bell are listed as holders of more than 12% of the company’s common equity, according to a court filing. The company has a deal to sell itself to New York-based investment firm Hildred Capital Management. An investment in 2020 by private-equity firm VMG Partners helped the startup expand its product offerings as well as its reach beyond Walmart, its first retail partner, to grocery, drug and specialty retailers in the U.S. and overseas, according to the court filing. In addition to diapers, training pants and baby products the company also sells sanitizers and vitamin gummies.

Helicopter ambulance company Air Methods Corp. filed for chapter 11 protection after it struggled to overcome a changing regulatory environment combined with higher interest rates, Bloomberg News reported. Air Methods listed assets and liabilities between $1 billion and $10 billion in a petition filed in the Southern District of Texas on Tuesday. A majority of its first-lien lenders, bondholders and its shareholders have agreed on a restructuring plan to cut debt by about $1.7 billion, according to a company statement. A group of first-lien lenders committed to provide $80 million of debtor-in-possession financing, it said. The closely-held company has been holding talks with creditors after missing an interest payment on its debt, Bloomberg previously reported. Its profits have been slashed by rising costs, rising interest rates and federal legislation aimed at protecting people from unexpected medical bills. Private equity firm American Securities acquired the company in 2017. Air Methods expects to complete the restructuring by year end, it said in the statement.