%1

Ultimate Jet, the charter airline based at Ohio’s Akron-Canton Airport, is expected to continue operating as usual while its management financially restructures the company under chapter 11 bankruptcy protection, the Cleveland Business Journal reported. Ultimate Jetcharters LLC, which does business as Ultimate Jet, filed for bankruptcy protection last week “to address challenges from the previous management group,” said Stephen West, president and CEO, in an emailed response to questions. Those challenges included at least $10 million in debt for which Ultimate Jetcharters became responsible after the airline’s founder sold a controlling interest in the company in early 2020, according to a bankruptcy court filing by CEO West.

Johnson & Johnson is weighing a third attempt to use bankruptcy for an $8.9 billion settlement of tens of thousands of lawsuits that allege tainted talc in the company’s baby powder caused cancer, the health care giant told investors yesterday, Bloomberg News reported. Erik Haas, J&J’s lawyer in charge of litigation, said during the company’s earnings call Tuesday that the world’s largest maker of health-care products is working with law firms representing “the vast majority” of talc victims to settle all current and future cases that could potentially cost J&J billions of dollars in damages if they go to jury trials. “We’re pursuing a consensual resolution of the talc claims through another bankruptcy,” Haas said during the earnings call. He added that J&J also will continue to “vigorously defend itself” in talc cases that come to trial while it explores the bankruptcy option once again. Courts have twice rejected J&J’s attempts to use the bankruptcy courts to force a talc settlement by setting up a trust to pay victims. Many J&J claimants have vocally opposed relying on a trust. In July, a judge in New Jersey rejected J&J’s second bankruptcy attempt, in which the company sought to resolve at least 40,000 suits for about $8.9 billion. The judge said J&J didn’t meet the test for financial distress imposed by a federal appeals court. The company has vowed to appeal that ruling to the Supreme Court.

Rite Aid Corp. resolved a fight with its largest supplier of prescription drugs, McKesson Corp., that the retailer said threatened its ability to continue providing customers with life saving medicines and imperiled its ability to survive bankruptcy, Bloomberg News reported. Lawyers for the two companies said during a court hearing Tuesday in New Jersey that they’ve agreed in principal to a settlement that will end a lawsuit Rite Aid filed against McKesson over their supply agreement. The settlement ensures that Rite Aid’s stock of prescription drugs won’t be impacted during its chapter 11 case, the lawyers said. The deal avoids a potentially costly fight that could have hindered Rite Aid’s restructuring efforts. Rite Aid claimed McKesson was threatening to walk away from the supply agreement unless it paid for new goods when delivered, describing the effort as “a cynical ploy for negotiating leverage” over the retailer. McKesson argued the long-term supply deal ended prior to the bankruptcy. Rite Aid lawyer Josh Sussberg said the retailer has now agreed to pay McKesson within seven days of receiving new products, versus 19 days previously. Terms of the proposed settlement must be documented and the agreement might be challenged by other Rite Aid creditors, he added. Any settlement must be approved by Judge Michael Kaplan, who is overseeing Rite Aid’s chapter 11 case.

FTX founder Sam Bankman-Fried's lawyer on Tuesday said the now-bankrupt cryptocurrency exchange's investments were not "reckless and frivolous," pushing back against testimony by former executive Nishad Singh portraying its spending on marketing and celebrity endorsements as excessive, Reuters reported. Singh, FTX's former engineering chief, testified for a second straight day at Bankman-Fried's fraud trial in Manhattan federal court. Under cross-examination, Singh told the jury that he thought FTX would be able to stay in business upon learning in September 2022 of a $13 billion shortfall in customer funds, potentially bolstering Bankman-Fried's argument that he believed the exchange's troubles were manageable. FTX declared bankruptcy on Nov. 11, 2022. Singh testified on Monday that the company's venture investments and $1.1 billion in planned marketing deals, including naming rights to the arena where the NBA's Miami Heat play and featuring NFL quarterback Tom Brady in commercials, "reeked of excess and flashiness." Defense lawyer Mark Cohen on Tuesday asked Singh, one of three former members of Bankman-Fried's inner circle who have pleaded guilty to fraud and agreed to cooperate with prosecutors, whether promoting FTX's brand could be useful. "I understood it had business benefits and costs," Singh said in testimony that defense lawyers could use to argue that Bankman-Fried was making what he believed to be good-faith business decisions in shelling out funds for marketing and investments even if others disagreed.

The U.S. unit of cryptocurrency exchange Binance has halted withdrawal of dollars by its clients from the platform, its updated terms showed on Monday, Reuters reported. In early June, Binance.US had halted dollar deposits, after the U.S. Securities and Exchange Commission (SEC) asked a court to freeze its assets. "In the event that customers wish to withdraw U.S. dollar funds from their account, they may do so by converting U.S. dollar funds to stablecoin or other digital assets, which can subsequently be withdrawn," the terms page said. The SEC had sued Binance, its CEO and founder Changpeng Zhao, and Binance.US's operation in June, alleging in 13 charges that Binance had engaged in a "web of deception," artificially inflated trading volumes and diverted customer funds.

Z Gallerie, the Los Angeles-based contemporary furniture retailer, has filed for chapter 11, citing liabilities between $50 million and $100 million, HomeAccentsToday.com reported. The retailer, which is owned by CSC Generation Holdings Inc. and does business as part of DirectBuy Home Improvement Inc., filed for protection in the U.S. Bankruptcy Court in the District of New Jersey. According to the filing, which was reported on Bankruptcycompanynews.com, ZGallerie has 21 locations in nine states. CSC bought DirectBuy/Z Gallerie out of bankruptcy in July 2019 for $20.3 million. In the filing, according to the report, Robert Fetterman, chief financial officer and interim CEO, said the debtor planned to retain Stump & Co. as its investment banker to market the debtor’s assets. “Additionally, the debtor also intends to file a motion proposing an efficient, public and flexible auction process in connection with its sales efforts. If the debtor is unable to implement a going-concern transaction, the debtor will turn to an orderly liquidation of its remaining assets, close its stores in the coming months.

Prima Wawona, the largest producer of stone fruit, has filed for chapter 11 bankruptcy protection with hopes of selling the business, KMPH.com reported. The company says that it is currently looking into a third-party sale or conversion of existing lender debt into equity ownership. Prima Wawona has also filed for court approval to continue operations, including payment of wages and benefits for more than 8,000 employees. The company says it also intends to pay vendors for the goods and services provided on or after the filing date.

Rite Aid appears to be pursuing a novel strategy to handle a huge number of opioid-related lawsuits by sidestepping plaintiffs until after filing for bankruptcy, WSJ Pro Bankruptcy reported. The drugstore chain on Sunday became the first large company facing mass opioid liabilities to file chapter 11 without any agreement with opioid plaintiffs, who may end up getting very little from Rite Aid. Other companies facing opioid litigation, including drugmakers Purdue Pharma, Mallinckrodt, Endo and Insys Therapeutics, had all lined up settlements with at least some opioid plaintiffs before filing for bankruptcy. Rite Aid said that it intends to use bankruptcy to cut billions of dollars in financial debt and reduce its store count. It has a proposed deal with bondholders to hand them full equity control. The retailer said it also intends to address various litigation facing the company, including the more than 1,600 opioid lawsuits that have been a drain on its resources. “It’s unusual that there’s no explicit settlement with [opioid] victims, which was the case in most of the other opioid bankruptcy cases,” said Edward Neiger, a lawyer who has represented opioid plaintiffs in other chapter 11 proceedings. The Supreme Court is currently examining Purdue Pharma’s use of chapter 11 to resolve opioid lawsuits and bankruptcy courts’ practice of granting releases from liability for affiliates and other parties tied to a bankrupt company. If the Supreme Court rules against Purdue, the decision could outlaw third-party releases as a tool to forge settlements of opioid lawsuits and other mass torts. That possibility may give Rite Aid and other companies pause before reaching similar deals, Neiger said.

Another former member of Sam Bankman-Fried’s inner circle at FTX told a jury Monday that he committed crimes alongside the 31-year-old crypto entrepreneur, saying he was aware FTX customer money had been routed to Bankman-Fried’s crypto trading firm, YahooFinance.com reported. "I defrauded customers, investors," said Nishad Singh, the former director of engineering at the now-bankrupt cryptocurrency exchange, who first met Bankman-Fried while he was in high school. Singh pleaded guilty in February to wire fraud and conspiring to violate U.S. campaign finance laws. He is one of three close colleagues of Bankman-Fried to plead guilty and testify against the former FTX founder. The others — Caroline Ellison and Gary Wang — appeared during the first two weeks of the trial. Still another high-ranking FTX insider, software developer Adam Yedidia, testified against Bankman-Fried last week. Prosecutors are arguing that Bankman-Fried committed wire fraud and six other crimes by embezzling billions in FTX customer funds and lying to investors and lenders.

Owners of the Tattered Cover Book Store have filed for chapter 11 reorganization — part of which includes closing three stores and eliminating employee positions. The bookstore chain currently owns seven stores and employs 103 people, the Denver Business Journal reported. Bended Page LLC, the owners and operators of the Tattered Cover, made the announcement through a press release after filing in the U.S. Bankruptcy Court for the District of Colorado. The three stores that will be impacted are in Denver’s McGregor Square, Westminster and Colorado Springs. Closure of these locations is expected to begin Oct. 23, and be completed by early November. The McGregor Square location opened in June 2021, the Westminster location opened in January 2022 and the Colorado Springs location opened in June 2022. At least 27 staff positions will be affected by the closures, the company said in a statement. Some impacted employees may fill temporary seasonal positions at the remaining stores during the holiday season. The company is working to develop severance packages for eligible employees affected by the closures. Earlier this year, the Tattered Cover went through a leadership change when bankruptcy attorney Brad Dempsey was appointed as CEO of the business. At that time, Dempsey told the Denver Business Journal he was tasked with addressing immediate financial issues of the company and putting it back on its feet.