%1

The Catholic Archdiocese of Baltimore filed for bankruptcy protection Friday, less than two days before a new state law takes effect allowing victims of child sexual abuse to sue institutions, no matter how long ago the abuse took place, the Washington Post reported. The legal action will shift to a bankruptcy court, where the process — if successful — will set a permanent end-date when alleged victims of abuse related to the church can file claims, rather than opening a permanent window as the law intended. Each diocesan bankruptcy is unique, experts say, and outcomes depend on the court, insurance arrangements and the legal setup of the diocese. Some legal analysts said the move by the country’s oldest Catholic diocese could limit damages for some survivors, while other experts say it could more equitably distribute Baltimore’s assets and offer anonymity and streamlined financial awards, which some accusers may value. It wasn’t immediately clear Friday what impact filing under chapter 11 of the bankruptcy code will mean for the archdiocese’s 153 parishes and dozens of ministries, including within the city of Baltimore. Baltimore is the 36th U.S. Catholic diocese or religious order to file for such protection since the Catholic clergy sex abuse crisis exploded into public view in the early 2000s. Baltimore will be the sixth diocese to file in 2023.

The labor union for West Coast dockworkers filed for bankruptcy to fend off a judgment holding it liable for what a federal jury found to be illegal slowdowns and work stoppages at the Port of Portland in Oregon, WSJ Pro Bankruptcy reported. The International Longshore and Warehouse Union filed for chapter 11 protection in a San Francisco court to halt litigation brought by a former terminal operator of the Port of Portland that threatened to deplete the labor union’s cash reserves. The ILWU, which represents dockworkers at major U.S. ports in Los Angeles, Long Beach and Oakland, Calif., is fresh off ratifying a new, six-year contract for about 22,000 workers at 29 ports from California to Washington state to end a period of labor uncertainty for some of the nation’s busiest ports. The dockworkers union also has been facing a looming trial on claims that it illegally slowed down operations over several years at the Port of Portland, then operated by an affiliate of Philippines-based maritime company International Container Terminal Services Inc.

A bank recently shut down the accounts of conspiracy theorist Alex Jones’ media company, citing unauthorized transactions — a move that caused panic at the business when its balances suddenly dropped from more than $2 million to zero, according to a lawyer for the company, the Associated Press reported. The action last week by Axos Bank also exposed worry and doubt at the company, Free Speech Systems, about being able to find another bank to handle its money. Jones, a conservative provocateur whose Infowars program promotes fake theories about global conspiracies, UFOs and mind control, is seeking bankruptcy protection as he and his company owe $1.5 billion to relatives of victims of the 2012 Sandy Hook Elementary School shooting in Connecticut. The debt is the result of the families winning lawsuits against Jones for his calling the massacre that killed 26 people a hoax and his supporters threatening and harassing the victims’ families.

Tooth alignment outfit SmileDirectClub filed for chapter 11 protection, Yahoo Finance reported. The company — hampered by years of losses, weak sales for clear aligners, and close to $850 million in long-term debt — plans to maintain normal operations thanks to an investment of at least $20 million by the company's founders Alex Fenkell and Jordan Katzman. Up to $60 million of additional capital is available upon satisfaction of certain conditions, including the favorable conclusion of a marketing process for the company, which is expected to result in the disposition of the company’s equity. SmileDirectClub believes the restructuring process will be "brief."

Headphone maker Muzik Inc. filed for chapter 11 in California, listing a slew of potential high-profile equity holders that include musicians Drake and T.I. and NBA players Chris Paul and Bradley Beal, Bloomberg Law reported. The Los Angeles-based company also named, in court papers filed on Wednesday, potential equity holders including musician Travis Barker, NFL player Brandon McManus, MLB player Matt Kemp, mixed martial artist Brian Stann, and a trust associated with Lionel Richie. Muzik listed assets and debts between $10 million and $50 million. The wireless headphone developer’s unsecured claims include an estimated $2.2 million employee severance lawsuit and a roughly $800,000 Paycheck Protection Program loan, according to a company filing. Drake, whose real name is Aubrey Graham, and T.I., whose real name is Clifford Joseph Harris Jr., are among several celebrities listed as potential equity holders in the company’s chapter 11 petition. Others include Twitter Inc., NBA player Kyle Lowry, and KZC Entertainment LLC, a company associated with actress Zendaya, according to the petition.

A year ago, Sam Bankman-Fried was a fixture on magazine covers and in the halls of Congress, a tousle-haired crypto billionaire who hobnobbed with movie stars and bankrolled political campaigns. On Tuesday, the founder of the failed FTX digital currency exchange is set to leave the jail where he has been confined for more than seven weeks and stand trial in a Manhattan courtroom on federal charges of fraud and money laundering, capping one of the largest and swiftest corporate collapses in decades, the New York Times reported. The charges against Bankman-Fried have put the rest of the crypto industry on trial with him. He has emerged as a symbol of the unrestrained hubris and shady deal-making that turned cryptocurrencies into a multitrillion-dollar industry during the pandemic. The demise of FTX in November helped burst that bubble, sending other high-profile companies into bankruptcy and provoking a government crackdown. The trial will offer a window into the Wild West-style financial engineering that fueled crypto’s growth and lured millions of inexperienced investors, many of whom lost their savings when the market crashed. Lawyers on both sides of the case are expected to lay bare the culture of scams and risk-taking that surrounded FTX and to dissect the often-misleading publicity campaigns that helped drive years of crypto hype. “It’s a fraud that was enabled and supercharged by crypto, and by crypto’s unique aspects,” said Lee Reiners, a crypto expert who teaches at Duke Law School. “It wouldn’t have been possible in any other context.” Jury selection begins on Tuesday in U.S. District Court, with the trial expected to last six weeks. Camera crews and reporters are expected to swarm the courthouse, and the author Michael Lewis has a widely anticipated book about the case coming out that same day, featuring behind-the-scenes details of Bankman-Fried’s rise and fall.

The lawyer for Wichita-based Pioneer Balloon Co. said employees and vendors will continue to be paid after the company appeared on Thursday in U.S. Bankruptcy Court for Kansas, the Wichita Business Journal reported. Filing last week under the corporate names Continental American Corp. and affiliate Pioneer National Latex Inc., both located at 5000 E. 29th St. North, the more than century-old balloon maker plans to restructure and remain in business. "We've got a lot liabilities, and we're looking to restructure," said attorney David Prelle Eron, who is CEO of Prelle Eron & Bailey PA, a firm that specializes in bankruptcy. "We're also looking for more longer-term equity partners to come in that'll be part of our big package." Eron said that Pioneer Balloon has reached an agreement with White Oak, the company's largest creditor, concerning the funding of the case. The company will continue to attend hearings as it works through the chapter 11 details, with the next court date set in mid-October.

Authorities arrested disgraced crypto hedge fund co-founder Su Zhu Friday, the latest detainment of a star from the crypto industry’s last bull cycle, YahooFinance.com reported. Singaporean authorities apprehended Su Zhu, 36, Friday afternoon at the country’s Changi Airport while he was attempting to leave the country. Singaporean courts placed a “committal order” against him according to Teneo, the court-appointed joint liquidators in the bankruptcy for Zhu’s firm, Three Arrows Capital Ltd. The court order, placed on Sept. 25, came as a consequence of Zhu’s “deliberate failure” to cooperate with Teneo’s investigations. He was sentenced to four months' imprisonment. The Singaporean courts have granted a similar order for Three Arrows' other co-founder, Kyle Davies, though "his whereabouts remain unknown at this point in time," said a Teneo spokesman. Separately, the Monetary Authority of Singapore earlier this month prohibited Zhu and Davies from conducting regulated investment activity for nine years each, according to Teneo.

Crypto exchange Gemini Trust Co. withdrew hundreds of millions of dollars from Genesis Global Holdco LLC several months before the lender froze deposits and ultimately filed for bankruptcy, Bloomberg News reported. Genesis and Gemini offered customers in the so-called Earn program the opportunity to generate yields on their crypto tokens. The service let customers of the Tyler and Cameron Winklevoss-owned exchange lend their tokens through Genesis. In August 2022, Gemini took out about $282 million in cryptocurrency from Genesis. The funds withdrawn from Genesis were used to build out a reserve intended to ensure Gemini Earn customers could make immediate redemptions. None of the money went directly to Gemini’s billionaire founders, the Winklevoss twins. Days after the collapse of FTX sent the already beleaguered crypto market into a spiral, Genesis froze customer withdrawals. In January, it filed for chapter 11 protection in New York. Gemini has since filed a claim in the bankruptcy court seeking $1.1 billion on behalf of Earn users. In the months since the initial withdrawal freeze, Gemini, Genesis and its parent company Digital Currency Group have been locked in settlement negotiations that have included public sparring between DCG’s founder Barry Silbert and the Winklevoss twins.

Ohio victims of child sexual abuse while in the Boy Scouts of America could see more compensation for the crimes committed against them under legislation passed by the state Senate yesterday in a unanimous vote, and expected to be approved in the House, the Associated Press reported. The bill’s passage comes amid the organization’s bankruptcy settlement, first filed in 2020 after tens of thousands of men nationwide brought forth claims they had been sexually abused by their Scout leaders. The organization filed bankruptcy in an attempt to continue operating while still partially compensating victims after an onslaught of lawsuits against them. Nearly 2,000 abuse claims have been filed in Ohio. Currently, the amount victims receive from the organization’s settlement depends on the length of the statute of limitations for civil claims in the state that they live in, as well as the length and severity of their abuse. The legislation voids the state’s current civil statute of limitations in bankruptcy cases, in an effort to ensure Ohio victims of Boy Scouts abuse get more compensation. By voiding Ohio’s existing cutoff of 12 years, the bill would ensure that any victim filing a claim receives all of the money they’re owed through the settlement, rather than a fraction of it.