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Sinclair Broadcast Group Inc. wrongfully drained at least $1.5 billion from its regional-sports-network subsidiary in the years leading up to its bankruptcy, a new lawsuit alleges, MarketWatch.com reported. In a lawsuit filed last month but made public Wednesday, Diamond Sports Group — which broadcasts nearly half of all Major League Baseball, National Basketball Association and National Hockey League games — accused its parent company of a “nefarious strategy” that sent it “careening toward bankruptcy.” According to the lawsuit, which was filed in U.S. Bankruptcy Court for the Southern District of Texas, Sinclair took more than $100 million a year in management fees from Diamond after acquiring the sports network for $10.6 billion from the Walt Disney Co. DIS, -0.82% in 2019, loaded it with billions in debt and funneled resources from the company while its business was left to languish. According to the suit, MLB Commissioner Rob Manfred testified that Sinclair Executive Chairman David Smith told him in late 2021 that he intended to “continue to milk” Diamond out of hundreds of millions in management fees along with “whatever else” he could take from the company until Sinclair’s original investment in the regional sports network was recouped.

A U.S. judge on Wednesday converted Christmas Tree Shops' bankruptcy to a chapter 7 liquidation, saying a court-appointed trustee should take over the bargain retail chain's wind-down and address doubts about unpaid employee wages, Reuters reported. Christmas Tree Shops filed for bankruptcy in May, hoping to keep most of its stores open while addressing its debt. But the company pivoted to a full liquidation in July after its store closing sales failed to meet revenue targets and Christmas Tree Shops defaulted on a $45 million bankruptcy loan. During a hearing before U.S. Bankruptcy Judge Thomas Horan in Wilmington, Delaware, a lawyer for Christmas Tree Shops, Harold Murphy of Murphy & King, traded barbs with an attorney for bankruptcy lender and store liquidator, Hilco Global. Murphy said that Hilco's store-closing sales missed revenue targets by $14 million. Hilco counsel Gregg Galardi of Ropes & Gray countered that the retailer's management exceeded its loan budget and told employees they would receive bonuses that Hilco never agreed to fund.

Loss-making private jet firm Wheels Up Experience nabbed a key $500 million lifeline but still faces turnaround challenges, as demand for private travel softens in the wake of the COVID-19 pandemic and rival operators lure some of their customers, Reuters reported. Wheels Up avoided a possible bankruptcy when it secured backing from investors on Tuesday, including U.S. carrier Delta Air Lines. Shares rose 11% on Wednesday in midday trading. But the company still has work to do to become profitable in a more difficult environment, said business aviation consultant Brian Foley. Two operators have closed down since May in the face of diminished traffic and higher labor costs could force some private-jet operators out of business. "There will be some more casualties," Foley said. Rivals, meanwhile, say they have been picking up some of the company's customers. "I don't wish for turmoil in the market at all, but I'm an opportunist," said Jim Segrave, CEO of private operator FlyExclusive, who said his company has attracted customers from Wheels Up, the third-largest private-flight operator last year.

The Texas-investment firm that sought to take over Mercy Hospital in Iowa City is now asking the court to appoint an examiner to investigate the hospital's bankruptcy filings ahead of its sale to the University of Iowa, the Des Moines Register reported. Preston Hollow Community Capital, a major investor in the 194-bed Iowa City hospital, called into question the hospital's plans to liquidate through a bankruptcy fire sale process to the university health system for $20 million. In court filings this week, the Dallas-based company accused Mercy Iowa City leadership of mismanagement, leading to the hospital's "financial freefall" in recent years. As a result, Preston Hollow Community Capital asked the court to approve "a comprehensive financial and legal review" of the hospital, its board of directors, its former managing partner MercyOne and its other partners, including Allscripts Healthcare Solutions, an electronic health records vendor. "In order to achieve that outcome, Preston Hollow Community Capital has requested the court appoint an examiner in line with longstanding provisions of the U.S. Bankruptcy Code," the company said in a statement. "This step will help maximize financial recovery for all creditors, including the pensions of hospital employees and retirees, while at the same time ensuring the sale process is fair and accurately reflects the hospital’s overall value to the community." Mercy Iowa City officials disputed the allegations made by the investment firm in a statement this week. Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

Lawyers for the Sandy Hook families who won historic defamation damages against the Infowars conspiracy theorist Alex Jones told a federal bankruptcy judge in Houston on Tuesday that Mr. Jones should not be allowed to use his chapter 11 filing to evade $1 billion-plus verdicts made against him, the New York Times reported. The families asked that Judge Christopher Lopez order Mr. Jones to pay them the full damage awards, with no possibility of a trial or a forced settlement over a lesser amount — in legal terminology, to make Mr. Jones’s debts to the families “non-dischargeable” through bankruptcy. If the judge rules in the families’ favor, Mr. Jones would likely be working the rest of his life to pay the debt. Mr. Jones spent years spreading lies that the 2012 shooting that killed 20 first graders and six educators at Sandy Hook Elementary School in Newtown, Conn., was a hoax aimed at gun control. Families of 10 victims sued him for defamation, and in trials in Texas and Connecticut were awarded about $1.4 billion in damages. As the cases went to trial, Infowars declared bankruptcy, and Mr. Jones declared personal bankruptcy late last year. The families have been fighting him in bankruptcy court ever since.

Private jet membership company Wheels Up Experience said Tuesday that it would receive up to $500 million in rescue financing from Delta Airlines and investors with turnaround experience in the travel and tourism industries, WSJ Pro Bankruptcy reported. With the new capital infusion Wheels Up, a startup that was founded on the idea of expanding access to private-jet ownership, has a path to averting bankruptcy, which the company has been exploring as one of its strategic options. Wheels Up said that a consortium of investors including Delta Airlines, Certares Management and Knighthead Capital Management agreed to provide a $400 million loan, while Delta will also provide an additional $100 million revolving credit facility. Lenders under the non-binding agreement announced Tuesday will receive newly issued common shares in Wheels Up to give them a 95% stake in the company. Wheels Up hasn’t turned a profit since it was founded in 2013 and has recently run low on cash, putting its survival as a going concern in doubt. Certares and Knighthead teamed up in the travel industry before, taking over Hertz Global Holdings in its bankruptcy in 2021.

An affiliate of Ken Griffin’s Citadel has acquired roughly $485 million in Yellow Corp. debt previously owned by Apollo Global Management Inc. and other senior lenders to the bankrupt trucking firm, Bloomberg News reported. The deal comes as Yellow seeks to secure a bankruptcy loan to fund its liquidation. Apollo and other senior lenders had offered to provide the company $142.5 million in new money to fund the trucking firm’s wind-down, but Yellow was approached with less expensive options after filing chapter 11. Apollo and other existing Yellow lenders won’t proceed with their proposed chapter 11 loan as a result of the Citadel deal, the person said. A Yellow lawyer said last week that the company is considering alternative bankruptcy loans from hedge fund MFN Partners LP, the company’s largest shareholder, and rival trucking company Estes Express Lines. Yellow has said the alternative bankruptcy loans it’s considering are less expensive and will give the company more time to sell its valuable real estate portfolio and vast fleet of trucks and trailers. The chapter 11 loan offered by funds managed by Apollo and other existing lenders carried 17% interest and higher fees.

Lordstown Motors said on Tuesday it had reached a $40-million settlement with Karma Automotive over a 2020 lawsuit in which the now-bankrupt electric vehicle firm was accused of stealing proprietary technology, Reuters reported. The settlement, placed with the bankruptcy court for approval, involves $5 million to be paid as royalty for the use of Karma's intellectual property, which Lordstown was accused of having misappropriated. California-based Karma had sued Lordstown for allegedly poaching its employees and stealing technology used in vehicles' infotainment systems. That case is scheduled for trial in September. In June, electric truck company Lordstown filed for bankruptcy protection and put itself up for sale after failing to resolve a dispute over a promised investment from Taiwan's Foxconn. According to a filing, Lordstown's debtors have requested the settlement to be approved by the bankruptcy court on or before August 28, but a hearing has not been scheduled so far. In case the settlement is not approved and the case goes to trial, Lordstown will continue to defend against Karma's claims, the filing added.

SVB Financial Group, the bankrupt former parent of Silicon Valley Bank, is losing $9 million a month in interest on deposits that were trapped when federal regulators took over the failed bank, a lawyer said yesterday in court, Bloomberg News reported. SVB Financial wants nearly $2 billion in deposits put into a court-controlled account while the holding company fights over the cash with the Federal Deposit Insurance Corp., according to court papers. The agency hasn’t provided a good reason for refusing to make payment on the deposits, SVB argues. The money is key to repaying bondholders owed billions of dollars by SVB Financial. FDIC lawyers have said in court that the defunct bank holding company must apply for the money like any other depositor. As an arm of the US government, the FDIC cannot be forced to pay interest on the disputed cash, Ben Finestone, a lawyer for agency, said yesterday in bankruptcy court.

The main lender of the Banyan Cay hotel, residential and golf project in West Palm Beach wants to be declared the winning bidder for the 200-acre property in bankruptcy court, the South Florida Business Journal reported. Denver-based Westside Investment Partners won the bankruptcy auction for the property with a $102.1 million bid in June. However, it wasn’t able to complete the transaction and the deal fell through in July. The bidding procedures recognized Westside as the stalking-horse bidder and the main lender as the backup bidder, based on its credit bid. On Aug. 9, the main lender, U.S. Real Estate Credit Holdings, in care of El Segundo, California-based Calmwater Capital, filed a motion to amend the sale order so it is declared the winner of the auction based on its $96.9 million credit bid. There were no other bids at the auction, according to court documents. “The debtors’ sale process failed,” U.S. Real Estate stated in its motion. “The debtors now lack funding to insure, maintain and otherwise preserve the collateral [property], pay employees and fund operations. Lender has offered to fund operations and agreed-upon professional fees related to closing to preserve what value is left in the property, have an orderly transition of the property to lender, allow ongoing vendors to be paid, and to otherwise do the things the debtors have been unable, or unwilling, to do to prevent further diminution in value and harm to the property.” U.S. Real Estate said that the debtor, Banyan Cay Resort & Golf LLC, should cease marketing the property for sale and complete the auction process with its credit bid as the winning bid. It seeks to close on or before Aug. 31.